IN THIS ISSUE

Board of Trustees Meeting Highlights

The MHA Board of Trustees met last week, focusing much of its attention on funding issues, including Medicaid reform and ongoing discussions with Blue Cross Blue Shield of Michigan (BCBSM). On the Medicaid front, the board heard a report on current activities at the state and national level. Specific reference was made to the activities of a work group convened by state Rep. Bruce Caswell (R-Hillsdale), which has created a preliminary list of 31 reform elements. In concert with the Partnership for Michigan's Health — comprised of the MHA, the Michigan State Medical Society and the Michigan Osteopathic Association — the MHA has drafted a formal response describing options and barriers that should be addressed during the work group's ongoing deliberations. This matter will be the topic of discussion by the newly established Board Subcommittee on Medicaid Reform (see related article).

In other matters, the board approved the audits of the MHA and its related entities prepared by the public accounting firm of Plante & Moran. The board expressed appreciation for the association's solid financial procedures, which resulted in a "clean opinion" from the auditors. Additionally, a resolution honoring John Rockwood, president of Munson Healthcare, Traverse City, was approved in recognition of his planned year-end retirement following 20 years of visionary leadership at Munson and his unfailing support of Michigan's hospitals.

Finally, the board discussed the importance of political advocacy and recognized the importance of achieving the statewide HEALTH PAC goal of $300,000 by year-end. Questions regarding the board's activities should be directed to David Seaman at the MHA.

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Federal Budget Reconciliation Remains in Flux

Last week, the U.S. House of Representatives expected to complete work on its version of budget reconciliation, the Congress's mechanism for implementing spending reductions required under the 2005 budget resolution. However, late on Thursday, House leaders reportedly had decided to pull the bill from House action. The version of the budget reconciliation that came out of the House Budget Committee requires significant cuts to the Medicaid program, which Democrats criticized as hurting the poor and failing to achieve deficit reductions. Supporters of the bill argue that the patient co-pays and other changes were done at the request of the National Governors Association.

The MHA and member hospitals advocated strongly for changes to the original House bill, which would have ended the use of Michigan's Medicaid managed care provider tax mechanism. Under the current House version, Michigan can continue using the mechanism for three years, with a partial phase-out in the fourth year and elimination of the existing mechanism in the fifth year. The House bill also includes an amendment offered by U.S. Rep John Dingell (D-Trenton) that will improve Michigan's federal matching assistance percentage. That rate for Medicaid services has decreased because of some large pension deposits, and this amendment could bring as much as $40 million in federal funding to Michigan's Medicaid program.

In a 52 to 47 vote Nov. 3, the Senate approved its fiscal year (FY) 2006 budget reconciliation bill, S. 1932, which cuts $10 billion over five years from the Medicaid and Medicare programs. The Senate agreed to spare states from cuts in federal Medicaid payments for FY 2006 by including a $500 million amendment directing the Centers for Medicare & Medicaid Services to ensure that no state receives a cut of more than 0.5 percent of their federal Medicaid matching payments during that year. The Senate bill permanently grandfathers Michigan's managed care provider tax mechanism. Due to the change in the House schedule, the next steps are unclear. The Senate had hoped to quickly move the bill to a conference committee and prepare a final version before the Thanksgiving recess. However, the vast differences between the two versions and the postponement in the House seem likely to delay final action for several weeks. For more information, contact Laura Appel at the MHA.

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Medicaid APC Implementation Set for July 1

As previously reported, the Medical Services Administration (MSA) intends to implement an outpatient ambulatory payment classification (APC) system effective July 1, 2006. This would replace the current cost-based payment system for hospital outpatient services (provider type 40) for Medicaid fee-for-service and managed care. The Medicaid outpatient prospective payment system (OPPS) will apply to all Medicaid-enrolled hospitals, including those excluded from Medicare OPPS, such as children's and critical access hospitals. To address implementation issues, the MSA has hosted several meetings with the APC hospital work group, comprised of representatives from hospitals, Medicaid health plans and the MHA, with the next meeting scheduled for Nov. 18.

