Twenty-five individuals from Wisconsin hospitals traveled to Washington, DC this week for the American Hospital Association’s Annual Meeting and visits on Capitol Hill. Hospital representatives from across Wisconsin were able to meet with every one of Wisconsin’s 10 Members of Congress or their staffs to discuss important federal issues. On the top of the list are proposed cuts under the Inpatient Prospective Payment System (IPPS) rule recently released by CMS.

Earlier this year, the President proposed a budget that would have cut Wisconsin hospitals by about $370 million over the next five years. Fortunately, that budget was rejected by Congress, and WHA thanks our Members of Congress who opposed the cuts. Unfortunately, hospitals are now being faced with a similar level of cuts through the proposed Inpatient Prospective Payment System (IPPS) rule. The most significant provision included in the IPPS rule is what has been referred to as the "behavioral offset."

The behavioral offset amounts to a 2.4 percent reduction in both FY 2008 and 2009 to eliminate what CMS claims will be the effect of coding or classification changes it anticipates will occur due to improved documentation and coding under the new system of DRGs. In essence, this 2.4 percent reduction is a way for CMS to take back three-quarters of the marketbasket inflation update, costing Wisconsin hospitals more than $400 million over the next five years, all without Congressional approval.

The IPPS rule would also have an especially hard impact on metro areas like Milwaukee through two other provisions—a freeze in capital payments for urban hospitals (zero marketbasket update) and the elimination of the 3 percent large urban add-on to capital payments. Columbia St. Mary’s VP Paul Westrick told Cong. Gwen Moore’s office that the hospitals in her district would lose close to $17 million from the two urban hospital provisions alone and $124 million over five years when the 2.4 percent behavioral offset is added (see table below for impacts statewide and by Wisconsin Congressional District).

Wisconsin                                 IPPS Rule Combined                     IPPS Rule Combined
Congressional District              Loss FY 2008                                   Loss FY 2008-12

Baldwin                                     $7.6 million                                          $71.4 million

Kagen                                       $4.7 million                                          $43.6 million

Kind                                          $3.5 million                                          $32.9 million

Moore                                       $13.8 million                                        $124 million

Obey                                         $4.6 million                                          $43.4 million

Petri                                          $3.3 million                                          $30.6 million

Ryan                                          $3.8 million                                         $35.4 million

Sensenbrenner                            $5.9 million                                         $52.7 million

Statewide                                  $47.2 million                                         $434 million

Combined losses include 2.4% behavioral offset, freeze in urban hospital capital payments and elimination of large urban capital add-on.

This same message was delivered by hospital leaders to all of Wisconsin’s Members of Congress, prompting both Senators Kohl and Feingold to immediately commit to helping stop the IPPS cuts (see more in this week’s President’s column). WHA thanks our Members of Congress for the opportunity to meet personally with them and/or their staffs this week and to discuss this significant issue.

Cong. Ron Kind Introduces Legislation to Protect Critical Access Hospitals

During their meeting with Cong. Ron Kind (D-La Crosse) in Washington, DC, hospital leaders personally thanked Kind for his continued support of the 23 Critical Access Hospitals (CAHs) in his district and the 58 CAHs statewide. They particularly thanked him for sponsoring The Rural Health Services Preservation Act of 2007 (HR 2159). HR 2159 will ensure CAHs are reimbursed at the same rate for treating all Medicare beneficiaries, including those enrolled in private Medicare Advantage (MA) plans.

"[CAHs] represent the backbone of the health care safety net in rural communities in our state and across the country," said Kind. "From life-threatening emergencies to preventive care, they are often the sole health care provider to rural residents. We must ensure that they can continue to provide these vital services, and this bill will prevent Critical Access Hospitals from being short-changed by Medicare Advantage plans."

WHA President Steve Brenton commended Kind for his continued work to protect rural hospitals. "Critical Access Hospitals play an important role in providing quality, local care to rural communities—so that rural residents do not have to travel to urban areas to receive high-quality care. This bill will help Critical Access Hospitals maintain their level of quality, and I want to thank Rep. Kind for his leadership on this issue."

