5 June 2012

Midwest Edition
Calendar
June 6-7
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Illinois Close To Charity Care Deal

Bill Was Heavily Influenced by Hospital Lobbying
The Illinois Legislature has sent to Gov. Pat Quinn a bill that would put tighter restrictions on hospitals for charity care spending in order to maintain their property tax exemptions, but also expands the denition of such outlays. The state Senate passed the bill on May 29 by a 31-27 vote. The House approved the bill four days prior by the proportionally similar margin of 60-52. The bill requires hospitals charity care levels equal or exceed the value of the property tax exemption. Tax exemptions for not-for-prot hospitals in Illinois have come under re in recent years. Three hospitals last year lost property tax exemptions from the Illinois Department of Revenue. That agency had followed criteria set forth by the Illinois Supreme Court in 2010, when it had upheld a lower court ruling revoking some of the tax exemptions for Provena Health. In those cases, the court and agencies had ruled that the providers did not furnish enough charitable care to their communities in order to offset the millions of dollars in annual property tax exemptions they received. The charity care spending median among Illinois hospitals is 1.4% of revenue, compared to a nationwide median of 6.6%, according to the trade journal Modern Healthcare. A 2011 compensation survey by Payers & Providers indicated that Illinois had the largest number of not-for-prot hospitals among Midwestern states whose chief executive ofcers earned $1 million or a more a year in compensation. The legislation that nally got the nod was the product of intense lobbying by the Illinois Hospital Association. In addition to buttonholing lawmakers, the IHA blitzed the radio airwaves with commercials suggesting that if tax exemptions were overly scrutinized, they would lead to hospital closures. The spots included emotional appeals such as a blaring ambulance, a wailing child and a terried parent screaming my baby is sickanyone help, please! And the IHA also contributed heavily to state ofceholders, spending nearly $400,000 in the months running up to the bills passage. As a result, the bill allows for the redenition of charity care to include community benets like healh fairs, and the cost of medical training and research both of which hospitals had been criticized for including in their charity care calculations. It also allows providers to make donations to other charitable healthcare organizations to
Continued on Next Page

June 11-13

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June 26-27

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WEBINAR

Wednesday, June 13 2012

Noon CST

PATIENT FINANCE: ISSUES & PATHWAYS

E-Mail info@payersandproviders.com with the details of your event, or call (877) 248-2360, ext. 3. It will be published in the Calendar section, space permitting.

Please join Mitch Patridge, chief executive officer, CSI Financial Services, Rick Tsupros, president, Matchpoint Solutions. and Ron Shinkman, publisher, Payers & Providers, to discuss the thorny issue of patient finance and debt collection. More Info @:

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NEWS
Charity (Continued from Page One)
boost their outlays, which will be averaged in three-year increments. This will enable hospitals to continue investing in their communities by providing services, enhancing access to care, improving quality, purchasing new life-saving technology, upgrading facilities, educating physicians and other healthcare professionals, and conducting medical research, said IHA President Maryjane Wurth.

Page 2

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In Brief
Missouri Medical School Dean To Retire Under A Cloud
The University of Missouri Medical Schools dean is stepping down after being caught in a swirl of Medicare fraud allegations. Robert Churchill, M.D., announced he will retire in October. Churchill is a 25-year university employee and former chairman of UMs radiology department. He was named dean in 2009. Churchills decision to retire came after the firing of two university radiologists who had allegedly relied on residents to perform diagnoses, which is a violation of Medicare rules. Although Churchill was not implicated, he said he decided to step down in order to minimize distractions. One of the fired radiologists, Kenneth Rall, M.D., had left the medical school in the 1980s after being convicted of misdemeanor embezzlement charges as part of a check-kiting scheme involving a partnership. He had faced potential Medicare fraud charges as well, but the charges were dismissed. Churchill rehired him in the late 1990s. The other physician is Michael Richards, M.D. Both have been the targets of a months-long investigation by the U.S. Attorneys office in Kansas City.

