24 January 2012

Midwest Edition
Calendar
February 22
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The Pre 39-Week Deliverys Demise

Payers, Experts Want Infants Carried to Full Term
Edward Hospital in suburban Naperville, Ill., The issue of early deliveries is a high delivers about 3,500 babies a year. In 2010, priority for a great number of organizations about 950 of those were scheduled deliveries, now. There has never been this level of through induction or C-section done between interest, said Leah Binder, CEO of Leapfrog. the ages of 37 and 39 weeks Some 55 organizations, gestation time in other including the American words, before the baby was Medical Association and the ready to come out. American Hospital In 2011 that number Association are involved. dropped to ve. Other partners include The hospital pushed its Aetna, Cigna, WellPoint, percentage of non-medically UnitedHealthcare, the necessary early births from Catalyst for Payment 28% to near zero by requiring Reform, and the Institute for physicians to get permission Healthcare Improvement, from the OB medical director among others. The Leapfrog to schedule an early delivery. data are expected to show a Edwards is one success decline in early deliveries story among many in the among the 750 hospitals that national effort to reduce the have reported. number of elective deliveries There are many before 39 weeks that occur reasons women want to without a good medical have their babies before Harold Miller reason. On Jan. 25 the 39 weeks, said Dennis Center for Healthcare Quality Leapfrog Group, an alliance Crouse, M.D., professor And Payment Reform of purchasers devoted to of pediatrics and improving quality and value, associate clinical chief will release results of a survey detailing of the division of neonatology at the hospitals progress in reducing these harmful University of Illinois-Chicago Medical Center. early deliveries and will announce a series of initiatives to deter and prevent the practice.
Continued on Next Page

March 6-7
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June 11-13
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NEWS
Early Deliveries (Continued from Page One)
Caregivers may want to deliver a woman theyve been caring for when they are on call. Or women may want to be delivered before their caregiver goes away on vacation, or when relatives are due to arrive to help her care for the newborn. And military wives often want to deliver before their husband goes overseas on a long deployment. And sometimes women get to the point where they dont want to be pregnant any more, especially in the summertime. They think they can deliver at 37 weeks or later, Crouse said. Unfortunately, the notion that a baby has reached full term at 37 weeks has gained widespread acceptance. In fact 39 to 41 weeks is better for the infant, Crouse said. Each week closer to 39 weeks there is a signicant reduction in morbidity. Part of that is due to our improved medical care for newborns on the pediatric side. Those infants do quite well and we dont see much in the way of mortality. Caregivers who deliver the infants early, he said, tend not to remember the few who dont do extremely well. Theyre not seen in follow-up; theyre seen by another physician. But those few are often extremely expensive for payers: health plans, state Medicaid agencies, and ultimately employers, said Larry Boress, president of the Midwest Business Group on Health, which put on a summit in November in Illinois to inform stakeholders on the issue. He is trying to gure out how to dissuade hospitals and physicians from allowing these early deliveries to proceed. Medicare has a list of adverse events they wont pay for, Boress said. Private payers are adopting similar approaches. Can we set up systems to pay docs less if they deliver for under 39 weeks gestation? Harold Miller, executive director of the Center for Healthcare Quality and Payment Reform, has a few ideas on this. Payers now reimburse for labor and delivery in piecemeal fashion. A Cesarean section is paid differently from a vaginal delivery, and infant care is paid out of another pot. Knowing that the fee is higher for a C-section than a conventional delivery creates perverse incentives for doctors and hospitals, Miller said. An early term elective delivery is costless and maybe even cost saving from the physician perspective, Miller said. Labor, delivery, and infant care should instead be bundled into one payment that puts the

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In Brief
Uncompensated Care Rises Strongly at Minnesota Hospitals
Minnesota hospitals contributed $3.4 billion to the life of the state in 2010, according to a report issued by the Minnesota Hospital Association, up 6% over the previous year. The increase was because of a dramatic increase in charity care, the association said, which rose 27%. The hospitals spent $1.17 billion on community and health services, education, and healthcare work force development. A substantial and growing proportion of hospitals community contributions is from providing care without getting paid, the association said. This uncompensated care includes charity care for patients from whom there is no expectation of payment, and bad debt, the result of patients who cannot or did not pay their share of the hospital bill. The total for uncompensated care was $496.5 million in 2010, an increase of about 4%. The losses from caring for Medicare and Medicaid patients also pushed up the community contribution gure. The federal and state government compensated hospitals $1.3 billion less than the actual cost of care, accounting for 7% of Minnesota hospitals operating expenses.

