By Sarah Abruzzese, CQ Staff

August 7, 2006 -- A good nursing home is hard to find, but the best place for consumers to start looking is an independent, not-for-profit establishment, according to a new report by the nonprofit advocacy group Consumers Union.

The report, "Nursing Homes: Business as Usual," says life inside America's nursing homes hasn't changed for the better since the group's publication, Consumer Reports, started researching the issue and since Congress passed legislation aimed at protecting seniors in nursing homes.

"We have seen little evidence that the quality of care has improved much since the first list came out in 2000," Consumers Union Programs Director Charles W.F. Bell said at a news conference Monday.

In fact, a total of 186 homes found to be providing poor care have been cited by Consumer Reports in previous years. The authors of the report also listed 12 five-time repeaters. Labeled the "deficient dozen," the group includes facilities around the country, including three from California, two from Minnesota, and two from Ohio.

The report also says enforcement of penalties for poor care has been tempered in recent years. Of the "deficient dozen," only four had received fines between 1999 and 2004. In 1999, the median fine for a deficient nursing home was $4,800, a number that dropped to $3,000 in 2004. According to the report, far fewer homes are being denied funding from the Centers for Medicare and Medicaid Services. In 1998, 51 facilities were terminated for poor care, and in 2005, only eight.

Consumer Reports looked at staffing levels, quality indicators, and recent state inspection reports for about 16,000 nursing homes across the country. The report broke the results down by state, identifying the top and bottom 10 percent, which consisted of 7 percent of the nation's nursing homes. To be listed in the top or bottom 10-percent tier, the home had to rank at the bottom or top in at least two of the three categories.

Staffing is a crucial piece of providing good care, said Trudy Lieberman, director of the Center for Consumer Health Choices at Consumers Union. The researchers found that not-for-profit nursing home patients received more attention from staff—an average of an hour more a day and two hours more a day of time with registered nurses.

"Nursing homes can choose how they spend money," Lieberman said, adding that it is possible independent homes put more money back into patient care and staffing numbers.

Lieberman recommended that families searching for a nursing home look at the home's owner and read reports on the home by CMS and ombudsman complaints. She also suggested paying unannounced visits with careful attention paid to meals and services.

"Consumer reports are a good thing, helping people get the data they need and make their own choice," said Bruce Yarwood, president and chief executive officer of the American Healthcare Association. But he cautioned that it is important to have the correct data and that some of the institutions that Consumer Reports examined aren't long-term care nursing homes for the elderly.

The report, the group's fifth examining nursing homes, will be in the September issue of Consumer Reports. It was paid for by a grant from The Commonwealth Fund.

By John Reichard, CQ HealthBeat Editor

August 9, 2006 -- As Congress began taking its summer repose this week, Centers for Medicare and Medicaid Services staffers scrambled to assemble hundreds of pages of new regulatory proposals—a process that culminated late Tuesday in the release of proposed major payment revisions for physician, hospital outpatient, imaging, specialty hospital, and ambulatory surgery center services. Among the surprises: a proposal for quality measures for hospital outpatient care that would lessen payment increases next year if data on quality isn't reported.

But perhaps the loudest expressions of pained surprise will be heard from doctors and ambulatory surgery centers. Under a proposed regulation for Medicare physician payments in 2007, doctors are scheduled to take a 5.1 percent cut on Jan. 1, rather than the original CMS estimate of 4.6 percent. "In mathematical terms, it's 11 percent uglier than the original estimate, and that estimate was 100 percent ugly," said Washington, D.C., consultant Alec Vachon, a former Senate Finance Committee staffer.

"Ambulatory surgery centers get creamed in this rule," Vachon added. "Industry lobbyists told me they were prepared to hate the rule. Now I believe them."

Doctor Cuts
The higher-than-expected payment cut to physicians means that the cost of legislation to block that reduction, widely expected at the end of this year, will be more than $1 billion more expensive than expected. That puts other types of providers in line to see cuts to come up with that extra money.

