WHA has been a strong supporter of initiatives to effectively and efficiently expand health care coverage. WHA was represented on Governor Doyle’s Healthy Wisconsin Council and joined with a broad spectrum of health care stakeholders earlier this year in supporting the Healthy Wisconsin initiative, which expands Medicaid and BadgerCare eligibility to a large percentage of the currently uninsured and improves provider reimbursements under those programs.

WHA also participated in and helped fund the recently released Lewin Group analysis of the Wisconsin Health Plan (WHP). WHA participated to ensure that the Lewin analysis would be an honest appraisal of WHP in terms of its immediate and long-term impact on Wisconsin’s citizens, taxpayers, employers and health providers. The state’s non-partisan Legislative Fiscal Bureau (LFB) had previously raised many issues about the WHP, including a concern that the proposal had understated the assessment revenue that would be necessary to fund the costs of the program. WHA shared the LFB’s skepticism.

The WHP proposal would require all employers and employees to pay a tax (totaling 15.5 percent of wages) that would fund the purchase of a single, standardized health benefit plan for nearly every Wisconsin citizen under the age of 65. The plan is an HSA with a $1,200 deductible, of which the first $500 would be funded through an HSA credit for every adult. The benefit plan would be a significant step down for most insured individuals; Lewin estimates its actuarial value at the 30th percentile of current plans available in Wisconsin.

Wisconsin is fortunate to have among the lowest uninsured rates in the nation. The Lewin Group analysis of the WHP demonstrates that the WHP is a broad and radical disruption of Wisconsin’s current health care financing system that unnecessarily creates "losers" in its quest to extend coverage to the uninsured, when a more targeted solution could achieve the same effect with far less upheaval.

"From a WHA perspective, the Wisconsin Health Plan stands in stark contrast to the approach recommended by Governor Doyle’s Healthy Wisconsin Council," said WHA President Steve Brenton. "The Healthy Wisconsin approach attacks a discrete problem with a discrete solution without disrupting the many good things that are happening in the Wisconsin health care market," Brenton said.

The Lewin report finds that the WHP would not produce any significant change in total health care spending, even after ten years. The purported savings, which are largely the result of assumed reductions in administrative costs and anticipated price reductions by insurers, amount to less than three-tenths of a percent per year. The program "works" only by massive redistribution of health care spending, creating many winners and losers in the process:

• Forty-nine percent of the employers who currently provide insurance will spend more than they are currently spending for a health benefit plan that is almost certainly less comprehensive than their employees currently enjoy.

• Fifty-two percent of households will spend more for health care.

• Employers who have been able to increase employee salaries by controlling their health care costs will be hit particularly hard. Under the WHP, employers’ health care costs are strictly a function of their payrolls. Perversely, those employers who are doing the best job of managing their health care costs are likely to be penalized the most under the WHP.

• While the WHP increases the number of persons with health insurance coverage, it reduces the number of persons who are employed. More than 8,000 jobs could be eliminated in the first year of the program alone.

• While it is estimated that state and local governments (representing 12 percent of the workforce) will save $1.1 billion, at the same time private employers (representing 88 percent of the workforce) will be forced to spend at least $627 million more for health care than they currently spend.

"It is legitimate to ask what is ultimately accomplished by a plan like the WHP," said Brenton. "While the program would extend coverage to most of those who are currently uninsured, there is virtually no change in total health care costs, and hundreds of thousands of individuals would be worse off than they are now," he said. In addition, Brenton expressed disappointment that the current version of the WHP abandons its original plan to eventually mainstream Medicaid and BadgerCare so that provider reimbursements for government program patients would be comparable to those for privately insured individuals. "Medicaid and BadgerCare would remain ‘orphan programs’ under the WHP," he said.

The Lewin report on the WHP presents policymakers with a dramatic picture of the massive disruption that the WHP would cause in order to address a problem on the margin of our health care system. It is evident that the problems associated with the first year of the program will multiply over time. With no mechanism to effectively address utilization of services, health care costs under the WHP will continue to increase faster than wages, requiring an annual increase in the assessment rate on employers and employees, from 15.5 percent of payroll to more than 18 percent by 2017.

The Lewin report makes it clear that in order for the WHP to work, tens of thousands of employers will have to be forced to spend more than they are currently spending on health care, and in return will receive a far less comprehensive benefit plan for their employees. It will be hard to convince them that the WHP is a "reform" worth supporting.

