The state Senate Health Policy Committee held a hearing last week at Wayne State University, Detroit, on MIHealth, the Senate bipartisan health insurance reform package.

Mike Duggan, president and chief executive officer, Detroit Medical Center, testified about the growing financial pressures related to the increasing number of uninsured and Medicaid patients seeking treatment in Michigan hospitals and the need to address the problem. Duggan reinforced that two-thirds of Detroit hospitals have closed over the past 20 years, primarily due to government failure to properly pay for care for the uninsured and underinsured. He also emphasized that the impact of indigent care is being felt throughout the state, including rural areas.

To reduce the number of uninsured Michigan residents, the Senate MIHealth package (Senate Bills 579-582) would expand Medicaid coverage to all citizens with incomes up to 200 percent of the federal poverty level (FPL) and subsidize the purchase of health insurance for individuals who earn up to 300 percent of the FPL. Health insurance regulations would be changed to allow for broader access to insurance for people with pre-existing conditions, and new rating rules would protect against premium increases after an insured person becomes ill. As introduced, the legislation would require additional payments from the hospital Quality Assurance Assessment Program to assist in funding the Senate MIHealth coverage expansion program.

The MHA Board of Trustees will be asked this week to provide policy and advocacy guidance related to all of the state insurance reform initiatives. Committee action on the MIHealth package is expected to resume after the legislative summer recess ends July 13. For more information about state legislation on health insurance reform, contact Laura Appel at the MHA.

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Last week, the Senate Appropriations Committee reported out its fiscal year (FY) 2010 budget recommendations (House Bill 4336) for the Michigan Department of Community Health (MDCH), which included dramatic cuts to hospitals and other providers, community mental health, and the Healthy Michigan Fund. The committee proposed cuts of more than $533 million in general fund dollars from the governor's revised executive budget recommendation.

The most significant provisions included an 8 percent reduction to hospital inpatient and outpatient rates (Medicaid fee-for-service and health maintenance organization capitation); a similar 8 percent cut to physicians and nursing homes; elimination of adult Medicaid patient optional services (chiropractic, podiatric, optometric, dental and hearing); and $10 million in general fund savings that the MDCH is instructed to produce from Medicaid co-payments and premiums.

An 8 percent cut to hospital inpatient and outpatient rates will result in lost funds totaling more than $112 million ($32 million in general funds and $80 million in federal matching funds). Detailed information concerning the impact of the cuts to individual hospitals was sent to their chief executive officers and chief financial officers last week.

In anticipation of the committee action, the MHA and its member hospitals waged an intensive grassroots and earned media campaign to urge state senators to reject additional health care cuts. A recent Hospitals-ACT Action Alert generated more than 200 e-mails to senate offices. A statewide radio blitz was conducted by the MHA and members, delivering nearly 30 news talk interviews in cities ranging from Detroit to Escanaba and from Port Huron to Grand Rapids. Additionally, the Partnership for Michigan's Health, comprised of the Michigan State Medical Society, the Michigan Osteopathic Association and the MHA, publicly opposed the cuts in a news release issued to the media. MHA communications continue to drive the public, media and health care advocates to the MHA's Health Care In Jeopardy blog, where visitors can learn more about the threats these health care cuts pose to real Michiganians and subscribe to receive updates via Facebook and Twitter.

It is expected that the full Senate will vote on House Bill 4336 early this week. MHA members are strongly encouraged to contact their state senator and urge resolution of the state's budget crisis - with an infusion of new federal stimulus dollars, NOT through continued MASSIVE CUTS - to protect health care services for all residents.

Members with questions on the state budget or the advocacy campaign should contact David Finkbeiner or Lori Latham at MHA.

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Last week, President Obama proposed $300 billion in health cuts over the next 10 years, with the intention of using the savings to defray the expense of health care reform. The cuts would primarily be accomplished through Medicare and Medicaid disproportionate share hospital (DSH) payments and Medicare inflationary update reductions. Combining these cuts with the president's budget recommendations, the total reduction to hospitals could reach $622 billion over the next 10 years. It is important to note that the proposed reductions amount to only half of the estimated funding necessary to implement the proposed health care reform.

If these cuts are enacted, Michigan's Medicaid program could lose $260 million in federal DSH funds annually. Additionally, Michigan hospitals could lose another $270 million in direct Medicare DSH fund payments each year.

The president's ideas, and similar proposals currently under consideration on Capitol Hill, seek to expand health coverage substantially through payment reductions to hospitals and other providers. The MHA and the American Hospital Association contend that successful health care reform and coverage expansion cannot result in a health care delivery system compromised by severe Medicare and Medicaid cuts; rather, it requires sacrifices by all affected parties, including providers, patients and payers. While payment reductions may play a role in any solution, the MHA is also working to expand models for collaborative quality improvements as mechanisms for reducing future costs of health care.

