Medicine Ball Exercise

Washington The White House quickly followed up on President Obama's pledge to authorize medical liability demonstration projects, announcing Sept. 17 the availability of $25 million in grants to be doled out to states by the Dept. of Health and Human Services.

Grants for up to three years and $3 million each will be awarded on a competitive basis to states and health care systems to test models that improve health care quality and patient safety while decreasing medical liability pressures on doctors.

In his Sept. 9 address to Congress, the president said he would authorize the state demonstration projects to test new ideas. Many doctors insist that medical liability concerns lead to practicing defensive medicine, which in turn contribute to higher health care costs. Many physicians also say they continue to struggle to pay liability premiums, which vary by specialty and state.

The American Medical Association applauded the announcement and said it supports the new initiative, even though it continues to push for caps on liability damages.

"The Obama administration's action to implement and test state-based reforms is a welcome step toward advancing the goal of liability reform for patients and physicians," said AMA President J. James Rohack, MD.

Dr. Rohack called defensive medicine "an unfortunate outgrowth of the broken liability system" that adds billions of dollars a year to health care costs. "The AMA supports federal funding for state-based pilot projects on medical liability reform alternatives such as health courts, early disclosure and compensation programs, and expert witness qualifications," he said.

But organizations representing trial attorneys say they hope the programs do not punish patients.

"Any changes to the malpractice system must focus on patient safety and preventable medical errors, not limiting patients' legal rights," said Anthony Tarricone, president of the American Assn. for Justice. "Forty-six states have already enacted tort reform, and health care costs continue to hurt the pocketbooks of American families. Because of these tort reforms, patients injured through no fault of their own are often unable to seek justice."

The funding opportunity is set to be available online within 30 days of the Sept. 17 presidential memorandum (www.grants.gov/).

Potential grantees will have two months to complete and submit their applications, with award decisions scheduled for early 2010.

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More than 46 million people in the United States are uninsured.

Their stories are as diverse as the country. Many are young, working in low-wage jobs. Many others are self-employed or are recently out of work. And many have medical histories that health plans deem too risky for insurance. While lawmakers spar over health system reform details, uninsured people in the U.S. live in the health system's coverage gaps.

American Medical News spoke with four people who, for various reasons, are uninsured. Their stories highlight some of the reasons why people fall through the cracks -- and why the solution has proven so elusive.

These individuals aren't all seeking the same solutions. But a common thread is affordability and access.

Like many others, they are waiting to see how Congress will act.

The self-employed painter

Daniel Luna, 55 [Photo by Lori Eanes / www.lorieanes.com]

Once the recession hit California, health insurance became a luxury for Daniel Luna. Last year he went nearly five months without work as a painting contractor.

He's been living on more than $20,000 in savings and from pawning more than $10,000 worth of coins for a fraction of their value. "Anything that I had saved up, I used it to make ends meet," said Luna, 55. But business has picked up a bit recently in Manteca, about 80 miles east of San Francisco.

Luna, a painter since 1981, has been trying to manage his diabetes since he was diagnosed several years ago. "I'm kind of in denial about it."

Luna had an individual, high-deductible health insurance plan that cost about $200 a month in 2000. But after he reunited with his ex-wife, Vicki, that year, the premiums started increasing, finally reaching $795 a month in 2008. They couldn't afford it, so he's been uninsured for more than a year. Sometimes he skips the medication he needs to control his diabetes because it costs $200 a month.

But Daniel is more worried about the health of Vicki, whom he remarried in 2006. She received a kidney transplant a year later and qualified for Medicare. But Luna is afraid that coverage will end next year and they won't be able to afford the $1,800 per month in immunosuppressives.

Luna has limited his visits to physicians for years. "I just don't want to create another bill."

About three years ago he sliced his finger with a razor blade while cutting a tube of caulk. He put some caulk in the cut and went to the emergency department. While he waited for the doctor, Luna cleaned the wound himself. A physician advised him to use a medical adhesive, then the hospital and doctor each sent an $800 bill.

