Enjoy Your Health

Washington -- New laws in Colorado will enable physicians to review and contest health plan rating systems, patients to have standardized and possibly electronic health plan IDs, and insurance companies to develop new types of plans that the state may help consumers purchase.

Colorado Gov. Bill Ritter Jr. on June 3 signed into law a host of health care bills. Colorado Medical Society spokeswoman Edie Sonn said the measure regulating physician ratings could be a national trendsetter. It was influenced by a model developed by New York Attorney General Andrew Cuomo.

The measure requires health plans to make transparent their systems for profiling, rating or otherwise characterizing physicians, said Dave Downs, MD, the medical society's president. "The law basically says that if that data is publicly reported, they need to demonstrate its validity and accuracy of attribution." It also gives physicians a chance to appeal the ratings.

Jeremy A. Lazarus, MD, speaker of the AMA House of Delegates, said, "The work of the Colorado Medical Society will help create a much fairer environment for physicians to practice medicine in, and shows that with the concerted action of physicians working together, we can achieve our goals."

The law arose from discussions between insurers and physicians in an advisory council assembled when UnitedHealth Group and PacifiCare Health Services Inc. merged in 2006. Michael Huotari, executive director of the Colorado Assn. of Health Plans, said the talks that led to the law were relatively harmonious.

"We realized that we had some fundamental agreements, surprisingly, about how this should be done in terms of principles and concepts," he said. These include using statistically valid numbers and giving physicians prior notice of the ratings and a chance to correct and appeal them.

Colorado has roughly 800,000 uninsured.

Ritter also signed several other bills on June 3. They expand access to Colorado's State Children's Health Insurance Program and direct the Division of Insurance to create a shopping guide for private health insurance on its Web site.

Also, the fiscal 2009 budget will increase Medicaid reimbursement for physician evaluation and management codes from about 68% of Medicare to 90% of Medicare at a cost of $29 million. Hospitals will see a 1.5% Medicaid reimbursement boost estimated to cost $4.4 million.

Another new law will mean that health plans' ID cards soon will carry the same basic information and in a few years could be a tool to improve health care efficiency and quality, Huotari said.

The law first requires health plans to adopt standardized ID cards that indicate the subscriber's co-payment and deductible amounts, among other information, by July 1, 2010. The law also creates a stakeholder work group to decide what additional information -- such as coverage limits -- health plan IDs should contain and what form the IDs should take. A credit card-style ID that can be swiped is one possibility.

The work group, which will include physicians, is expected to finish its recommendations no later than mid-2009, according to the law's provisions, with a goal of implementation two years later.

The panel is expected to seek advice from the Workgroup for Electronic Data Interchange, of which the AMA is a member. Health plans have anticipated this advance in technology and support the law, Huotari said. The Colorado Medical Society also supports the law.

Should electronic IDs become reality, Dr. Downs doesn't expect the measure to lead to major equipment or software purchases for physician practices. A typical credit-card style reader costs about $100, Sonn said.

Electronic IDs present the opportunity to reduce medical errors if they allow physicians to access a patient's medical history quickly, said Rep. Anne McGihon, chair of the Colorado House Health and Human Services Committee. "You're not going to have to run the same test again, but you're going to immediately know what that person had," she said.

Setting up a mandate?

Some of the legislation followed recommendations of the Blue Ribbon Commission for Healthcare Reform, a panel created in 2006 by the General Assembly. The commission's ideas focused on expanding health care access to the state's roughly 800,000 uninsured, while maintaining choice, reducing health care costs and improving quality.

Richard Haugh, spokesman for the Colorado Hospital Assn., said the panel set the tone for the 2008 legislative session.

"[The commission] probably did a lot to foster an atmosphere of collaboration. I expect to see that going forward, too," he said.

One of the new laws requires insurance companies to work with two state agencies to design "Centennial Care Choices," a program geared toward the uninsured in which private health plans could provide basic coverage. This follows a Blue Ribbon Commission recommendation to establish a minimum-benefit health plan with a target premium of $200 a month for an individual. The proposal is part of a commission recommendation to establish an individual insurance mandate in Colorado.

The Centennial Choices law requires the new plans to include primary and preventive coverage, offer incentives for healthy behaviors and use pay-for-performance programs where appropriate. But it was written with controlling costs in mind.

"It kind of turns the usual process on its head," Huotari said. Plans will determine how much it costs to offer certain benefits and work with state agencies to design the plans. The hope is that it will be flexible enough to allow insurance companies to innovate, Huotari said.

The Colorado Medical Society and the hospital association both support the Centennial Care Choices law. "In general, it's a great stepping stone toward health care reform," Haugh said.