Ohio County Can Again Operate Worker Health Programs

A new law signed by Gov. John Kasich of Ohio allows Franklin County, which includes Columbus, to maintain a

Continued on Page 3

provider team at risk if the outcome is not good, he thinks. In a bundled payment, things you do that harm the baby become a cost that you want to avoid, rather than something that gets paid for by the health plan, or Medicaid. Now there is a built-in disincentive to do an unnecessary C-section. The problem is guring out how to wean hospitals from the revenue streams that come from neo-natal intensive care and other follow-up care for C-sections. Miller is developing new nancial models that share the risk and reward from cutting back on these procedures. The March of Dimes has been working on this problem for several years. It devised a program in ve states that combined account for 35% of U.S. births to reduce the rate of elective early births. It solicited ve hospitals to volunteer in each state, to develop a program to tackle the problem. Edward Hospital was one of the ve in Illinois. Somehow we had drifted toward doing deliveries between 37 and 39 weeks that were not medically indicated, said Patricia Bradley, a nurse and the director of obstetrics at Edward. The hospital adopted a toolkit prepared by the March of Dimes that includes a lot of data on NICU use by infants delivered before they are fully ready. Now, with any request for early delivery physicians have to submit a form listing the patients gestational age. If there is to be a delivery before 39 weeks, the OB medical director must approve the reason. Minnesota has even passed a law codifying what hospitals and physicians must do. It includes four pieces: 1. A hard-stop policy, requiring a medical directors oversight to do an early delivery. 2. An estimate of gestational age before the baby reaches 20 weeks. 3. An education program for mothers explaining why its important to carry the infant to full term. 4. A requirement that hospitals have a quality improvement process in place for inductions of labor before 39 weeks. In Minnesota, 38% of births are paid by Medicaid or Minnesota Care. We said, well continue to pay for all babies being born, but we want to know if the hospital has the four steps in this process in place, said Jeff Schiff, M.D., medical director for Minnesota health care programs at the Department of Human Services. If they have it in place, every year they have to report to us their rate of elective induction 37 to 39 weeks, Schiff said.

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McLaren Renames 11 Hospitals

Eastern Michigan System Launches Campaign
Eleven hospitals in eastern Michigan operated by McLaren Health Care are getting new names in a rebranding that removes the words medical center or hospital from the facilitys moniker. A mouthful such as McLaren Health Care Village at Clarkston, for example, is now McLaren-Clarkston. The others follow a similar formula, linking McLaren to the marketers preferred name for the locality. Using one name will enable us to have a single identity that reects the scope and impact of our organization across the state, said Philip Incarnati, president and chief executive ofcer of McLaren Health Care, which is based in Flint. McLaren is one of the largest health systems in the Midwest, with 17,000 employees, 11,000 afliated physicians, and net revenues of $2.1 billion. Letting area residents know that their local hospital is part of McLaren, part of a larger health system, is one of the goals of the rebranding, Incarnati said. A new logo has been unveiled, and a marketing campaign will launch in late January.

In Brief
wellness program for county employees. County ofcials want to ght obesity, high blood pressure, diabetes, and heart disease in the county work force, but in 2009 a local prosecutor declared that state law prohibited the local government from paying for such programs out of the general fund. Franklin County had started the programs in 2007. Some counties in the state have operated wellness programs, while others declined to, citing recommendations from local legal authorities. In 2011 the county spent $30.6 million on health benets for 2,450 employees, up from $28.6 million in 2010. The county spent about $200,000 a year in 2008 and 2009 on programs for blood-pressure screenings, nutrition advising, and Weight Watchers.

Former name: Bay Regional Medical Center Bay Special Care Hospital Central Michigan Community Hospital Great Lakes Cancer Institute Ingham Regional Medical Center Ingham Regional Orthopedic Hospital Lapeer Regional Medical Center McLaren Health Care Village at Clarkston McLaren Regional Medical Center Mount Clemens Regional Medical Center POH Regional Medical Center

New name: McLarenBay Region McLarenBay Special Care McLarenCentral Michigan McLaren Cancer Institute McLarenGreater Lansing McLaren Orthopedic Hospital McLarenLapeer Region McLarenClarkston McLarenFlint McLarenMacomb McLarenOakland

Blue Cross, Shield of Minnesota Names New President, CEO

Kenneth Burdick has been appointed president and CEO of Blue Cross and Blue Shield of Minnesota, succeeding Patrick Geraghty, who moved to Blue Cross and Blue Shield of Florida. Burdick came from Coventry Health Care, and before that was at Secure Horizons, a UnitedHealth Group company. In a statement Burdick said he is looking forward to working in this community and leading Blue Cross at a time of signicant change in healthcare. He is a graduate of Amherst College and has a law degree from the University of Connecticut. The Minnesota Blues are based in Eagan, near St. Paul.