The bill has been roundly criticized by healthcare advocates, who contend it will provide incentives to hospitals to spend less money to assist uninsured patients. Along with the charity care changes, the legislation also contains a $1-a-pack tobacco tax that is projected to raise more than $350 million a year for Illinois beleaguered Medicaid program. Gov. Quinn is expected to sign the bill into law.

KHI Gets $4M Regional Health Grant

Will Be Used to Study New Apportionment Methods
The Kansas Health Institute was recently selected from eight organizations across the country to lead a $4 million public health effort. The project will help agencies nationwide implement cross-jurisdictional sharing, or regional approaches to service delivery. Gianfranco Pezzino, KHIs project codirector, said the money, given in part by the Robert Wood Johnson Foundation, will be divided into two components. Half will be given to KHI to run the national program ofce for the project. The second half will be distributed to up to 18 grantees. The goal of the program is to assist counties teaming up across the country that are working on regional efforts to improve quality and efciency and reduce costs. KHI will provide technical support and receive and distribute information about all of the projects. This is the rst time there is a major national undertaking like this that looks at the way public health services are provided, Pezzino said. There are currently two major types of public health programs, Pezzino said. One is the home rule approach in which services are provided essentially from within the community. The second is consolidation. Under this system, a handful of counties funds are consolidated into one board of health, which oversees efforts for all of the areas. Pezzino said the pilot is trying to nd situations between the two extremes that are neither purely home rule nor consolidation. One model is regional cooperation, used in Kansas. Here, regions have jurisdiction over their own area, but they agree to share some services like an epidemiologist among the counties. There is an economy of scale in many services that can be achieved by consolidating resources, he said. In the middle is where we are going to see a lot of innovation and we are more interested in those that arent ready to embrace consolidation but nd themselves unable to provide essential services with the nances they have.
Continiued on Next Page

Walgreens, OptumRX Extend Pact

Retail giant Walgreens has expanded a strategic partnership with pharmacy benefit manager

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Continued on Page 3

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Longer ALOS!*

NEWS
KHI (Continued from Page One)
The KHI received a Robert Wood Johnson grant in 2005 to initially develop the standards for such a regional model. The need for change in the way public health is delivered stems from two major changes that have occurred over the past decade or so, Pezzino said. The rst is the shift from provisional health to population-based health. Public health used to be thought of as care for the poor, providing immunizations and ghting ailments such as tuberculosis and sexually transmitted diseases. The new model is more focused on disease prevention by population. Its usually based on the environment people are in. The best interventions we can put in place are those to keep kids from starting to smoke in high school or eat better or build communities that will keep people active, Pezzino said. Some of the things we used to focus on are less important than they used to

Page 3

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In Brief
OptumRX. The firms PBM services will continue to be made available through 7,800 Walgreens outlets throughout the United States. This is a great opportunity to ensure our current and prospective customers have a broad range of options, including access to premier retail outlets like Walgreens, to help meet their health care needs, said OptumRX Chief Executive Officer Dirk McMahon. Walgreens and OptumRx share a commitment to quality, safety and affordability for all our customers. The agreement between Walgreens and OptumRX was described as multi-year, but a joint statement issued by the firms did not provide any specifics. Walgreens is based near Chicago. OptumRX is a subsidiary of Minnesota-based UniteHealthcare.

be, like TB which doesnt affect nearly as many people as it used to. The second factor is the increase in money that came to states to enhance public disaster preparedness after 9/11. Expectations of public health were beefed up and were funded by the federal government. Years later, the departments are trying to gure out how to continue providing preparedness and other services as budgets continue to shrink. Pezzino said that more than 50 percent of local governments had to decrease or suspend public health activities this past year. Things are very tight and more in certain places than others, he said. We are being asked to do more and have greater expectations, but budgets arent increasing so something has to give. Pezzino is hoping the pilot project will help communities learn to work together to do more with less. TAMMY WORTH