Aurora’s Loren Anderson Receives AHA "Grassroots Champion" Award

The AHA, in partnership with WHA, awarded Loren Anderson, executive vice president of Aurora-South Region, with the "Grassroots Champion" award for Wisconsin during a breakfast presentation held during the AHA Annual Meeting in DC on May 8. As a 2007 award honoree, Anderson was recognized for his exceptional leadership in generating grassroots and community activity in support of a hospital’s mission.

"Loren Anderson understands the value of grassroots advocacy and is willing to go the extra mile to ensure his legislators understand the value of Wisconsin’s community hospitals," said WHA President Steve Brenton. "WHA congratulates Loren on this well-deserved award."

As a member of WHA’s Board of Directors, Anderson demonstrates his leadership on behalf of Wisconsin’s hospitals. From grassroots advocacy on Medicaid funding and medical liability caps to attending WHA’s Annual Advocacy Day and AHA Annual Meeting, Anderson is always working to represent his hospitals and hospitals statewide before public policy decision-makers.

"Loren Anderson is a committed health care executive and a conscientious grassroots champion," said WHA Vice President of External Relations & Member Advocacy Jenny Boese. "We applaud him for his tireless efforts to build relationships with local legislators and to effectively impact public policy."

AHA Chair-Elect Bill Petasnick, president & CEO of Froedtert & Community Health in Milwaukee, emceed the May 8 Grassroots Champion breakfast in DC.

The Department of Health and Family Services (DHFS) has formed an advisory committee to begin discussions on possible modifications to HFS 117 relating to fees for copies of health care provider records. The first committee meeting is scheduled next week.

Representing hospitals on the committee will be Cathy Ptak, regional director, clinical information services for Aurora Health Care, and Meg McElroy, director, patient health information, Children’s Hospital of Wisconsin.

Participants also include other health care providers, insurers, health information management services, copy services, legal firms and DHFS.

DHFS has asked participants to come to the meeting fully prepared to discuss copying fees and allowable costs and to provide information that demonstrates what each participating entity thinks the fees should be. The group is described as advisory in nature, and it is DHFS’ intention to ultimately forward a recommendation to Secretary Kevin Hayden, even in the absence of committee consensus.

During 2003-05 legislative session, after an advisory committee process, DHFS proposed fees that did not accurately reflect the cost of providing copies of medical records. WHA and others objected to the proposed rule. Supporting those objections, the standing health committees in both houses of the Legislature rejected the proposed rule. Attempting to resolve the issue, WHA, other health care providers, insurers, and defense counsel reached a compromise that provided for fees that more closely matched the costs involved in the copying of medical records and similar fees in surrounding states. The Joint Committee for the Review of Administrative Rules (JCRAR) supported the compromise and requested that DHFS adopt it. Trial attorneys opposed the compromise, and DHFS rejected JCRAR’s request to amend the then-proposed rule. Ultimately, a bill was introduced by JCRAR to block the efforts by DHFS to set limits on fees that do not reflect the cost of providing the service. The bill was not enacted by the end of the last legislative session and as a result, earlier this year DHFS promulgated the rule setting insufficient limits on medical record copying fees.

The fees now in effect are projected to cost hospitals millions in unreimbursed costs for providing copies of medical records.

Kalahari Resort, Wisconsin Dells *** June 27-29, 2007

The Kalahari Resort Room Reservation Cut-Off: June 6
Conference & Golf Registrations: Due June 6 to WHA

More information and registration form can be found at www.wha.org

Potential hospital Medicare payment cuts are coming at us from at least three different directions. Consider the following:

• Proposed fiscal year 2008 Inpatient Prospective Payment System (IPPS) rules issued by CMS would reduce Medicare payments to Wisconsin hospitals by nearly $400 million over the next five years, largely because of "behavioral offset" reduction of 2.4 percent designed to "compensate" for anticipated hospital coding changes related to new DRGs also contained within the regulations. The regulation also freezes capital payments for urban hospitals.
  
• Hospitals are also vulnerable to potential payment reductions that may be included in the actual FY08 budget. The Administration has proposed across-the-board cuts, and there are rumors that efforts to "fix" the flawed physician payment formula will be funded by hospital payment reductions—the proverbial "robbing Peter to pay Paul."
  