The MHA is pressing Michigan's congressional delegation to stand behind its community hospitals and reject cuts of the magnitude the president has proposed. MHA members are urged to contact their U.S. House member and both U.S. Senators immediately. Federal lawmakers must understand that true health care reform must be policy-based and that across-the-board cuts cannot be sustained by nonprofit hospitals.

In related news, the Congressional Budget Office (CBO) sent a letter last week to Sen. Edward Kennedy (D-MA) estimating the cost of the health care reform legislation being considered by the Senate Health, Education, Labor and Pensions (HELP) committee. According to the CBO, the HELP committee plan would cost at least $1 trillion, while leaving 37 million Americans uninsured. Similar costs were informally estimated for a similar plan the Senate Finance Committee is developing. For this reason, Sen. Max Baucus (D-MT) has delayed the Senate Finance Committee's scheduled mark-up of its legislation until after the July 4 holiday recess. For more information, contact Laura Appel at the MHA.

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On June 1, the Medical Services Administration (MSA) released a concurrent draft and final policy implementing Executive Order 2009-22, which will reduce provider rates by 4 percent and eliminate coverage of optional Medicaid services for adults, including chiropractic care, podiatric services, hearing aids, eyeglasses and associated vision services, and nonemergent dental care, effective July 1. This will result in a $14 million fee-for-service and health maintenance organization reduction - $4.3 million in general funds and $9.7 million in federal funding - to inpatient and outpatient hospital payments.

In its comments to the MSA, the MHA stressed that these reductions will further threaten the already strained financial condition of Michigan hospitals, resulting in:

• further disparity between Medicaid payments and the cost of providing care to the Medicaid population, noting that Medicaid reimburses hospitals only 62 percent of inpatient costs and 48 percent of outpatient costs
• diminished cash flow
• additional hospital staffing reductions, further reducing state and local tax revenues and exacerbating the current downward spiral of Michigan's bleak economy

The MHA also noted that this policy would result in fewer physicians participating with the Medicaid program, further limiting access to physician services as Medicaid enrollment continues to grow at a staggering rate. Ultimately, sicker Medicaid patients will seek treatment in the more costly hospital setting, likely through the emergency department.

Members are encouraged to submit comments on the provider rate reduction and service coverage elimination policy to the MSA by the June 30 deadline. Questions should be directed to Jason Jorkasky or Vickie Seal at the MHA.

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In May, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update the Medicare inpatient prospective payment system that would decrease Medicare inpatient payments to Michigan hospitals by $104 million in FY 2010, further threatening the financial viability of hospitals and the services they provide to their communities. In late May, the MHA distributed hospital-specific impact reports to hospital chief executive officers, chief financial officers and directors of reimbursement. The MHA is particularly concerned about the negative financial impact of these proposed changes, since approximately 57 percent of Michigan hospitals incur losses on services provided to Medicare beneficiaries. The latest data indicate that Michigan hospitals sustained a negative 2.3 percent Medicare margin in 2006, a significant change from 1997 when they experienced a positive 12.3 percent margin on Medicare services.

In its draft comments, the MHA urges the CMS to mitigate its proposed "behavioral offset" adjustment for what the CMS believes are changes in coding practices rather than real changes in case mix resulting from higher patient acuity. This adjustment is projected to decrease Medicare inpatient payments to Michigan hospitals by $88 million in FY 2010, which more than offsets the marketbasket increase for FY 2010. In addition, the MHA opposes the elimination of indirect medical education capital payments, expected to decrease payments to Michigan's teaching hospitals by $26 million in FY 2010.

In regard to development of the FY 2010 Medicare area wage index, the MHA urges the CMS to restore its initial policy of recognizing pension costs based on Generally Accepted Accounting Principles, rather than funding status. This change would benefit many Michigan hospitals that have appealed this issue, particularly given the plummeting stock values during the current economic recession. The MHA will finalize and submit its comments by the end of the month and urges hospitals to review the impact of the proposed rule on their operations and submit their comments to the CMS before the June 30 deadline. Members with questions should contact Vickie Seal at the MHA.

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On June 16, the Health Information Technology (HIT) Policy Committee, a federal advisory committee to the U.S. Department of Health and Human Services, released its initial recommendations for the definition of "meaningful use" of electronic health records (EHR). The HIT provisions of the American Recovery and Reinvestment Act (ARRA) require that hospitals and physicians meet the definition of meaningful use before they can receive Medicare or Medicaid stimulus funds afforded by the act. In addition, hospitals and physicians that do not demonstrate meaningful use of EHR technology by 2015 will risk financial penalties under Medicare.

