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Healthcare Business News
 
Healthcare cuts on the table

Fearing the fiscal cliff

Hospitals detail approaches to slow looming cuts


By Rich Daly
Posted: December 1, 2012 - 12:01 am ET
Tags:

Cook County Health and Hospitals System garnered some unusual attention recently in Washington. And it is the kind of notice hospitals are eager for as post-election fighting over federal spending ramps up.

During a high-profile Nov. 27 event outlining preferred approaches to slow the rise of federal deficits and to avert looming cuts, Sen. Richard Durbin (D-Ill.) highlighted the Chicago health system's recently launched Medicaid medical home project. A federal waiver allowed it to begin enrolling 115,000 newly eligible Medicaid beneficiaries a year earlier than the rest of the nation under the healthcare law's expansion of Medicaid, in exchange for establishing a comprehensive care program for them.

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“This is going to turn out to be a real money-saver as we start to think about early interventions and coordinated care for a lot of people who are chronically ill and very expensive,” Durbin said about the program.

Dr. Ram Raju, CEO of the Cook County health system, said in an interview that the program aims to ensure the enrollees—many of whom already receive charity care from the hospital—receive the maintenance care needed to keep them from expensive emergency department visits and hospitalizations.

“It means we are responsible for them both inside and outside the hospital,” Raju said.

Durbin's praise for the Cook County program reflects his party's long-held insistence that the Patient Protection and Affordable Care Act will eventually reduce healthcare costs as its initiatives are implemented and should shield Medicare and Medicaid from major cuts as lawmakers have haggled over ways to resolve a series of budget stalemates.

Specific promises of savings from the Affordable Care Act have emerged as the first line of defense for many hospitals and their advocates during the post-election fight for savings to offset the cost of eliminating looming tax increases and Medicare cuts.

During a Nov. 29 briefing for congressional staff, Rebecca Ryder, president and CEO of Franklin Memorial Hospital, Farmington, Maine, repeatedly highlighted cost-saving initiatives at her facility that have cut emergency department spending by 7% during the past 12 months.

“For the Medicare and Medicaid program, the cost has gone away because we are seeing those patients through primary care, a much cheaper setting,” Ryder said in an interview afterward. “There are ways to begin to quantify what everyone is doing.”

Hospital advocates bolster their argument with warnings about how hospitals and their communities would suffer under further cuts in reimbursement from the programs.

“What the fiscal cliff discussions bring to the table is the potential of more and significant cuts in a variety of arenas that could literally destroy the ability of many healthcare systems to deliver healthcare services at a high-quality level, and that is no exaggeration,” Kenneth Raske, president of the Greater New York Hospital Association, said in an interview.

Raske's group joined the Service Employees International Union last week in running ads in Washington newspapers warning about the consequences of cuts in Medicare graduate medical education and hospital evaluation and management services.

An American Hospital Association lobbyist said his group is focused on fighting the proposed $7 billion evaluation and management cut because it was receiving the most attention as a potential offset to avoid coming cuts. Physician advocates also have joined hospitals in fighting cuts to graduate medical education, citing concerns that medical school graduates have started to exceed the number of available residency slots for the first time.

Hospitals also have emphasized that they continue to absorb $155 billion in cuts over 10 years required by the healthcare overhaul and can ill-afford more cuts.

Rebecca Ryder, president and CEO of Franklin Memorial Hospital
Rebecca Ryder, president and CEO of Franklin Memorial Hospital, tells a congressional briefing on Nov. 29 how primary care has helped cut costs.
Photo credit: GETTY IMAGES
Those messages received a lukewarm reception last week from members of Congress and their staffs, said hospital officials who came to Washington to lobby against more hospital cuts, including the looming 2% Medicare provider and 26.5% physician-fee cut.

“There is a genuine sensitivity that this is an important thing … but the issue is, where do we get the money?” Jerry Grannan, vice president of business integration and business development for Allegiance Health, Jackson, Miss., said in an interview.

The AHA and many of its members have responded to such questions with a list that summarizes nearly $1.9 trillion worth of nonhospital federal health program cuts, taxes and legal reforms that could substitute for hospital cuts.

“Hospitals have already been absorbing some of these cuts; we've got to look more broadly through a more comprehensive approach across the whole sector,” Richard Umbdenstock, the AHA's president and CEO, said in an interview.

Those alternatives to reduce costs in federal healthcare programs are part of a growing crowd of proposed healthcare cuts that various provider and advocacy groups have issued as the White House and Congress scramble for ways to avert the looming federal cuts and to prepare for a larger deficit reduction battle next year. Those proposals include a recently issued list from the liberal Center for American Progress, which is viewed as closely aligned with the Obama administration. The think tank, which had previously urged giving healthcare reforms a chance to work, suggested $385 billion in entitlement program savings, including at least $34 billion in Medicare hospital cuts.

Sen. Richard Durbin (D-Ill.)
Sen. Richard Durbin (D-Ill.) lauded the Cook County health system’s Medicaid medical home project.
Photo credit: GETTY IMAGES
The number and sources of those cuts packages may indicate that patience might have run out among policymakers for some of the healthcare law's savings to begin.

“It's not that we aren't trying to inch in the right direction, it's just given the system we have in place, it is very little, very slow,” said Gail Wilensky, former director of the precursor agency to the CMS under President George H.W. Bush.

The slow payoff of healthcare reform efforts is the downside of newly implemented provider reforms from the healthcare law, such as the one at Cook County Health and Hospitals System, where Raju said it remains uncertain what savings—if any—the program will provide. “It is too early because we just got it, but we are all committed to coordinating care and making sure they are staying healthy and their diseases are under control,” he said. “I'm pretty sure it will be done better.”

Other health policy experts remained optimistic that growing savings from ongoing implementation of the healthcare overhaul could still have an impact.

The healthcare overhaul's various provisions “are trying to incent integration and a fair amount of consolidation in a complicated system and that's what we see happening,” Dan Mendelson, president and CEO of Avalere Health, said during a Washington health policy breakfast.

Providers and their allies may have another year to gather early data on savings that quantify their healthcare-delivery reform efforts and avoid cuts because a major deficit reduction and entitlement deal that some Washington health policy experts expect will not be finalized until late 2013.

However, hospital cuts remain possible to pay for avoiding automatic Medicare cuts under the Budget Control Act of 2011 and physician rate cuts that are scheduled to begin early next year. Negotiations on those cuts and the larger tax increases and defense cuts that are scheduled to occur in tandem are ongoing, according to the Obama administration and members of Congress. However, few details have emerged about what cuts they are considering or the extent of the package they are considering.

Publicly, Republicans have continued to insist that any end-of-the-year deal include overhauling Medicare and Medicaid to reduce the federal government's annual deficits. The White House has publicly agreed with that approach.

“It is the president's position that when we're talking about a broad, balanced approach to dealing with our fiscal challenges, that that includes dealing with entitlements,” White House press secretary Jay Carney told reporters in a Nov. 27 briefing. He specifically cited $340 billion in healthcare savings included in the president's proposed budget.

Provider advocates raised concerns at the time the budget was introduced about the impact of many of those proposals, including combining varying state matching rates under Medicaid into a single and lower rate and expanding disproportionate-share hospital payment cuts included in the reform law.


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