• Finally, the recent release of the Medicare board of trustee’s annual report portends potential future provider cuts. The bad news is that for the second consecutive year, the trustees are warning that general tax revenue will account for more than 45 percent of total Medicare spending by 2012, a projection that triggered a "funding warning" that requires the White House to propose future action. Because of the "45 percent trigger," passed as part of the Medicare Modernization Act of 2003, President Bush is required to propose ways of "reining in" Medicare spending. Those new proposals will likely include another round of provider payment cuts.

Wisconsin hospital attendees at the AHA Washington meeting earlier this week heard briefings on the bleak outlook for Medicare spending. Attendees discussed the issue with members of Wisconsin’s congressional delegation and staff during Capitol Hill office visits. While we are in the early stages of fighting off these troublesome proposals, both Wisconsin Senators Feingold and Kohl pledged support for derailing the proposed CMS "backdoor" regulatory reductions, and all members of the delegation were sympathetic and engaged in discussing troublesome access issues that may arise from future Medicare provider cuts.

According to AHA staff, the most urgent priority for current attention is the proposed inpatient prospective payment regulation. Here’s a link to the WHA issue paper: www.wha.org/governmentRelations/pdf/2007IPPSruleWHAposition.pdf. Look for additional news relative to our efforts to influence the Medicare debate over the coming weeks.

Steve Brenton
President

Medford Memorial Health Center President and CEO Greg Roraff and the Memorial Member Association Board of Directors welcomed Senator Russ Decker (D-Weston), Co-Chair of the Joint Finance Committee, and Representative Mary Williams (R-Medford) this week for a question and answer session on the state budget. The meeting provided an excellent opportunity for these hospital leaders to gain better insight into how their legislators view important hospital-related provisions in the budget.

On the subject of the hospital tax, Sen. Decker indicated his support for the tax, saying it would draw down additional Federal funds, most, but not all, of which would be used to increase Medicaid payments to hospitals. Rep. Williams, on the other hand, expressed her opposition to the tax, countering that Federal matching funds are not guaranteed and that the proposal goes against Federal rules on payments to hospitals.

Roraff and Board members appreciated the openness of both legislators in discussing their views on the hospital tax but were firm in delivering the hospital message that there was no assurance hospitals would see any increased reimbursements under the tax. Roraff cited the nursing home bed tax as a perfect example of "promises made and promises broken."

Both legislators agreed that lowering the cost of health care is a priority, and from a Finance Committee perspective, Sen. Decker said he remained open to alternative funding proposals. Both legislators differed on their opinions of the cigarette tax with Sen. Decker feeling it will pass and Rep. Williams remaining unconvinced.

Attendees expressed frustration with the budgetary practice of shifting funds from one account to another to pay for seemingly unrelated obligations. They pointed out that in this budget cycle, Medicaid is especially hard hit with the Governor proposing to take $873 million out of Medicaid.

On May 7, WHA and the Rural Wisconsin Health Cooperative (RWHC) met with Otis Woods, administrator, Division of Quality Assurance (DQA), formerly the Bureau and Office of Quality Assurance, and his staff in the most recent Hospital Forum.

DQA provided data concerning the number and category of the most common hospital citations issued by state surveyors for the first quarter of 2007. The most common citations related to "nursing services," followed by "medical record services" and "patient rights." A summary of the most common citations and other data are available on WHA’s Web site at www.wha.org/legalAndRegulatory/hospCitationQ1_07.pdf. WHA and RWHC requested this information so hospitals could learn about the issues and violations currently being identified by DQA surveyors.

In addition to the citation data, DQA advised WHA and RWHC that DQA is considering serving Statements of Deficiency ("SODs") electronically. DQA also is planning a conference entitled, "Demystifying Hospital Regulations." The conference, scheduled for this fall, will provide hospitals with an overview of hospital regulations, the complaint process, infection control, medical records, and patient rights. More information will be provided soon.

Under a new law passed last legislative session, Wisconsin hospitals now must provide information concerning the identification and prevention of shaken baby syndrome to parents of infants born in the hospital or born en route to the hospital. Hospitals must provide printed material at no cost to the new parents and must make audiovisual material available for the parents to view.