The Workers Compensation Advisory Council, which is composed of representatives from management and labor, met June 7 to continue negotiations on the biennial Workers Compensation "agreed to" bill. The management representatives are aggressively pushing for significant cuts to current reimbursement rates for hospitals and other health care providers.

WHA with the Wisconsin Medical Society and the Wisconsin Chiropractic Association made a presentation to the Council that demonstrated the cost-effectiveness of medical care in the Workers Compensation system that would be jeopardized if money were taken out of the system.

"It’s not clear to me what management is trying to ‘fix’," said George Quinn, WHA senior vice president. "They, unfortunately, seem willing to jeopardize an excellent system based on nothing more than wanting to pay less for what their workers receive."

Quinn pointed to a Workers Compensation Research Institute report released last week that made the following observation about the Wisconsin system: "Medical costs and the utilization of medical care were among the lowest [. . .]. Workers in Wisconsin expressed high levels of satisfaction with their health care and had relatively few problems accessing the care that they or their providers wanted. Wisconsin has been able to achieve favorable cost outcomes while consistently demonstrating the best, or among the best, outcomes for workers on all measures examined in our study."

Management, led by Wisconsin Manufacturers and Commerce, is proposing a $125 million, or a 40 percent cut, for hospitals.

Quinn reacted, "Why should the Workers Compensation program, which represents only 3.5 percent of Wisconsin hospitals’ volume, receive a discount greater than the 10 percent that they currently enjoy?"

Workers Compensation insurance is one of the most profitable lines of insurance in Wisconsin and among the most profitable in the country according to the National Association of Insurance Commissioners.

Negotiations on the bill will continue at the next meeting of the Council on June 25.

One of my main priorities is, of course, health care reform. When I was out knocking on doors all last year, health care reform was the #1 concern among my constituents. Next came property tax relief, school funding reform and campaign finance reform.

I look forward to using my experience in law enforcement (Rep. Hraychuck served as Polk County Sheriff from 2001-2006) on the Criminal Justice Committee. I am an outdoors enthusiast so I also look forward to serving on the Natural Resources and Tourism, Recreation and State Properties committees.

2. Despite the fact that Wisconsin is a national leader in health care outcomes for its citizens, adequate access to health care services remains a challenge, especially in rural areas. What would you do to improve access to health care services in rural areas and how can more graduates in health care fields be encouraged to work in rural parts of the state?

My district has a very large rural population. I am very concerned about maintaining access to medical care in my district. I think the most important thing we can do to grow the rural workforce is provide incentives to the providers. Incentives could include a loan forgiveness program that would encourage medical students to locate their practices in rural areas. Any kind of incentive that would bring providers to the rural areas should be considered. Providers could then in turn recruit quality physicians and staff to the area.

3. In his budget proposal, Governor Doyle proposes a tax on hospitals. Several concerns have been raised about the viability of this tax and its negative impact on hospitals and health care consumers across the state. Do you support a tax on hospitals?

I am a new legislator and as such, am new to the budget process as well. But it seems the basic concept of the tax is if you give us $2, we’ll bring you back $4. If the federal dollars dry up, the mechanism to return the money goes with it. The hospital tax will be part of the $58 billion state budget. I can’t say at this time whether I support the tax or not, but I want to do what is best for the hospitals in my district. I’ve heard from hospital administrators in my area and they are very concerned about the impact the tax will have on them, which is in the millions. I am certainly aware of their concerns, and I am listening. I want to do what is best for the hospitals in my district.

I hosted a health care forum in April in my district and Agriculture, Trade and Consumer Protection Sec. Rod Nilsestuen was a co-presenter. We talked about the Governor’s proposed health care plan, along with others. It was a very encouraging listening session and well received in the community.

4. Governor Doyle also proposes to remove over $873 million dollars from the current state Medicaid budget to use for other state spending unrelated to health care. This Medicaid budget "hole" is then backfilled in part with revenue generated from a tax on hospitals. What are your views on using funding designated for one state program to pay for other state programs?

I am just learning about the budget process as a new legislator. For me to say it is good or bad is difficult to say at this point but generally, I would like the money to stay where it is suppose to stay.

5. A Madison nurse was criminally charged after making an unintentional error. Would you support legislation to protect our health care workforce from criminal charges for unintentional errors?

Yes.

6. Current legislative proposals to reform the health care system range from implementing a single-payer government-run system to allowing consumers and the market to use health care cost and quality information to make better health care purchasing and utilization decisions. What do you view as the key issues for health care reform and what elements do you think need to be included in any reform proposal?