During a telephone press briefing late Tuesday, CMS Administrator Mark B. McClellan sought to apply balm to that news by emphasizing new coverage of preventive services in the payment rule. For example, the proposal would implement a statutory requirement that Medicare's colorectal screening benefit is no longer subject to the Part B deductible in Medicare.

McClellan also highlighted the fact that doctors would receive payment incentives to spend more time with their patients. But American Medical Association Board Chairman Cecil Wilson said seniors and doctors "are stuck wondering if 2007 will be the year access to care erodes as we wait for congressional action to stop the Medicare cuts." Wilson also complained that the proposed rule "imposes cuts on imaging services that are used by physicians to make specific and accurate diagnoses of patient illnesses." Use of many imaging services has been encouraged through new screening benefits, he noted.

McClellan, however, suggested the proposal seeks to blunt imaging cuts. The proposed rule would continue to impose a 25 percent reduction in payment for preparing additional medical images of contiguous body parts. CMS said last year that it would slice payments by half in 2007, not 25 percent, for the added images, but the latest proposal retreats on that prediction.

The proposed rule also would implement a statutory requirement that payments for certain types of medical imaging in the doctor's office be capped at the same amount paid to hospital outpatient departments. By applying those caps after making the reductions for multiple images, imaging payments will be higher, McClellan said.

Dialysis facilities received a bit of good news, however, in the proposed reg. Certain add-on payments received by the facilities for drug products would be slightly higher under the proposal, Vachon said.

Hospital Outpatient Departments
McClellan said that because of fast-rising spending on hospital outpatient care, the status quo must not continue. "Doing nothing is not sustainable from the standpoint of Medicare costs and beneficiary premiums, and we want public input on the best approaches to promoting high-quality, affordable care," he said in a press release on the proposed rule for 2007 payments for the sector.

Citing what he called Medicare's "equitable adjustment authority," McClellan said the proposal would require hospitals to report data on quality performance measures starting in 2007. If hospitals next year failed to report the inpatient quality-of-care data necessary to receive a full payment increase, the update they receive for outpatient care would be two percentage points lower, CMS said. Thus instead of receiving an increase next year of about three percent for outpatient care, facilities would get an increase of about one percent. CMS said that pending the development of quality measures specific to outpatient care—something CMS plans to do—it's fair to tie payments to reporting of data on inpatient measures because they cover many of the same activities as in outpatient care. The outpatient rule also expands the set of quality measures on which hospitals must report data to receive a full payment update for inpatient care in fiscal 2008. Added measures assess the satisfaction of patients with the care they get at a facility, post-surgical complications, and death rates at a facility for heart attack, heart failure and pneumonia patients within 30 days of receiving treatment.

Consistent with a mandate in the 2003 Medicare overhaul law (PL 108-173), CMS also is proposing a new payment system for ambulatory surgery centers that would take effect in 2008. CMS said the proposed rule would "allow payment to an ASC for any surgical procedure that does not pose a significant safety risk, greatly expanding the list of surgical procedures for which Medicare pays an ASC facility fee."

But payments to the surgery centers would be tied for the first time to the "Ambulatory Payment Classifications" (APCs) used for payment of hospital outpatient departments. The proposal calls for ambulatory surgery centers to receive 62 percent of the APC level, a relatively low percentage, analysts said.

Specialty Hospitals
McClellan also announced the release of a regulatory plan for doctor-owned specialty hospitals, which critics say have carved out more lucrative procedures and patients for themselves in an example of "cream-skimming" harmful to the Medicare program.

Release of the plan effectively lifts a CMS administrative moratorium on the enrollment of new specialty hospitals as Medicare providers. But CMS will require facilities to disclose the percentage that individual doctors own of a facility and the terms of their compensation. Specialty hospitals also will be required to inform patients before they receive care that staff physicians have an investment interest in the hospital.

