Reg's Blog

Senior and Post-Acute Healthcare News and Topics

What’s Trending: Catching Up

Probably the biggest trend as of late is my tardiness in getting these posts out on-time…sorry.  My end of the week (last week) got distorted as I needed to attend a meeting with regard to a Medicaid shift in Kansas from fee-for-service to “managed”.   As I have been through these conversions or switches before, it’s always interesting to watch provider reaction, the MCO presentations, etc.  I hate to be cynical about these transitions but past-experiences suggest that the Kansas experiment will suffer from the same issues I have witnessed in other states – a rather bumpy take-off.  States that have a large rural Medicaid population tend to struggle to get networks built and enrollment in-place “timely” (ala Kentucky’s issues).

In one regard, I’m actually glad I’m a tad behind as this weekend produced some rather interesting political news sure to focus debate more directly on healthcare.  This said, below is what I am following now and expect to follow as a trend for a while yet.  In addition, this week’s Fall Out issues are a tad different as they come from readers and industry insiders and thus, are a shade different “in perspective”.

Politics and Healthcare: Moving on from last week, politics remains on my radar for a few reasons.  First, as I admitted last week, I’m a policy and politics “junkie”, fascinated by the mix of fact and fiction and what “sticks” where.  Second, there is a great deal of healthcare meat on the table and with the inclusion of Paul Ryan on the Republican ticket, the Medicare/Medicaid political barbecue has just been lit.  As a confession, I do know Paul quite well and have worked on past campaigns on his behalf.  He’s an oddity in political circles as his substance is far greater than his political profile.  So as the gloves start to come off, my watch is how the issues regarding entitlement spending play out.  The cold hard reality is this: Entitlement spending on Medicare, Medicaid and Social Security is greater than the total revenue intake of the Federal government from all sources.  Healthcare reform via the ACA widens this gap for minimally, the next ten years.  After this ten-year period, its anybody’s guess as to where the spending line will level.  Embedded in the ACA is a series of cuts to Medicare of $700 plus billion to make the numbers sort-of work.  What we don’t know is the impact of Medicaid expansion and how state’s will respond (either in favor of or against).  The debate forthcoming is about as stark of a difference in approaches as found in recent political cycles.  Romney/Ryan would eviscerate as much of the ACA as possible, opting for a managed, fee-for-service landscape that includes primarily federal block grant funding and privatized initiatives to contain costs and assure access.  The ACA as we all know by now, is more directive in its approaches, utilizing governmental policy and insurance plans to garner greater levels of coverage while funding ideal innovations in delivery (ACOs, etc.).  I liken the ideological difference to hands-on and hands-off.

Med B Therapy Exception Change: Like many, I’ve been waiting to see how this rolls-out and now we have some answers.  CMS has foretold of changes to the current outpatient therapy cap exception process under Part B, moving the process from a “deemed” exception methodology to one requiring authorization from a Medicare contractor (ala prior authorization beyond the cap).  Providers will be able to submit exception requests to a designated contractor every 20 days and per the law, receive a decision within 10 days.  If no decision is made in the 10 day window, the request is deemed “granted”.  Denials with reasons are given to the provider with a chace to re-submit.  This first-phase rolls out October 1 and providers can begin processing requests in mid-September.  The current cap limit is $3,700, separated between PT/Speech and OT (non-aggregated).  On my radar is the industry reaction and how providers will begin to formulate their strategies for attaining exceptions via this new process.  I’ll be more interested to see how many exceptions are denied initially, come mid-September/October 1 as I suspect the number to relatively high and variable between contractors.  Rarely do these initiatives work as intended and rarer still is uniformity of decisions between the Contractors.

Medicare Cuts and Sequestration: In the heart of the political season, the Obama administration is required within the next 30 days to announce the implementation of a 2% Medicare cut, effective January 1, 2013.  This “cut” is the result of current legislative failures (and no legislation presently on the table) to produce a $1 trillion package of deficit reduction.  Recall, last year’s Super Committee created a legislative compromise to raise the debt ceiling via an either-or approach: Either find a deficit reduction package or automatic cuts would occur.  This is the “sequestration” implication; required action without new legislation.  Within the next month, the Obama administration is required to report to Congress its plan for implementing the 2% cuts – Medicaid is not part of the cuts.  Congress then must decide to accept the plan or revise the plan.  What I am watching is less the substance of the report (where the cuts come from) and more the political drama that will ensue.  Congressional dysfunction is engrained in Washington so I am doubtful that a plan revision is even possible.  I suspect a piece of legislation that evaporates the issue via bi-partisan delay (the Potomac two-step) until after the elections.

Medicaid Expansion:Back on my radar thanks to one small piece of news from Washington this past week – a kinder, gentler tone on how state’s can or cannot expand and the CMS reaction to such a decision. Essentially, CMS has taken the tone of “doesn’t really matter to us” and states can somewhat take their time.  The new “position” came from the CMS head of Medicaid and CHIP.  The message is that states can choose to expand as early as January 1, 2014 or delay if desired.  Her only message is that delay will result in non-optimized federal funding (additional dollars from the Feds to implement expansion).  In effect, the message is take-it or leave-it and we’re fine with either – a stark difference from earlier messages that incorporated threats fof dire funding cuts for states that didn’t get on the expansion bandwagon.  The Supreme Court’s decision clearly changed the CMS rhetoric.  My watch now is how states decide to craft their bargain with the Feds for FY 2013.  As I have mentioned in prior posts, state budgets are a mess and full funding of expansion is tantalizing to some and to others, a scary proposition.  Again, I think November’s elections are the make or break point for many “red” governed states.

