Midwest Edition: New Ohio Governor Trims Medicaid

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26 April 2011

Midwest Edition

Calendar New Ohio Governor Trims Medicaid


Reshapes Program to Improve Care, Save Cash

May 11-13 Facing a potential budget decit of $7.7 transformation ofce spokesman. It does so
billion in the next two years, the newly by insisting that Ohio’s 2.2 million Medicaid
elected Republican governor of Ohio has beneciaries have a medical home that
;)(2<3!8(*)!R1(2/<&!944-.(</-4!O1II/< proposed a sweeping reform of Medicaid that coordinates their care, and by asking that
'*)+)4<)0!%&!<3)!82).)2(40!82/4/A>
;-L!<-!1+)!3)(2<3!S1(2/<&!I)<*/A+ he hopes will improve quality of care and providers assure more value for each dollar
!<-!(0.(4A)!A2/4/A(2!-1<A-I)+> patient satisfaction while saving large sums spent. It also addresses “hot spots” of high
94<)*A-4</4)4<(2!;-<)2! for taxpayers. medical resource consumption, such as
(40!8-4@)*)4A)!8)4<)*6
82).)2(40> In so doing Gov. John Kasich has alienated nursing home care and chronic disease care.
E$#PQ> some interest groups but also attracted That’s where the money is: Just 4% of
attention from national observers for an Medicaid recipients cost 52% of Medicaid
82/AG!;)*)!@-*!B-*)!94@-*I(</-4
approach characterized as more spending, the transformation ofce says.
comprehensive and nuanced than what’s “I like what they’re doing in Ohio,” said
June 7-8 happening in many statehouses. Tricia Brooks, a senior fellow at the
Kasich created the Governor’s Ofce of Georgetown University Center for Children
Health Transformation as soon as he took and Families. “It is refreshing to nd a
940/(4(!:1*(2!;)(2<3!=++->
$?<3!=441(2!:1*(2!;)(2<3!8-4@)*)4A) ofce in January. It coordinates policy for all conservative administration choosing not to
B(**/-<<!940/(4(C-2/+!D(+<> six state agencies that have a hand in have ideology guide their action but really
EF##> Medicaid. take a hard look at how the state is delivering
82/AG!;)*)!H-*!B-*)!94@-*I(</-4 The Medicaid reforms are arrayed around healthcare. They are looking at where cost
ve basic goals: and quality can be improved, together,
* Improve care coordination. without relying on cutting coverage as a
* Integrate behavioral and physical health mechanism to get the budget under control.”
June 15-17 care. This week the governor’s proposed budget
* Rebalance long-term care. will go through its rst hurdle in the
* Modernize reimbursement. legislature, as the House takes up the bill on
=;9'!94+</<1<)!"#$$ * Balance the budget. April 28. “Everything we have proposed will
D01A(</-4!@-*!I)I%)*+!-4! The last item is driving all the rest. The be modied a little bit,” Poklar said in a
3)(2<3!*)@-*I6!)JA3(45)+6!A-IC2/(4A)> budget proposal that Kasich prepared in telephone interview.
K/I!'(L2)4<&!(40!K-I!M(+A32)!(*)
51)+<!+C)(G)*+> March shaves $1.4 billion off the trendline for
B-+A-4)!N)+<!8-4@)*)4A)!8)4<)* Medicaid, according to Eric Poklar, Continued on Next Page
O(4!H*(4A/+A-
EPPQ!=;9'!I)I%)*+!