The HIT Policy Committee's meaningful use work group developed the recommendations around priorities such as improving quality, safety and efficiency of care; reduction of racial disparities; coordination of care; providing patients and families with access to health care data; and ensuring adequate privacy and security of health information. The work group used these priorities to identify objectives and measures that will determine meaningful use.

There are separate objectives and measures for each of the years 2011, 2013 and 2015, with increasing functional and technical requirements to meet the definition of meaningful use. For 2011, the focus is on capturing and transmitting data. Objectives include the use of computerized physician order entry (CPOE) systems for all order types, with a corresponding quality measure that will examine the percentage of orders entered directly by physicians through CPOE. However, there is no indication of a target percentage that would acceptably meet meaningful use, and this ambiguity also exists in the remaining measures for 2011. Another potentially troubling requirement is that a provider being investigated for a Health Insurance Portability and Accountability Act privacy or security violation cannot achieve meaningful use, and thus, cannot receive incentive payments until the provider is cleared of all violations.

The MHA has formed an HIT Task Force that is working to provide guidance to the MHA and member hospitals on issues such as health information exchange (HIE) and will closely follow the meaningful use requirements. There are specific HIE measures included in the first implementation phase of the meaningful use definition, including the ability to exchange health information (specifically lab results, care summaries and medication lists) with external clinical entities. Like the other measures, they do not have specific targets to determine compliance.

Although the objectives and measures to achieve meaningful use will evolve over time, hospitals are urged to carefully examine the draft definition and comment to the Office of the National Coordinator for Health Information Technology. Comments are limited to 2,000 words and are due by Friday, June 26. Comments can also be e-mailed using the subject line "Meaningful Use." Members with questions should contact Jim Lee at the MHA.

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On May 29, the Medical Services Administration (MSA) released an updated schedule regarding implementation for the Community Health Automated Medicaid Processing System (CHAMPS). In March 2008, the MSA launched the provider enrollment (PE) subsystem of CHAMPS. Effective Sept. 18, the MSA intends to implement the eligibility, prior authorization, claims and encounters (CE), and contracts management subsystems. The CE subsystem will allow Medicaid fee-for-service (FFS) claims submission, inquiry and adjustments/voids through the CHAMPS online system beginning Sept. 18. All Medicaid FFS claims submitted on and after that date will be processed for payment starting Oct. 1.

In its comments, the MHA urged the MSA to ensure that all Medicaid FFS claims are adjudicating accurately and that Medicaid reimbursement updates to code sets and grouping software will occur without payment errors or delays prior to implementation of the CHAMPS CE system. The MHA also requested that the MSA provide details regarding the file layout of the new CHAMPS-generated remittance advice as soon as possible to allow hospitals time to make the necessary system modifications.

The federal government is providing 90 percent of the $90 million in funding for the replacement of the current system, which was developed in the 1970s. Members are encouraged to submit comments on the CHAMPS implementation schedule to Faye Ruhno at the MSA by the June 30 deadline. Members with questions should contact Jason Jorkasky or Vickie Seal at the MHA.

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In May, the Centers for Medicare & Medicaid Services (CMS) proposed a 1.6 percent reduction to Medicare skilled nursing facility (SNF) rates effective Oct. 1, 2009. When all proposed changes are incorporated, this rule is projected to decrease Medicare payments to Michigan hospital-based SNFs by an aggregate $423,000 in fiscal year (FY) 2010, further threatening the financial viability of SNFs and access to these vital services for Medicare beneficiaries and other Michigan residents.

In particular, the MHA believes the proposal to recalibrate the weights of resource utilization groups (RUGs) for FY 2010 is unwarranted. This portion of the proposed rule would reduce Michigan SNF reimbursement by approximately $1 million. In its draft comment letter, the MHA urges the CMS to not proceed with its proposed RUG weight recalibration for FY 2010. All comments on the proposed rule are due to the CMS by June 30. Members with questions should contact Vickie Seal at the MHA.

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The state House Health Policy Committee met last week to begin taking testimony on a four-bill package relating to mental health parity. According to the House Fiscal Agency, House Bills 4597-4600 would "prohibit health insurers from imposing cost-sharing requirements and benefit or service limitations for mental health and substance abuse services that are more restrictive or financially burdensome than for medical services."

If passed, the bills would impose parity requirements on all group and individual policies issued after January 2010. The language says that, if a policy includes mental health and substance abuse coverage, the terms cannot differ from those applying to other medical services. The bills do not, however, require policies to cover mental health or substance abuse treatment.

While the federal mental health parity bill makes the same requirement, it does not include individual coverage or groups of fewer than 50 employees. Although they differ widely, 42 other states have some form of parity requirement.

Most of the testimony offered centered on the potential cost of the proposal and concerns that businesses might raise co-pays and deductibles or drop mental health coverage altogether to avoid the mandate.

