The "hidden tax" on every hospital patient’s bill grew by $264 million in 2003, to a total of almost $1.7 billion. The costs associated with providing charity care, bad debt expense and the fact that the government doesn’t pay the full cost of care for Medicare and Medicaid recipients, are all part of the hidden tax.

Due to these additional costs, hospitals must charge patients with insurance more than the cost of their care, thus raising their charges. In other words, a hidden tax.

Government program underpayments alone surpassed $1.1 billion, an increase of $216 million over 2002. Bad debt and charity care approached $500 million. The total hidden tax equals 27% of the average insured patient’s hospital bill. Five years ago, the tax amounted to 17%.

This continuing trend is troubling to the Wisconsin Hospital Association (WHA), a trade association for the state’s community hospitals, since these costs contribute to escalating insurance premiums.

"Less than 75% of what an insured patient pays goes toward the actual cost of the care received. The rest is just to make up for what other payers fail to fund," according to WHA Senior Vice President George Quinn. "These unpaid costs are shifted directly to businesses and their employees. The hidden tax continues to be a significant reason behind rising health insurance premiums."

Net patient revenues grew by 11.7% in 2003, totaling $9.7 billion statewide. Expenses grew by 11.4%. Patient care margins amounted to 4.5%, up from 4.0% in 2002. One-fourth of Wisconsin’s hospitals lost money on patient care in 2003.

WHA board members, alternates, hospital region presidents and senior staff will gather in Kohler, Wisconsin next week to discuss emerging issues that will likely be on the Association’s future strategic agenda.

Following a 2004 elections panel discussion led by former Wisconsin Congressman Scott Klug, planning session participants will discuss consumer pricing transparency and Medicaid funding issues.

The pricing transparency discussion will focus on the emergence of high deductible health insurance policies and the resulting interest and expectations that more information about provider "prices" and performance be available to enable consumer purchasing decisions. A panel featuring Humana President Larry Rambo, State Representative Curt Gielow (R-Mequon) and WHA staff will discuss the issue and identify challenges and opportunities.

The topic "Medicaid: Where Will the Money Come From?" will focus on expected recommendations from WHA’s Task Force on Medicaid that are likely to require new funding. Illinois-based Medicaid consultant, Steve Scheer, and WHA’s George Quinn will discuss specific strategies deployed in other states designed to address MA funding priorities.

WHA members will be provided with an overview of discussions and areas of consensus requiring future Association focus. The 2002 WHA Planning Session led to the creation of CheckPoint^SM and the Association’s significant and growing commitment to measuring and reporting quality and safety measures. Last year’s planning session led to the creation of WHA’s Council on Workforce Development, the WHA/Wisconsin Medical Society Task Force on Wisconsin’s Future Physician Workforce, and the WHA/Wisconsin Manufacturers and Commerce/Wisconsin Association of Health Plans Healthier Choices health reform agenda.

If you haven’t already, mark your calendar for WHA’s Annual Convention, which will be held September 15-17 at the Grand Geneva Resort in Lake Geneva. Hospital administrators, management staff, nurse leaders, volunteer leaders, and trustees are encouraged to attend this year’s convention, which offers many opportunities for education and motivation.

The agenda includes a Friday morning presentation on "followership." Thomas A. Atchison, Ed.D, president and founder of Atchison Consulting Group, will explain what inspires employees to follow a leader. Health care examples and data will be used to show that the highest quality and most profitable hospitals are those with the greatest followership. With over 30 years of experience in the health care industry, Atchison has consulted with health care organizations on managed change programs, team building and leadership development.

The full conference brochure with registration and information will be available soon; however, you may make your room reservations at the Grand Geneva by calling 800-558-3417. Ask for the WHA Annual Convention room block. The special room rate will be available only until August 15.

The WHA, with the Wisconsin Medical Society (WMS), submitted a supplemental brief in Pierce v. Physicians Insurance Company of WI, Inc., in response to questions posed to the parties by the Wisconsin Supreme Court. As previously reported in The Valued Voice, WHA and WMS submitted an amicus brief in this case.

The plaintiff is asking the Court to permit, in effect, two recoveries for one occurrence of medical malpractice. The plaintiff asks the Court to permit recovery for wrongful death, which currently is subject to a $350,000/$500,000 cap for noneconomic damages, and a recovery for pain and suffering (including emotional distress), which currently is subject to a $350,000 cap on noneconomic damages adjusted annually for inflation. Both recoveries would be related to a single occurrence of medical malpractice.