82/AG!;)*)!H-*!B-*)!94@-*I(</-4

E-Mail
info@payersandproviders.com with
the details of your event, or call
(877) 248-2360, ext. 3. It will be
published in the Calendar section,
space permitting.
www.lakesidecommunityhealthcare.com

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Payers & Providers NEWS Page 2

Top Placement... Ohio Medicaid (Continued from Page One)


Bottomless Potential Over the past two years, Medicaid chaired by Greg Moody, an experienced
expenses in Ohio rose by 16%. The Kasich Medicaid policy expert, went into high gear.
Advertise Here budget would trim that by $1.4 billion in the They put the entire Medicaid package
(877) 248-2360, ext. 2 next two years, mainly by addressing the together in 50 days.
needs of the chronically ill and changing the Part of the problem is specic to Ohio.
way nursing home care is provided. The state ranks 42nd in health outcomes for

In Brief
The federal health reform law of 2010 will health systems overall, and it is 37th most
have a dramatic impact on the states and affordable. That means “37 other states have
their budgets, Poklar pointed out. The an advantage over Ohio when it comes to
Affordable Care Act will add 970,000 new workforce productivity,” Poklar said.
UnitedHealth Group Medicaid eligibles in Ohio and contribute The transformation team is using the “hot
$34 billion in costs from 2014, when it goes spots” approach discussed by Atul Gawande,
Shares Rebound After
into effect, to 2019, when the federal M.D. in a New Yorker article in January. The
Strong Earnings Report
subsidies to the states diminish. essay documented how dogged physicians
UnitedHealth Group Inc. shares
In 2011 the state and federal governments are trying to control health spending on
jumped on April 21 after the company together will pay $18 billion to support people with multiple illnesses who have no
said net income rose to $1.35 billion Medicaid in Ohio. By 2017 the state expects medical home and rely on emergency
in the rst quarter, up from $1.19
billion a year ago. Earnings per share
to spend 30% more to cover half again as departments and frequent hospitalizations for
hit $1.22 a share, compared with many eligibles. State ofcials are worried care.
$1.03 a share in the rst quarter 2009. that the requirements of the ACA are going “Some of those people are expensive
UnitedHealth’s earnings beat to completely bust the budget. because the system is not well set up to deal
estimates by 33 cents a share, “If federal health reform does stand, in
propelling the stock 8% higher by the
with them,” Poklar said. You end up with
day’s close, to $47.81. Revenues 2014 we need to be prepared for these new “bad outcomes for people and high cost to
reached $25.4 billion, up from $23.3 people coming in,” Poklar said. While the the system and the taxpayer.” The patients are
billion last year. governor doesn’t like the reform law, the
The Minnetonka, Minn.-based
seeing multiple doctors, who don’t talk to
insurer, the largest in the country by transformation ofce “has not been shy each other, and there is often an underlying
sales, is the rst of the major managed- about adopting the best-practices aspect” of mental health diagnosis. The Ohio team will
care companies to report earnings this the law for Ohio. Those include the medical
season. It raised its estimate for full-
require such frequent yers to have a medical
year prots at the same time, from homes and incentives to achieve better home, with a care coordinator to see to it that
$3.70 per share to $4.05. outcomes. their chronic conditions are managed as well
The solid results lifted the entire “What’s impressive about it is it’s a broad
group of health insurance stocks.
as possible.
WellPoint Inc. rose 4.2%, Aetna Inc. range of interventions, not just one thing,” Another area of proposed savings is
went up 5.5%, and Cigna Corp. said Alan Weil, executive director of the nursing home care, where Ohio spends 52%
increased 3.2%, signaling optimism National Academy for State Health Policy in
among investors about their quarterly
more than the national average. The reform
results. A full year after passage of the Washington. Many states are trying to gure plan will reallocate resources to allow elderly
Affordable Care Act, the insurance out how to rein in Medicaid spending. patients to stay in their own homes as long as
companies appear to be adapting Ohio’s approach, focusing on how care is
better than many observers had
possible. The budget proposal raises funding
expected. delivered instead of on provider payment for home and community-based services for
WellPoint is scheduled to report on rates, is distinctive, Weil said. the elderly by $31.6 million over two years,
April 27, Aetna on April 28, and Cigna Kasich served in Congress as chair of the
on May 5.
allowing 7,248 more people to be served this
House Budget Committee in the late 1990s way.
when Newt Gingrich was speaker. He spent The nursing home lobby is the only
U Wisconsin Group 10 years in private industry, then ran for advocacy group that has heavily opposed the
Won’t Take Money governor last year. He is regarded as “one of reform package. “Gov. John Kasich’s budget
from Pharmacos the most aggressive reformers among the proposal has the potential to devastate Ohio’s
A small policy group at the University new crop of Republican governors,” skilled nursing facility community, cutting
of Wisconsin School of Medicine and according to Washington Post blogger rates more than 7% for a total $472 million,”
Public Health has decided to stop Jennifer Rubin. says the Ohio Health Care Association on its
accepting donations from the
pharmaceutical industry, after criticism Well before he was elected, however, website.
that it advocated for narcotic Kasich had convened a small group of policy The Ohio Hospital Association has largely
painkillers. experts starting three years ago to begin to supported the reforms, agreeing to extend a
research overhauling the state’s Medicaid franchise fee that taxes hospital revenues
Continued on Page 3
policies. After the election, that group, because it draws down federal funds.

