PSA Update

Welcome to the January 9, 2009 edition of the American Medical Association's Private Sector Advocacy (PSA) Update containing breaking news on managed care issues and other PSA initiatives designed to assist the Federation with advocacy efforts around the country. If you forward this information, we would appreciate appropriate acknowledgment. If you have any questions or comments, please contact Emily Niederman.

Learn more about AMA PSA and its activities.

AMA practice tip: Losing revenue through inappropriate health insurer adjustments 
The AMA developed the educational resource "Is your practice losing revenue through inappropriate health insurer adjustments?" (PDF, 176KB) to alert physician practices to the need to carefully review health insurer explanations of benefits in order to pinpoint and address underpayments based on inappropriate adjustments by the health insurer.

Stories
1. Daschle lays out plan to overhaul health care
2. The GOP should fight health-care rationing
3. High medical costs, low pricing hurts managed care
4. Cigna cutting 1,100 jobs
5. Pressure builds for further slashes to Medicare Advantage spending
6. Health-Care outlays climb at slowest rate in years
7. CMS demo will bundle physician and hospital payments
8. Tufts to break with Blue Cross

Summaries

1. Daschle lays out plan to overhaul health care
January 8, 2009, New York Times
Former Senate majority leader, Tom Daschle, enjoyed a warm reception in the Senate Health Education Labor and Pension Committee on Thursday, during his first confirmation hearing to be Secretary of Health and Human Services. Mr. Daschle promised to work in a bipartisan fashion to address increasing healthcare costs, the growing uninsured population, and other major healthcare issues and stated the he would discourage the Senate from using reconciliation - a procedure that protects legislation from filibusters - to pass healthcare reform bills.  The nominee stated he supports the concept of a public insurance program modeled after Medicare to vie with private insurers to provide better benefits and better customer service at a lower cost. However, many Republicans are strongly opposed to the concept, claiming that it could significantly restrict true competition in the health insurance market and could lead to a single-payer, government-run health care program.  The Senate Finance Committee, which has jurisdiction over the nomination, will hold its confirmation hearing in the coming weeks and will likely vote to confirm, sending the nomination to the full Senate.

2. The GOP should fight health-care rationing
January 7, 2009, Wall Street Journal
Congressman Tom Price, a Republican physician from Georgia, argues that the Republican Party missed an important opportunity to reform the healthcare system over the last eight years, and expressed concern with an emboldened Democratic Party, lead by HHS-Secretary nominee Tom Daschle, pushing a “government-centered health-care agenda.” As the major debate about American healthcare is fast approaching, the Congressman advocates for a patient-centered approach built upon two pillars: access to coverage for all Americans and coverage that is truly owned by patients.

3. High medical costs, low pricing hurts managed care
December 31, 2008, Yahoo Business News
Health insurance stock prices fell more than 50% on average last year as WellPoint Inc. stocks fell 52%, UnitedHealth Group stocks fell 54% and Cigna Corp. stocks fell 69 percent. Those declines were even greater than the 46% drop seen in the Dow Jones U.S. Healthcare Providers Index, a category that also includes hospital chains and smaller insurance companies. While investors remain wary, some analysts believe that the industry bottomed out last year and the insurers will rebound in 2009.

4. Cigna cutting 1,100 jobs
January 6, 2009, Pittsburgh Business Times
Cigna Corp. announced this week that is would be laying off 1,100 employees, or approximately 4% of its workforce, as a result of the economic downturn.  The company said it will incur between $30 million and $40 million, after taxes, in cost reduction charges in fourth-quarter 2008.  The job cuts are expected to be largely complete by midyear and the company will provide additional information during its fourth-quarter earnings call scheduled for earlier February.

5. Pressure builds for further slashes to Medicare Advantage spending
January 5, 2009, American Medical News
As Congress gears up for healthcare reform, Medicare Advantage cuts are again being considered as a way to pay for some of the costly proposed changes.  In July 2008, Congress cut Medicare Advantage payments to help pay for the 18-month physician payment patch that will last through the end of this year, but many believe that additional cuts are necessary.  The Medicare Payment Advisory Commission (MedPAC) reported in December that Medicare Advantage Private fee-for-service plans on average will be paid 118% of standard fee-for-service rates this year, and all Medicare Advantage plans will be paid an average of 114 percent.  Furthermore, a recent GAO report found that that Medicare Advantage plans made roughly $1.3 billion more in profits in 2006 than expected. 

6. Health-Care outlays climb at slowest rate in years
January 6, 2009, Wall Street Journal
According to a study released this week by the journal Health Affairs, healthcare spending in the United States grew at a rate of 6.1% to $2.2 trillion in 2007, down from the growth rate of 6.7% in 2006.  Prescription drug spending largely accounted for this decrease in growth, as such spending increased only 4.9%, compared with an 8.6% increase in 2006.  Most other healthcare services grew at the same rate or faster in 2007.  Healthcare spending again expanded faster than the overall economy in 2007 as health care consumed 16.2% of GDP, up from 16% in 2006. 

7. CMS demo will bundle physician and hospital payments
January 7, 2009, Healthcare Finance News
The Centers for Medicare and Medicaid Services (CMS) have announced the sites for its Acute Care Episode (ACE) demonstration.  The Medicare demonstration will bundle payments for hospitals and physicians for a set of inpatient episodes of care, in an attempt to show that such bundling can help align incentives and improve quality.  CMS has selected the Baptist Health System in San Antonio, the Oklahoma Heart Hospital in Oklahoma City, Exempla Saint Joseph Hospital in Denver, Hillcrest Medical Center in Tulsa and Lovelace Health System in Albuquerque to participate in the demonstration.

8. Tufts to break with Blue Cross
January 6, 2009, Boston Globe
 After January 31, 2009, Tufts Medical Center will no longer accept Blue Cross Blue Shield HMO coverage.  Tufts officials state that following 11 months of negotiations, the insurer has refused to pay physicians a reasonable rate and, therefore, the medical center has no choice but to stop accepting its HMO coverage. According to Tufts Medical Center's chief executive, Ellen Zane, Blue Cross pays her physicians and hospital 20 to 40% less than other major teaching hospitals and, unless Blue Cross offers Tufts a major payment increase before the end of the month, the Blue Cross HMO contract with Tufts doctors will end on February 1st.