My Fall Out issues this week come from readers and industry insiders.  Here is their take on what they see;

  • From a reader and colleague in the Infusion/DME industry in response to my last week’s What’s Trending….To your point on audits within each sector of healthcare, us infusion providers are being hit with CERT, ADR, and now PERM audits.  We have decided to stop sending certain claims to Medicare because every claim is triggering a CERT audit.  Wonderful effect on my cash flow.  The PERM audit put me over the edge…I need to send the medical record to the PERM contractor due to a $1.90 payment.  That’s right, one dollar and ninety cents.  I called the contractor in Baltimore, and asked if I could just send a check for the money in question, because it will cost more in electricity to print paper copies from our EMR…the person was not amused. They have no sense of humor.  Seriously, these audits are putting a major crunch in resource allocation.  Each CERT request is generating 30-40 pages of documentation.
  • From a colleague who reads and who I often discuss economics and policy issues with (he’s a risk consultant)….  

% of the 2012 Federal Budget of $3.8 Trillion

Medicare, Medicaid and Other Healthcare          $ .836 Trillion              22%

Social Security                                                               .798 Trillion              21%

Defense                                                                            .722 Trillion              19%

Interest on the Federal Debt                                       .228 Trillion                6%          (sub total 68%)

——–

Other Welfare Programs                                      .722 Trillion              19%

Education                                                                .152 Trillion                 4%

Foreign Affairs                                                       .038 Trillion                 1%

All Other Government Spending        .              .304 Trillion                  8%

——————            ———–

2012 Total Federal Spending                             $3.800 Trillion             100%

2012 Total Tax Revenues                                       2.473 Trillion               65%

———————

$1.327 Trillion               35%              (Federal Deficit for 2012)

$16.400  Trillion                                  (Total Federal Deficit)

Let’s add up just 1) Medicare/Medicaid, 2) Social Security, 3) Defense and 4) Interest on the National Debt. (22% + 21% + 19% + 6% = 68%)  These 4 items total 68% of the Federal Budget.

We could shut down the ENTIRE FEDERAL GOVERNMENT except for these 4 programs and WE STILL DON’T BALANCE THE BUDGET !!!

What are our Presidential and Congressional Candidates saying:

1. Just cut government waste.

2. Just lower taxes and the economy will grow its way out of this fiscal mess.

3. Just control government spending

4. Just tax the a) rich and b) big corporations more

5. Just cut Entitlements and things will be all right. Obviously, these individuals are using such slogans to get elected. What will it take to fix things?  This is the magic question. It will probably require all of the following:

a. Significant cuts in Entitlement programs and Defense

b. Tax increases most likely significant increases for all of us who pay taxes.

c. Significant changes/cuts in government employee pension and retiree health insurance benefits.

d. Spending cuts across the board in all other government areas

What about Welfare programs?  How much can we cut?  Another good question.  Cuts will need to be made here too.  However, do you want to live in a society where the disabled, sick, aged, poor, unemployed and other disadvantaged individuals live like they do in India, Haiti, South Africa?  Is there welfare fraud in these programs?  Yes.  Is it pervasive and widely abused?  I don’t think so. 

The medicine to fix this mess will not be pleasant. We all must suffer.  No exceptions.  The rich, middle class and poor.  Government employees including the police, firefighters, teachers and military.  Wall Street investors, bankers, doctors, lawyers.  Big corporations, small and medium sized businesses.  All of us. The trick will be how to do it in a fair and equitable way.  Good luck with that.

Will our elected officials have the political will to act before it is a crisis?  Unfortunately, there is no evidence of it.  There will need to be a crisis.   

So, we are basically SCREWED no matter who we elect.  There is an old saying “People get the government they deserve.”  Needless to say, we deserve the medicine we will be forced to swallow in the coming years for not paying attention to what was happening in Congress, the state legislatures, county boards and municipal council chambers.

And this is only the Federal budget.  God help us when all the other levels of government finish with us, i.e. State, County, City, Village, Township.  Each of these have their own financial troubles to deal with.  Guess how they will fix these?  Same song different verse.

  • Finally, from a reader and colleague in the hospice industry….What went wrong?  Those of us in hospice for the past twenty plus years were kind of like kindergarten teachers; we did it because we loved it and thought what we were doing was noble and proper.  We never intended to make a ton of money on caring for the terminally ill and in reality, we never did.  We raised money to make ends meet and we never thought of drumming up business by hanging out at nursing homes and telling the nursing home that we could make them money by taking their Medicaid/Medicare residents and putting them on hospice.  When we went to a nursing home and took care of someone, it was because the  person was truly dying and proof of point, they generally did in short-order.  I am truly depressed to see these mega-corps tarnish what I love and think of as the most important service on earth and all because shareholders just want more return.  What happened to “care” coming first and profit coming to those who put “care” first?

Until next time and as always, keep the feedback coming and keep the faith!

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August 13, 2012 - Posted by | Hospice, Policy and Politics - Federal | , , , , , , , , , ,

2 Comments »

  1. The 2% Medicare cut effective January 1 will negate the 1.8% increase we are getting October 1?

    Comment by Kimberly | August 13, 2012 | Reply

    • Not exactly. As it stands today, the Obama administration is required to submit to Congress a plan to reduce Medicare outlays by 2% effective January 1. This reduction can come from sources across Medicare and “may” include some rate reductions. My take is that the 2% reduction won’t actually occur as Congress must approve the plan or come up with an alternative. My guess is the alternative will be to delay anything until after November’s elections. In any regard, the short answer to your question is “not likely” as the outlay reduction will be broad-based, not just rate-based.

      Comment by Reg Hislop III | August 14, 2012 | Reply


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