A WHA analysis of the Doyle Administration’s hospital tax and payment plan released today to WHA members reveals serious errors and impossible-to-implement assumptions that undermine the claim to deliver hundreds of millions of dollars in higher payments to Wisconsin hospitals.

The WHA staff analysis took into account current federal Medicaid laws and regulations, which severely limit the state’s ability to deliver higher payments through approaches included in the Administration’s plan. "All three hospital payment vehicles described in the plan are seriously flawed and will fail to deliver promised payment increases to Wisconsin hospitals," said WHA Senior Vice President George Quinn. "The notion that hospitals will gain hundreds of millions of dollars in higher payments is wrong."

Since the budget bill was introduced on February 13, WHA staff has been combing over the "fine print" details and assumptions associated with the hospital tax proposal and related Medicaid budget initiatives. Longstanding federal rules will severely limit critical components of the Governor’s proposal, essentially negating touted payment increases and turning the vast majority of Wisconsin hospitals, urban and rural, into "losers," some by many millions of dollars through the tax. Special conference calls have been scheduled for Monday, March 5 and Tuesday, March 6 to facilitate further membership discussion and understanding of WHA’s analysis.

The Workers Compensation Advisory Council (WCAC) is considering a proposal that would mandate a fee schedule for health care providers treating Workers Compensation patients. The WCAC began negotiations on the 2008-2009 "agreed-to bill" during their meeting on February 28. Traditionally, the WCAC agreed-to bill is adopted by the Legislature without amendment. The WCAC intends to finalize their proposals to be included in the bill by June.

The voting members of the WCAC include Wisconsin Manufacturers and Commerce, other representatives of management, and representatives of labor unions. Nonvoting members of the Council include Workers Compensation insurers. WHA, the Wisconsin Medical Society, and the Wisconsin Chiropractic Association are nonvoting liaisons to the Council.

The proposal to mandate a fee schedule was among a number of proposals presented to the Council by management’s representatives. The labor union representatives are proposing to increase the rate paid for permanent total disability payments made to injured workers. Details of the proposed mandated fee schedule were not presented at the February 28 meeting, but a presentation of the details and a discussion of the proposed fee schedule are on the agenda for the April 5 meeting of the Council.

It is important to note that injured workers fare better under Wisconsin’s Workers Compensation system than in almost any other state studied by the Workers Compensation Research Institute. In Wisconsin, while employers pay less for medical care compared to most other study states, injured workers report better medical outcomes and, unlike many other states, have few problems accessing care. And workers here are the most likely to return to work. WHA will work to preserve Wisconsin’s excellent system.

More information on the proposed fee schedule and the WCAC "agreed-to bill" will be provided as it becomes available.

When I first heard about a proposal to tax patients at Wisconsin hospitals, I am embarrassed to say I was of two minds. This proposal is formally described as an "assessment" on hospitals, but many feel it is more fairly described as a "sick tax." Whatever label you put on it, it is an additional cost to non-profit hospitals that their patients will pay, either in higher prices or fewer services. At the same time, I know there is an urgent need for additional federal dollars that we only can get if we raise additional in-state dollars.

If I had a rich uncle who offered to give me two dollars for every one I could raise at home, I’d look hard to find a way to do it. In the most recent report available, Wisconsin only gets back 82 cents on each dollar we send to Washington, DC. Compared to other states, we rank 48^th in the amount of federal dollars per person that come back to Wisconsin. If you think this isn’t so bad because it is due to our lack of receiving federal spending for a "volatile" defense industry, you’d be wrong; we also rank near the bottom in per capita non-defense funding (42^nd). Wisconsin’s ranking for the percentage of costs paid to hospitals in its Medicaid program is similarly at the bottom.

I plan to grow very old in Wisconsin, so I need our state to invest in its future, not to take me along in a race to the bottom. As a state, we have been slipping in our ranking compared to other states in average income, percent of kids graduating from high school, percent of college graduates staying in Wisconsin, dollars invested in startup companies, and many other important indicators of our economic and social competitiveness.