I think the final product will be a culmination of the best parts of the various reform packages that are currently circulating. Of course, the Senate Health Committee is working on a plan now that I believe will be sent to the Assembly in about a month. I am looking forward to working on it when we receive it. I think two things are essential in any reform package: cost containment and the elimination of cost shifting. We need to stop the low reimbursement rate for Medicaid. A third element is that we need to cover the uninsured and underinsured because we pay for them anyway and it is a factor in cost containment. If we can provide affordable, efficient, effective, and quality health care to everyone, we’ve done our job.

7. Any other comments?

In looking at the future of health care, I think SeniorCare is a good example of the type of program we are capable of producing in Wisconsin, and I am confident that we can be a national leader by developing a health care plan that works for everyone.

Earlier this week, WHA President Steve Brenton sent a memo to the CEOs of Wisconsin’s prospective payment system hospitals updating them on recent activities surrounding the federal FY 2008 Inpatient Prospective Payment System rule.

As previously reported, the most significant provision included in the IPPS rule is what has been referred to as the "behavioral offset." This 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. This offset will cost Wisconsin hospitals more than $400 million over the next five years and is opposed by WHA.

Because of this negative impact, WHA asked our Members of Congress to sign onto "dear colleague" letters circulating in Congress opposing the IPPS rule. A big "thank you" goes out to the following legislators who signed on: Senator Russ Feingold, Senator Herb Kohl, Cong. Tammy Baldwin, Cong. Steve Kagen, Cong. Gwen Moore, and Cong. Tom Petri.

This week the American Hospital Association (AHA) submitted its comments to CMS on the rule. In addition to highlighting concerns with the behavioral offset, the AHA letter also focused on the Medicare-Severity Diagnosis-related Group (MS-DRGs) changes. AHA believes the MS-DRGs are a reasonable framework for patient classification, provided that they are used for several years and that other severity systems are no longer considered by CMS. AHA recommends a four-year transition to the MS-DRGs. This transition is also supported by WHA.

If your hospital would like to submit comments to CMS on the IPPS rule, those must be submitted to CMS by 5pm (ET) on Tuesday, June 12. Comments may be submitted via regular mail at the addresses below or electronically at www.cms.hhs.gov/eRulemaking.

Via regular mail:
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS -1533 - P
P.O. Box 8011
Baltimore, MD 21244-1850

Via overnight or express mail:
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS -1533 - P
Mailstop: C4-26-05
7500 Security Boulevard
Baltimore, MD 21244-1850

Dear Senator Decker and Representative Rhoades:

We have reviewed the new hospital tax and payment proposal shared with you by Secretary Morgan on May 17, 2007. The latest version of the plan appears to be a more thoroughly researched and crafted proposal than the spreadsheet of projected hospital "winners and losers" released on February 13. It is also a much different proposal that includes significant changes to the number and types of hospitals that are taxed and the mechanisms for delivering higher Medicaid payments to hospitals.

While it can be argued the new plan may increase the chances of (required) approval by the federal Centers for Medicare and Medicaid Services (CMS), the nature and scope of the changes illustrate just how uncertain the entire proposition of a new tax on Wisconsin health care providers can be. Given the potential impact the hospital tax could have on health care costs and Wisconsin’s track record with existing provider taxes and (thought to be) segregated funds, WHA remains opposed to the hospital tax. We urge lawmakers to continue exercising great caution when entertaining this proposal.

Major Changes to the Plan

• Tax Rate Reduced, Tax Amount Remains $418 Million: The most notable change to the tax is the reduction in the tax rate from 1 percent of gross revenues to .8 percent of gross revenues. While the tax rate has changed, the dollar amount raised by the tax has not — the proposal would still generate $418 million over the biennium.  
  
  As confirmed by the Legislative Fiscal Bureau (LFB) analysis, the proposal still takes roughly 30 percent ($120 million) of the tax to help backfill the $873 million that is being taken out of the Medicaid program in SB 40. In other words, even if the new payment plan is approved by CMS, $120 million of the hospital tax will not be used to capture additional federal matching funds (leaving roughly $162 million in new federal dollars unclaimed), will not be used to increase Medicaid payments to hospitals, and will increase the cost of health care for many across the state.

