News briefs

HCFA proposes increase in rates for hospitals

Hospitals across the United States would see a 2.55% increase in Medicare payment rates in fiscal year 2002, according to a proposed rule issued by the Health Care Financing Administration in Baltimore and published in the May 4 Federal Register.

The proposed increase, which would become effective Oct. 1, 2001, will affect about 4,800 acute care hospitals that are paid under the prospective payment system (PPS). The proposed rule also contains provisions to implement a number of mandates in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, which will also become effective Oct. 1, 2001. Among these is a proposed mechanism to facilitate access to high-cost new services and technologies by authorizing special payments to cover increased costs.

The proposed rule also makes a number of revisions to the diagnosis-related group (DRG) classifications. For example, the proposed rule would create two new pancreas transplant DRGs and would create new DRGs for cardiac defibrillator cases and percutaneous transluminal coronary angioplasty cases.

In addition, the proposed rule provides for a three-year hospital geographic wage index reclassification, the use of three-year averages of the average hourly wages in qualifying for geographic reclassification, and the option to use a statewide index instead of individual wage indexes for the geographic area of a state. HCFA plans to publish a final inpatient PPS rule by Aug. 1, for implementation Oct. 1, 2001. 

E-health searches differ from commerce behavior

Patients who use on-line health information say it has a real impact on how they manage their care, according to a recent study. But the study also indicates that typical on-line traffic-building strategies don’t seem to work, because usage patterns in e-health bear little resemblance to those in e-commerce.

The study, conducted by the Boston Consulting Group, shows that the more patients use the Web for health, the stronger their response to the call to action issued by health care companies. For example, those who use the Internet frequently are two to three times more likely than infrequent users to take action that affects their diagnosis and treatment.

Reaching patients on-line, however, can be difficult. The research reveals two key dissimilarities between the Internet searching behaviors of patients and consumers:

• Unlike consumers seeking other information on-line, patients don’t explore health topics on the web at their leisure or for entertainment. The vast majority — 77% — uses the Internet for health issues only when they have specific questions.

• Internet users don’t usually turn to health sites directly when searching for health information. To answer their health queries on the web, 65% of patients usually start with general search engines. Even those who favor specific health-related sites report that they initially found them through general search engines.

The report did find, though, that patients have begun to migrate to more active segments over the past year. This suggests that greater patient access to on-line information is leading to greater patient involvement, the researchers say. In addition, patients who take a more active role in their care are beginning to "stick" to sites. These patients are more likely than patients in other segments to visit health sites and disease-specific sites. 

More HIPAA action expected this year

The U.S. Department of Health and Human Services (HHS) will soon release changes to the privacy and transactions and code sets rules of the Health Insurance Portability and Accountability Act, says William Braithwaite, senior advisor on health information policy in the department’s office of the assistant secretary for planning. Modifications to the rules will be in the form of a notice for proposed rule making publication, says Braithwaite, who spoke at the TEPR 2001 Conference in Boston on May 10. His comments were reported by Health Data Management.

HHS expected to release guidance for the privacy rule in May in an attempt to clear up any discrepancies in the final rule, which was released in April. Modifications to the rule, such as more clearly specifying when a patient’s prior consent is needed to release his or her medical information, will be included in a notice for proposed rule making and released later this year, Braithwaite says.

HHS also expects to release a notice of changes for the transactions and code sets rule, including doing away with the National Drug Code code sets mandate, he adds. 

HHS Task Force will target patient safety

Department of Health and Human Services (HHS) Secretary Tommy Thompson has announced that a new Patient Safety Task Force has been established within HHS that will coordinate a joint effort among several agencies to improve existing systems to collect data on patient safety.

These agencies include The Agency for Healthcare Research and Quality, the Centers for Disease Control and Prevention, the Food and Drug Administration, and the Health Care Financing Administration. HHS’ fiscal 2002 budget proposal includes up $72 million, an increase of $15 million over fiscal year 2001, for efforts to improve patient safety and reduce the number of adverse events.

In addition, Thompson has charged the task force with studying how to implement a user-friendly Internet-based patient safety reporting format. The group will develop computer networks, user-friendly reporting systems, and standards for coding the content of the reports, reports AHA News. The system will feature a uniform data collection method. The Centers for Disease Control and Prevention and the Food and Drug Administration will provide data on medical errors, while the Agency for Healthcare Research and Quality will analyze the causes of medical errors. 