But Luna speaks more positively about one physician. In 2002, he painted a house for Eric Ramos, MD, medical director of the Del Puerto Health Center in Patterson, Calif. Dr. Ramos took a personal interest in Vicki and Daniel, making sure she was seen by specialists and he monitored his diabetes.

Luna is waiting to see what Congress can do about the health system, but he's not expecting a breakthrough. Although he served in the Marine Corps, he doesn't have enough service time to qualify for care at Dept. of Veterans Affairs hospitals. "They need to take care of some of us," he said.

The physician without a practice

Pierrette Mimi Poinsett, MD, 51 [Photo by Lori Eanes / www.lorieanes.com]

Pierrette Mimi Poinsett, MD, 51, has treated thousands of children in her 16-year career as a pediatrician. But she's spent most of the last few years caring for only one -- her 12-year-old son, Josh.

Although she described Josh as an intelligent boy who has excelled in school at times, she said he also has bipolar disorder, severe emotional problems and Tourette's syndrome. Josh's father has not been actively involved in his life, she said.

Josh has been uninsured for a year, and Dr. Poinsett for more than two. She ran her own practice in Modesto, Calif., from 2000 to 2006 but was unable to keep it afloat. Seventy-five percent of her patients were enrolled in the state's low-paying Medicaid program or in its Children's Health Insurance Program. The Kaiser Permanente health network also began operating in Modesto, increasing competition.

Dr. Poinsett moved to Petaluma, Calif., in February 2006 to work for another clinic. But Josh had an emotional breakdown and was hospitalized two weeks after they arrived, she said.

Dr. Poinsett found it impossible to balance her son's needs with her job, so she resigned.

Since then, Dr. Poinsett has been a medical consultant, has taught in a medical school and has even worked in a coffee shop, among other jobs. She hasn't practiced medicine for more than a year and has not been a full-time pediatrician for more than three years. "I'm not able to work the full 40 hours a week plus calls," she said. None of her jobs have offered health insurance, and having asthma makes getting an individual policy difficult. She took a $100,000 loss when she sold her home in Modesto and has spent thousands on her son's health care.

Dr. Poinsett is exploring Josh's eligibility for CHIP. California reopened the program to new enrollees in early September after a budget crisis led to an enrollment freeze over the summer. Josh used to be eligible for Medicaid, but child support payments pushed their income over the program's limit, she said.

"My heart says I would love to practice medicine," Dr. Poinsett said. But pediatric jobs are scarce in the area, and she doesn't want to leave Sonoma County after spending years navigating the county public health system and finding the right school for Josh. She also has family nearby. Lately, she's been writing more about health policy and serving as an advocate for families of children with special needs. She's also considering starting a fair-trade spice company.

Dr. Poinsett's experience makes her think that the only way she and her son will be insured steadily is if Congress adopts a single-payer system or at least a national public insurance plan. Something is wrong, she said, when a health plan CEO makes millions while his or her company denies care to patients.

The young adult willing to go without

Keith Cross, 30 [Photo by Doug Trapp / AMNews staff]

If Keith Cross represents the general attitude of young adults -- the most likely age group to be uninsured -- many believe health insurance is just for the sick and people with families. Cross, 30, could have bought insurance when he was a server at a few restaurants in Covington, Ky., in the early 2000s. He remembers being offered one policy that cost $75 a month. But he declined.

"From a restaurant employee's point of view, it's not worth it to have health insurance unless you have a family," he said. "A single person -- it's not even worth it."

He has been ill at times. One day Cross woke up with his throat swollen, apparently from an infection. But the boss at the restaurant told him to come in anyway to cover a double shift. "I wasn't dying or nothing. My throat was sore," said Cross, who had to communicate in writing with that night's customers.

After his shift ended at 10 p.m., he went to a hospital emergency department in Cincinnati, just across the Ohio River. A doctor ordered a shot of antibiotics. It cleared up Cross' infection, but even now he still cringes at the $175 bill.

Cross self-treats most minor illnesses with over-the-counter medication. He said he would see a doctor if he were to develop something serious. Mostly he received updates on his health through physical exams required by some of his jobs.

