Published 12/1/2008

Second Look – Reimbursement and Regulation

Medicaid spending to substantially outpace U.S. economy
According to a report released by the U.S. Centers for Medicare & Medicaid Services (CMS), spending on Medicaid is expected to substantially outpace the rate of growth in the U.S. economy over the next decade. According to projections, Medicaid benefits spending will have increased by 7.3 percent from 2007 to 2008, reaching $339 billion, and will grow at an annual average rate of 7.9 percent over the next 10 years, reaching $674 billion by 2017. Over the same period, the growth rate of the general economy is projected to be 4.8 percent. The report also finds that Medicaid enrollment is projected to increase at an average annual rate of 1.2 percent over the next 10 years, reaching 55.1 million by 2017.

ICD-10 implementation costs higher than CMS estimates
AAOS and 11 other healthcare organizations have released a study (PDF) conducted by Nachimson Advisors, LLC, which suggests that CMS has underestimated the cost of implementing the International Classification of Diseases (ICD)-10 code set. According to the study results, the implementation cost for a three-physician practice could be as high as $83,290, while a 100-physician practice might pay more than $2.7 million. CMS has proposed implementing the codes by October 2011.

AAOS has been monitoring the proposed transition to ICD-10 and is actively engaged to ensure that the transition places as little administrative and cost burden on physician practices as possible.

GAO report examines effect of HAI reporting systems
The U.S. Government Accountability Office (GAO) has released an overview (PDF) of various state reporting systems for tracking hospital-acquired infections (HAIs). The report finds that the hospitals required varying levels of funding and staff resources for implementation, but all hospitals that tracked methicillin-resistant Staphylococcus aureus (MRSA) infection rates reported a decline in such infections as a result.

Evidence-based HAI-prevention strategy
Five leading healthcare organizations have released a strategy guide to help prevent six common HAIs. “The Compendium of Strategies to Prevent Healthcare-Associated Infections in Acute Care Hospitals” addresses two specific organisms—MRSA and Clostridium difficile—as well as device- and procedure-associated HAIs, including surgical site infection. The strategy guide is produced jointly by the Society for Healthcare Epidemiology of America, the Infectious Diseases Society of America, the American Hospital Association, the Association for Professionals in Infection Control and Epidemiology, Inc., and The Joint Commission.

Insurer lowers medical liability rates in Texas
Insurance Journal
reports that insurer Medical Protective will reduce medical liability rates by an average of 6.2 percent for Texas physicians, effective Jan. 1, 2009. The company cites a 2003 Texas tort reform law as one of the reasons for the reduction. Cumulatively, the company has lowered liability premiums in Texas by an average of more than 37 percent over the last 4 years.

OIG approves gainsharing arrangements
The Office of Inspector General (OIG) of the U.S. Department of Health and Human Services has released two advisory opinions regarding physician reimbursement. In the first opinion (PDF), OIG approved a multiyear gainsharing agreement between a hospital and two cardiology groups. Under the agreement, the hospital will pay each cardiology group 3 years of cost savings based on specific changes the group makes to its cardiac catheterization laboratory practices. In the second opinion, OIG states that it will not pursue sanctions against a hospital seeking a method to reward staff for helping it meet performance goals. Read the AAOS position statement on gainsharing.

Medical schools see record enrollment
The Association of American Medical Colleges (AAMC) has announced that first-year enrollment at U.S. medical schools has increased to more than 18,000 students—a record level and an increase of nearly 2 percent over 2007. Many medical schools are increasing their enrollment levels in response to increased demand for physicians. Additionally, according to AAMC data, the number of Latino first-year enrollees increased by more than 10 percent this year; the number of Native American first-year enrollees increased by more than 5 percent; and the number of African American first-year students remained nearly the same as in 2007, at 7.2 percent. The percentage of women first-year enrollees held steady at about 48 percent.

Race and insurance status affect trauma mortality
Race and insurance status are independent predictors of outcome disparities after trauma, according to a study published in the Archives of Surgery. A review of 429,751 patients age 18-64 years (Injury Severity Score 9) included in the National Trauma Data Bank from 2001-2005 found that African American (n = 72,249) and Hispanic (n = 41,770) patients were less likely to be insured and more likely to sustain penetrating trauma than white patients (n = 262,878). African American and Hispanic patients had higher unadjusted mortality rates (white, 5.7 percent; African American, 8.2 percent; Hispanic, 9.1 percent) and an increased adjusted-odds ratio of death compared with white patients. Insured patients (47 percent) had lower crude mortality rates than uninsured patients (4.4 percent versus 8.6 percent). Insured African American and Hispanic patients had increased mortality rates compared with insured white patients. This effect worsened for uninsured patients across groups.

AAMC issues healthcare reform principles
The Association of American Medical Colleges (AAMC) has issued the following six principles to help guide reform of the nation’s healthcare system:

Affordable, transportable, and continuous healthcare coverage that combines the best of public and private systems should be available to all.

The U.S. system must be restructured to promote wellness and disease prevention, while providing high-quality, cost-effective diagnosis and treatment of illness, as well as palliative care.

  • Healthcare financing mechanisms should be sustainable, equitable, explicit, accountable, and promote efficiency and quality.
  • Existing programs that serve defined populations should be maintained until superior alternatives can fully replace them.
  • The supply of healthcare practitioners must be adequate and reflect the population and its healthcare needs.
  • Any reconfiguration of the healthcare system should acknowledge and support the costs inherent in health research, technology development, and the provision of necessary specialized services.

Large gap persists between “best” and “worst” hospitals

According to findings published in the 2008 HealthGrades Hospital Quality in America Study, patients have a 70 percent lower chance of dying at the top-rated U.S. hospitals compared with the lowest-rated hospitals across 17 procedures and conditions. Among the study’s other findings:

The in-hospital, risk-adjusted mortality rate improved 14.17 percent from 2005 to 2007.

If all facilities had performed at the level of the top-rated hospitals, 237,420 Medicare deaths potentially could have been prevented over the 3 years studied.

Four diagnoses—sepsis, heart failure, pneumonia, and respiratory failure—were associated with 54 percent of potentially preventable deaths.