Cardinal Delves Into Redevelopment

Detroit Provider Pact Includes Urban Renewal
Medical services giant Cardinal Health is teaming up with Detroit Medical Center and Henry Ford Health System to help bring urban renewal to the beleaguered Motor City. The two providers have agreed to longterm distribution agreements with the Ohiobased Cardinal. As a result, Cardinal will relocate a medical products distribution centers from Romulus, Mich. to Detroit, bringing the city 140 jobs. Cardinal also plans to build a 273,000plus-square-foot distribution center in Detroit, contingent on incentives it can obtain from the Detroit Browneld Redevelopment Authority and the Detroit City Council. Construction could begin late this year and be complete by the end of 2013. Ofcials suggested the project could jumpstart redevelopment in Detroit, which has been ravaged by the shrinking and outsourcing of domestic automotive production over the past 40 years. The citys population has dropped by half since the 1950s. Healthcare as the center of urban redevelopment has taken off in recent years, starting with a project in Fresno, Calif. more than a decade ago. Henry Ford Health System is deeply committed to the revitalization of the midtown area and is pleased to be collaborating on what we envision as the rst step in a major redevelopment effort, said Nancy Schlichting, Henry Ford Healths chief executive ofcer. We're thrilled to be making progress and expect that this project will lead to further development not only in the areas of warehousing and ofce space but also in retail and residential space. According to Donald P. Groth, Detroit Medical Centers vice president of materials resource management, the hospital had wanted to leverage its long-term business relationship with Cardinal into something more meaningful. This new facility will fulll Cardinal Health's commitment to relocate its Michigan based distribution operations within the City of Detroit, which was part of the negotiation of the DMC agreement, Groth said. We are excited our 20-year partnership will continue and the relocation will be an opportunity for new construction within the midtown area. Cardinals distribution center is also expected to serve the rest of Michigan, as well as northern Ohio and northern Indiana.

University of Michigan Performs 500th Ventricular Assist Implant

The University of Michigan Center for Circulatory Support has performed 500 implants of a left ventricular assist device in cardiac patients. The recipient, an Ann Arbor high school teacher, is awaiting a heart transplant. For patients in severe chronic or acute heart failure, heartassisting technology can offer a gateway to better long-term quality of life, said Keith Aaronson, M.D., medical director of the heart transplant program and Center for Circulatory Support. The center was the rst in Michigan to implant the assist devices. Currently, 110 patients have them implanted. The one-year survival rate for the center is more than 97%.

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Payers & Providers

OPINION

Page 4

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Peering Into Our Healthcare Future

How Our Future Policy And The ACA !May Fare
Health policy in the United States has often been described as being made up of the tripartite of quality, access and cost. The CEO of a former company I worked with used to say that you can only optimize two of the three. This is relevant to the current discussion of the Accountable Care Act, its subsequent replacement, or a continuation of the status quo. the national debate over the ACA is the healthy scrutiny of the rate of growth of health expenses. The year of insolvency for Medicare (expected to be 2024) keeps bouncing around. Most analysts agree, though, there is a nite limit to how long Medicare can last under its current reimbursement system. Recently, Connor Sen (Minaville.com) blogged: Ten years ago, for every one retiree there were 10 people entering the U.S. workforce. Ten years from now, for every person who enters the workforce, QUALITY there will be 10 new retirees. Americans believe their The pyramid will be stood on its By personal doctor, hospital and head. Insolvency of the popular insurance plan are good, but about William M. Dwyer federal program will create one-third think the national system generational friction of the highest is full of waste and leaves too many people out. order. The 2012 Milliman Medical Index reported The fact that America has outspent the rest of this month that the average annual cost for the world as a percent of GDP is well known. employer covered health insurance for a family of When people question what we get for four is now $20,000. Employer coverage is by far that high investment, we seem to stumble over the best payer in the system, so this is not just about our answers. I would argue that the whole the high rates of Medicare growth anymore. world depends on the investment and discovery in our leading academic medical THE FUTURE centers (where training of a signicant number Hospitals have already morphed away from of global physicians also occurs), and the huge inpatient acute care and provide community care investments in innovation from private U.S. through free-standing sites, home care and even pharmaceutical and medical device retail medicine. Many have established companies. The breakthroughs against the relationships with local physicians and insurers, or leading causes of death in the past 50 years are have bought them. Hospital beds will be less stunning compared to the rest of history. important in the future for most Americans, but more important to the few critically ill citizens who ACCESS need them. For many years, Americans have been Physicians are not as happy today as their troubled that we have such a high rate of forefathers who entered this profession. Some uninsured, about 15% or 50 million citizens, doctors are even encouraging their children to seek especially compared to other well-developed other careers or retiring early themselves. countries. Nonetheless, physicians make up the human capital Going back to President Truman, we that is needed for an advanced modern health care have tried to pass national legislation to bridge system. this gap over and over again. President Obama With shortages rearing their heads by showed courage in taking on this task once geography and specialty, this will be a needed input again, and it is a lightning bolt issue amongst for the health system far into the future. I suspect our leading political parties. there will be a decline of the role of Insurance Depending on where you stand, companies. But that is a topic for another day. President Obama is viewed either as a hero or villain for this effort. Our problem has always been trying to gure out who is going to pay for William M. Dwyer is a Kansas City-based consultant. He is a member of the Payers & the expansion of access to the uninsured.
Providers editorial board.