Hospitals may be found in violation of anti-kickback regulations if the compensation of doctors is out of proportion to the percentage of the facility they own. And hospitals that fail to report physician investment and compensation arrangements will face fines of up to $10,000 a day. That enforcement effort will begin with specialty hospitals that did not fully respond to a recent CMS survey to determine their investment and compensation arrangements.

The hospitals that responded reported compensation proportional to investment percentages, but 53 percent of the specialty hospitals polled did not provide the requested data.

CMS noted that traditional hospitals have complained that specialty hospitals can better coordinate the delivery of care with staff doctors because of the opportunity for physician ownership. To "level the playing field," CMS said it will do a pilot test easing hospital-doctor collaboration on more efficient care, including a "gain-sharing" demonstration in which traditional hospitals can share profits with doctors from increased efficiency.

By Sarah Abruzzese, CQ Staff

The Gulf Coast is still struggling to provide health care services a year after Hurricane Katrina, with low-income residents still the hardest hit, according to panelists at a Kaiser Family Foundation discussion on Tuesday.

Several panelists at the discussion, which was titled "Health Care One Year After Hurricane Katrina," spoke of a system stretched beyond reasonable limits, recounting stories of suffering health care providers unable to rest, intent on counseling patients while suffering the same plight: homelessness and uncertainty.

Among those low-income survivors the foundation spoke with for its latest report, "Health Experiences of Low-Income Katrina Survivors," almost all were suffering from emotional or mental trauma, while few reported receiving formal counseling. According to the report, the loss of facilities made it difficult for survivors to connect with care often because they lacked transportation information. Survivors also went without needed medical care and medications for weeks and in some cases months after Katrina, the report said.

And nearly a year later, survivors are still having trouble taking care of their most basic needs, living day to day. "Those who were uninsured continued to describe major problems connecting with care due to long waits, limited health care resources, and unaffordable costs," the report said.

Resources are an issue throughout New Orleans, with shortages of mental health care providers, nursing staff, and facilities. And the future might be bleak for nursing home administrators, according to David Dosa, assistant professor of medicine at Brown Medical School, who said the elderly are not a focus in the event of a catastrophe.

While nursing homes are increasing their supplies to prepare for the next crisis, many homes where patients were shifted have not received payments for care since last year.

Comparing Hurricane Katrina's approximately 100,000 square miles of devastation to the Dust Bowl of the 1930s, Irwin Redlener, president of the Children's Health Fund and director of the National Center for Preparedness at Columbia University's Mailman School of Public Health, said that what happened to the Gulf Coast was a series of unprecedented realities that have created an ongoing health crisis. Redlener said the crisis isn't finished, with people suffering from health issues that were "mildly out of control" a few months ago, but are now "wildly out of control." Redlener said planning for immediate needs should mean equal planning for the future.

Fred Ceris, secretary for the Louisiana Department of Health and Hospitals, said the decimated infrastructure in New Orleans left health care leaders with an opportunity to innovate and rebuild a system. But that opportunity was heavily hampered by a high cost of care, due to an ineffectual and costly delivery system.

Plans call for the implementation of everything from an interoperable electronic medical records system to a more patient-oriented system with decentralized facilities. Karen DeSalvo, chief of general internal medicine at the Tulane University Health Sciences Center, said the goal is to have decentralized care facilities tied to a central facility where patients can be referred to for testing and serious medical issues. However, getting there might take as long as eight years, she said.

According to a recent poll, frustration with the slow response to rebuilding the Gulf Coast is shared by a majority of Americans. Seventy percent of respondents in the foundation poll, titled "The Public's View on the Response to Hurricane Katrina," said individuals have not gotten the help they need. And 56 percent said the federal government has not done enough.

Not only have Americans not forgotten Hurricane Katrina, their opinion of the federal government has changed because of it, said Drew Altman, president and chief executive officer of the Kaiser Family Foundation. In fact, 53 percent of Americans polled for the survey were so disappointed by the government's handling of the catastrophe that it negatively impacted their confidence in the federal government. "Not good news," Altman said, adding that Americans "have a pretty realistic view" of the state of things in the Gulf Coast region.