The medical society also supports requiring people to have health insurance but doesn't have an official position on how a mandate should be structured. "We're very agnostic on the way you get there," Dr. Downs said.

McGihon said the key to adopting an individual mandate is making sure it's part of a comprehensive plan to advance health care access.

Any significant expansion of access to health care or insurance will require more public funds, which under Colorado's strict constitution means asking voters for approval, McGihon said.

Still, she was optimistic about the state's chances of covering more of its residents. "You should keep your eye on Colorado. We are just starting down the road to comprehensive health care reform."

Washington -- Selected primary care physicians in a dozen communities will receive potentially tens of thousands in additional Medicare dollars for using certified electronic health records systems under a demonstration project starting next year.

Over the five years of the project, each doctor chosen for the demo could receive up to $58,000, with a limit of $290,000 per practice. The initiative will operate in Alabama; Delaware; Georgia; Louisiana; Maine; the Maryland/Washington, D.C., area; Oklahoma; and Virginia. The other communities are multicounty areas centered on South Dakota; Jacksonville, Fla.; Madison, Wis.; and Pittsburgh.

The Centers for Medicare & Medicaid Services will work with partners in Louisiana, Maryland, Pittsburgh and South Dakota starting this fall to recruit 200 small- to mid-sized primary care physician practices to participate in each community when the demonstration begins in June 2009. Projects in the remaining eight communities will launch one year after the initial four.

Physicians do not necessarily need to be first-time EHR adopters to qualify for the bonuses. Federal officials expect that many of the participants already will have a certified system.

Participation will not necessarily ensure extra Medicare payments. CMS randomly will choose only half of the 200 practices recruited in each community to get EHR incentive payments. The other half will serve as a control group and will get no bonuses, even if they use certified systems.

Practices that are put into the control group will know from the outset and will need only to fill out an annual survey of their EHR status. They will receive a small fee for filling out the paperwork. CMS wants to see how that group progresses in IT adoption without receiving any incentives. No one in the control group will be required to use an EHR. Incentive payments will not be available to non-primary care doctors or to practices with more than 20 physicians.

The size of the payments will be based in part on how sophisticated a practice's system is and whether the practice reports certain clinical quality measures defined by CMS for preventive care and the treatment of diabetes, congestive heart failure and coronary artery disease. In years three through five of the demonstration, Medicare will pay bonuses in large part based on how practices perform on these quality measures.

The administration is focusing on smaller physician practices because they have not embraced EHRs as quickly as federal officials would like. President Bush has proposed that most Americans have an electronic record by 2014.

"The gap between those who practice in small- to medium-sized offices and those who practice in larger offices or organizations is continuing to widen," said Karen M. Bell, MD, director of the office of health IT adoption for the Dept. of Health & Human Services. "This underscores our need to concentrate on those clinicians who, as it turns out, constitute the majority of practitioners in the U.S."

The American Medical Association said the federal incentives would be important to primary care practices in the 12 communities -- if the payment structure works.

"This a step toward wider use of new technologies that can help improve health care quality, and we look forward to the program findings, as we would like to see effective EHR programs expanded to cover other areas of physician practice," said AMA Board of Trustees Chair Joseph M. Heyman, MD.

Slow going

Efforts to encourage physicians to adopt electronic health records have not yet had a widespread impact. A survey of nearly 2,800 doctors by researchers at Massachusetts General Hospital and published June 18 in the New England Journal of Medicine found that only 4% of physicians reported having an extensive, fully functional EHR system, and only 13% said they had a basic system. Many of the physicians who did not use electronic systems cited cost concerns as a major barrier to adoption.

The researchers said Medicare health IT bonuses could play an important role in creating a new landscape for paperless medical records.

"Our data suggest that such incentives could be important facilitators of adoption," the authors write. "However, the cost of achieving widespread adoption of electronic health records in the United States could be high, probably in the tens or hundreds of billions of dollars, and whether any future federal administration will find the necessary resources is uncertain."

The promise of up to $58,000 in additional Medicare payments could attract some small physician practices that are on the fence about EHRs because of the cost, said Timothy G. Ferris, MD, MPH, medical director of the Massachusetts General Physicians Organization and one of the study's authors. But direct and indirect implementation costs of taking on a new system can be significant over time, and the additional Medicare money likely will only be enough for most practices to break even, he said.

"Every little bit helps, but I don't think the effect will be very dramatic in terms of new adopters," he said.

