IN
THIS ISSUE
Governor
Announces 6 Percent Cut — Providers Respond
Budget Stalemate Continues: Caregivers Brace for More Cuts
Legislature Passes Business Tax Replacement Plans
Hospital Comments Urged on Medicare Inpatient Rule
Poor Health is Risky Business: DVD Highlights Value of Employee Wellness
Rules Released to Update Medicare Prospective Payment Systems
Hospital Hosts Congressman
One Month Remaining in the 2007 HEALTH PAC Campaign
News to Know
Governor
Announces 6 Percent Cut — Providers
Respond
Last
week, Gov. Jennifer Granholm announced a 6
percent Medicaid reimbursement cut to hospital
inpatient and outpatient rates, disproportionate
share hospitals and graduate medical education in
an attempt to balance the state budget for
fiscal year 2007. If these administrative cuts
are enacted
June 1, 2007, hospitals will be cut $30 million
between June 1 and Sept. 30.
In
addition to the hospital cuts, the governor’s
announcement included a 6 percent Medicaid
cut to physicians, nursing homes and mental health
providers.
This administrative action is separate from
legislative
proposals to reduce Medicaid currently under
consideration by the state House and Senate.
It is unknown what
action the legislature will take in response
to this announcement; however, the chance
exists that this
newly announced cut will be in addition to,
not in lieu of, the cuts proposed formerly by
the legislature.
The
House
recently voted to cut Michigan hospitals $28 million and the Senate
$13.4 million for the remainder of fiscal year 2007.
These legislative
proposals will likely be moved to a conference
committee for further deliberation.
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Health system executives
Dennis Swan (left) and Jay Rising explain the
serious consequences the proposed Medicaid cuts
would have for hospitals and their patients. |
In
response to the cuts, the MHA organized a Code
Blue
news conference representing
the breadth and depth of the health care delivery
system
to
call
upon the
legislature to take action to protect
Medicaid. Dennis
Swan, president & CEO, Sparrow
Hospital & Health
System, Lansing, and Jay Rising, executive
vice president & chief
financial officer, Detroit Medial Center,
represented the hospital community to
articulate the impact of
the cuts to hospitals and the patients
they serve. Other professionals mirrored
these comments, including
Hoyt Nursing & Rehab Center owner
Jon Reardon; Michigan State Medical
Society President AppaRao
Mukkamala, MD; Michigan Osteopathic
Association President John Bodell,
DO; Jim Bowe,
vice
president, Advocacy
and New Business Development, Trinity
Continuing Care Services; and Dan Russell,
executive
director, Genesee County Community
Mental Health. Lawmakers
were told that they alone are responsible
for the imminent physical and economic
harm to every
Michigan
citizen who depends on health care
access and jobs.
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| |
MHA President
Spencer Johnson joined others from the health
care community to convey the severe
repercussions of instituting the proposed
Medicaid cuts. |
The
MHA is receiving feedback that many lawmakers have
not heard from
their hospitals,
making
these proposed cuts closer to reality. Michigan hospitals
are being again urged to immediately
contact every state lawmaker
and the governor to describe
the realities that have caused this
declaration of Michigan health care’s Code Blue. For more information, contact
David
Finkbeiner or Lori
Latham at
the MHA.
Back
to Top
Budget
Stalemate Continues: Caregivers Brace
for More Cuts
Last
week, the Medical Services Administration (MSA)
released a final
policy to implement a 6 percent reduction
in Medicaid payment
rates effective June 1, 2007. These
cuts were announced by
Gov. Granholm in an attempt to
balance
the Fiscal Year (FY) 2007 state
budget and apply to hospitals,
physicians, skilled nursing facilities,
mental health services and other
providers. The
reduction applies
to both Medicaid fee-for-service
and managed care payments, including
disproportionate
share hospital
and graduate medical education
payments paid through the Medicaid fee-for-service
system.
The rule is
projected to cut payments to Michigan
hospitals
by $30 million during the final
months
of the state fiscal year, which
ends Sept. 30,
2007.
The
MHA is deeply concerned about the impact of these
cuts
on Michigan
hospitals
and
on the state’s
most vulnerable citizens, and
in response has declared a Code
Blue crisis, as these cuts will put
Michigan
lives at risk and place vital
jobs in imminent jeopardy in
all 83
Michigan counties. Members are
urged to
contact every
state lawmaker and Gov.
Granholm to:
Members
with questions regarding Medicaid payments or
policy issues should
contact Vickie
Seal,
and questions regarding MHA advocacy should be addressed to Lori
Latham at the MHA.
