Hospital and business leaders Thursday urged the Legislature to support Governor Jim Doyle’s latest proposal to shore up the state’s Medicaid program. On Wednesday, Doyle proposed using an expected general fund balance and debt refinancing to plug an estimated $230 million hole in the Medicaid program.

"We are very pleased with this proposal," said Eric Borgerding, senior vice president, Wisconsin Hospital Association (WHA). "Wisconsin chronically underpays hospitals for Medicaid services; this proposal will assure that situation does not get worse. We urge the Legislature to support it so we can start to repeal the hidden health care tax placed on employers."

According to WHA, Wisconsin’s Medicaid program paid hospitals $350 million less than what it cost hospitals to provide care to Medicaid recipients. The shortfall must be recouped from other payers, including business, which amounts to a "hidden health care tax."

The worsening of the "hidden health care tax" situation in recent years has drawn the attention of the state’s largest business group, Wisconsin Manufacturers & Commerce (WMC).

"When the state refuses to pay for the health care programs it creates, those costs are shifted to business," said James A. Buchen, vice president of government relations for WMC. "It’s essentially a hidden health care tax paid in the form of higher health insurance premiums. The Governor’s proposal is a down payment on repealing this hidden tax, which will require long-term reforms to the system."

According to Borgerding, the state has expanded its health care programs significantly in the past few years, while at the same time paying health care providers in those programs less.

"The state has created some laudable new health care programs, but in 2003 its Medicaid program paid hospitals less than 60 percent of what it costs them to provide care," said Borgerding. "In other words, about $350 million in unpaid Medicaid hospital costs were shifted to the private sector just last year – that’s more than the state’s funding share of BadgerCare and SeniorCare combined."

"The first step in reforming the Medicaid program is ending the cost-shifting game," said Buchen. "We can do that by making the state pay for its programs, instead of shifting the burden to employers. Providing health care to Wisconsin’s poor is a basic function of government, and the government should weed out waste, fraud and abuse to make sure it has enough money to pay its bills for basic services."

"The Governor’s plan is a good first step," Buchen added, "and we hope his budget bill continues in this direction."

On January 19, WHA, together with the American Hospital Association (AHA) filed a request to file an amicus brief with the Supreme Court in Ferdon v. Wisconsin Patient Compensation Fund. As detailed in prior issues of the Valued Voice, this case challenges the constitutionality of Wisconsin’s non-economic damage cap in medical malpractice lawsuits and puts at risk Wisconsin’s comprehensive medical liability system.

As stated in WHA’s and AHA’s joint petition to file an amicus brief: "This case raises issues that will substantially impact the entire health care delivery system in Wisconsin, including the State’s comprehensive system governing medical malpractice liability claims….A declaration that [the non-economic damage caps] are unconstitutional and will impair WHA members’ abilities to provide affordable health care to Wisconsin residents and to retain highly qualified physicians in all general and specialty practice areas."

As one of only six states not currently experiencing a medical malpractice "crisis" according to the American Medical Association, maintaining the non-economic damage caps is particularly important for retaining and attracting physicians to Wisconsin. A March 2004 study released by WHA and the Wisconsin Medical Society entitled "Who Will Care for Our Patients?" documented a growing physician shortage crisis in Wisconsin, particularly in underserved areas of Milwaukee County and rural Wisconsin.

"Preserving the current medical liability environment in Wisconsin is key to addressing the physician supply issue," said Judy Warmuth, vice president of workforce, WHA. "The current environment has attracted physicians to Wisconsin, and has averted the loss of physicians due to prohibitively high malpractice insurance premiums that states without caps have experienced."

Payments to health care providers under the Health Insurance Risk-Sharing Plan (HIRSP) will increase by at least five percent beginning in July of this year as a result of action January 14 by the HIRSP Board of Governors.

HIRSP is the state’s health insurance program for medically uninsurable individuals who do not have access to employer-sponsored health insurance. The program currently covers more than 18,000 people.

Because of rapidly increasing health care charges, the program’s consulting actuaries had recommended a double-digit premium increase for participants and a new methodology for calculating program costs to take effect during the last quarter of the current policy year, which ends June 30. At the same time, the actuaries recommended a five percent increase in provider reimbursement because current rates are at approximately the same level as they were in 2001-02.

In order to avoid an interim premium increase, the Board agreed to delay the provider rate increase until the beginning of the new policy year on July 1. Provider payment rate increases for the next policy year could be higher than five percent if a larger increase is needed to ensure that providers do not contribute more than their mandated 20 percent share of HIRSP program costs.

By law, policyholder premiums are set to recover 60 percent of program costs. Health insurers and providers share the funding burden for the remaining 40 percent. Insurers pay assessments based on their respective Wisconsin market shares. Provider contributions are made in the form of reductions in the rates they would otherwise be paid under the HIRSP policy.

Effective January 1, 2005, WHA staff and their families saw our health plan transition from a HMO/PPO to a consumer-driven model that includes individual health savings accounts (HSA)…a significant development that is being replicated by small and medium-size employers all across the nation. In fact, some are predicting that a majority of small employers will choose high-deductible health plans as their coverage strategy within the next five years.

WHA made this change, in part, to align our actions with our rhetoric. We determined that since our public policy agenda on the insurance affordability issue maintains that the absence of "skin in the game" distorts the demand side of the equation (utilization)…then the opportunity to begin instilling a modest amount of purchaser behavior with our own staff makes sense.