That approach worked for awhile. Then in 2002, after moving to be near family in Houston and getting a job as a cable TV contractor, Cross put his foot through a customer's ceiling. The injury required two surgeries, costing $15,000, plus six weeks of rehabilitation and six months on crutches. Although he was still uninsured, workers' compensation covered the cost.

Afterward, he held two steady jobs in Texas for about two years, but neither offered health insurance -- and he couldn't have afforded it anyway, since his fixed wage never exceeded $10 an hour.

Another severe injury from a high-pressure hose at a water well drilling company put him in the hospital in October 2006 -- less than two months before he would have qualified for health insurance at that job. Cross is seeking workers' compensation coverage for that incident, too.

Cross doesn't have a grand plan for health system reform. But he would like workers who rely on tips to get a free doctor visit now and then for preventive care.

Cross said he would have taken up that offer. "In my 20s I would have went. Even now."

The uninsurable retiree

Paul Gerhold, 62 [Photo by Alex McKnight / www.amcknight.com]

Paul Gerhold can afford health insurance, and he'd like to have a full policy to cover him until he qualifies for Medicare.

Gerhold, 62, who lives with his wife near a retirement community south of Ocala, Fla., spoke with several major health insurance firms in the early 1990s. "It was universal. Nobody would insure me for what I needed insurance for."

Gerhold was diagnosed with ulcerative colitis more than 20 years ago. He has traveled to India for three separate colon surgeries, most recently last fall.

Gerhold paid $30,000 for the surgeries, relying on previous income as a manager for General Foods, income from stocks and income from the decorative, metallic-glazed pottery he makes with his wife, Claudette, 70.

They used to be insured, though he doesn't recall needing the coverage much. Gerhold had employee coverage through General Foods until he took a company buyout in 1985. COBRA covered him for a couple of years, then he bought an individual plan. When premiums increased 30% in one year, he let it lapse.

Now his ulcerative colitis diagnosis makes insurance companies shy away. "I wouldn't really insure myself either."

But he has a gripe with hospitals. He wanted to have colon surgery in the U.S., but he couldn't find a hospital that would bill him at the same rates they would an insurance company. His third surgery in India cost $6,000, including travel and a recovery stay in a guest house. The same operation would have cost $26,000 in the U.S. if he paid cash up front, more if he waited for a bill. Insurers would have paid $11,000 to $13,000, an amount Gerhold said he would have paid.

Gerhold said if Congress accomplishes one thing, it should be to allow the uninsured to receive care at the same cost insurers pay. In the meantime, he has decided against buying health insurance that covers everything but his colitis.

"You can see the bus coming. You're not worried about the cars behind you."

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Sweeping changes to the federal anti-self-referral rules, approved more than a year ago, will take effect Oct. 1, potentially causing many physician-hospital arrangements to fall out of compliance if doctors are not prepared. Being unaware of the Stark law revisions or the structure of a particular deal will not excuse physicians from liability, legal experts say.

"What the changes did was make it much more difficult for physicians and other entities providing designated health services, primarily hospitals, to do joint ventures around hospital services," said Boston attorney Lawrence W. Vernaglia, co-chair of Foley & Lardner LLP's national health care payments, fraud and abuse, and compliance work group. "Stark is a strict-liability statute. So even if you have the most innocent of intentions, you are still subject to the grossest of penalties, as if you meant to violate the law."

The Stark law generally prohibits physicians from referring patients to entities in which they have a financial stake, with certain exceptions. The Centers for Medicare & Medicaid Services in an August 2008 final rule instituted broad revisions to the Medicare hospital inpatient prospective payment system that will restrict:

• So-called "under arrangements," in which hospitals contract with physician-owned entities to provide a wide range of ancillary services, such as clinical labs or imaging services.
• Per-use or "per-click" payments for equipment and space leases.
• Compensation deals based on a percentage of revenue generated by space or equipment use.

The regulation changes were delayed one year from the original Oct. 1, 2008, implementation date.