But I also know about Wisconsin’s non-profit nursing homes’ experience with a similar provider tax; it is not a pretty picture. According to John Sauer, executive director of the state association of non-profit nursing homes, they pay more in taxes than they get back in increased reimbursement. "Once you embrace the position of taxing the provider community to leverage additional federal money in matching funds, this becomes the first option for funding future increases and dollars are often siphoned off for other state spending," Sauer said.

The proposed tax on patients is not even close to being equitable. Bottom line: hospitals make lousy tax collectors, as a large share of our patients are on government programs and often exempt from our ability to collect the tax, leaving those not exempt to pick up the entire assessment, regardless of their income.

For example, if two-thirds of a hospital’s patients are exempt, a one percent "assessment" on the hospital’s total revenue becomes a three percent tax on the remaining one-third of its patients who are not exempt. As this is more likely to fall on lower income working families with less comprehensive insurance coverage, this tax is regressive—strongly at odds with Wisconsin’s progressive tradition.

I don’t envy the Governor and the Legislature’s job of addressing a complex array of competing priorities that have to be brought together this summer into a balanced budget. I believe hospitals have shown restraint when they criticize the tax but not the tax collectors or the need for taxes. This comes naturally as most hospital executives are necessarily schizophrenic when it comes to politics, loving the Democrats’ preference to support health care and the Republicans’ preference not to over-regulate it.

To do otherwise would make little sense for a sector that is so dependent on public funding that one way or the other must be paid for by taxes. The late and venerable Senator Russell Long of Louisiana said it best, "don’t tax you, don’t tax me, tax that man behind the tree" and may have also said "don’t cut my program, cut that one hiding over there."

There is no easy solution, but one place to start is to focus on the problem, not the rhetoric. How do we raise the match needed to increase the amount of federal dollars coming into Wisconsin? How can hospitals in their role as hospitals best contribute to our state’s competitiveness? A good place to start is to use a higher cigarette tax as the required match for additional federal funds to help pay for the enormous expense of smoking-related illness.

I don’t know the whole answer, but it’s not forcing non-profit hospitals to tax their patients.

These are just a few of the comments WHA received last year from some of the 530 individuals who attended Advocacy Day 2006 in Madison. Advocacy Day 2007 is slated this year for May 1 at the Monona Terrace in Madison, so mark your calendars now!

WHA has a great lineup of speakers, including Kellyanne Conway, a nationally regarded and highly quoted pollster, who will provide Advocacy Day’s morning keynote address. Conway will cut through the rhetoric to provide attendees the pulse of the nation on important issues and the politics surrounding them. Governor Doyle and legislative leaders have been invited to participate in the luncheon keynote address and a legislative leadership panel discussion, respectively.

The highlight of Advocacy Day is always the hundreds of attendees who take what they’ve learned during the day and put that into action by meeting with their legislators in the afternoon. Last year one attendee had this to say about being involved with the afternoon’s legislative visits, "I like being part of influencing the Legislature." And when another attendee was asked what could persuade him to go on a visit, said, "I don’t need persuasion; I will [visit] next year."

To help educate and train Advocacy Day 2007 attendees for their legislative meetings, nationally known grassroots guru Amy Showalter of The Showalter Group will provide a customized presentation on effectively meeting with legislators. She will demonstrate why face-to-face meetings are the most powerful tool in the grassroots toolkit and how to make your legislative visit successful.

With the State Capitol only two blocks away (transportation will be available), meeting with legislators or their staff has never been more convenient or more important. Hospitals are facing a great number of legislative issues this year, and it is essential for legislators to hear first hand from hospital employees, trustees and volunteers about the impact of those issues on your hospitals and the communities you serve.