!!!"#$$!%&!'(&)*+!,!'*-./0)*+!'1%2/+3/456!778
Payers & Providers NEWS Page 3

Longer ALOS!*
Healthcare Cost Inflation Is Slowing
Advertise Here
Spending Growth on Branded Drugs Declines
(877) 248-2360, ext. 2
*For our ads, not your hospital Two independent indices released last week year earlier.
indicate that the rate of health care ination IMS Health said the historically low growth
may be slowing, albeit slightly. rate in pharmaceutical spending was caused
In Brief The Standard & Poor’s Healthcare Economic
Composite Index rose 6.19% over the 12
by a variety of factors, including fewer patient
visits to physicians ofces, patent expirations,
months ending February 2011, a drop from a increasing reliance on generics, and less
rate of 6.31% as of January. spending on new drugs.
Spending on prescription drugs increased by The average prescription copayment
The UW Pain & Policy Studies
Group had taken about $2.5 million 0.6% in 2010 on a real per capita basis, declined by 1.8%, from $10.93 in 2009 to
over 10 years from companies that compared to 3.1% in 2009. Nominal spending $10.73 in 2010.
manufacture opioids. During this increased 2.3%, reaching $307 billion last year, Payers and physicians are becoming
period, the group supported according to a study by IMS Health. Nominal increasingly adept at encouraging the switch
prescribing narcotic painkillers for
spending went up 5.1% in 2009. to generic medications once branded drugs
non-cancer chronic pain and
published papers in scientic journals Even with the decline in the rate of cost fall off patent. Within six months of patent
advocating use of the opioids. Those growth, health care spending still rose by three loss, patients got the generic form of the drug
drugs, such as OcyContin, are highly times the rate of the consumer price index, 80% of the time last year. The value of the
addictive and have led to an epidemic which was 2.1%. In May 2010 the S&P health branded products that went off patent and
of abuse, sometimes leading to death
through overdose. care index showed 8.74% growth. faced generic competition in 2010 was $12.6
The Food and Drug Administration Costs paid by commercial insurance plans billion, compared to $19.5 billion the year
recently unveiled a new program to went up 7.97%, while Medicare claim costs before.
control prescription abuse by rose 3.22%, the lowest rate of growth in six Generics accounted for 78% of total
educating physicians about pain
years. Physician wages rose by an annualized prescription market share, up from 63% in
management and patient selection.
According to an investigative 5.4% as of February, almost twice their rate of a 2006.
report in the Milwaukee Journal-
Sentinel, the UW Pain Group received
a total of $1.6 million over 10 years

