A debt refinancing proposal that would provide $175 million to immediately shore up the state’s hemorrhaging ($400 million in the red) Medicaid program appears headed for the morgue, the victim of severe political fighting between the Governor and legislative leaders.

"Its like two cannons pointing at each other, with MA stuck in the middle," said WHA’s Eric Borgerding. "Unless the sides can come together very soon, this one-time opportunity will be wasted, and we will all regret that down the road."

Putting the MA deficit (and lost opportunities to address it) into an absurd context, the state could have completely eliminated ALL fee for service Medicaid payments to hospitals in 2003 and still be left with a $100 million deficit.

Some would argue the state is already heading in that direction, with Medicaid payments to hospitals projected to have fallen below 60% of cost in 2003. And while the impact of these cuts is most immediately felt by health care providers, it is Wisconsin’s employers who ultimately pay the price.

"I am all for sound fiscal policy, but while lawmakers focus on things like the Taxpayers Bill of Rights, the hidden tax of Medicaid cost shifting is being ignored," said WHA President Steve Brenton. "In 2002 Wisconsin citizens and businesses paid an additional $269 million for health care because of Medicaid underpayments just to hospitals. If you factor in physicians and other providers, the private sector’s Medicaid tab is even greater."

The Taxpayer Bill of Rights, or TABOR, is a proposed state constitutional amendment that would limit growth in state spending to inflation plus growth in population (see "President’s Column" on page 3). Legislation to amend the state constitution must be passed by two consecutive legislatures and approved by voters. Such legislation is not subject to a Governor’s veto. The proposal has the backing of the state’s largest business group.

Further compounding the problem, the Legislative Fiscal Bureau this week released a report indicating that revenue collections through mid 2005 will be $220 million below budgeted amounts. That means the roughly $190 million set aside by Governor Doyle in the 2003-05 state budget in anticipation of a Medicaid shortfall is now off the table.

With just a few weeks left in the 2003-04 legislative session, it appears the Legislature will put off the Medicaid problem until after the November elections. Under current projections, Medicaid will run out of funding in March of 2005.

"If the last few weeks are any indication, we could be headed for a major train wreck early next year," said Borgerding.

When considering the impact government has on health care providers, consumers and payers, one must remember the importance and role of all three branches of government. The legislature is often the first that often comes to mind, with its authority to write the laws and appropriate funds. The executive branch, with the Governor’s strong veto authority and state agencies’ authority to implement and enforce the law, is also important. One, however, should not overlook the crucial and growing role that the third branch of government, the courts, is playing in health care.

WHA’s advocacy agenda is dependent on a dominant presence in the Capitol and regulatory agencies, pushing policies that support the mission of community hospitals. Capitol victories, however, are for naught if hospitals and others in the health care community do not protect these policies when challenged in the courts. As several articles in recent editions of The Valued Voice have indicated, WHA is defending hard-won legislative gains by participating in key legal cases when these gains are challenged. "Courtroom advocacy" is a growing component of WHA’s government affairs agenda.

WHA currently is involved in three important legal cases; a common theme among the cases is WHA’s insistence that the courts interpret the statutes as the legislature intended and respect the authority entrusted the legislature and the Governor by the people of Wisconsin.

The significance of the courts’ involvement in health care is clear when considering the courts’ interpretations of Wisconsin’s medical malpractice statutes; and these decisions continue. Wisconsin has avoided, in significant part because of its innovative and well-balanced medical malpractice laws, the malpractice insurance crisis experienced in many states that is inflating the cost and reducing the availability of health care in those states.

What the trial lawyers’ lobby cannot accomplish in the legislature, they are trying to accomplish in state courts – that is, the erosion of Wisconsin’s model medical malpractice laws. WHA is defending against this assault in two separate cases:

Maurin v. Hall. The plaintiffs and the Wisconsin Academy of Trial Lawyers (WATL) are challenging the constitutionality of the medical malpractice statute’s wrongful death caps and arguing that the two wrongful death caps in Wisconsin statutes may be "stacked," potentially increasing the total amount of any judgment. WHA is defending the constitutionality of the wrongful death caps. Further, WHA is arguing that the statute does not permit stacking of the caps and requests that the court decide this recurring but not addressed issue. The trial court in this case held that the caps on noneconomic damages in wrongful death actions are unconstitutional and thus the trial court did not address the issue of whether the two caps may be stacked. The Court of Appeals requested that the Wisconsin Supreme Court review this case directly, and the Supreme Court accepted that request.