Plan to join more than 500 of your peers from across the state at Advocacy Day 2007 on May 1. A complete program and registration form are available online at www.wha.org. A printed copy of the Advocacy Day 2007 brochure will also be included in next week’s Friday Packet, so watch for it. For questions, contact Jenny Boese at 608/268-1816 or jboese@wha.org. For questions specific to registration, contact Sherry Rabuck at srabuck@wha.org or 608-274-1820.

Last week’s column examined the Health Care Quality Fund (HCQF) proposed in the Doyle Administration Budget to house new revenues garnered from the HOSPITAL TAX, the higher TOBACCO TAX, interest from the TOBACCO SETTLEMENT BOND REFINANCING and the one-time raid on the Injured Patients and Families Fund (IPFF). This new trust fund is slated to pay for a variety of Medicaid coverage expansions, provider rate increases and tobacco control programs. IMPORTANTLY, this trust fund also finances ongoing costs of the Medicaid program that were previously funded by general tax revenues (known as GPR).

As shown in the ADMINISTRATION’S own analysis.... (see below)....this trust fund: is all but depleted of cash at the end of the biennium (FY 09); has revenue streams that are either one-time transfers (IPFF); frozen (tobacco bond interest); or declining (tobacco tax). The only revenue source that is increasing...is the HOSPITAL TAX.

Also note that fund expenses will undoubtedly continue....and almost certainly increase at significant rates. Add the fact that the larger Medicaid program has a claim on this trust fund, and the only rational conclusion is that the HOSPITAL TAX will be eyed for a large increase!

Here’s a very likely scenario that Wisconsin’s community hospitals might face in 2009...when the next budget is introduced...with huge pressures for more Medicaid spending...a 48 percent increase in the hospital tax just to finance the cost-to-continue trust fund obligations.

The table below illustrates the likely 2009 scenario, using the ADMINISTRATION’S own information gleaned from the 2008-09 budget documents. WHA staff have modeled FY 2010 REVENUE for the new trust fund and ongoing EXPENSES (extremely conservative with no inflation). The result is a revenue shortfall of $101 million. Those funds must come from yet another raid on the IPFF (almost unfathomable), higher tobacco taxes (are you kidding), or higher hospital taxes. If decreased trust fund expenses are debated...look for a reduction in hospital payments...the greatest "expense" to the fund.

The bottom line—follow the money—using the Administration’s own projections. Raising another $101 million in hospital taxes amounts to an effective increase in the tax of 48 percent.

Steve Brenton, President

                                                                        FY08                     FY09                         FY10

REVENUES

Injured Patients & Family Fund Transfer             $175,000,000                 $0                             $0

Tobacco Tax Increase                                         275,700,000         270,500,000             265,000,000

Tobacco Permanent Endowment Transfer               50,000,000           50,000,000               50,000,000

Hospital Assessment                                          205,532,800         212,726,500             220,200,000

Balance from prior year                                     ____________          97,300,000                   243,500

TOTAL                                                             $706,232,800        $630,526,500           $535,443,500

EXPENDITURES

Healthy Wisconsin Authority Admin                         $500,000               $500,000                 $500,000

Childless Adult Expansion                                                  0              6,153,700               12,200,000

Hospital Assessment MA Funding                         59,409,700            63,250,200               63,250,200

Hospital Rate Increase                                         146,123,100          149,476,300             149,500,000

Tobacco Control Activities                                      30,000,000            30,000,000              30,000,000

E-Health                                                               10,000,000            10,000,000              10,000,000

MA Funding Stabilization                                      362,900,000          370,902,800             370,900,000

TOTAL                                                               $608,932,800        $630,283,000           $636,300,000

Fund Balance                                                       $97,300,000              $243,500           $(100,900,000)

On March 20 and 27, WHA will offer a two-part audioconference focused on changes to the EMTALA rule, presented by Sue Dill Calloway, RN, MSN, JD, a nurse attorney and the director of risk management for OHIC insurance Company. Attendees of Calloway’s program repeatedly comment that they are finally able to understand and apply the law to their facility.