1099 Repeal Contains Hidden Tax


from Purdue Pharma, maker of
OxyContin. The company and three
of its executives pleaded guilty to
various charges and paid nes and
restitution of $635 million. Low-income Subsidies Might Have to be Paid Back
Physicians who Wrote
Excuses for Wisconsin The rollback of one of the most unpopular Timothy Jost, a professor at Washington
Protesters are Probed provisions of the 2010 Affordable Care Act and Lee University in Virginia, explained at a
also contained a modication that may cause healthcare journalists conference in
Wisconsin officials are taxpayers some grief after the law goes fully Philadelphia last week that to qualify for the
investigating eight physicians who into effect. reduced-cost insurance coverage, families
wrote medical excuses so that
protesters at the state Capitol could Two weeks ago President Obama signed must project their income for the year.
explain why they were not at work. into law a bill repealing the 1099 reporting But, he pointed out, income is often
Many protesters were teachers requirement, which obligated any employer unstable and unpredictable, especially among
who had been warned by their doing more than $600 a year in business with the self-employed or those engaged in the
school districts not to be absent
a vendor to ll out an IRS form 1099. The trades. If, at tax ling time, a family’s income
from class, unless they could show
a doctor’s note or prior permission. additional $22 billion in revenues gleaned has exceeded their estimate and takes them
The investigations are under the from this clause in the health reform act were over the prescribed limit, or if the status of a
auspices of the Wisconsin Dept. of to cover some of the costs of the expansion in dependent child has changed, the family
Regulation and Licensing and the insurance coverage. could be liable to pay back the value of the
Medical Examining Board. One
physician from the University of The business community complained that subsidy, up to $2,500.
Wisconsin Medical School offered the additional paper work was burdensome “What they thought was a grant turns out
to help out protesters with doctor’s and not worth the effort, so Congress, in a rare to be a loan,” Jost said. “Repayment demands
notes. instance of bipartisan unity, got rid of it. may be substantial and cause serious
The demonstrators were
But to make up for the lost revenues, hardships.”
protesting the bill pushed by Gov.
Scott Walker, a Republican, to cut Congress decided to make low-income Taxpayers, as a result, are likely to be angry
back collective bargaining rights families covered by the subsidized insurance when they get the bill, which may over time
for public employees in Wisconsin, pay back the subsidy if their income exceeds erode support for the expanded insurance
which subsequently passed. their estimate for the year. coverage, Jost said.

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Payers & Providers OPINION Page 4