• Critical Access Hospitals (CAHs) Dropped: Perhaps the most significant change is the exemption of CAHs from the tax and payment mechanism. This is consistent with flaws in the plan identified by WHA and described in our March 1, 2007 analysis and our March 12, 2007 letter to Secretary Morgan. Our skepticism with the notion of taxing CAHs was well founded, and we are pleased that Wisconsin’s 59 rural CAHs have been removed from the tax.

• More than Doubling of the Current Upper Payment Limit (UPL): The new plan proposes a 129 percent increase of the current UPL (room available for higher payments). Like almost all aspects of the hospital tax, it is unknown if CMS will approve more than doubling state’s current UPL, but this must be achieved for the payment plan to work. Both increased fee-for-service rates and higher payments delivered via HMOs are dependent on CMS approving the Administration’s substantially increased UPL. We have alerted DHFS staff to a number of remaining technical concerns with their latest UPL calculation that we believe may raise red flags with CMS.
  
• Tripling of the Dollars Delivered Through Medicaid HMOs: The new plan includes a massive change in the way payment increases are delivered, moving away from more predictable fee-for-service payments to less certain, negotiated payments made to hospitals by HMOs. The new version of the tax would deliver roughly 60 percent of the intended higher hospital payments through HMOs—roughly three times the amount of dollars intended to flow through Medicaid HMOs in the first tax plan.
  
  In our analysis of the first hospital tax proposal, we expressed strong doubts that these payments will actually flow, dollar-for-dollar as calculated by the Administration, through HMOs and to hospitals. The new plan does nothing to guarantee that these dollars will indeed be passed through, while greatly increasing the amount of dollars delivered via HMOs. Our concerns about this aspect of the plan have increased proportionately.

Unchanged and/or Unaddressed

While the current proposal is better formulated, several key policy issues remain unchanged and/or unaddressed. These include:

• Safeguarding the Tax from Current/Future Raids and Diversions: According to LFB paper #371 (pp. 4 and 5), and as discussed above, the new version of the hospital tax continues to divert almost one-third of the tax revenue ($120 million) away from hospital payments. This revenue is used to ultimately subsidize general fund spending. The fact that the plan already, in just its first biennium, siphons off 30 percent of the tax revenue reinforces very justifiable concerns about future raids on the hospital tax. As dollars are diverted from the hospital tax, its impact on the cost of hospital care for many patients and employers across the state will also increase.

• No Linkage Between Hospital Tax Revenues and Reimbursement Increases: There remains no mechanism in the plan to assure that as revenues increase from the tax (which is pegged to gross revenues) they will be used to commensurately increase hospital Medicaid payments. Absent such a "linkage" between the tax and payments, the tax will annually increase, quickly outpacing hospital rate increases, eroding the promised benefits of the plan and further increasing the cost of health care.

• Taxation Before CMS Approval: The proposal still taxes hospitals before the payment plan is approved (if ever approved) by CMS. According to LFB paper #371 (point #7), the hospital tax is "based on two key assumptions: (a) that DHFS could increase MA payments to hospitals by the amounts assumed by the administration, while complying with federal requirements; and (b) that CMS would determine the hospital assessment to be a permissible provider tax."
  

  The notion of levying a $418 million tax without any certainty that those dollars would be recouped through a CMS-approved payment plan is perhaps the plan’s single largest flaw.
  
  LFB paper #371 (point #11) states: "It is possible that CMS could modify the administration’s proposed method of increasing reimbursement to hospitals, which could reduce the MA reimbursement increases the administration assumes would be provided to hospitals." According to LFB, if this were to happen, DHFS can still expend the "segregated funds" generated by the hospital tax for non-hospital purposes.
  
  As also recognized by the LFB in paper #371 (point #12), there is nothing in the proposal that would require DHFS to modify the tax in a way that reflects actual, CMS-approved payment levels. SB 40 gives DHFS the sole authority to levy a tax on hospitals of up to 1 percent of gross revenues. It is entirely up to DHFS to decide if the amount of the tax will be adjusted to reflect payments that may or may not be approved by CMS. There is no role for the Legislature.
  
  If CMS does not approve the payment plan, or approves a significantly modified/reduced payment plan, the impact of an unrecouped $418 million hospital tax could have serious consequences for our health care system.

• HMO Pass Through: As mentioned above, the new tax plan increases the reliance on HMOs to "pass through" a significant portion of the proposed hospital payment increases. Based on the experiences of our members, we remain highly skeptical that these payment increases, which the Administration is counting on to make the plan work, will fully materialize.