Changes to the federal EMTALA rule will be covered, including the changes in the 2007 inpatient prospective payment system rules, the Born-Alive Infants Protection Act and its relationship to EMTALA, 2003 changes and guidance from Centers for Medicare & Medicaid Services, the 2005 Office of Inspector General of the Department of Health and Human Services supplemental compliance guidance section on EMTALA, the 2004 changes to the conditions of participation interpretive guidelines, and the December 2005 CMS memo on the parking of patients in hospitals. In addition to changes in the law, attendees will learn about the EMTALA regulations concerning on-call physicians.

Those who should consider participation include CEOs, COOs, CMOs and CNOs; ED managers, physicians and nurses; obstetrics managers and nurses, behavioral health directors, staff, nurse managers, and psychiatrists; nurse supervisors; outpatient directors; compliance officers; legal counsel; risk managers; directors of hospital based ambulances; staff nurses; nurse educators; and medical staff directors.

Register for the EMTALA Update 2007 audioconference series to educate your entire staff in a short period of time without incurring multiple registration fees or travel expenses. The registration fee includes one toll-free telephone connection to each presentation, so you can gather numerous staff members in one room to "attend" for one economical price. Prior to the event, you will receive the PowerPoint presentation, which you can distribute to all participants.

Wisconsin Organization of Nurse Executives (W-ONE) will host its annual convention for nurse leaders and managers from April 18-20, in Green Bay. The convention, with a theme of "Leading Your Team in a New Age for Health Care," will be kicked off by two back-to-back sessions presented by Tim Porter O’Grady. The agenda will also include a variety of interesting breakout session topics, the opportunity to network, and wrap with a presentation by Marie Manthey.

The convention will be held at the KI Center/Regency Suites in downtown Green Bay. Anyone who has responsibilities in leading and managing RNs will benefit from the educational agenda and is welcome. Attendance is not limited to current W-ONE members or to registered nurses.

As a major sponsor, NLFMC offers free health screenings for body fat, cholesterol, and blood pressure. Because Women’s Wellness Day is held on an annual basis, many participants are able to monitor any changes in their screening results over time, which supports our mission to improve the health of our communities.

Local experts host a variety of breakout sessions on topics such as personal health and fitness, gardening, financial planning, decorating, and much more.

In the three years since it was launched, Women’s Wellness Day has received overwhelmingly positive feedback. Participants appreciate the event being offered locally, and many use it as a day to get together with their girlfriends, daughters, and mothers.

New London Ambulance
New London Family Medical Center (NLFMC) operates New London Ambulance, which serves 11 communities in Outagamie and Waupaca counties. New London Ambulance is a hospital-based health and safety program that provides high quality pre-hospital care, supporting our mission to improve the health of our communities.

Two ambulance units based in New London and Bear Creek respond to the needs of residents. The units work jointly to ensure that the entire service area has the best coverage possible. If one ambulance responds to a call, the other will move to a location that provides a faster response time to the entire service area.

In 2005, New London Ambulance began using an advanced patient care procedure called Rapid Sequence Intubation, or RSI. The technique helps patients who are having difficulty breathing.

RSI is now used by New London Ambulance paramedics whenever necessary. Previously, the procedure was performed either by emergency room physicians at the hospital, or by flight nurses with ThedaStar air medical helicopter.

Hutchinson Hospital (HH), in Hutchinson, Kansas is seeking a new President/CEO. Hutchinson Hospital is a 216-bed full service independent community hospital 45 minutes west of Wichita, Kansas. HH will embark on new initiatives that call for a CEO who is adept at expanding hospital product lines and service areas with vigilance towards quality and customer service. Other required experience would include work at an independent hospital, strong marketing and public relations skills, and successful work in physician relations. If you or someone you know would like to learn more about this outstanding opportunity, please contact us at: Hutchinson@wittkieffer.com.

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