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COST The impetus for the HMO Act of 1973 was breaking the cost curve, among other things. Needless to say, national health expenditures have grown at a rate of almost three times the GDP since then. Not anymore. A byproduct of

Op-ed submissions of up to 600 words are welcomed. Please e-mail proposals to editor@payersandproviders.com

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MARKETPLACE/EMPLOYMENT

Page 5

AVP - Accountable Care Organization

Patients and families from across the region and around the world come to Cincinnati Children s Hospital Medical Center because we are dedicated to improving child health. We serve the medical needs of infants, children and adolescents with family-centered care, innovative research and outstanding teaching programs. Cincinnati Children's Hospital Medical Center ranks third in the nation among all Honor Roll hospitals in U.S.News and World Report's 2011- 2012 Best Children's Hospitals ranking. It is ranked #1 for gastroenterology and in the top 10 for all pediatric specialties - a distinction shared by only two other pediatric hospitals in the United States. Cincinnati Children's is one of the top two recipients of pediatric research grants from the National Institutes of Health. It is internationally recognized for improving child health and transforming delivery of care through fully integrated, globally recognized research, education and innovation. Working for the largest national pediatric healthcare system, the Assistant Vice President will lead and manage its newly created Accountable Care Organization (ACO) with anticipated annual revenues up to $500 million. Major responsibilities include Network Delivery, Network Management, Credentialing, Data Analysis and Reporting, People Management and Payor Contracting and Relations. Specifically responsible for provider enrollment with payors, network provider contracting and provider relations issues, ACO credentialing program, processes related to administering payor contracts, medical management functions including care management, care coordination, utilization and disease management programs, quality improvement programs across ACO provider network, data analysis and reporting. Assist in payor contract negotiations. To be successful, our ideal candidate will possess a Bachelor s degree along with ten years experience managing network management, care management, medical management, and/or care coordination activities in hospital-owned or physician-owned health plan, PHO, or payor environment. Master s degree in business or health administration preferred. The incumbent must possess resiliency and perseverance in both starting up new business enterprises and in scaling up business enterprises after start-up phase. Demonstrated leadership and management skills required along with experience in formulating credible, effective, long-range strategies to attain overarching organizational objectives; anticipating future trends, as well as potential threats or opportunities; and accurately predicting how strategies will play out. Network management experience in Medicaid managed care plan desirable. Experience starting up new business enterprises preferred. Cincinnati Children's Hospital Medical Center offers a comprehensive employee benefits program that is equal to or better than the majority of the other health care institutions in the city. The benefits program is constantly reviewed to identify better ways to deliver world-class benefits. Visit our career site at www.cincinnatichildrens.org to submit your resume and application. Job ID# 58097. Cincinnati Children s is an Affirmative Action/Equal Opportunity Employer.

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MARKETPLACE/EMPLOYMENT

Page 6

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