Illinois Systems Try to Overturn CON

Quest for New Hospital will Get Judges Hearing
Two hospital systems that were turned down by the Illinois CON panel in their quest to build a new hospital in Chicagos far northwestern suburbs are using a new strategy to get the decisions overturned. Centegra Health System and Mercy Health System have each proposed to construct a new hospital for which the Illinois Health Facilities and Services Review board has found no pressing need. In December the CON committee dismissed appeals, citing insufcient capacity utilization at other hospitals within driving distance of the McHenry County location. (Payers & Providers, Dec. 20, July 12, June 28). The two sponsoring organizations have requested hearings in an attempt to overturn the panels decision. They will be assigned a hearing ofcer to determine the merits of their case, the review board administrator said last week. Ultimately the hospital companies could take their case to a circuit court. Mercy proposed a $115 million hospital in Crystal Lake, which was denied in a 6 to 2 vote. Centegra wants to build a 128-bed facility for $233 million in Huntley. That plan was also denied. Mercy has dedicated a web page to whipping up public support for its proposal. Visitors to http:// www.mercycrystallake.org/ are invited to sign a petition, send a letter, and watch a video describing the new hospital.

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OPINION

Page 4

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A Startling Slowdown in Spending

CMS Growth Projections Are Well Below Prior Estimates
Healthcare spending in 2009 and 2010 grew at implementation of the Affordable Care Act. In the slowest rates in 50 years. This startling fact, reduction in utilization and trims in payment news, published in an article by staff of the rates under the ACA more than offset the Centers for Medicare and Medicaid Services projected cost of covering the uninsured. (CMS) in Health Affairs, was largely attributed Projected Medicare spending is even further to the shrinking economy. (Payers & Providers, below original estimates, and provisions in the Jan. 17). Loss of jobs and ACA play a major role in the insurance, slow growth in new, lower numbers. Medicare wages and family incomes, and spending in 2020 is now greater out-of-pocket estimated to be $922 billion, healthcare costs have which is $150 billion lower than undoubtedly caused uninsured, the $1.07 trillion projected by underinsured, and low-wage CMS pre-reform. As the authors workers and their families to note, Medicare savings come forgo care, contributing to the from ACA changes in payment slowdown in health spending. rates for Medicare Advantage An estimated 9 million people plans, home health agencies, became uninsured when they and other providers (effective lost a job with benets over Oct. 1, 2009), fraud and abuse 200810, and they were much provisions, as well as more likely than those who did requirements for prescription not lose coverage to report drug rebates for Medicare delaying needed care. managed care plans (effective CMS is projecting lower Jan. 1, 2010). The ofcial CBO health spending over the rest of health reform estimates included the decade. While the poor $397 billion in projected economy is having an effect on Medicare savings from ACA By Karen Davis current spending, the recession provisions over the 201019 alone doesnt explain why period. But it would now appear projected health spending in 2020 is that the reduction in projected Medicare outlays substantially below estimates made just two over a 10-year period is almost twice that. years ago. Either the original estimates were too At a minimum, dire predictions that the ACA high, or the tectonic plates underlying the would fail to control costs and, in fact, accelerate health system are beginning to shift. spending have not been borne out by the early CMS's estimates of healthcare spending experience. It now appears that both the costs of through the end of the decade have been covering the uninsured and Medicare spending falling over the last year and a half. The most are substantially below pre-reform estimates. recent projection of national health spending in The efforts made over the last decade to 2020 is $4.6 trillion, or 19.8% of GDP, transform health care delivery may also have compared with its projection of $4.9 trillion, or contributed to slower spending growth. Private 21.1% of GDP, in 2009 in the absence of sector initiatives have been encouraging hospitals reform. This represents a $275 billion (5.6%) and physicians to adopt improved safety methods, reduction for 2020, compared with pre-reform reach performance benchmarks, and reorganize estimates. Moreover, that projection represents care to achieve greater value. Private insurers and a cumulative reduction of $1.7 trillion over the Medicaid have begun to pay for care differently, 10 years from 2011 to 2020. creating opportunities for new models of health This reduction in projected national health care delivery. There is much to celebrate in this spending is particularly important because the historic slowdown. After a half-century of increaspre-reform projection of health care costs was ing as a share of the economy, the health sector is used by the Congressional Budget Ofce (CBO) now increasing at a more affordable rate. and the CMS Ofce of the Actuary in estimating the cost and impact of health Karen Davis is president of the Commonwealth reform. Already, spending is far below the Fund in New York. This is excerpted from a trajectory projected to result from recent blog post, at CommonwealthFund.org.

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