Back
to Top
Legislature
Passes Business Tax Replacement Plans
Last
week, the House of Representatives passed a
business tax plan
to fully replace Michigan’s
expiring $1.9
billion single business tax (SBT). The
new Michigan Business Tax would be levied
against business
income and business net worth, and would
also provide
$700
million in new tax credits for in-state
business investment, compensation
and research. These credits are
designed to benefit Michigan companies
that invest in the state and encourage
out-of-state
companies to make
similar investments. The package also provides
substantial personal-property tax
relief, long sought
by Michigan manufacturers and other industries.
While
the Senate also passed its
plan last
week, the
House plan
is the tax
structure
anticipated
to ultimately
be adopted by the
legislature and sent to the governor
for review.
The SBT will
expire Dec.
31,
2007,
leaving
a nearly
$2 billion hole
in the
state’s
revenues. The
movement on
a new business
tax could result
in continued
funding for state
programs,
including Medicaid,
in fiscal year
(FY) 2008.
However,
this replacement
tax
does not address
the existing
$700 million
deficit
for the remainder
of the current
fiscal year,
or the structural
deficit
of more than
$1 billion
that will still
exist
for FY 2008. For
more information,
contact Laura
Appel at
the MHA.
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Hospital
Comments
Urged on Medicare
Inpatient
Rule
Last
week, the MHA distributed
hospital-specific
impact
reports to
hospitals that reflect
the estimated
impact of
the fiscal
year (FY)
2008 proposed
rule on the
Medicare
inpatient prospective
payment system.
Compared
to FY
2007, on
a statewide basis,
the
rule
will result
in a $22
million decrease in
Medicare
inpatient payments to
hospitals
in FY 2008. Although
the rule proposes
a 3.4
percent
marketbasket increase,
most
of the increase
is
offset
by a coding
adjustment and other
policy
changes by the Centers
for Medicare & Medicaid
Services
(CMS).
The rule
also
includes
replacement
of the
current
diagnosis-related
group
(DRG)
classification
system
with
a revised
Medicare
severity
(MS)
DRG
system
and continues
the transition
from
charge-based
DRG weight
calculations
to cost-based
weights,
representing
the second
year
of the three-year
transition
that
began
in FY
2007.
On
a statewide
basis,
Medicare inpatient
payments
are projected
to
decrease
by 0.5
percent; however,
projections
for individual
hospital
impacts
vary
widely
from
a 10.5
percent
decrease to a 9 percent
increase. The variations
will depend
on
the mix
of services
provided
at each
hospital and area
wage
index changes,
including
the Sept.
30, 2007,
expiration
of the
Medicare
Modernization
Act Section
508 special
reclassifications,
which will
significantly
reduce
Medicare
payments
to
some
Michigan
hospitals.
Hospitals
are encouraged
to review
the proposed
rule and its
impact on their
operations
and submit
comments
to
the CMS
by the June
12 due
date. The MHA will
provide
additional information
regarding
the proposed
rule in
the next few
weeks.
Members
with
questions
should
contact Vickie
Seal at the
MHA.
Back
to Top
Poor
Health
is Risky
Business: DVD Highlights
Value
of Employee
Wellness
The
MHA continues
to
assess the emerging
health
care
trends
in
the areas
of
access, funding,
quality
and
health status
improvement.
In
the area
of
health improvement,
the
findings
are
clear that
Michigan
is
one of the
nation’s
least
healthy
states,
with
some
of
the
highest
rates
of
tobacco
use,
obesity,
chronic
heart
disease,
hypertension
and
diabetes
among
its
residents.
These
unhealthy
behaviors
are
subsequently
driving
up
health
care
costs
for
Michigan
residents,
governments
and
employers.
The
MHA,
in
collaboration
with
pharmaceutical
company
Pfizer
Inc.,
is
leading
efforts
to
improve
Michigan’s
health
status
through
employer-based
initiatives.
One
step
in
this
endeavor
is
the
production
of
a
DVD,
titled
Poor
Health is
Risky Business,
to
discuss
prevention
and
wellness
strategies
for
Michigan
employers
and
employees.
MHA
members received
copies of
this DVD
and are
encouraged to
use it
with employees
and community
initiatives. The
DVD describes
employer-based prevention
and wellness
strategies, how
Michigan employers
can implement
such strategies,
and stories
of companies
that have
successfully invested
in the
health status
of their
employees. To
receive a
copy,
contact Paige
Hathaway at the
MHA.
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Rules
Released to
Update Medicare
Prospective Payment
Systems
Last
week, the
Centers for
Medicare and
Medicaid Services
(CMS) issued
proposed and
final rules
to update
the Medicare
prospective payment
systems for
fiscal year
(FY) 2008
applicable to
various types
of health
care facilities.