For coordination of benefit purposes and for administrative simplification, the Medicaid OPPS will mirror as closely as possible the current Medicare OPPS claim submission and payment policies, including incorporation of the Medicare:

The MSA intends to use Medicare APC weights and each hospital's Medicaid outpatient cost-to-charge ratio, obtained from its most recently filed cost report for outlier payments. The MSA will apply a reduction factor, currently targeted at 55 percent of Medicare APC payments, to determine Medicaid APC payment rates. Although the financial impact is to be budget-neutral on a statewide basis, the impact on individual hospitals may vary, based upon mix of services provided. Consistent with the current fee-for-service system, the agency does not intend to incorporate a wage index adjustment. The MSA is currently analyzing coverage differences between Medicare and Medicaid, including:

The MHA will provide additional information regarding Medicaid APC implementation as it becomes available. Hospitals should contact the MSA regarding specific concerns. For more information, contact Vickie Seal at the MHA.

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Board Subcommittees Created

As part of its strategic planning activities, the MHA Board of Trustees in September recommended the creation of board subcommittees to address the association's strategic pillars of funding, access, health improvement and quality. At its Nov. 9 meeting, four new subcommittees were established, in addition to the already existing Board Subcommittee on Blue Cross Blue Shield of Michigan, chaired by Garry Faja, president and CEO, Saint Joseph Mercy Health System, Ann Arbor.

The Subcommittee on Medicaid Reform, charged with evaluating strategies to advance a reform agenda and identifying strategies to positively affect state budget deliberations, will be chaired by Dennis Swan, president and CEO, Sparrow Hospital and Health System, Lansing. The Subcommittee on Access will be chaired by Spencer Maidlow, president and CEO, Covenant Medical Center Inc., Saginaw, and is charged with determining priorities to positively affect the health care workforce and/or expanding health care coverage. The Subcommittee on Quality will be chaired by Donald Kooy, president and CEO, McLaren Regional Medical Center, Flint, and is charged with continuing the MHA's efforts to distinguish Michigan hospitals as national leaders in the improvement of care, including the alignment of the MHA Keystone Center on Patient Safety & Quality's objectives with accrediting standards and advancing Keystone efforts into new areas of the hospital setting. Finally, the Subcommittee on Health Improvement is charged with examining options to make a favorable impact on health status in Michigan and identifying preferred models for association action. This subcommittee will be chaired by Ned Hughes, president, Gerber Memorial Health Services, Fremont.

The subcommittees will work throughout the first half of calendar year 2006, with final recommendations forwarded to the board next summer. Questions regarding the subcommittee structure should be directed to David Seaman at the MHA.

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Mix of Health Care Legislation Moving

Since completing action on the state budget in late September, the Michigan Legislature has moved several health-related bills. House Bill (HB) 4403, sponsored by Rep. Howard Walker (R-Traverse City), would allow a physician to delegate tasks involving the use of surgical instrumentation to an individual who is a specifically authorized surgical technologist or surgical first assistant when that physician is present during the procedure and provides direct supervision. The MHA Legislative Policy Panel recommended at its October meeting that the MHA support HB 4403, which now awaits the governor's signature. A bill the Legislative Policy Panel will discuss in early December was moved to the House floor; but an agreement between the sponsor and the MHA will hold HB 5325 on the House floor to allow a work group to discuss concerns with the legislation. Sponsored by Rep. Kevin Green (R-Wyoming), the bill would require hospitals to offer an influenza vaccination to each elderly person admitted to a hospital during flu season, as long as the vaccine is available. Rep. Green also sponsored HB 5040, which would require the MDCH to submit an annual report to the state legislature on the differences between Medicaid and Medicare reimbursement rates. HB 5040 is a priority of the Partnership for Michigan's Health and it was recently moved to the House floor. Finally, the House Health Policy Committee moved MHA-supported HB 4670 to the House floor, which would require the MDCH to issue a special volunteer license to qualified doctors who are retired and want to volunteer to serve patients who are uninsured or indigent.