By CQ Staff

August 7, 2006 -- Department of Health and Human Services Secretary Michael O. Leavitt told the nation's governors Sunday that all providers of federally financed health care will soon be ordered to adopt quality measurement tools and health information technology standards.

Leavitt said President Bush will sign an executive order announcing the new requirements "within a matter of weeks," the Washington Post reported Monday. An HHS official confirmed the accuracy of the story. Federally financed health care programs include Medicare, Medicaid, and the Federal Employees Health Program, among others.

Although the Bush administration has characterized the health information standard-setting process as voluntary, Leavitt also has emphasized the importance of timely adoption of those standards and of using government to spur adoption. Health IT standards in the executive order will include such activities as reporting of lab results, registering of patients, the writing of prescriptions, and providing secure communication channels between doctors and patients and among providers.

Leavitt also predicted that by the end of the year, most of the nation's 100 largest private employers will include similar quality measurement and health IT requirements in their contracts with doctors and hospitals. The Post also reported that both Michigan and New Mexico are moving toward creating a system of universal coverage by mandating individual purchase of coverage.

By Elizabeth B. Crowley, CQ Staff

August 7, 2006 -- The Medicare system for physician payments needs an overhaul and not just a patch, the head of the Centers for Medicare and Medicaid Services told reporters Monday morning.

"We have got to get to a better system," said CMS Administrator Mark B. McClellan, adding that the current system is "not sustainable."

Medicare's physician payment formula presumes nine years of annual cuts in the amount physicians are paid. Congress has made several one-year increases to eliminate the cuts, but under the payment formula, that requires a deeper cut the next year, absent further congressional action.

"I don't think it'll just be extended out another year," McClellan said, noting the estimated cost of a one-year "fix" for fiscal 2007 would be $13 billion over five years and that the problem would have to be addressed again next year. "Every year, it keeps getting more expensive," he said.

It was unclear whether McClellan was referring to a multi-year payment fix or to a one-year fix coupled with a requirement that doctors begin reporting data on the quality of care they provide.
Rewriting the formula to provide a 2 percent to 3 percent yearly payment increase that reflects the rising expenses of treating patients would cost the federal government $218 billion over 10 years, according to the Congressional Budget Office.

Further complicating the process are plans to overhaul the existing system.

There is bipartisan agreement that a formula cutting payments to doctors each year must be scrapped, but there has been no agreement on how to pay for doing so.

"I think there's a good chance this will be the year that we'll really move away" from the physician payment formula, McClellan said, adding that he has discussed the issue with key players in Congress—including Rep. Bill Thomas, R-Calif.; House Energy and Commerce Chairman Joe L. Barton, R-Texas; and Senate Finance Chairman Charles E. Grassley, R-Iowa—and believes there is considerable support for changing the system.

CMS is working on rules for a new pay-for-performance system, with Medicare tying physician payments to the quality of care they deliver.

The idea is that payment ultimately will be based on whether a physician meets quality performance standards, or at least shows improvement on those standards. But Medicare first needs to find a way to encourage doctors to report their performance.

McClellan said Congress had talked about creating, then withholding, a bonus—or payment increase—for doctors who don't report results.

McClellan also suggested a system requiring physicians to document quality improvements and a trend of reduced costs, so they could be rewarded with a percentage of the savings.

McClellan also said Monday that CMS would make several announcements in the coming weeks, including:

• A release of information in "coming weeks" about the 2007 bidding process for Medicare Part D that would show a "more robust availability of benefits" and more plans that offer "doughnut hole" coverage.
• An increasingly personalized approach to dealing with beneficiaries. According to McClellan, CMS would soon be able to provide beneficiaries with eligibility information on preventive medicines.
• The expansion of Medical Savings Accounts. "Most Medicare beneficiaries, if not all, will have some access" to the accounts before long, he said.

