8 December 2011

California Edition
Calendar
January 12-14

L.A. Care Will Absorb Medi-Cal Cuts

Move Was Made to Help Preserve Provider Network
$20 million over the next scal year. The costs would be paid out of its general fund and through cost-containment efforts. Its always helpful if youre not facing cuts, said Jim Lott, executive vice president of the Hospital Association of Southern California and a former L.A. Care board member. Kahn said he had been publicizing L.A. Cares decision in the hope that other health plans with Medi-Cal enrollees would follow suit. However, it was unclear if other health plans that provide managed care benets to Medi-Cal enrollees would immediately do so. A spokesperson for Health Net, which covers 450,000 Medi-Cal enrollees in L.A. County and is L.A. Cares primary competitior, said it was still examining the situation. A spokesperson for Anthem Blue Cross of California, which is an L.A. Care contracting plan, declined to immediately comment. The cuts, retroactive to June 1, are being challenged by members of the provider community. The California Hospital Association led suit last month in federal court to block the cuts. Suits by the California Medical Association and interest groups representing pharmacists and pharmacies were led shortly thereafter. Hospitals and physicians in particular said the cuts would make it more difcult to provider services to Medi-Cal enrollees.

The states largest Medi-Cal managed care plan announced this week that it would shell out millions of dollars to cover recently </74=2&94/!<8/>?"&!2=!?8"!<277":"!2=! enacted state reductions in provider @$"&:"9#-!.8-04#4/90!AB?8!/996/7! payments. @$"&:"9#-!C"54#49"!49!D20"$4?"! L.A. Care Health Plan, which covers #29="&"9#"E!F8G/9""!H2?"7(!D20"$4?"! I/?429/7!./&JE!F!540#600429!2=!?&"950!/95! about 800,000 Medi-Cal enrollees in Los ?&"/?$"9?0!/=="#?49:!@!!#/&"E!KALBMKL'*E Angeles County, said it would not pass on the ! reductions to its directly contracted providers, which treat about one-quarter of its enrollees <74#J!H"&"!=2&!C2&"!N9=2&$/?429 (the remainder are contracted out to other health plans). The cuts include 10% or more reductions in payments to skilled nursing facilities inside January 19 hospitals, pharmacists and other specialty care. !R26?8"&9!</74=2&94/!./?4"9?!R/="?-! The reductions, which were approved by <2772S646$E!!26%7"?&""!H2?"7(!T9?/&42E! the U.S. Department of Health and Human U"-92?"!0>"/J"&!V/$"0!W"49"&?0"9!/9! Services in late October, are expected to save 2?8"&0!G477!540#600!G/-0!?2!%"9#8$/&J! California $623 million a year. S6/74?-!/95!0/="?-E!KXXMK+YBE L.A. Care Chief Executive Ofcer Howard Kahn said the move was made in order to preserve the integrity of the health plans <74#J!H"&"!=2&!C2&"!N9=2&$/?429 network. The tolerance level has been reached in terms of what we can ask of our providers, said Kahn. He added that L.A. Care has been January 23-24 accepting about 10,000 additional dualeligible Medicare/Medi-Cal enrollees per ."&029/74O"5!C"54#49"!P2&75!<29="&"9#"! month, further straining the network. )*+)E!<2$>6?"&!H40?2&-!C60"6$(! Kahn estimated that absorbing the costs C269?/49!Q4"GE!F!=2#60!29!>"&029/7! would cost L.A. Care between $10 million to $"54#49"!29!?8"!$27"#67/&!7"3"7E!K+()**M KL(B**E !
<74#J!H"&"!=2&!C2&"!N9=2&$/?429

Thursday, Dec. 15, 2011

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California Healthcare: A 2012 Business Forecast

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NEWS

Page 2

Mental Healthcare Hard To Access

UCLA Study Finds Some Populations Challenged
A signicant majority of Californians who require mental health services cannot readily access or obtain them, according to a new study by UCLA researchers. About 2 millions Californians nearly 10% of the population require such services but are often out of luck when it comes to getting them, according to the report by the UCLA Center for Health Policy Research. One of the largest groups with unmet needs is single parents with children. According to the data, 17% of all single parents have unmet needs, about double the average for the entire population statewide. About 11% of single adults also have unmet needs. By contrast, married adults have needs below the rest of the population. Insurance plays a signicant role in whether services can be obtained. Among uninsured adults, nearly 90% had some unmet or inadequately addressed mental health need. Two-thirds received no care at all. However, those with insurance coverage also had gaps in receiving treatment. Seventyseven percent of privately insured and 65% of publicly insured adults had unmet mental health needs. About 45% in both groups received no treatment at all. There is a huge gap between needing help and getting help, said David Grant, the study's lead author and director of the California Health Interview Survey, a sprawling questionnaire on which many UCLA health studies are based. The data also shows large disparities in mental health status and treatment by demographic, economic and social factors. These ndings can help direct the state's limited resources to those in greatest need of help. Not only is this group in need of mental health services, but they are about 40% more likely than Californians without such needs to have chronic conditions such as asthma and diabetes. The report did not make any specic recommendations other than to conduct more extensive research. Additional analyses are needed in order to achieve a better understanding of what factors are most strongly and independently associated with mental health needs and treatment utilization in California,and how such factors may differ among segments of the population, the report said. A better understanding of these variances will provide crucial information that can be used to inform tailored treatment and intervention programs for at-risk and vulnerable populations.