The bills were opposed by Blue Cross Blue Shield of Michigan, the Michigan Manufacturers Association, the Economic Alliance for Michigan, the United Auto Workers (UAW), the Michigan Chamber of Commerce, the Small Business Association of Michigan, and the National Federation of Independent Business-Michigan.

The MHA supported the bills, as did the Michigan Nurses Association; American Federation of State, County, and Municipal Employees (AFSCME) Council 25; and the Michigan Psychological Association.

No vote was taken on the package and additional hearings are expected. While there is substantial support in the House, the Senate has consistently opposed similar legislation. Members with questions should contact Nancy McKeague at the MHA.

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Whether the challenges hospitals face involve supervising employees or health insurance claims being wrongfully denied, the MHA Health Foundation offers a webinar this summer to address them.

Scheduled for July 23, the program We Have a Situation ... Disciplinary Action or Mentoring Opportunity? reviews one of the more unpleasant tasks for supervisors and managers. When disciplining an employee, a potentially uncomfortable meeting can turn into an occasion for teaching. This webinar will provide numerous examples of how to approach an employee on sensitive issues and how to discuss a problem without hurting their pride, approach a problem respectfully, and understand the connection between discipline and mentoring.

Hospital leaders who would like guidance on decreasing the number of claims denials that are erroneously attributed to unnecessary admissions will benefit from the webinar Case Management Assignment Protocol: An Answer to the Problem of Claims Denials for Unnecessary Admissions. Scheduled for Aug. 13, this offering provides a case study of a group of Florida hospitals that worked with physicians to overcome payment denials attributed to unnecessary admissions. In sharing the experience, the webinar will outline:

• a Case Management Assignment Protocol process and how to use screening tools
• procedures for resolving differences between attending physicians and case managers
• areas where state law and Medicare payment policy should be examined
• methods for handling patient status assignments that are later determined to be incorrect

Details and registration for these valuable programs are available on the MHA Web site. Questions should be directed to Sara Miller at the MHA.

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At the MHA Annual Membership Meeting this week, 70 hospitals/health care systems will be formally recognized and commended for achieving or exceeding their organizational Health PAC goals.

As of June 17, the campaign had raised more than $294,000 toward the $350,000 statewide goal. Ten additional hospitals/systems have achieved their organizational goals: Brighton Hospital; Carson City Hospital; Clinton Memorial Hospital, St. Johns; Detroit Medical Center Corporate; Mercy Hospital Grayling; Oakwood Healthcare, Inc., Dearborn; Saint Joseph Mercy Health System, Ann Arbor; St John Health Corporate, Warren; St. John River District Hospital, East China; and Trinity Health Corporate, Novi. 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+). For more information on the campaign, goal achievers and club members, visit the Health PAC Web site. MHA-member hospitals/systems that have not yet met their organizational goals are encouraged to take the necessary steps to initiate or complete their fundraising campaigns by June 30. At a minimum, the Health PAC Board is encouraging 100 percent participation from every hospital administrator. Members with questions should contact Stacy Dowdy at the MHA.

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• The MHA Annual Membership Meeting will be held Wednesday through Friday at the Grand Hotel, Mackinac Island. Attendees will learn what's ahead for hospitals in Michigan and throughout the nation, from payment to health care reform. For more information, contact Erin Steward at the MHA.

• The MHA Board of Trustees will meet Wednesday at the Grand Hotel, Mackinac Island. The board will review the current status of health care reform proposals and the state budget crisis. For more information, contact David Seaman at the MHA.

• The deadline for submission of the 2009 Leapfrog Hospital Survey is June 30, and only hospitals that report by the deadline will be considered for the Leapfrog Group's Top Hospitals list. Participating in the survey demonstrates a hospital's commitment to improving patient safety and provides the citizens of Michigan with valuable information on hospital safety. Members with questions should contact Sam R. Watson at the MHA.

• Although next Friday is recognized as this year's Independence Day holiday, Blue Cross Blue Shield of Michigan (BCBSM) will have a nurse on call for case management from 8 a.m. to 5 p.m. July 3 at (248) 563-8846. Precertification calls will also be accepted July 3 from 8 a.m. to noon and from 1 to 4 p.m. Call (800) 922-5114 for information on acute rehabilitation and (800) 482-4040 regarding subacute skilled nursing facilities.

• The Registered Nurses Association in Michigan (RN-AIM) has issued a call for abstracts for research posters or evidence-based practice innovations. The posters may be selected for presentation at RN-AIM's Fourth Annual Conference & Assembly, scheduled for Oct. 8 and 9 at the St. John Conference Center in Plymouth. Staff nurses, advanced practice nurses, administrators and others who would like to share a research idea or evidence-based project are encouraged to submit an abstract electronically by June 29 to RN-AIM Research Council Member Bill Corser.