Attorneys representing physicians and hospitals said many of these arrangements would have to be restructured to avoid federal penalties. Some deals may have to be unwound completely.

"Medicare really took a broad cut at reforming its self-referral regulations and really wanted to tackle what it saw as potentially abusive arrangements" that could lead to improper referrals and overutilization, said Thomas Hoffman, the American College of Radiology's associate general counsel. "CMS anticipated that with the under-arrangement change, players were going to look for other buckets to fit into for exceptions. And that's where the per-click and lease-arrangement changes come into play."

Readying for restructure

Historically, CMS rules treated physician-hospital arrangements for ancillary services as an indirect compensation relationship that qualified for a variety of safe harbors under Stark, said San Francisco attorney Daniel A. Cody, who works with physicians and hospitals on such arrangements. Under the final rule, however, physician groups will be considered to have a direct ownership stake in the designated health services they provide, effectively barring referrals unless they can meet stricter ownership exceptions under Stark.

"The problem is, there are much more limited exceptions for ownership arrangements," said Cody, a partner at Reed Smith.

Doctors generally are barred from referring patients to entities in which they have a financial stake.

Doctors likely will have to restructure contracts to narrow the scope of services they perform for a hospital, he said. For example, a physician-owned entity may need to limit its clinical services but still could conduct billing and management activities. Many contracts include provisions allowing physicians to amend or dissolve a deal to comply with a change in law, he added.

Vernaglia said physicians still can lease equipment or space they own, but they may have to consider unbundling such services from other arrangements. Doctors also may have to adjust the compensation structure to a flat fee, such as a per-month payment. Any change in compensation must reflect fair market value, he noted.

Because such physician-hospital deals have been a long-accepted practice, Vernaglia recommended that doctors "first look hard at the older deals that have been around for 10 or 15 years and that you are complacent about. Those are the deals that will come back and bite you."

Vernaglia noted that doctors have little legal recourse against alleged Stark violations. He pointed to a January ruling in which the 3rd Circuit Court of Appeals found that a hospital ran afoul of the Stark law because it did not update its contract with an anesthesiology group to reflect a change in the services provided by the physicians. Because of the alleged Stark law violation, the court in Kosenske v. Carlisle HMA also allowed a false claims case to proceed against the hospital and physician group. That case is still pending.

Impact on patient care

Meanwhile, some physician organizations expressed concern that the rule changes will limit access to care.

In an Aug. 9 letter to CMS, the American College of Cardiology said the physician-hospital arrangement prohibitions "may unnecessarily eliminate some physician-owned services that enhance access to high-quality cardiovascular care." The organization -- while generally supportive of CMS efforts to prevent abuse -- is asking the agency once again to defer the Oct. 1 implementation deadline and consider whether certain deals "provide benefit to the Medicare program and should perhaps be exempted."

The American Medical Association, in various letters to CMS, also advocated against the revisions. The Association said the additional regulatory layers unnecessarily complicate physician practices, driving up health care costs and possibly eliminating long-standing, nonabusive relationships that can create more efficient care.

But the American College of Radiology's Hoffman said access limitations are unlikely, because doctors have options to restructure in a way that ensures continuity of care. The organization supported the changes but also requested the extension until Oct. 1 to give doctors time to adapt.

"Are the [restructured deals] going to be as economically attractive? Perhaps not. But doctors should not rule out looking at them," Hoffman said. "They have to structure what is best for patient care."

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Washington -- The reactions of governors and other Medicaid stakeholders to a Senate Finance Committee's Medicaid expansion proposal ranged from reserved praise to open hostility.

The proposed expansion is part of Senate Finance Committee Chair Max Baucus' (D, Mont.) long-awaited health system reform bill, the America's Healthy Future Act. The bill, starting in 2014, would increase Medicaid eligibility for those U.S. citizens earning up to 133% of the federal poverty level. Most states offer very limited, if any, Medicaid coverage to adults without children.