Under the statute, the Children’s Trust Fund (Child Abuse and Neglect Prevention Board) is charged with preparing or arranging for the preparation of printed and audiovisual material relating to shaken baby syndrome and impacted babies. All hospitals in the state should have received audiovisual material from the Children’s Trust Fund. According to the Fund, a hospital may use the printed material prepared by the Fund or the hospital’s own material that provides information regarding the identification and prevention of shaken baby syndrome and impacted babies; the grave effects of shaking or throwing on an infant or young child; appropriate ways to manage crying, fussing, or other causes that can lead a person to shake or throw an infant or young child; and a discussion of ways to reduce risks that can lead a person to shake or throw an infant or young child. The materials must be available in English, Spanish, and other languages spoke by a significant number of the state’s residents.

At the same time the written material is provided, hospitals must provide the parents with a form that includes a statement that the parents have been advised as to the grave effects of shaking or throwing an infant or young child and the other required information, a telephone number that the parents may call to obtain assistance on how to care for an infant or young child, and a statement that the parents will share the information with all persons who care for the infant. The form cannot include a signature line or any other requirement that the parents sign the form. The person who provides the material to the parents must document in the hospital’s records that the material has been provided.

Hospitals, physicians, and hospital staff members are immune from liability for any damages resulting from any good faith act or omission in providing or failing to provide the required material.

For information about obtaining the material prepared by the Children’s Trust Fund, contact Susan Abbey, professional development director of the Fund at: 1-866-640-3936 or visit their Web site at http://wctf.state.wi.us/home/SBS%20Prevention%20Resources.htm.

Five Wisconsin hospitals were among those named to the Solucient "Top 100" hospitals list. The hospitals on the list are selected using nine clinical, financial and operating-efficiency measures, such as mortality and infection rates, average length of stay, operating profit margins and expenses per discharge.

The Wisconsin hospitals included in the "Top 100" are:

Hospital Name                                                                 Category

University of Wisconsin Hospital and Clinics, Madison         Major Teaching Hospitals

St. Mary’s Hospital, Madison                                             Teaching Hospitals

Columbia St. Mary’s Hospital, Milwaukee                            Teaching Hospitals

Monroe Clinic, Monroe                                                       Medium Community Hospitals

Bay Area Medical Center, Marinette                                    Small Community Hospitals

"As a group, Wisconsin hospitals already rank among the best in the nation when it comes to financial performance and quality measures. To have five Wisconsin hospitals listed in Solucient’s ‘Top 100’ is quite an achievement," noted WHA President Steve Brenton.

The over-65 population will nearly triple between 1980 and 2030 as a result of the aging Baby Boomers, adding new demands and challenges on an already stressed-out health system, according to a new report released on May 8 by First Consulting Group of Long Beach, Calif. With new projections on Boomer health into 2030, the report details how this powerful population will impact health care for decades to come.

"[The] report outlines a tidal wave of health needs – Boomers are just the beginning," said Rich Umbdenstock, president of the American Hospital Association (AHA). "The good news is more of us will be active and enjoying our later years. But to meet the health challenges that come with that, we will need a greater focus on wellness and prevention, new approaches to care delivery, and a new look at the American health care system."

The first Boomers will turn 65 in 2011, and according to the report, more than 37 million of them—six out of 10—will be managing more than one chronic condition by 2030. Also by 2030:

• 14 million Boomers will be living with diabetes—that’s one out of every four Boomers.
• Almost half of the Boomers will live with arthritis, and that number peaks to just over 26 million in 2020.
• More than one out of three Boomers—over 21 million—will be considered obese.

As patients live with multiple chronic diseases, demand for services will increase. The number of physician visits has been increasing for all adults, up 34 percent over the last decade, and this trend is expected to continue. By 2020, Boomers will account for four in 10 office visits to physicians. Over the next 20 years, Boomers will make up a greater proportion of hospitalizations as they live longer but with multiple complex conditions. At the same time, the number of registered nurses, primary care and specialty physicians will not keep pace with demand. As the Boomer generation is more racially and ethnically diverse, there will also be a greater need for caregivers who reflect the diversity of this population.

With changing demands, expectations and new technology, care delivery will also change. Boomers have lived through an amazing array of medical advances, from polio vaccine to radical heart surgery, and that trend will continue over the next two decades. Procedures like minimally invasive surgery, new imaging techniques that "see" through the skin, and remote care technologies will improve the quality of many Boomers’ lives allowing them new opportunities.