The Senate passed Senate Bill (SB) 794, which would create a Newborn Screening Quality Assurance Advisory Committee within the MDCH, to the House last week. The MHA supports SB 794 because it would require the committee to issue an annual report on the appropriateness and cost of new or existing newborn screening tests. Members with questions should contact Dave Finkbeiner at the MHA.

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BCBSM Establishes DRG and Capital Update Factors

Last week, the Blue Cross Blue Shield of Michigan (BCBSM) Participating Hospital Agreement Reimbursement Committee established an update factor of 4.0 percent for diagnosis-related group (DRG), per diem, and controlled charges for hospitals with fiscal years beginning April 1, 2006. This represents an increase from the 3.9 percent factor established last quarter. The committee considered several factors, including the current national input price index and subsequent revisions to the original projections; BCBSM hospital reimbursable margins; and other hospital-specific measures, such as cash position, days in accounts receivable and average age of plant.

The committee also established the capital update factor for all hospitals at 0.9 percent, which is higher than the 0.7 percent increase for the previous year. The capital update methodology employs the same indexes for depreciation and interest that the Centers for Medicare & Medicaid Services uses for the Medicare capital update, adjusted for the BCBSM distribution of capital expenses. The committee is comprised of hospital, BCBSM and independent representatives. For more information, contact Marilyn Litka-Klein at the MHA.

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Comments Sought on JCAHO Credentialing and Privileging Standards

Last week, the Joint Committee on Accreditation of Healthcare Organizations (JCAHO) announced the field review of the Credentialing and Privileging Standards for hospitals and critical access hospitals. In 2003, JCAHO convened a task force to review and revise the standards for the credentialing and privileging of licensed independent practitioners and other practitioners. As a result of this review, four new concepts are proposed for incorporation into the standards. These concepts are designed to transition the credentialing and privileging process from an often subjective exercise to one that would establish additional evidenced-based, consistent processes for determining the competence of practitioners. Comments on the proposed standards must be returned to JCAHO by Dec. 5. For more information, contact Sam Watson at the MHA.

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Medicare's 2006 Updates for Outpatient Services Focus of Workshop

Officials at the Centers for Medicare & Medicaid Services have stated that faulty coding on millions of claims has cost hospitals legitimate reimbursement. The MHA Health Foundation workshop, Secure APC Revenue Integrity: 2006 APC and CPT/HCPCS Updates for your Outpatient Data Cycle, will help hospitals confirm that their coding and billing practices are accurate for Medicare's 2006 changes to current procedural terminology (CPT) and ambulatory payment classification (APC) codes. The full-day workshop is scheduled for Dec. 13 in Lansing and Dec. 14 in Novi and will be offered as a Webinar on Jan. 5 and 6, 2006. An early registration discount is available through Nov. 23. Contact Leigh Anne Jewison at the MHA for more information.

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Last Chance for 2006 MHA Directory Reduced Rate Pre-order

Friday is the last day for members and nonmembers to pre-order the 2006 MHA Membership Directory at a reduced rate. Order this week to receive a 20 percent discount, making the cost $100 for members and $240 for non-MHA members. After Nov. 18, the directory will be available for $125 for MHA members and $300 for nonmembers.

Nowhere else can organizations and individuals access comprehensive contact information for every MHA-member organization, including mailing and e-mail addresses, phone numbers, fax numbers, Web site addresses and more. The list of member employees includes such titles as chief information officer, compliance officer, managed care director, human resource director and chief of staff. Many organizations have more than a dozen contacts each listed in the 2006 MHA Membership Directory. The directory also includes the number of hospital and health system full-time employees, inpatient and outpatient admissions, and a listing of MHA staff and services. With all of these features, the MHA Membership Directory is the best way to make a connection in 2006. For more information, contact Renee Cullimore at the MHA.

