June 28, 2004

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Hospital Study Commission Hears from Financing Expert
At a meeting held last Monday, June 21, the Commission studying Maine's hospitals heard a lengthy presentation from Nancy Kane of the Harvard School of Public Health regarding the current financing of Maine's hospitals.
Dr. Kane discussed the financial health of Maine's hospitals in the context of: 

  •                     Rising cost of health insurance premiums
  •                     Role of hospitals in overall health expenditures
  •                     Affordability of premiums for individuals

     She drew a sharp distinction between the financial health of Maine's hospitals, versus the financial health of the health care systems, noting that most of the operating gain is being distributed to hospital system subsidiaries and affiliates, particularly physician practices.  For instance, in 2002 alone, $29.7 million was transferred to physician practices owned by hospitals or health care systems,  representing 58% of the total of funds transferred to affiliates.  Up to 50% of some affiliated organizations operating expenses were being subsidized.  While Dr. Kane attributed the poor financial performance of the practices to inefficiency, many observers at the meeting commented that the shortfall from MaineCare was a much greater factor.

     On the controversial question of whether or not Maine's hospitals are more expensive than hospitals in other states, Dr. Kane provided  median operating margins from 1996 through 2002 and found Maine's margins to be higher in 6 of the the 7 years.  Dr. Kane noted that there was a significant reduction in net operating margins in Maine in 2002, attributable primarily to increasing costs and higher discounts to payors. 

She also provided data on the amount of free care provided and the amount of bad debt.

Her Summary included the following points:

                    *   Maine hospitals have had a profitable decade; most are in very good financial health

                    *   Record cost increases in 2002 were in excess of substantial revenue increases; greater cost discipline in the industry is needed to make health care more affordable in this state of relatively low-income people

                     *   The hundreds of millions of dollars going into system affiliates, particularly for physician practice subsidies as high as 50% of practice expenses, may not be the most efficient, effective way of delivering physician services.  Alternative models should be sought, possibly involving more sharing of specialists across hospitals in a regionalization model.

        The Commission meets next on Tuesday, July 6 and at that meeting will talk about electronic information systems.  Another meeting will follow on Monday, July  12.  Both meetings will begin at 9:00am in Augusta.

       Copies of Dr. Kanes power point slides (40) are available at the MMA office (call Julie at 622-3374 or jbanta@mainemed.com).



Medicare Contractor Advisory Committee Hears Presentation on Quality
The Medicare Contractor Advisory Committee (formerly called the Carrier Advisory Committee) met at the Maine Medical Association on June 21, with the meeting broadcast via videoconferencing to sites in New Hampshire, Vermont and Massachusetts. 

Following introductions by CAC Co-Chair Stephen Black-Schaffer, M.D., John D. Birkmeyer, M.D., presented on the topic of, "Making Surgery Safer:  Volume and Beyond."  Dr. Birkmeyer, formerly at Dartmouth Medical School, is currently the George D. Zuidema Professor at the University of Michigan and its Chair of the Center for Surgical Evaluation and Policy. 

Dr. Birkmeyer's talk centered around the assertion that bad outcomes in surgery are common and that the chance of a bad outcome depends on where and by whom the surgery is performed.  By implication, Dr. Birkmeyer noted that a large number of bad outcomes are avoidable.  He stated that there were two pathways to improving surgical outcomes, the first being to direct patients to the best surgeons or the best hospitals, the second was to improve care across the board.  As means to achieve this improvement, Dr. Birkmeyer cited three trends:

                           *   Heightened patient consciousness (e.g. media)

                            *   Giving patients/PCPs access to provider specific information (e.g. public reporting)

                             *   Selective contracting by payers and health plans (Leadfrog Group)

Dr. Birkmeyer spoke of Leapfrog's three safety standards:  computer order entry, ICU staffing by board-certified physicians, and volume and mortality standards.  He cited the work of the Northern New England Cardiovascular Study Group (l987 to date) as particularly notable.

Dr. Birkmeyer stressed that there were pros and cons associated with each of the two strategies and made recommendations for moving forward in improving outcomes.  He discussed how to get to data and how to select measures appropriate to a particular procedure.  He discussed, "How well do measures predict FUTURE performance."  He encouraged the profession to better delineate processes that matter.