The
proposed rule
for the
skilled nursing
facility (SNF)
PPS for
FY 2008
would take
effect Oct.
1, 2007,
and provide
SNFs with
a full
marketbasket update
of 3.3
percent, among
other provisions. The
SNF
PPS
proposed rule was
published in the May
4 issue of
the Federal Register, with comments
due to the CMS by June 29.
A
proposed rule
to update
the inpatient
rehabilitation facility
(IRF) PPS includes
a
3.3 percent
payment increase
based on
the rehabilitation,
psychiatric and
long-term-care (RPL)
hospital marketbasket.
The rule
also contains
other changes
and clarifications. The
CMS will
accept comments
regarding the
IRF
PPS
proposed rule until July
2, with
a final
rule to
be issued
later this
year.
The
first major
refinement to
the home
health (HH)
PPS since
its October
2000 implementation
are contained
in a
proposed rule
that would
take effect
Jan. 1,
2008. While
the rule
provides a
full 2.9
percent marketbasket
update, the
CMS proposes
to apply
a 2.75
percent reduction
to the
national standardized
60-day episode
payment rate
for what
the agency
believes are “coding changes
that do not reflect real changes
in case mix.” A number of
additional
provisions are
incorporated in the HH
PPS proposed rule published in the May
4 issue of the Federal Register, with comments
due to
the CMS by June 26.
 |
The
CMS also
issued a
final rule
last week
to update
the payment
rates and
policies for
long-term, acute-care
hospitals (LTCHs).
The final
rule takes
effect July
1 and
includes a
0.71 percent
rate increase, with the
standard rate
increasing from
$38,086.04 to
$38,356.45. The
rate update
is based
on a
3.2 percent
marketbasket increase
and a
2.49 percent
adjustment to
account for
coding practices,
similar to the adjustment
proposed by
the CMS
in the
FY 2008
inpatient PPS
proposed rule.
Several additional
major provisions are
also included
in the
LTCH
final
rule and the MHA will provide members
with more detail in the coming
weeks.
In
addition, the
CMS issued
a notice
to update
the Medicare
payment rates
for the
inpatient psychiatric
facility (IPF)
PPS, effective
July 1,
2007. Since
the CMS
is not
making any
policy changes,
this rule
is being
issued as
a notice
to update
the current
rates and
there
is no
comment period
for this
update,
which
was also
published in
the May
4 issue of the
Federal Register.
Members
with questions
on any
of the
rules relating
to the
Medicare prospective
payment system
updates for
FY 2008
should contact
Vickie Seal at
the MHA.
Back
to Top
Hospital
Hosts Congressman
 |
| (Left
to right) Fritz Kellermann, hospital trustee;
U.S. Rep. Tim Walberg; Jack Denton, hospital
CEO. |
U.S.
Rep. Tim
Walberg (R-7th
District)
joined
key staff
and board
members of
the Eaton
Rapids Medical
Center for
a luncheon
at the
hospital last
week. During
the meeting,
Walberg and
hospital
employees
discussed the
importance
of
protecting
federal
funding for
critical
access
hospitals and
the vital
role played
by all
of Michigan’s
community hospitals
in maintaining the
fragile health
care safety net that continues
to be threatened
by worsening
economic conditions. For more information,
contact Amy
Barkholz at the MHA.
Back
to Top
One
Month Remaining
in the
2007 HEALTH
PAC Campaign
With
one
month
remaining
in
the
annual
fundraising
campaign,
the MHA
Health
PAC
has raised
$79,993
toward
the
$350,000
statewide
goal.
The Health
PAC Board
congratulates
four
new
health
care
organizations
that
have
achieved
their
organizational
goal:
Crittenton
Hospital
Medical
Center,
Rochester
Hills;
Michigan
Association
of Healthcare
Advocates,
Lansing;
Oaklawn
Hospital,
Marshall;
and
Otsego
Memorial
Hospital,
Gaylord.
All
those
who
contribute
to
the
campaign
secure
membership
to
one
of
the
following
clubs:
Chairman’s
Circle
($1,000+), Trustees’ Club
($750+);
President’s
Club ($500+),
Capitol
Club ($350+) and
Century
Club
($250+).
The
MHA
Health
PAC
strongly
encourages
those
hospitals/systems
that
have
not
met
or
exceeded
their
organizational
goals
to
immediately
launch
local
fundraising
campaigns.
Members
with
exceptional
performance
will
be
formally
recognized
at the MHA
Annual
Membership
Meeting;
therefore
all
contributions must
be
received
by June
8. Members
with
questions
should
contact
Lori Latham at
the
MHA.