One physician who understands well the indirect costs that can come with going paperless is Richard J. Baron, MD, a Philadelphia internist. The five-physician practice he founded decided in 2004 to adopt a fully featured EHR system, and he described the process as the most difficult thing that his small business has done. Although the system eventually transformed patient care, unexpected startup and maintenance costs combined with decreased productivity during the transition took its toll at first.

"The experience in our office was that it cost us over $40,000 per doctor and that we saw a 2.5% absolute decrease in revenue in the year in which we implemented," he said. "In a business where your costs are fixed costs and your income as a physician is what's left at the end of the year, you can double a revenue decrease in terms of its impact on salary."

Dr. Ferris said the more promising element of the demonstration would be in testing a new way for Medicare to pay for patient care beyond just funding medical services. Whether the model succeeds should depend on what effect it might have in improving clinical outcomes, efficiency of care and patient satisfaction, he said.

The staying power of Christian medical bill-sharing plans has judges, legislators and regulators asking a philosophical question: Does a plan count as insurance if it doesn't charge premiums or pay claims, yet allows people to contribute to a pool of money they can draw upon to pay medical bills?

The answer to that question might depend upon a reading of state insurance law, whether a state has passed exemptions for religious organizations that pay for medical bills, or even the religious sensibilities of the parties involved.

Backers of these plans say they provide a low-cost alternative to insurance for people who otherwise couldn't get it or afford it. Their detractors say these plans are insurers in sheep's clothing, trying to find a way to shimmy out of state insurance financial and coverage regulations.

Either way, doctors might not know their patients might be participating in these bill-sharing plans, because often the plans are constructed so a physician is paid in cash first, after which the patient's bill is published in a plan's newsletter, with a request for reimbursement. However, sometimes physicians face the same wait for payment as they do for any health plan.

Christian bill-sharing plans aren't new, but have attracted more attention lately because of regulatory and legislative activity, and because the plans are being pitched as an alternative to not being insured -- though they say they're not insurance.

The Cover Florida health reform plan Gov. Charlie Crist signed in May included an amendment exempting faith-based health care programs from state insurance regulation, as long as the group qualifies under federal guidelines as a nonprofit religious organization.

[...]

Bad debt levels fell among for-profit hospitals in the first quarter of 2008, says a report by the international credit-rating agency Fitch Ratings.

Still, these hospitals continue to have a higher percentage of unpaid medical bills than physicians and nonprofit hospitals.

For-profit hospitals saw bad debt levels as a percentage of revenues fall from 18.4% in the fourth quarter of 2007 to 17.7% in the following quarter, said Fitch Ratings' recently released "For-Profit Hospital Industry Quarterly Diagnosis" report.

Past surveys by the Medical Group Management Assn. estimated physician practices' bad debt level in the 5% to 10% range. For nonprofit hospitals, Fitch said the percentage in 2006, the latest data available, was 5.5%. Bad debt is generally defined as payments that are written off as uncollectable.

Fitch analyst Lauren Coste attributes the decline in bad debt among for-profit hospitals in part to decreases in the number of uninsured patients at those facilities.

In addition, hospitals have been more aggressive in collecting co-payments up front and have improved efforts externally and internally to collect debt, she said.

This has balanced a change in for-profit hospitals' accounting techniques, Coste said. They have become more conservative in their assumptions concerning how many of their patients would pay for their services, which results in more debt being written off as uncollectable. Before, their accounting figures reflected a more hopeful collection amount.

[...]

After several years of mostly striking out with consumers, personal health record vendors are adopting a business-to-business marketing model, courting employers and insurers in hopes of expanding PHR adoption.

A recent study by Cambridge, Mass.-based industry analyst Chilmark Research found that of the more than 200 PHRs on the market, only 20% are Internet-hosted, which is what the study focused on.

Of those, 40% are thriving, 35% are treading water "and the remaining 25% are walking zombies, not quite dead, but not very alive, either," the study said.

Study author John Moore said PHR vendors, until recently, were marketing to consumers. But with the exception of those with a chronic disease or their caregivers, consumers had expressed very little interest.

Now employers and health plans are starting to see the potential for PHRs to reduce health care costs, Moore said, and are offering incentives for their use. So vendors are focusing on strategic alliances.

Moore said privacy and security hurdles still need to be cleared before consumers can be sold on offering personal information for any PHR.

"What really surprised me [in doing the survey] is what a terrible job the PHR vendors have done addressing privacy and security as an industry," he said.

Moore believes the entrance of Google and Microsoft into the market could help raise the bar on what consumers will expect.

But the American Medical Association and others aren't waiting for vendors to respond, but would like to see legislation mandating security standards. The AMA is advocating that HIPAA be extended to all entities that have contact with health data, including PHR vendors.

[...]