By John Reichard, CQ HealthBeat Editor

August 9, 2006 -- Critics of doctor-owned specialty hospitals reacted favorably to aspects of a plan issued late Tuesday by the Medicare program to tighten oversight of the facilities, but they stuck to their view that the facilities should be banned.

The plan "is important," said Senate Finance Chairman Charles E. Grassley, R-Iowa, but "these steps alone won't unravel the web of conflicts that have been created by these limited-service hospitals, which cherry-pick patients based on dollars rather than diagnosis and put the well-being of both individual patients and the health care delivery system at risk."

Doctor-owned specialty hospitals limit themselves to certain procedures—cardiovascular surgery, for example—that according to critics are highly lucrative and siphon off patients from traditional hospitals they need to be able to offer services with low or no profit margins.

Similarly, the American Hospital Association, which depicts doctor-owned specialty hospitals as a threat to the survival of the traditional hospital, praised the plan's requirement that physician-owners disclose to patients their financial interest in the facilities.

"Patients have a right to know whether a conflict of interest may affect their care," said Thomas Nickels, AHA senior vice president.

Nickels also praised the Centers for Medicare and Medicaid Services plan for requiring the facilities to disclose what percentage each physician-investor owns and how much he or she is being paid. In cases where the percentage of profits received by a physician exceeds the percentage representing his or her ownership stake, CMS could prosecute the specialty hospital for violating laws barring kickbacks for referrals. But "given the growing evidence that financial interest may be overtaking patient interest, the AHA continues to believe physician self-referral to limited-service hospitals they own should be banned," he said.

Grassley and top Finance Committee Democrat Max Baucus of Montana had urged CMS to delay issuance of the regulatory plan, citing flaws in a survey on which the plan was based. Delaying the plan would have extended a CMS administrative moratorium on enrolling new doctor-owned specialty hospitals as Medicare providers. But CMS Administrator Mark B. McClellan defended the survey in a letter Tuesday to the two senators, blaming problems in the survey in part on a low response rate by hospitals. CMS declined to extend the moratorium.

The proposed regulations on doctor-owned specialty hospitals were among other regulatory proposals issued by CMS on Tuesday, including major payment revisions for physician, hospital outpatient, imaging, and ambulatory surgery center services (ASCs). Reactions on Wednesday were mixed.

AHA praised CMS for giving hospitals plenty of time to submit data on a variety of new performance measures the agency is establishing for fiscal 2008. But the association's vice president for policy, Donald May, faulted a CMS proposal that would reduce the amount of the payment increase hospitals get in fiscal 2007 for outpatient care if they don't report data on existing measures of the quality of inpatient care.

Quality measures should only affect payment for outpatient care if they specifically address outpatient care, he said, noting that a number of measures specific to outpatient care are in development. A fundamental principle of quality-based payment should be that "incentives are linked to the care provided," he said.

The CMS proposal overhauling payments to ASCs for 2008 also drew fire. Kathy Bryant, president of the Federated Ambulatory Surgery Association, said "we're extremely disappointed by the rate CMS is paying" in the proposal.

Bryant said ASCs accept the premise of the rule that they should be paid less than hospital outpatient departments because they are more efficient. But setting payments to ASCs at 62 percent of what hospital outpatient departments will receive in 2008 "seemed excessive to us," Bryant said.

"We had indicated we could live with 75 percent," a figure she said would have saved Medicare 25 cents of every dollar otherwise spent on doing procedures in the outpatient department.

Payments for some of the highest-volume procedures done by ASCs will see cuts in 2008 under the proposal, she said.

Payments would be trimmed 13 percent for upper gastrointestinal tract endoscopies involving biopsies and 10 percent for diagnostic colonoscopies, she said.

Also, because of differences between hospital outpatient departments and ASCs in the "bundles" of services CMS is including in payments for procedures, the savings delivered by ASCs won't be as apparent to patients, Bryant said.

On a positive note, CMS is proposing in 2008 to add about 800 more types of procedures it will pay for in ASCs—an increase of 25 percent.