Paper copies of Dr. Birkmeyer's presentation are available from MMA (call Julie Banta at 622-3374 or jbanta@mainemed.com.

Following Dr. Birkmeyer's talk, CMS Regional Administrator Charlotte S. Yeh, M.D., FACEP spoke on the Medicare Modernization Act (MMA).  Dr. Yeh reminded CAC members that while the Medicare prescription drug benefit was the center piece of the legislation, there were several other parts of the 776 page bill that are important to physicians but which few physicians are aware of.  She noted the improved coverage for preventive services and provisions regarding new technology, as well as the positive changes to physician payments.

Dr. Yeh also noted the very significant changes to the Contractor process, the establishment of regional PPO's and competitive bidding for local "Medicare Advantage Plans." She also discussed the quality initiatives in the legislation and the changes in EMTALA. (Dr. Yeh practiced as an emergency physician and was considered a national expert on EMTALA prior to her entering a new career at CMS).

Physicians may go to the CMS website at www.cms.hhs.gov/medlearn/matters/ for more information.  Paper copies of Dr. Yeh's presentation are available at MMA (call Julie Banta at 622-3374 or jbanta @mainemed.com.

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More Than 100 Physicians/Administrators Attend Annual Survival Seminar
The Spectacular Events Conference Center in Bangor was the site of MMA's June 23rd Physician Survival Seminar and over one hundred physicians and administrators were in attendance.  Keynoting the day's program was U.S. Attorney for the District of Maine Paula Silsby.  Attorney Silsby spoke of the various resources being employed in Maine to prosecute healthcare fraud and noted that the government distinquishes between criminal fraud, civil fraud and an honest mistake.

Additional talks during the plenary session in the morning included Lisa Letourneau, M.D. of Maine Health discussing the chronic disease care model, Laureen Biczek, D.O., Medical Director for MaineCare and Dennis Shubert, M.D., PhD, Executive Director of the Maine Quality Forum.  Dr. Shubert brought attendees up to date on the DIrigo Health insurance product as well and discussed the functions of the Maine Quality Forum.  Much of the attention of the Forum is being focused on electronic information systems and their potential to improve quality of care.

Eleven different breakout sessions in the afternoon rounded out the day.   A limited number of materials from the day are available at MMA for a fee of $30.00.  Contact Chandra Leister at 622-3374 or cleister@mainemed.com [return to top]

Vacancies for Maine Physicians on Medicare Contractor Advisory Committee
As of March 2004, there were several vacancies on the Medicare Contractor Advisory Committee (formerly called the Carrier Advisory Committee).  The following specialties are not represented and are losing a valuable opportunity to provide meaningful input into Medicare processes and policy.  The CAC meets quarterly on Monday afternoons, usually 2:30pm to 4:30pm.  While most of the meetings are in Waltham, MA, the meetings are video-conferenced to Portland and Bangor.  If you are interested in making a nomination to the CAC, or in volunteering yourself, please send a CV to MMA EVP Gordon Smith who will forward nominees on to Craig Haug,M.D.,  the CAC Co-Chair and the Medical Director for National Heritage Insurance Company, our Medicare Part B contractor for Maine, New Hampshire, Vermont and Massachusetts.

        Specialties not represented currently are:

                 Cardiovascular/Thoracic Surgery

                 Clinical Lab Director

                 Critical Care

                 Family Medicine

                 General Surgery


                 Infectious Disease

                 Medicaid Operations

                 Nuclear Medicine



                 Phys. Med. & Rehab

                 Plastic/Recon.  Surgery

                 Pulmonary Medicine





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Consumers for Affordable Health Care Releases CON Report
Following a review of DHS records from 1997 to 2003, Consumers for Affordable Health Care recently released a study criticizing the State's certificate-of-need (CON) program and calling for improvements.  CAHC reports that DHS approved 68 CON applications and denied only 4 during this period.

CAHC Executive Director Joe Ditre said, "If the Governor's Office of Health Policy & Finance wants to effectively use CON to control costs and improve care in Maine, it must ensure that the CON program has more people.  There simply are not enough staff people to do this important work."