In the supplemental brief, WHA and WMS ask the Court to follow the Court’s recent decision in Maurin v. Hall, in which the Court held that "[t]here is a single cap for noneconomic damages in medical malpractice cases . . .. The total noneconomic damages for bodily injury or death . . . may not exceed the limit under the [medical malpractice caps on noneconomic damages] for each occurrence."

"This Court’s holding in Maurin not only correctly interprets the statutory language but also is consistent with the longstanding legislative policy to limit health care provider liability in order to control health care costs. The Court’s decision in the Pierce case will signal whether the Court will continue to uphold the legislature’s ‘unbroken pattern of narrowing the scope of noneconomic damages flowing from medical malpractice claims in order to control costs,’" observed Colleen O’Connor Patzer, a partner at Michael Best and Friedrich LLP who prepared the brief on behalf of WHA and WMS.

A decision in the case is not expected until later this year. The Court heard oral arguments in the case in April 2004 and will hear additional oral arguments in November 2004.

Last weekend’s Milwaukee Journal story, "Health Care Discounts Vary Widely," makes much of the fact that the discounts that hospitals provide to payers differ, often greatly - no surprise to any hospital leader. The article then tries – and fails – at making a connection between the discounts and the need for price transparency.

Representative Gregg Underheim is quoted as saying: "There is still a void of information when it comes to true pricing. We are moving into a consumer-driven health care system, and information must be available." But later the article states "participants in county government’s conventional health plan had no stake in the price difference(s). Milwaukee County government paid…for the procedures."

So how is this a failure of the health care field to be transparent? We can all agree that those who have a direct economic stake in the decision to use a provider for services have a right to meaningful information in making that decision. In other words, if you are paying, you should know the price. None of the County employees pay, so they probably have little interest in this information; the County needs it, and has it.

Before we can have an intelligent conversation about pricing transparency, we need agreement on what we mean by it. I think the best way to "get a handle" on this concept is to focus on those circumstances when pricing information is relevant for decision-making. In the case outlined in the article, prices are "transparent" to the payer; in this case Milwaukee County. The County made a decision to contract with the hospitals, presumably based on a combination of cost and quality information.

In those cases where patients who are insured but still pay a substantial portion of the bill – the classic consumer-driven health care scenario – they should be able to obtain the price from the health plan that provides their insurance policy so that they can make decisions regarding which providers and which services to choose. It is the HEALTH PLAN that has negotiated the price, and it is the HEALTH PLAN that needs to show value to its policyholders by providing meaningful information on both cost and quality. After all, in addition to providing catastrophic coverage, the insurer must provide information for informed decision-making in order for it to be competitive in the marketplace.

What about those with no insurance? WHA has been proactive on the issue of billing and payment issues relating to uninsured patients. This past April, our Board issued a set of guidelines that suggest, among other things, that hospitals provide clear information to patients regarding their hospital bills, and if appropriate, their ability to obtain financial aid. I am not aware of any Wisconsin hospital that has refused to provide this information to a prospective patient.

Finally, retail prices, with all of their limitations, provide valuable information to health care researchers, planners, and others. The WHA Information Center is dedicated to providing this information in a timely and user-friendly manner.

In discussing pricing transparency, we need to keep in mind the context and economic relationships that really dictate what information is relevant – and to whom. The guiding principle should be to make available information that is useful to decision-makers within the context of economic relationships – not saturating the environment with useless data.

The Centers for Medicare and Medicaid Services (CMS) unfortunately announced that all physician recruitment contracts, including agreements that predate the Stark II Phase II regulations, must comply with the regulations by July 26, 2004. On July 14, 2004, CMS issued the following frequently asked question concerning the physician recruitment issue.

Question: My hospital has physician recruiting contracts that predate the Stark Phase II interim final regulations. Do these contracts need to comply with the new regulations?