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In Brief
Prime Acquires Stake in Texas Hospital
Ontario-based Prime Healthcare Services has made its rst acquisition outside of California, purchasing a 34.8% stake in 112-bed Harlingen Medical Center in Texas from Charlotte, N.C.-based MedCath for approximately $9 million. Prime also bought MedCaths share in a real estate rm that leases the hospital site. MedCath has been shedding assets since the rst quarter of 2010, when ofcials announced it would sell the company either in its entirety or piecemeal. "This is our rst foray outside of California and into Texas, a businessfriendly state, and we believe it will be a successful one," said Prime Chairman Prem Reddy, M.D. The deal gives Prime full or part ownership of 14 hospitals. The forprot company is also trying to acquire Christ Hospital in New Jersey.

HHS Issues Final Rule For MLR Calculations

The Department of Health and Human Services declined to accept certain recommendations of the health insurance industry when it set the nal regulation last week setting standards for calculation of minimum medical loss ratios. The Affordable Care Act requires large-group health plans to spend at least 85% of premium revenues on actually medical care for insureds, known as the medical loss ratio, or MLR. The required MLR for small groups and individuals is 80%. Improvements to medical quality may also be included in the MLR. In comments on the preliminary rule issued last December, the health

Young Nurse Pool Swiftly Growing

New Graduates Helping to Address Shortage
The heathcare industry for years had issued concerns about a shortage of nurses and the number of young people entering a profession dominated by people in their 40s and 50s. But new data from Santa Monica-based Rand Corp. suggests that those fears may be abating. According to a study of U.S. Census data by Rand researchers published in the most recent issue of the journal Health Affairs, the number of registered nurses between the ages of 23 and 29 in the workforce increased 62% over the past decade. Nationwide, the number stood at 165,000 in 2009, compared to 102,000 in 2002. The number of young nurses had been in steep decline since 1979, when it peaked at 190,000. "The spike we've seen in young women becoming registered nurses is dramatic," said David Auerbach, a Rand economist and the study's lead author. "If the trend continues, it will help to ease some of the concerns about future nursing shortages." Researchers had projected that the United States would need as many as 400,000 new nurses by 2020. California could be short nearly 90,000 nurses by 2030. Demand for the profession is being driven primarily by aging baby boomers, along with a shortage of primary care physicians, prompting providers to rely more heavily on nurse practitioners. In California, more than 11,500 students graduated from nursing programs last year, more than double the 5,300 in 2002,

Continued on Page 3

Continued on Next Page

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Nurses (Continued from Page One)
according to a report from the California Board of Registered Nursing. Industry observers say aggressive efforts by hospitals and non-prot foundations to grow nursing school slots accounts for the increase. The study noted the growth of accelerated programs offering a bachelors degree in nursing has helped spur demand.

Page 3

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In Brief
insurance industry requested that antifraud programs and all coding costs be included within the accepted denition of the MLR. The agency agreed to allow some of the costs related to ICD-10 coding implementation. AHIP, the health insurance lobby in Washington, said HHS had followed a thorough and balanced process in crafting this nal regulation. It said it would continue to work with HHS on the fraud issue, and expressed satisfaction that some of the claims upgrading expenses are appropriately recognized as activities that improve healthcare quality.

Spots for baccalaureate programs more than tripled between 2000 and 2010. The study projects that the number of nurses will grow 24% between 2009 and 2030, mirroring the overall population growth. However, the overall nursing workforce will continue to age through 2012, when it will average 44.2 years.