9-21:)!$6!;++1)!$$!
EHR Won’t Be Happening Soon
'(&)*+!,!'*-./0)*+!/+! The Economics of Digitizing Are Still Punishing Offices
<1%2/+3)0!).)*&!=31*+0(&!%&!
'(&)*+!,!'*-./0)*+!'1%2/+3/456!
778>!?4!(441(2!/40/./01(2! This is a big year many physicians, including our hospital electronically, what’s the point of
+1%+@*/<A/-4!/+!BCC!(!&)(*! myself. There are big nancial incentives to going electronic? The above-mentioned vendor’s
DB$EC!/4!%12F!1<!A-!$#! invest in an electronic health record (EHR) system, as well as a whole host of others out
+1%+@*/%)*+G>!;A!/+!0)2/.)*)0!%&! today, not tomorrow. If we digitize this year, there, is not compatible with our hospital and it’s
)H:(/2!(+!(!'IJ!(AA(@3:)4A6! we can qualify for an $18,000 payment under not likely to be for some time. All systems would
-*!(+!(4!)2)@A*-4/@!4)K+2)AA)*> the American Recovery and Reinvestment Act have to be compatible eventually, the vendor
(ARRA) passed as part of the economic stimulus said. In the meantime, our system would be pretty
package of 2009. And we may be eligible for useless, at least when it came to sharing
up to $44,000 over the next ve years if we can information with our hospital network.
?22!(0.)*A/+/456!+1%+@*/%)*!(40! prove that our EHR improves and streamlines The system our hospital is in the process of
)0/A-*/(2!/4L1/*/)+M patient care. If we wait till 2013, implementing is expensive. Initially,
the payment will be less; and it we were told that it would cost
DNOOG!"ENH"PQ# will disappear after 2016. $7,000 per physician per year. In
/4R-S<(&)*+(40<*-./0)*+>@-: So why am I not more excited? our practice, that would be a
Converting from paper to whopping $21,000, which can’t be
T(/2/45!(00*)++M
digital isn’t as easy as it sounds. recovered through patient charges.
N$N!U>!V-22&K--0!W(&6!X1/A)!Y There are lots of obstacles, not After protests by many physicians,
Y1*%(4F6!8?!C$Z#Z least, fear of change. After 27 the price has come down a little
years of practice, I’ve developed a bit, but it’s still too expensive.
W)%+/A) charting system that works for me; I have the suspicion that quality
KKK><(&)*+(40<*-./0)*+>@-: switching to something new seems of care is not the primary motive
J(@)%--F daunting. for going electronic; rather, money
KKK>R(@)%--F>@-:[<(&)*+<*-./0)*+ Moreover, our charting—which is. Frankly, no one trusts us any more.
=K/AA)* must respond to demands from By Ross A. In the eyes of the federal government
KKK>AK/AA)*>@-:[<(&)*+<*-./0)*+ malpractice lawyers, insurers and Slotten, M.D. and insurers, doctors are a bunch of
government regulators, who are crooks who must be scrutinized at
always searching for errors and deceit—is every step. I say this because the nature of the
already a pain in the neck. Digitizing requires a medical chart has changed over the last few
whole new set of hand-eye coordination decades. Instead of being a simple record of an
\0/A-*/(2!Y-(*0 techniques. interaction between patient and doctor, it now
In principle, I agree with the need for must comply with a variety of cumbersome
Y*/(4!]>!X/2.)*+A)/46!T>I> digitizing. Most important, the record would be standards. Every encounter has a code based on
X)4/-*!9/@)!'*)+/0)4A
legible. Doctors’ handwriting is horrible. I still level of service; every diagnosis must match
=3)!8(:0)4!^*-1<
can’t read the notes of one of my partners. The what’s in the record. And now easily tracked by
_-++!?>!X2-AA)46!T>I> problem is, he can’t type. When asked how this the powers-that-be. Once again, it’s a good idea
`2)/4!X2-AA)4!,!J*)4@3 was possible, he said his sister typed his papers in principle, but a mineeld if any errors are
83/@(5- when he was in college! We always knew he made.
was spoiled. For him, a signicant obstacle is Finally, will the electronic medical record
T/@3()2!7>!T/22)4+-4 an inability to type. No matter how many reduce costs? I doubt it. At least not for the
'*)+/0)4A templates you have in the EHR—and there doctors and hospitals that are being compelled to
V)(2A3!a1(2/A&!?0./+-*+!778 could be a huge number for a primary care acquire it. Medicine is one of the few areas in
V/532(40!'(*F6!;22> physician—you still have to write a narrative of which innovation leads to greater expense, not
your encounter with a patient. less.
One vendor assured us that there are now
\0/A-* good voice recognition programs available to Ross A. Slotten, M.D., practices family
I14@(4!T--*) get around this. But that same vendor told us medicine in Chicago. He is
0:--*)S<(&)*+(40<*-./0)*+>@-: that we could also scan our written notes into a member of the Payers & Providers editorial
the computer. So we’d be faux digital, yet still board.
able to demonstrate “meaningful use” of an
;R!&-1!0-!4-A!*)@)/.)!&-1*!/++1)!-R! electronic medical record system and get our
'(&)*+!,!'*-./0)*+!%&!$$!?>T>!-4!
=1)+0(&6!<2)(+)!@(22!DNOOG"ENH"PQ#> $18,000. This is absurd, and one more reason
we won’t be buying this vendor’s system.
Another obstacle is compatibility with our
hospital system. If we can’t communicate with

!!!"#$$!%&!'(&)*+!,!'*-./0)*+!'1%2/+3/456!778
Payers & Providers MARKETPLACE/EMPLOYMENT Page 5

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! !

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*New England Journal of Medicine, 2004.

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Payers & Providers MARKETPLACE/EMPLOYMENT Page 6

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