The Congressional Budget Office upped its 2006-15 Medicare spending estimate by $70 billion to $5.5 trillion, primarily because of higher estimated costs under the new prescription drug benefit. The CBO said it added $54 billion to projected net spending under the drug benefit over the 10-year period, reflecting final formulary rules and eligibility standards for the low-income subsidy. Some $36 billion of the increase applied to 2004 through 2013, the original period for which the CBO projected a net drug-benefit cost-$640 billion after premium receipts but before Medicaid savings from the cost-shift-resulting in a new total of $676 billion for the period. The CBO said it would provide additional details of its drug benefit analysis in a March 15 report. The CMS recently estimated net federal spending on the benefit at $723 billion for 2006-15. Meanwhile, the agency said President Bush's Medicaid proposals would yield smaller net savings than expected, $8.5 billion through 2010 instead of the $13 billion projected by the White House. Overall net savings from cuts to all programs also fell below the White House estimate-$50.8 billion through 2010 instead of $62 billion-because of spending rates and other factors, the CBO said.
Proper care could reduce costs
Appropriate primary care could have reduced costs for diabetes-related hospitalizations by $2.5 billion in 2001, or almost two-thirds, saving Medicare $1.3 billion and Medicaid $386 million that year, the Agency for Healthcare Research and Quality said. According to a new report, diabetes-related admissions-often for preventable complications-cost all payers $3.8 billion in 2001. The data showed a marked discrepancy in care. The average annual healthcare cost for diabetes patients with multiple hospitalizations in 2001 was nearly three times that of diabetes patients with one hospitalization ($23,100 vs. $8,500). Racial and ethnic minorities and low-income people were more likely than others to have multiple diabetes-related hospitalizations, the AHRQ report said.
Christiana to sell health plan
Christiana Care Health System, Wilmington, Del., agreed to sell its 31,000-member Mid-Atlantic Health Plan to Blue Cross and Blue Shield of Delaware, pending regulatory approval. Financial terms were not disclosed. Two-hospital Christiana Care, which formed Mid-Atlantic in 1997, would be the latest of several providers to quit the insurance business in recent months. "This agreement will allow Christiana Care ... to focus our system's resources on our core competencies as a healthcare provider," system President and Chief Executive Officer Robert Laskowski said in a news release. Meanwhile, the 360,000-member Delaware Blues' affiliation with 3.2 million-member CareFirst remained in question. CareFirst has filed an appeal in U.S. District Court in Baltimore, challenging a December 2004 ruling by the Delaware Supreme Court requiring the Delaware plan to break off from its parent.
Hospitals sue over Medicaid cuts
Thirty California hospitals sued the state Department of Health Services in federal court in Sacramento to halt what they called "devastating" Medicaid payment cuts. About 40 other hospitals were expected to join the suit, said the plaintiffs' law firm, Hooper, Lundy & Bookman. At issue is a mandate in California's fiscal 2004-05 budget that froze Medicaid reimbursement at 2003 levels for so-called "noncontract" hospitals. Roughly 20% of the 430 California hospitals that treat Medicaid patients don't have contracts with pre-negotiated rates with California and instead receive fee-for-service payments based on historical costs. In a news release, Byron Gross, a partner with the plaintiffs' law firm, said California "illegally failed to consider the cost of the services involved, whether costs had increased and whether the rate reduction would have an impact on the ability of hospitals to continue to provide quality care and sufficient access" to beneficiaries of the state Medicaid program, Medi-Cal.
Red Cross to sell plasma unit
The American Red Cross will exit the plasma therapeutics business, signing a new long-term plasma procurement contract with Baxter Healthcare Corp. and terminating their long-standing contract-manufacturing arrangement for the processing of plasma products. Under the new agreement, Baxter will purchase plasma from the Red Cross beginning July 1. Baxter said it expected the change from the Red Cross contract-manufacturing arrangement to the direct sales of plasma products would increase annual revenues of antibody therapy and other plasma products by approximately $100 million in 2006. Other financial terms were not disclosed. Red Cross officials said the decision to divest the plasma business and become strictly a plasma supplier like other blood banks was part of a strategic initiative to concentrate on its core mission of blood services.
UNC system to cut 200 positions
The University of North Carolina Health Care System, Chapel Hill, said it would eliminate 200 positions in a move expected to save $8 million annually. About 40 employees, none in direct patient-care roles, will be affected, as the rest of the positions are unfilled, spokeswoman Karen McCall said. Those employees will be offered other positions. The system also is looking to cut costs in its supply chain and is improving its billing and scheduling practices to become more efficient, McCall said. UNC did not release full-system financial results. UNC Hospitals, which covers the hospitals on the system's main campus, earned $5.6 million on net revenue of $353.8 million for the seven months ended Jan. 31, 2005. For the fiscal year ended June 30, 2004, UNC Hospitals earned $5.1 million on net revenue of $553.8 million.
Hospital employment up
Employment at hospitals rose 0.15% in February to 4,334,800 people, according to the U.S. Bureau of Labor Statistics. That figure represents 6,400 more employees than in January and 74,400 more than in February 2004, a 1.7% jump. The number of employees in all healthcare sectors last month was 12.2 million, a 0.19% increase from January and a 2.2% increase from February 2004. The country's overall unemployment rate rose to 5.4% in February from 5.2% in January.