The study was prepared by First Consulting Group at the request of the AHA to help hospitals better prepare for the impending tidal wave of Baby Boomers and their care needs.

Kradwell School, on the campus of Aurora Psychiatric Hospital, serves students with a variety of behavioral health issues. These may include depression, ADHD and ADD, bipolar disorder, learning disabilities or substance abuse. And there are others who may be bright students but simply aren’t doing well in a traditional educational setting.

The children come from 27 different school districts in southeast Wisconsin, from West Bend to Watertown, Mukwonago to Milwaukee.

Courses are highly individualized and designed with the student’s success a top priority. Most students’ ACT scores are higher than the state average. The goal at Kradwell is for every student to go on to higher education – whether it is technical school or college. In fact, career planning is part of the education at Kradwell, and filling out college applications is part of that plan.

The school offers two sessions per day, one in the morning from 9 to noon, and an afternoon session from 12:30 to 3:30. Each session consists of six 30-minute classes of individualized study. The ratio is about one teacher to every five students. Some students may also attend traditional schools in addition to Kradwell, and day treatment for behavioral health issues also is available on campus.

Because of the demand for such education, Kradwell recently built an addition to accommodate more and younger students. In fall 2006, for the first time, the school welcomed kindergarteners through fifth-graders, in addition to sixth grade through high school, and enrollment has increased from 110 to 135 students.

Although the school does charge tuition, about half of the student body is referred by school districts. When that is the case, their tuition is paid by the districts. Aurora provides in-kind operational services to this unique school (facilities, utilities, computer and IS support, human resources, accounting, etc.) plus capital expenditures for classroom furniture and AV equipment, computers, etc.

Many children come to Kradwell after they and their families have exhausted every other option. Once they find the right environment, many of these students blossom, with some even graduating a semester early. At Kradwell, individualized instruction gives youngsters the best opportunity to succeed and to improve their lives.

For more information about Kradwell School, call 414-454-6593.

Submit hospital community benefit stories to Mary Kay Grasmick, editor, mgrasmick@wha.org or call 608-274-1820.

In general, a pure occurrence product costs more than a claims-made product. When you see an occurrence rate that seems too good to be true, it probably is! You should determine what the policy covers and what it excludes. What looks like a great deal may quickly lose its appeal when you examine the coverage details. Pure occurrence products are available, but the real thing doesn’t come at bargain prices.

When evaluating the cost of claims-made versus occurrence, the buyer needs to evaluate the trade-off between the lower annual cost of the claims-made product against the value of not having to purchase tail coverage that comes with an occurrence policy. The cost of tail coverage can be expensive – it can cost as much as 200 percent of the expiring claims-made premium. You will need to also evaluate how likely it is that you will ever need to purchase tail coverage.

Voluntary termination occurs when you make the decision to cancel your facility’s claims-made coverage. Unless your facility is closing, you will need to purchase replacement coverage. If you move to another claims-made policy, the new carrier will almost always match your existing retroactive date, eliminating the need to purchase tail coverage. If you decide to move to occurrence coverage, then you need to purchase tail coverage for your old claims-made policy.

Involuntary termination occurs when your carrier makes the decision to cancel your claims-made coverage. There are a number of reasons why this may happen to a facility:

• The current carrier decides not to write a certain class of business or in a specified geographic area.
• The current carrier cancels the coverage due to concerns over the facility’s loss history.

Given the volatility of the medical liability insurance business, these scenarios need to be proactively addressed. Even the Wisconsin medical liability marketplace, a fairly stable market compared to the national average, has not been immune to insurance carriers dropping out of the market due to financial concerns. A facility needs to monitor the financial health of their medical liability carrier no less than annually. If a carrier starts to show signs of financial stress, it may be advantageous to move to a more financially secure carrier sooner than later. A claims-made policyholder has the ability to move their past years of coverage with them to the new carrier.

The risk of cancellation due to loss experience is probably the most difficult to anticipate. While it does not happen often, it also is the most likely reason a facility will have to purchase tail coverage. Again, being proactive is the best advice—following risk management best practices and maintaining a clean loss history will help your facility avoid this scenario.

Claims-made versus occurrence coverage—each coverage has its own advantages and disadvantages, depending on your situation. By closely evaluating your specific coverage needs, you can best customize your coverage to suit your own special needs and situation.

Top of page