Kaiser Hospitals Lead On Leapfrog List

Nearly a Third of Hospitals Named Are in California
California hospitals, particularly those operated by Oakland-based Kaiser Permanente, dominated this years list of top hospitals published this week by the Leapfrog Group. Twenty-two of the 65 hospitals on the list are located in California. Eighteen of those are operated by Kaiser. The Kaiser hospitals represented more than a third of all the urban hospitals on the list. The Washington, D.C-based Leapfrog awards the designation to hospitals that excel in preventing medical errors, reducing mortality for high-risk procedures such as cardiac bypass surgery and reducing readmissions for patients treated for conditions such as pneumonia and heart attacks. It focuses specically on patient outcome data, resources used to care for patients, and management practices that promote quality and safety. Hospitals also had to demonstrate they had a computerized physician order entry system online and met stringent standards for stafng the intenstive care unit. More than 1,200 hospitals nationwide were evaluated by Leapfrog to be included on the list. Kaiser ofcials attributed such a large number of its hospitals being named to the Leapfrog list as a result of its attention to patient care and its systemwide use of electronic health records. Our prominence among Leapfrogs top hospitals in the country showcases our continuous improvement and our commitment to high quality care and service by our physicians, nurses and clinicians, said Jed Weissberg, M.D., Kaisers senior vice president of quality. This honor also highlights our dedication to reducing potential errors. Our leadership in the eld of technological innovation especially our electronic health record promotes efciency, quality and patient safety. The non-Kaiser hospitals in California included on the Leapfrog list include MillsPeninsula Health Services, Stanford Hospital and Clinics, the UC San Diego Health System, Childrens Hospital of Los Angeles and Childrens Hospital of Orange County. What this award says is that...we are committed to providing the best care to every patient who walks through our door, said Stanford Hospital Chief Executive Ofcer Amir Dan Rubin.

San Bernardino County Hospitals Form Stroke Network

Loma Linda University Medical Center, Arrowhead Regional Medical Center and Pomona Valley Hospital Medical Center have banded together to create a stroke response network for residents of San Bernardino County. Under the system, paramedics will take patients to the closest of the three hospitals when they suspect they are suffering from a stroke. All of the facilities have been certied as stroke centers by the Joint Commission. The intent of the system is to cut down on the brain damage and disabilities stroke victims often suffer due to a prolonged reduction of blood supply to the brain. Several more hospitals including facilities in San Bernardinos huge desert region are expected to join the network in the next year. San Bernardino County is the largest county by area in the United States. The sizable distances emergency vehicles must sometimes travel makes coordinating care more challenging than in smaller counties. The countys stroke victims have also waited as much as 20 hours after the onset of symptoms before seeking care. An outreach effort by hospitals has cut that delay by about 70%.

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OPINION

Page 4

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Making Bundled Payments Work

A Thorough Understanding of The System is Required
The Centers for Medicare and Medicaid Innovation (CMMI) recently announced the national expansion of bundled payment pilots, signaling the beginning of the end of physician fee-for-service with the largest insurer in this country. As we know, as goes Medicare, so goes healthcare, and commercial payers are vigorously following suit. Success under bundled payment is predicated on visionary leadership, effective decision-making, and ultimately, practice grounded in the best available evidence. Organizations need to fully understand what it takes to make bundled payment work. Four hard truths of bundled payment include: BP sponsor does not lower the cost of care, the nancial results can be a disaster. 3. Managing change Bundled payment calls for leadership competence in change management. Just as seemingly exible teams can be found to resist change, well-performing hospitals can suffer from a build-up of silos, unquestioned routines, and overly powerful individual groups. Effective leaders today will enable change to grow through accomplishment and even error, knowing that while most changes and reorganizations fail, those that work best are built around good decisions that are well implemented.

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1. Everything a patient needs and nothing that they dont 4. Knowing what real While most of us are masterful accountability looks like at providing diagnostics and Bundled payment is an therapeutics for our patients, evidence-based approach to the discipline required to follow health reform. Successful current best evidence and implementation of evidencecommit to providing only the based best practice is tests and procedures that contingent on a feedback patients need does not come mechanism that alerts easily for those who are also individual clinicians when they By trying to balance the desires of the fail to adhere to best practice Deirdre Baggot patient and family with the litigious standards and/or when optimal nature of medical practice. clinical performance is not Bundled payment provides the achieved. The attributes that make impetus necessary to commit to developing healthcare professionals exceptional clinicians discipline around the nothing that they dont can be a handicap when it comes to holding need part of fee-for-value. Committing up one another accountable. Characteristics of front to a xed price with the potential for caring and empathy are requisite to good physicians and hospitals to share savings that bedside manner but often result in physician result from particularly efcient care has been administrators confusing attentiveness with found to be highly effective in previous accountability. But in a bundled payment bundled payment demonstrations environment, adherence to best practice standards is an expectation and not an option. 2. No volume play this time The fear that the physicians will take their While with the ACE Demonstration CMS business elsewhere must be replaced with a offered applicants market exclusivity, this perk new conversation around the value we are does not exist in bundled payment expansion creating on behalf of our patients. pilots. Giving Medicare a discount with no promise of incremental volume to offset the risk of undertaking the physician Part B Deirdre Baggot is a vice president with The payments, the readmission risk (although this Camden Group, a healthcare consulting firm is quickly becoming moot), and the in El Segundo. development and administration of a gain sharing program creates a much deeper Op-ed submissions of up to 600 words are discount than just the three percent they are welcomed. Please e-mail proposals to requesting with the application. Clearly, if the
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