Hospital to study effect of electronic medical records

The University of Colorado Hospital in Denver has announced two new grants for controlled studies of how patient care is affected by electronic access to medical records. The announcement of The Commonwealth Fund gift of more than $282,000 plus a significant grant from CaP CURE was made at a University of Colorado Hospital Authority Board of Directors meeting by Dennis Brimhall, president and CEO.

With support from the Commonwealth Fund grant, researchers Steve Ross, MD, and C.T. Lin, MD, will manage a study of the effect of patient access to electronic medical records (EMRs) on the attitudes, expectations, and experiences of patients and physicians at a specialty clinic for heart failure at the hospital.

Researchers will conduct a controlled study of patients with congestive heart failure who are provided access to their EMRs via the Internet and will evaluate the effect of EMR availability on patients’ understanding of their conditions, their ability to provide self-care, and their confidence in the care they are receiving. Physicians’ views on medical record access also will be studied.

The grant from CaP CURE will help fund a study of about 30 prostate cancer support group members to determine how their use of the Internet affects their medical care. The grant will help patients communicate directly with their physicians at any time via the Internet. Michael Glode, MD, will direct that study. 

HCFA gives direction on cost-to-charge ratios

The Health Care Financing Administration (HCFA) has provided Medicare program intermediaries detailed instructions on how they are to calculate the payments certain hospitals and community health centers are due to make up for some of the losses they suffered in the switch to the outpatient prospective payment system, according to a report in the on-line news service AHA News Today.

HCFA’s Program Memorandum Transmittal A-01-51 gives instructions on how to calculate payment-to-cost ratios for determining the transitional corridor payments, or transitional outpatient payments. Rural hospitals with fewer than 100 beds, qualifying cancer hospitals, and children’s hospitals are slated to receive the full difference between what they would have gotten under the pre-Balanced Budget Act system and what they would get under the new outpatient prospective payment system. All other hospitals and CMCHs will get a portion of that difference.

The new program memorandum also notes that hospitals using subscripted cost centers and providers that changed the types of services they furnish after the cost reporting period HCFA used to calculate the original ratio may request recalculations of their cost-to-charge ratios. 

CBO: McCain-Kennedy bill would drive up care costs

The patient’s bill of rights co-sponsored by Sens. John McCain (R-AZ) and Edward Kennedy (D-MA) would increase premiums by an additional 4.2%, according to an analysis by the Congressional Budget Office (CBO). Critics say this could cause many employers, already facing a 13% increase in health care costs this year, to drop plans. Dan Danner, chairman of the Health Benefits Coalition, says it would be "unconscionable" for Congress to enact any legislation that would make health care more expensive and risk the possibility of millions of more Americans losing their health coverage.

Despite language regarding a "cap" on lawsuit damages to employers, the bill still leaves them open to unlimited, class-action suits, the COB study contends. A recent survey shows that 46% of employers carrying health plans would drop them if they were made vulnerable to expanded health care liability. A copy of the CBO analysis, requested by Sen. Don Nickles (R-OK) of the Budget Committee, can be found at from=7

Hospital profit margins show negligible increase

Operating profit margins at U.S. hospitals flattened at an annualized average of 3.69% in 2000, indicating only a slim degree of financial health, according to a report by Solucient, a provider of benchmark information on health care.

Hospital operating margins increased 0.41% over 1999 and remained relatively low, a full 36.6% lower than in 1997. Solucient president Gregg Bennett says margins of from 3%-4% are not sustainable in the long run, especially given the pressure from increasing drug costs and hospital labor shortages. He also says hospitals are still feeling the sting of the 1997 Balanced Budget Act and its clamp on Medicare payments.

Other key findings from the study, "The Health of Our Nation’s Hospitals," include: Smaller hospitals finished the year best at 4.84%, their highest operating margin since 1997; larger hospitals produced the slimmest operating margins at 2.83%; regionally, western hospitals posted the weakest operating margins — 3.9%, while northeastern hospitals fared the best, going from break-even in 1999 to almost 5% in 2000. For more information, visit