Lagerstrom v. Myrtle Werth. The plaintiff and the WATL are challenging the constitutionality of the statute provision that abrogates the collateral source rule for medical malpractice cases in Wisconsin. In general, the collateral source rule prohibits a defendant in a tort case from presenting to the jury evidence that the plaintiff has received compensation for his or her injuries from another source, such as the payment of medical bills by a health insurer. In Wisconsin medical malpractice cases, however, defendants may present evidence of compensation from other sources to the jury (abrogating the collateral source rule). WHA is defending the constitutionality of the statute as a key piece of Wisconsin’s medical malpractice laws. The trial court in this case held that the statute is constitutional; the plaintiff and WATL are requesting that the Court of Appeals overturn the trial court’s decision.

In addition to the cases involving the medical malpractice statutes, WHA is supporting Meriter’s position in the following case that involves statutory interpretation:

Meriter v. Dane County. WHA is supporting Meriter’s request to the state Supreme Court that it review the Court of Appeals decision that permits counties to avoid paying for the health care costs of county inmates. The Court of Appeals held that the county could avoid paying for an inmate’s health care by releasing the inmate from custody while the inmate was in the hospital, ending the county’s statutory obligation to provide and pay for the inmate’s health care according to the court, only to re-arrest the inmate upon discharge from the hospital, making the reason of the release suspect. The legislature intended the statute to require counties to provide and fund health care for their inmates. Unless overturned, this decision will permit counties, without a legislative vote, to shift their obligations to hospitals and thus to employers and other payers of health care.

Watch The Valued Voice for information on these and future cases as WHA’s activity in the courthouse is in the spotlight as a key element of WHA’s tri-lateral advocacy agenda.

Nursing Education Loan Repayment Program applications are due February 25. Information and applications can be found at http://bhpr.hrsa.gov/nursing/loanrepay.htm. The highest priority for funding this year will be nurses with the greatest need, employed at Disproportionate Share Hospitals. Last year all the program money was granted to the highest priority group and it is expected that the same thing will happen this year.

Wisconsin hospitals are eligible for funding from the Health Resources and Services Administration (HRSA) to enhance isolation and decontamination capacity. The Wisconsin Hospital Association, the Wisconsin Division of Public Health’s Bioterrorism Preparedness Program, and the seven Regional Hospital Preparedness Teams will be sponsoring a seminar in two locations: April 6, 2004, at the Crowne Plaza Hotel in Madison from 8 am to 4 pm and on April 8, 2004, at the Lake of the Torches Resort in Lac du Flambeau from 8 am to 4 pm. These seminars will provide information to assist hospitals to access and use the FY 2003 HRSA funds that have been awarded in enhancing negative pressure airborne isolation rooms. In addition, hospitals will also learn about funds that still are available from the FY 2003 HRSA funds to enhance decontamination capacity as well as to obtain portable decontamination stations, if needed, along with decontamination suits and training. Hospitals will also learn at these seminars what funds will be available from the HRSA FY 2004 funds to continue the enhancement of isolation and decontamination capacity.

Who should attend?

• infection control practitioners
• directors of plant operations
• security and safety directors
• emergency department staff
• disaster preparedness committees
• bioterrorism coordinators

Led by Senate Minority Leader Jon Erpenbach (D-Middleton), Senate Democrats including Sens. Bob Jauch (D-Poplar), Judy Robson (D-Beloit), Spencer Coggs (D-Milwaukee) and Bob Wirch (D-Kenosha), held a press conference on Tuesday, February 10. They urged the Republican-led Senate and Assembly to advance a number of proposals.

One of the proposals, supported by WHA, would immediately begin addressing the projected $400 million deficit in Medicaid (see January 23 issue of Valued Voice) by restructuring some of the state’s long-term debt. Due to the timing of certain debt payments, the proposal, which would generate $175 million for Medicaid, must be acted upon by February 18 or it will no longer be available. The idea was first broached by Governor Doyle some two weeks ago, but to date, the Governor and legislative leaders have proven incapable of reaching an agreement on this crucial proposal.