Here are a couple of other aspects of our decision.

• WHA did not make this change to lower our health care benefit costs…at least in the short term. In fact, our overall financial commitment to our health benefit will be higher in 2005 than it was in 2004.
  
• 100% of participating employees are funding their HSA account at 100 percent of the annual deductible ($1,000 single/$2,000 family).
  
• Small group employee meetings and education worked well in obtaining staff "buy in" for moving to an HSA. And we addressed concerns that arose relating to administrative aspects of the transition. For example, we assured staff that if an early health care expenditure exceeded the "banked" account, WHA will front-end funds needed to cover the deductible for employees and family members.

• In order to assure that wellness is a strong component of our overall health benefit, WHA is funding a $250 annual wellness benefit (fitness club, primary care office visit, smoking cessation, etc.) for each employee.

Over time, we’ll report back as to the impact that our decision to move to an HSA has had on utilization and on future health care benefit costs. The bottom line: this is our small attempt to test the theory that consumer-driven health care can have a positive impact on rising health care costs and be designed to maintain wellness and primary care incentives.

Steve Brenton,
President

WHA and the Rural Wisconsin Health Cooperative (RWHC) have been meeting with the Wisconsin Department of Health and Family Services’ Bureau of Quality Assurance (BQA) to discuss ways to improve the hospital regulatory environment. Through these meetings, there have been a number of issues addressed, including specific surveyor issues, post-survey questionnaires, increased regulatory consistency, increased regulatory predictability, and the possibility of combined surveys.

WHA and RWHC believe that the goal of hospital surveys should be to improve the quality of care at Wisconsin hospitals. In order for the surveys to become part of the overall quality improvement system, with BQA and the hospitals coordinating their efforts, WHA and RWHC believe it is crucial for hospital staff to know about the issues identified by the BQA surveyors at other hospitals. WHA and RWHC asked and BQA agreed to provide quarterly reports describing the citations, both federal and state, issued by the BQA surveyors. Early next week, hospital CEOs will receive this information from WHA and RWHC. WHA and RWHC are seeking feedback from hospitals concerning the usefulness of these reports and whether different or more information should be included in the reports.

Dana Richardson, VP quality initiatives, WHA, and Tim Size, executive director, Rural Wisconsin Health Cooperative, were recently accepted as members of the National Quality Forum’s (NQF) Steering Committee for a new project called the National Voluntary Consensus Standards for Hospitals: Additional Priority Areas. The purpose of this project is to identify and endorse additional standards for measuring performance of the nation’s general acute care hospitals including coordination of care, rural-sensitive measures, and measure of mortality for heart attack, heart failure and pneumonia.

The NQF is a voluntary consensus standards-setting organization that uses a formal process to endorse standards that meet the needs of a variety of health care stakeholders. The product(s) of these activities include measures or indicator set(s), set(s) of practices, and supporting documentation such as guidelines for reporting the standards. In addition, NQF engages in other activities aimed at promoting the use of such standards, linking quality measurement to quality improvement strategies, disseminating information, and exchanging knowledge and ideas.

The NQF’s general consensus development process consists of five principal steps including consensus standard development, review, member council approval, Board of Directors endorsement, and evaluation (see schematic of the consensus development process). The consensus development process is guided by the Steering Committee (SC) or Review Committee (RC) which works with NQF staff to develop project plans, provide advice about the subject, ensure input from relevant stakeholders, and review draft products. The SC/RC members reflect the diversity of the four major health care stakeholder groups represented by the Member Councils, as well as specific perspectives of important to the project topic. The four stakeholder groups are consumers; health care professionals, providers and health plans; purchasers; and research and quality improvement. Products that are included in a draft recommendation for action (e.g. a recommended measure set) are approved by the SC/RC before they are made available for public comment or Member Council approval or Board of Directors endorsement. Once a consensus standard is endorsed, an evaluation process is implemented to collect information and refine the standard based on issues that are identified after widespread use.

All NQF consensus reports and products are evidence based and explicit about the science underlying the recommendation, the criteria for selecting them, and the rationale for recommending the particular item or approach. Information on each new NQF project is posted on the NQF web site www.qualityforum.org as components of the project are approved.

Jennifer Frank, WHA’s vice president of education and marketing, has assumed the role of staff liaison for the WHA Foundation, Inc.

The WHA Foundation was established in 1968 to support the educational, research and charitable programs of the Wisconsin Hospital Association and its members. As a 501(c) 3 organization, the Foundation’s grant making has supported programs and initiatives throughout the state.

In 2004, the Foundation supported health care workforce development by establishing a scholarship program that helps supports students in the final semester of their health care degree programs. More than $34,000 in scholarships were awarded to 27 students in 2004. More than 90 percent of these students are now employed by WHA member hospitals. Additionally, the Foundation provided a grant to the Wisconsin Nursing Redesign Consortium, a statewide organization working to rethink and redesign the profession and practice of nursing for Wisconsin. The Foundation has also supported health care quality initiatives through a grant to the Checkpoint initiative to fund the development and launch of the CheckPoint^SM Web site.

The Foundation also supports the annual Global Vision Community Partnership Awards, a competitive program recognizing and celebrating the work of WHA members who collaborate with community groups to meet and address demonstrated community health needs.