Answer: Yes, all recruiting arrangements must comply with the new regulations as of July 26, 2004. Each financial relationship with a physician must be evaluated for compliance with the Stark law based on its specific facts and circumstances. However, we are mindful of the concerns raised by the question and can offer the following observations. First, the Stark law is a self-implementing statute that went into full force and effect on January 1, 1992 with respect to referrals for clinical lab services and January 1, 1995 with respect to referrals for other designated health services. Accordingly, parties have had a legal obligation to comply with the statute since those effective dates. In the absence of final regulations for a particular exception, parties must have complied with a reasonable interpretation of the statute. Second, the Phase II regulation, including the new exception at § 411.357(e)(4) for certain joint recruitment arrangements, goes into full force and effect on July 26, 2004. Thus, a hospital-funded recruitment arrangement in which the recruited physician is subject to a restriction against competing with the group will not comply with the new joint recruiting exception in the Phase II regulations. Parties should document that any non-compete clause is void and will not be enforced. Third, continuing obligations (i.e., obligations for which performance is not yet required or is not yet complete) under a pre-existing recruitment arrangement must comply with the Phase II regulations as of July 26, 2004. For example, past payments under an income guarantee need not be recalculated so long as, at the time they were paid, the arrangement complied with a reasonable interpretation of the statute. Finally, in addition to the Stark law, all recruitment arrangements are also subject to the Federal anti-kickback statute located at section 1128B(b) of the Social Security Act (42 U.S.C.1320a-7b(b)), which may prohibit recruitment arrangements even if they do not violate the Stark law. Inquiries with respect to that statute should be directed to the Office of Inspector General.

An administrative rule hearing relating to Wisconsin’s Statewide Trauma Care System was held on July 15 by the Department of Health and Family Services. WHA and many of its members statewide have been and continue to be active, direct participants in the development and implementation of a comprehensive approach to the triage, treatment, transport, and ultimate care of major trauma victims. WHA member hospitals are represented on the State Trauma Advisory Council (STAC) and many more WHA members are participating in the monthly STAC meetings and various sub-committees of STAC.

"WHA remains committed to the Trauma Care System objectives of decreasing the incidences of trauma, providing optimal care of trauma victims and their families, and collecting and assessing trauma-related data in order to improve trauma care regionally and statewide," said Bill Bazan, vice president, metro Milwaukee, who testified on behalf of WHA.

There are, however, some changes that WHA recommended to DHFS on the administrative rule draft. They are as follows:

• In the definition section, the definition of a level IV trauma care facility should read: "Level IV means a class of trauma care facility that is characterized by the hospital’s ability to stabilize and provide advanced trauma life support prior to patient transport." WHA recommended omitting "in remote areas where no higher level of care is available." This change maintains the voluntary nature of the hospital’s self-assessment process regardless of what geographic area in the state the hospital is located.
  
• In the section describing the duties of DHFS (the lead agency), WHA recommended that among the chief duties of the lead agency is to "develop and revise administrative rules for the statewide trauma care system" and not just "develop and revise guidelines." This change would preserve and provide for greater input from all stakeholders in the trauma care system.
  
• In the investigations section, it is stated that the lead agency can send in an auditor to check on complaints "without notification." WHA strongly recommended that if an investigation of a hospital or emergency vehicle were to be accomplished efficiently and productively for both the entity and the authorized state agent, there would need to be some advance notification of a pending visit. This would insure that the right people are present to provide the necessary information and response to the complaint.
  
• In the section dealing with the duties of STAC, WHA recommended a 4th responsibility be added to read: "Recommending to the department that an administrative rules process be initiated for any changes and/or modifications to the Scope of Practice Statement for Inter-Facility Transfers." The rationale for this important addition is to provide hospitals, especially rural hospitals, and emergency medical service agencies the opportunity to provide input to any proposed changes so as not to compromise patient care.

For those hospitals that wish to provide written or oral testimony, there are still three hearing dates remaining in northern Wisconsin:

- Thursday, July 22, 10–3, Room 152A, Northeastern Regional Public Health Office, 200 North Jefferson St., Green Bay
- Friday, July 23, 9–1, Conference Room, Northern Regional Public Health Office, 1853 North Stevens St., Rhinelander
- Tuesday, July 27, 11–3, Room 123, DHFS State Office Building, 610 Gibson Street, Eau Claire

Looking for a new way to get the word out about a job in your hospital? With this issue of The Valued Voice, WHA is introducing a new service for member hospitals—the WHA Job Bulletin. The Job Bulletin will be published monthly as a supplement to The Valued Voice.