Senate Democrats also called for the passage of other bills pending in the legislature, including expanding certain health benefit mandates, allowing use of off-label drugs for cancer treatment and banning the use of unavoidable overtime. The Senate Democrats also called for expansion of the SeniorCare program to include the disabled who do not meet the age requirements and opening up the any willing provider law to require HMOs, PPOs and limited service health organizations to allow any provider in the area to provide services.

Wisconsin’s woefully under-funded Medicaid, BadgerCare and HIRSP programs face monumental short-term and long-term fiscal challenges. And those challenges may grow exponentially should the Wisconsin Legislature pass the Taxpayer Bill of Rights (TABOR).

The TABOR legislation (AJR 55) is the first in a series of actions required to amend Wisconsin’s Constitution. The amendment would limit government spending increases to inflation (presumably the Consumer Price Index) adjusted for population growth. Spending above that limit would require approval by Wisconsin voters.

This proposal comes at a time when Wisconsin’s Medicaid program is facing a $400 million deficit – a deficit that exists despite enactment last July of one of the leanest budget bills in recent memory – and at a time when Wisconsin hospitals are being reimbursed at less than 60% of cost, and just 34% of charges.

Wisconsin’s chronically under-funded health care programs would likely be hard hit by TABOR. Growth in Medicaid spending, for example, is fueled by growth in program participants and utilization of health care services…cost drivers not factored into the amendment’s "allowable growth" formula. Hence, during an economic downturn such as that we’ve experienced over the past three years, health care program spending skyrockets well beyond "normal" inflation. The likely funding fiasco could be cataclysmic and the prospects for passing a public referendum highly dubious.

According to a WMC poll released this week, 65% of Wisconsin citizens would support TABOR even if it "will prevent Wisconsin from investing in programs … that provide subsidized health care"— that’s Wisconsin’s Medicaid program folks, the one that already provides the third lowest rate of reimbursement in the country for hospitals, and the same program that in 2002 added some $270 million to the price of health insurance for Wisconsin businesses through the "hidden tax" of cost-shifting.

TABOR supporters also note that the constitutional amendment will require the establishment of a "rainy day" fund to help pay bills during a recession. Skeptics will argue, however, that the "rainy day" fund’s ability to adequately finance state programs during a recession is doubtful. And they are likely right.

Over the next several weeks we are likely to witness a significant discussion of the Taxpayer Bill of Rights. Let’s not kid ourselves; the issue will be hugely popular with taxpayers, many of whom will respond positively to the "sound bite" as opposed to examining the unintended consequences that such a constitutional amendment will engender. For that reason, tough questions must be asked and meaningful answers provided.

Steve Brenton
President

Health care spending in the United States is projected to grow 7.8% in 2003, down from the 9.3% growth experienced in 2002, according to a report issued February 12, 2004 by the Centers for Medicare & Medicaid Services (CMS).

A slowdown in health care spending growth in 2003 would follow six consecutive years of acceleration.

As a percentage of Gross Domestic Product (GDP), health care spending is expected to continue to grow, reaching 15.3% in 2003, up from 14.9% in 2002, according to the report prepared by the CMS Office of the Actuary and published on-line today by the journal Health Affairs.

Hospital spending growth appears to have peaked in 2002 at 9.5%. Hospital spending growth is projected to decelerate to 6.5% in 2003 and to 6.2% by 2005, as both price and utilization are anticipated to grow more slowly. The projected slowdown is even greater in the public sector, where hospital spending growth falls from 9.1% in 2002 to 4.4% in 2003. However, growth in hospital spending relative to total personal health care is expected to remain above its historical average from 1984 through 2000.

The deceleration in the health care spending growth rate is mainly due to slower rates of growth anticipated for Medicaid and Medicare spending, private health insurance spending per enrollee, and medical price inflation. In particular, hospital and prescription drug spending are projected to experience slower growth than they have in recent years.