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Members in the News

Christopher Palazzolo	K. Douglas Deck

St. John Hospital & Medical Center, Warren, recently announced that Christopher Palazzolo will become its new vice president of finance/chief financial officer effective Nov. 21. Palazzolo has served at the Detroit Medical Center since 2001, most recently as executive vice president and chief financial officer. He is a graduate of Michigan State University, where he received a bachelor's degree in business administration, and brings 28 years of experience in finance and administration to St. John.

K. Douglas Deck has been named president and chief executive office of Munson Healthcare, Traverse City. He will assume the position in January after the retirement of current president and CEO John Rockwood, who has been with the organization 22 years and became president in 1993. Deck is currently president and CEO of Samaritan Health Partners and Good Samaritan Hospital in Dayton, OH, a position he has held for more than 17 years. He is also executive vice president of Premier Health Partners, a regional three-hospital health system headquartered in Dayton.

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Medicare Part D Open Enrollment Begins

Beginning Tuesday, Michigan's 1.5 million Medicare beneficiaries (senior citizens ages 65 and older and certain younger disabled people) will begin signing up for one of the Medicare Part D plans that have been approved in the state. All individuals entitled to Medicare Part A and/or enrolled in Medicare Part B can enroll in one of the Medicare drug plans. Many Medicare beneficiaries remain confused about the new drug benefit, and they will be seeking guidance and answers from their community hospital.

Within days, member CEOs, directors of volunteer services, patient representatives, outpatient services directors, public relations directors and community benefit managers will receive a packet of additional tools from the MHA to help with the inevitable inquiries from Medicare beneficiaries. Among the tools included in the packet are the Medicare Prescription Drug Coverage Brochure, Service Provider Fact Sheet, Medicare Prescription Drug Benefit/Medicare Part D Fact Sheet, Materials Order Form, Sample Article for Internal and External Newsletters, and a flier for the Medicare Prescription Drug Plan EXPO.

To date, the Michigan Medicare/Medicaid Assistance Program (MMAP) materials included in this packet have been shared in Monday Report, in a comprehensive mailing to member public relations directors and community benefit managers in October, and as part of a well-attended MHA education session in September. MMAP is the primary organization in Michigan responsible for educating beneficiaries about Medicare Part D.

Those with questions about Medicare Part D should contact a local MMAP representative from 8 a.m. to 5 p.m., Monday through Friday by calling (800) 803-7174 and asking for a MMAP counselor or by visiting the MMAP Web site. Members with questions should contact Kevin Downey or Lori Latham at the MHA.

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Michigan Hospitals Continue to Gather Tons of Food

Shown here as viewed from a balcony, Battle Creek Health System's soup sculpture for the Michigan Harvest Gathering will feed local families.

As the 2006 Michigan Harvest Gathering goes into its final days, hospitals statewide are showing a remarkable proficiency for collecting groceries and cash to help feed the hungry in their communities. With reports received from about 30 percent of participating MHA-member organizations, Michigan health care organizations and the MHA have already donated more than 10,000 pounds of groceries and nearly $32,500 to this year's campaign.

Battle Creek Health System's (BCHS) food drive is an example of the ingenuity of the MHA-member teams conducting food drives. Initiated with cans of soup donated by the hospital cafeteria, a "can sculpture" of the BCHS logo was built, followed by the words "We Care." The sculpture grew as employees donated cans of soup for the Food Bank of South Central Michigan in Battle Creek. The cafeteria continued to promote the food drive using a "soup special," rewarding diners with a free bowl of soup when they contributed a can. In addition, jars were provided at the cafeteria registers to collect spare change for the campaign.

The statewide Michigan Harvest Campaign continues until Thanksgiving. MHA members conducting food drives must submit a Post-Food-Drive Reporting Form to the MHA to have their donations included in the overall totals for the campaign. Each organization should report both the pounds of groceries and the cash amount raised. For more information, contact Linda Dicks at the MHA.

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Flu Vaccine Update: Quantity Plentiful, Distribution Variable

Based on information from manufacturers, the nation's influenza vaccine supply is expected to be between 78 million and 80 million doses. According to the Michigan Department of Community Health, this greatly exceeds last year's supply of 61 million doses and would be one of the highest amounts ever provided. However, delays in distribution may mean some people will have to wait until late November or early December to be vaccinated. Some doctors have not received vaccine shipments, and vaccine manufacturer Chiron Corporation said recently that it will not produce as many doses as initially expected.