WHA members frequently request WHA to post positions in The Valued Voice. In the past, this request has been granted on a case-by-case basis. Lately, there has been an increase in the number of these requests, especially for hard-to-fill positions. WHA expects that as the workforce shortages widen, members will more often ask WHA to post positions. Based on that expectation, WHA created the "Job Bulletin."

Postings in the WHA Job Bulletin will be:

• Available to WHA members only, for positions that are directly employed by the member’s hospital or health system
• Updated Monthly – All positions are posted for one month only, unless they are resubmitted to WHA
• Free

The benefits to you of posting a position in the WHA Job Bulletin:

• Offered as a no-cost benefit of membership
• It is another strategy for addressing workforce issues
• Position announcements are publicized in both The Valued Voice and on the WHA Web site. These familiar tools are widely accessed by large numbers of interested parties.

Rep. Ron Kind (3 CD- WI) joined with Rep. Tom Osborne (3 CD- NE) to introduce the Rural Health Equity Bill which would require Medicare Advantage organizations to reimburse Critical Access Hospitals (CAH) and Rural Health Clinics (RHC) 101% of the payment rate otherwise applicable under the Medicare program.

The Medicare Modernization Act enacted last year will foster the growth of Medicare Advantage plans in rural areas. In the past, CAHs and RHCs have been unable to negotiate fair reimbursement policies with managed care plans. This bill seeks to assure that rural providers are able to negotiate adequate payment from Medicare managed care plans to allow them to continue to provide quality health care to Medicare beneficiaries living in rural communities.

The House Appropriations Committee approved an amendment by voice vote to stop the implementation of the proposed CMS "75% rehabilitation rule" until an Institute of Medicine study is completed on the rule. The IOM report is to be submitted to Congress and CMS by October 1, 2005, and bars CMS from enforcing the rule until nine months after the report is submitted.

Wausau Hospital and WHA staff worked with Congressman Dave Obey’s office to detail the impact of the implementation of the rule on Wisconsin’s 23 hospitals with inpatient rehab units. Congressman Obey is the ranking minority member of the Appropriations Committee, and the only Wisconsin congressman on the committee.

"Slowing down this rule is key to many Wisconsin patients who might otherwise lose access to rehabilitation services in communities across Wisconsin. Waiting to implement the rule pending a study by clinical experts, is the right thing to do and we appreciate Congressman Obey’s assistance in advancing this important amendment," said WHA President Steve Brenton.

Children’s Hospital of Wisconsin has earned Magnet Recognition from the American Nurses Credentialing Center (ANCC). Magnet status is awarded to health care organizations that are able to demonstrate a sustained level of excellence in nursing care and quality. Approximately 100 hospitals in the nation have Magnet status. Children’s Hospital is only the seventh freestanding pediatric hospital in the country to earn this award, and it is the third health system in Wisconsin to achieve Magnet status.

The hospital began collecting evidence for submission to the ANCC almost two years ago. Nurses and leaders prepared more than 2,300 pages of documentation that was submitted in December 2003. In May 2004, the hospital was granted a site visit. After scrupulous review, the ANCC granted Children’s Hospital this elite status. This designation recognizes the quality of the nursing program and demonstrates its importance, and the importance of nurses to the success of the entire organization.

"This is one of the highest achievements a hospital can attain in the nursing world," said Nancy Korom, RN, MSN, vice president of Patient Care Services at Children’s Hospital of Wisconsin. "It is an honor for the nursing staff and the entire hospital. We all contribute to the care of the children, adolescents and families we serve. Receiving Magnet recognition validates the high standards we set and strive to achieve in patient care."

Columbus Community Hospital was recently approved as a Critical Access Hospital (CAH). The total number of CAHs in Wisconsin now stands at 37.

Pembina County Memorial Hospital Association, a non-profit integrated health care organization located in Cavalier, North Dakota is seeking an experienced Administrator/CEO. This position oversees operations of a 25-bed hospital, 60-bed long-term care facility, rural health clinic and 20-unit congregate housing facility.

Successful candidate must have a B.S. with 5+ years of broad based health care management experience. Strong communication, organizational and interpersonal skills are a must.

Closing date: August 7, 2004. Qualified applicants should direct resumes to: Steve Holm, Pembina County Memorial Hospital, PO Box 380, Cavalier, ND 58220.

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