The consumer group made the following recommendations to improve the effectiveness of the CON program:

1.  The State should consider decreasing the dollar amounts that trigger CON review.

2.  Staffing of the CON Unit should be increased.

3.  The CON Unit needs to employ or contract for economic and financial expertise.

4.  The CON Unit should be organizationally relocated within DHS.

5.  The CON review and decision process should be depoliticized.

6.  The CON program should be guided by specific criteria that tie program decisions to the goals outlined in the State Health Plan.

7.  The CON program should be monitored on an ongoing basis to track the effect of approved projects on costs and quality, with mechanisms available to correct problems, as needed.

While the MMA has not yet reviewed the full CAHC report, the recommendation to decrease the threshold for CON review is very much contrary to the MMA's view of the CON program.

You may read a summary of the report and download the full report on the CAHC web site:

http://www.mainecahc.org/foundation/articles/040623_CON%20report.htm. [return to top]

CalPERS to Oppose WellPoint-Anthem Deal; Announces 2005 Rates
Officials from the California Public Employees' Retirement System (CalPERS), a shareholder of both WellPoint Health Networks, Inc. and Anthem, Inc., and California Treasurer Phil Angelides have publicly stated that they intend to "fight the proposed merger" between the two health insurers citing concern over the "excessive" compensation packages various executives of the two health insurers are expected to receive.  "This merger is the poster child for excessive executive compensation," said Angelides, also a member of the CalPERS board.  "These are payouts that will be made on day one - without any regard as to how this merger performs for shareholders in the years ahead."

The California Insurance Department, which must sign off on the merger, was scheduled to hold a hearing about the proposed merger on June 25.  A separate public hearing about the merger will be held in California on July 9.

CalPERS, the third largest purchaser of health insurance benefits in the country, recently announced the smallest rate increase in three years.  HMO rates will increase 11.4% for 2005 and PPO rates will increase 6.4%.  CalPERS has 1.2 million enrollees placing it behind only the federal government and General Motors Corporation in covered lives.

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WHO Report Warns of Risks of Alternative Medicine
Last week, the Wall Street Journal covered the World Health Organization's (WHO's) release of a report saying that the increased popularity of alternative medicine "poses global health risks" and that governments worldwide should "tighten oversight of the natural-medicine industry."  The report says that adverse reactions and injuries from alternative medicines and therapies have doubled in the past 3 years.  The risks include paralysis caused by unqualified manual therapists, herbal products contaminated with heavy metals and herbal products that cause adverse reactions when combined with prescription drugs.

You may find more information about the WHO report at the organization's web site:

http://www.who.int/mediacentre/releases/2004/pr44/en/. [return to top]

CBO Issues Report to Congress on State Tort Reform Initiatives
On 6/17/04, the Congressional Budget Office (CBO) issued a report to Congress on state tort reform initiatives since 1986 and the relevance of state experience for federal lawmakers.  The report's authors cautioned that the data reviewed is limited and that "the findings are not sufficiently consistent to be considered conclusive."  The most consistent findings in the studies reviewed in the report are that state tort reform:

  • decreased the number of lawsuits filed;
  • lowered the value of insurance claims and of damage awards; and
  • increased insurers' profitability "as measured by payouts on claims relative to premiums in the short run."

The report, The Effects of Tort Reform:  Evidence from the States, is available on the web at:  http://www.cbo.gov. [return to top]

Health Affairs Publishes Study on Medicaid Physician Reimbursement Rates
In a study released 6/23/04, Health Affairs reports that Medicaid rates for physicians grew 27.4% from 1998-2003 following a period of slow growth in the 1990s.  The study's authors were from the Urban Institute and the Center for Studying Health System Change and the Robert Wood Johnson Foundation provided support for the effort.

The study found that 30 states increased their rates at or above the inflation rate and 10 states raised physician fees by more than 35%.  Ten states had average Medicaid fees that were more than 25% above the national average in 2003.  Those states are Alaska, Arizona, Connecticut, Delaware, Iowa, Massachusetts, Nevada, New Mexico, North Carolina, and Wyoming.

The report concludes that Medicaid rates have not changed substantially during the past decade and Medicaid still pays physicians less than Medicare.  Medicaid physician fees were approximately 69% of Medicare physician fees in 2003, up from 62% in 1998.  Medicare fees were about the same in 2003 as they had been in 1998.

You may find more information about the report on the web at:

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.374. [return to top]

For more information or to contact us directly, please visit www.mainemed.com l ©2003, Maine Medical Association