To date, it's estimated that the four influenza vaccine manufacturers have distributed about 64 million doses. Sanofi pasteur, the largest provider, has distributed 51 million doses. The company has shipped vaccine for all pre-booked orders, and it expects to have shipped 58.5 million doses by mid-November. Providers with confirmed orders should be receiving vaccine in the coming weeks, but those whose orders are on a waiting list may not receive more vaccine. Health care providers who are uncertain about the status of their vaccine orders should contact their vaccine distributors for an update.

As influenza vaccine distribution and administration is a mostly private-sector enterprise, vaccine supplies are likely to vary. Many communities and providers appear to have ample supplies of vaccine, while others have already used their supplies or are still receiving shipments.

October and November are traditionally the months when most people seek and receive an influenza vaccination, and the influenza disease season usually doesn't peak until January or later. Providers should remind patients that getting an influenza vaccination in December is beneficial. Those who are unable to receive a vaccination now should arrange for one later this month or in December, as the vaccine supply can change quickly. Members with questions should contact Sherry Mirasola at the MHA.

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New Requirements Finalized for SNFs

The Centers for Medicare & Medicaid Services (CMS) recently published a final rule that established a new data collection, posting and record-keeping requirement for skilled nursing facilities (SNFs) and nursing homes, effective Dec. 27, as specified by the Benefits Improvement and Protection Act of 2000 (BIPA). Under the final rule, these facilities are required to post the actual working hours and total number of hours worked during each shift by licensed and unlicensed nursing staff directly responsible for resident care. In addition, the rule requires facilities to post their resident census. The data must be posted daily in a place readily accessible to residents and visitors, with updates made at the beginning of each shift.

The CMS interprets licensed nursing staff to mean registered nurses, licensed practical nurses and licensed vocational nurses, while interpreting unlicensed nursing staff to be certified nurse aides. Members with questions regarding the final rule should contact Vickie Seal at the MHA.

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Rural Health Caucus Reviews Challenges to Small Communities

The Rural Health Caucus met over lunch in the Capitol last week to discuss a report highlighting the differences between rural and urban communities and their implications for rural health status and access to care. The Rural Health Caucus was formed in 2001 by state Rep. Bill Huizenga (R-Zeeland) and Sens. Jason Allen (R-Traverse City) and Alan Sanborn (R-Richmond) to serve as a bipartisan forum for legislators to discuss rural health issues and support public policy to advance rural health care. Rep. Leslie Mortimer (R-Horton) currently serves as chair of the caucus.

Robert LaBarge

The report was prepared by the Michigan Rural Health Association (MRHA), a partnership of several organizations that advocates for rural health issues. MRHA members include Rep. Huizenga, the MHA, the Small Business Association of Michigan, the Michigan Center for Rural Health, the Michigan Health Council, and groups representing federally qualified health clinics, free clinics and community mental health services. The incoming president of the MRHA is Robert LaBarge, CEO of Sturgis Hospital. For more information about the report or the MRHA, contact Amy Barkholz at the MHA.

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• The MHA Small or Rural Hospital Council will meet at 11:30 a.m. Wednesday at the MHA. A representative from the Michigan Department of Community Health will discuss statewide trauma system recommendations. For more information, contact Amy Barkholz at the MHA.

• The MHA Financial Policy Panel will meet at noon Wednesday at the MHA. For more information, contact Marilyn Litka-Klein at the MHA.

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MHA Members can also refer to these items in our Weekly Mailing: AB 1127 MSA Work Group Meeting Hall Render Record Retention Schedule Hall Render Universal Service Fund Telecommunications Support for Rural Health Care Providers   MHA AHA & JCAHO Collection of Patient-level Data  MHA MHA Policy Briefs from Nov. 9, 2005, Board of Trustees Meeting