The impacts of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which are not reflected in this set of projections, are anticipated to significantly affect the payers for prescription drugs beginning in 2006. Specifically, the shift of payments from Medicaid and private spending to Medicare as the benefit is implemented will likely change the projected trends for those payers; however, the impact of MMA is not expected to significantly alter the aggregate health spending projections contained in this article. The impacts of MMA will be assessed in a later report.

Medicare spending growth is projected to slow in 2003 due to the expiration of many of the provisions in the Medicare, Medicaid, and SCHIP Balance Budget Refinement Act of 1999 and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. Also, payments for inpatient hospital outlier cases are expected to be sharply curtailed. Medicare spending is expected to grow at only 5.2% in 2003, down from 8.4% in 2002 and 9.5% in 2001.

In 2003, Medicaid spending is expected to grow 7.5%, down from 10.2% in 2001 and 11.7% in 2002. The deceleration is due largely to states’ decisions to limit Medicaid spending in light of their fiscal problems and a decrease in enrollment growth as the economy improved. Medicaid enrollment is projected to grow 3.9% in 2003, down from 5.9% in 2002.

Prescription drug spending is still projected to be the fastest-growing sector, but growth is expected to continue its slowdown that began in 2000. Prescription drug spending growth is expected to be 13.4% in 2003, 12.9% in 2004, and 12.4% in 2005.

Members of WHA’s West Central Region met February 11 at Myrtle Werth Hospital in Menomonie to learn more about the public launch of the CheckPoint program. WHA VP Dana Richardson explained the data collection process and said even more hospitals than expected have submitted information on the safety goals. While processes are still being fine tuned with data vendors and the CMS data warehouse, most hospitals are in the final stages of submitting the clinical data, according to Richardson.

Some hospitals are collecting information related to the 10 clinical and 5 safety measures that are included in the CheckPoint program for the first time.

"It was a nice surprise to exceed our expectations on the number of hospitals that submitted safety goal data. Several quality managers commented that they found the data submission process to be helpful in understanding where they are in implementing these goals in their own hospitals," Richardson said.

The WHA regional CheckPoint meetings continue over the next two weeks. The schedule follows:

Southeastern: February 25, University Club, Milwaukee, 10am
Vikingland: March 5, Hayward Area Memorial Hospital, Hayward, 10 am

If you have not registered to attend one of these two meetings, contact Mary Kay Grasmick at mgrasmick@wha.org or 608-274-1820.

Hospitals and managed care organizations can now verify physician assistant (PA) credentials through the American Medical Association’s (AMA) well-known Physician Profile Service. The venture between the American Academy of Physician Assistants (AAPA) and the AMA expands the AMA’s well-known Physician Profile Service to include primary source verification of PA credentials.

Health spending accounts (HSAs) are the latest version of consumer-driven health plans to hit the marketplace, offering some distinct advantages over previous types of plans. Many employers are looking to these vehicles as a way to slow down the increasing cost of group health insurance for their employees. The HSA may finally offer enough benefit to both the employer and employee to attract a large number of converts in the near future.

What are HSAs and are hospitals a good fit for an HSA program? Get the answers in Solutions Spotlight, included in this week’s packet.

Covenant Health Systems in Waterloo, Iowa, seeks a vice president of business development. The position reports to the president and CEO of the Covenant Health System. This individual will be expected to work in close collaboration with senior leadership team members, staff and physicians. He or she will also serve as a member of the Covenant Health System senior leadership team and the Wheaton Franciscan System leadership council.

Covenant Health System is a member of Wheaton Franciscan Services, Inc. (WFSI). The system includes 13 owned hospitals, as well as formal affiliations with three others; four sub acute care facilities; two home health agencies; numerous physician clinics; more than 2,900 units of assisted living and other housing for fixed-income elderly and low-income families.

Net income was $6.7 million in FY 2002, and $19.7 million in FY 2003. Inpatient discharges are relatively stable; outpatient activity is increasing significantly. Market share has slipped over the years and is currently in the mid 50s. With 2,300 employees, the system is one of the largest employers in the Cedar Valley area that includes Waterloo, Cedar Falls, and the surrounding areas.

For more information contact Elaine Auerbach at eauerbach@auerbachsearch.com or 469-241-9664.

Top