By its nature, the latest hospital tax plan is still a very uncertain and risky proposition. While certain technical aspects of the plan have been improved, several critical elements remain unaddressed or hinge upon the state gaining necessary federal approvals. There is, however, one element of the hospital tax that is very certain – hospitals will be taxed $418 million dollars regardless of if, when or what payment plan CMS may approve.

In light of these continuing and unaddressed concerns, WHA remains opposed to the hospital tax.

Sincerely,

Steve Brenton,
President

This is the highest volume time of the year for new license applications at the Department of Regulation and Licensing (DRL). Graduations, new residency programs and relocations create an influx of thousands of applications. May and June have always been difficult months for the department to meet its 15-day allowance for processing the applications, and this year is no exception. Hospitals have contacted WHA with the complaint that applications are now taking in excess of four weeks to process. This timeline may be much longer for some individuals as no application is processed until proof of graduation is received from programs and schools, some of which take up to four weeks to supply this information to the Department. This seriously compounds an already difficult situation.

The employment of new graduates and those who are transferring into the state may be affected by the backlog at DRL. WHA encourages hospitals to notify applicants and interviewees to apply for a license early to ensure that they are prepared for employment.

WHA expressed concern to the Department about the situation, as did members of the WHA Workforce Council at a meeting last year when the Department made a formal presentation to that group. WHA recognizes that state funding and employment practices impose limitations on staff available to perform work in departments. Practices—similar to those used in hospitals—that match work demand and staffing, are needed to prevent or reduce this annual problem for all employers of licensed staff.

In celebration of Hospital Week, May 6-12, Cumberland Memorial Hospital-Extended Care Unit, Inc. partnered with the Healthier Cumberland Coalition to bring the community a special event called Know Your Numbers, Know We Care. This event took place at the Cumberland Memorial Hospital on May 8 and 9 from 6-9 a.m. Community members were invited to stop in and have health screenings done free of charge. The screenings included Blood Pressure, Triglycerides, Fasting Glucose, HDL Cholesterol, LDL Cholesterol, Total Cholesterol and Waist Circumference. All of the measurements are related to Metabolic Syndrome, which is a collection of health risks that when combined, increase the chances of a person developing heart disease, stroke, and diabetes. When people know their risk, they have "advance notice" and the opportunity to make health and lifestyle changes today that can delay or prevent the development of serious diseases.

One of the goals of the Know Your Numbers, Know We Care event was to help community adults know more about their health numbers and how they can improve their health. Over 175 community members participated over the two days. Health displays, information, prizes, and breakfast refreshments were available for the participants while they waited to discuss their results with a nurse. Because of the caring and commitment they have to the health of their community, Cumberland Memorial Hospital has worked with the Healthier Cumberland Coalition since it began its efforts in 2004.

Submit hospital community benefit stories to Mary Kay Grasmick, editor, at mgrasmick@wha.org.

SynergyHealth CEO Gregory A. Banaszynski has been named Distinguished Alumnus in the Field of Health Sciences by the University of Wisconsin – Milwaukee Alumni Association. Banaszynski, along with 13 other graduates of the University of Wisconsin – Milwaukee, were honored at the association’s annual awards reception on Saturday, May 19.

One of the most common defined contribution plan metrics of success is the level of participation in the plan, and for good reason.

It is a plan dynamic that creates challenges when it is too low (in passing those non-discrimination tests) and sometimes when it is too high (in funding the accompanying match). Yet, widespread dissatisfaction with the general rate of participation in such programs led to the inclusion of an automatic enrollment safe harbor in last year’s Pension Protection Act.

A recent survey conducted by PLANSPONSOR.com showed 33 percent of respondents had adopted or will soon be adopting the automatic enrollment feature to increase participation. A close second—29.6 percent—had added lifecycle/lifestyle funds. Roughly 25 percent used targeted participation messages and 20 percent simplified the enrollment process.

Other options taken include: expand (or shrink) fund menu, increase or modify company match, increase frequency of employee meetings, and accelerate eligibility standards.

Additional suggestions from respondents involve mandatory enrollment meetings and/or increasing the frequency of those meetings, making employees return enrollment forms and activate their online account as part of the enrollment process, contacting all employees, and hiring an investment adviser. Such actions can effectively make automatic enrollment a moot issue, as would be designating a default fund.

Whether you have used some or all of these methods or developed your own, the level of plan participation will continue to be an important issue for plan sponsors. If you have questions or would like more information on this topic, contact David Cutler at dcutler@wha.org or 800-362-7121.

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