Baucus negotiated the bill with five other senators, including three Republicans, none of whom supported the legislation as introduced on Sept. 15. Baucus said he and other bill authors held a conference call that day with about a dozen governors and heard few complaints.

"I frankly think that [the Medicaid expansion] is pretty much resolved," Baucus said. His committee began marking up the legislation Sept. 22.

On average, the federal government would pay for about 90% of the expansion, which would cover 11 million of the country's 46 million uninsured. States would pay at least 5% and possibly up to 22.7% of the state-specific cost. A preliminary Congressional Budget Office estimate released Sept. 16 pegged the expansion at $287 billion over a decade. Additional spending would be partially offset by a mandatory increase in manufacturers' Medicaid drug rebates, Baucus said. (See correction)

The American Medical Association sent a Sept. 21 letter to Baucus that does not reference the Medicaid expansion. But it lodges serious concerns about the reform bill's lack of a permanent Medicare physician payment solution. It also calls for major changes to provisions that effectively would ban new physician-owned hospitals, require doctors to report quality information to Medicare, cut pay for some services to provide bonuses for others, and establish an independent Medicare commission to adjust payment rates for services, among other proposals.

Governors say no thanks

The chairs of the bipartisan National Governors Assn. and the Republican Governors Assn. panned Baucus' Medicaid expansion less than 24 hours after Baucus suggested it was a done deal.

"It is an unfunded mandate that will come to the American people as state tax increases," said Mississippi Gov. Haley Barbour, chair of the Republican Governors Assn. Barbour estimated that covering 5% of the cost would require $80 million in additional funding in Mississippi.

In contrast, the pending House health reform bill would cover the entire cost of increasing Medicaid eligibility to people earning 133% of poverty. It also eventually would raise physician Medicaid pay to equal Medicare rates. The Finance bill does not address doctors' Medicaid fees.

Vermont Gov. Jim Douglas, chair of the National Governors Assn., said many states have cut education, underfunded pension plans and laid off employees during the latest recession. State revenues are expected to be weak for years. "We can't expect states to put every new dollar into a health care system when all these other important and vital public services have been neglected or underfunded." Douglas said the federal government should cover the entire cost of the Medicaid expansion.

Even Senate Majority Leader Harry Reid (D, Nev.) had mixed opinions on the Baucus bill. Reid offered muted praise for the legislation in a news release aimed at a national constituency on the Senate Democrats' Web site. The proposal "is another important piece to the puzzle and brings us a step closer to having a comprehensive health insurance reform bill on the Senate floor."

But Reid was more critical in a news release targeting Nevadans and posted on his personal Senate Web site. "While this draft bill is a good starting point, it needs improvement before it will work for Nevada." Reid said the state would face the second-highest increase in Medicaid spending under the Finance Committee bill.

On Sept. 22, Baucus said he had amended the bill to provide full federal funding to states that experience a significant increase in Medicaid enrollment due to the size of their current programs and their unemployment rates. Other senators filed more than 550 amendments in advance of the markup.

Some qualified support

Although the American Academy of Family Physicians supports expanding Medicaid eligibility to cover the uninsured, the organization is concerned about the Finance Committee's bill, said AAFP President-elect Lori Heim, MD. For example, the Finance measure doesn't provide funding for the millions of people who are eligible for Medicaid now but are not enrolled.

Still, Dr. Heim said, Medicaid coverage would be a step up for many. "There are a lot of good things about being on Medicaid if you have no insurance coverage at all."

But Dennis Smith, who ran Medicaid during the Bush administration, said its eligibility should be narrowed to focus on people with disabilities and people needing long-term care, not expanded to cover more able-bodied people. The latter would be better off with vouchers for private insurance because many don't stay enrolled in Medicaid for more than a couple of years, said Smith, former director of the Centers for Medicare & Medicaid Services' Center for Medicaid and State Operations and now a senior fellow at the Heritage Foundation.

Smith said the Finance bill's authors want to use Medicaid to cover more people because it pays physicians less than Medicare or private insurance. "They're doing it for budget reasons, not policy reasons."

The National Assn. of Public Hospitals and Health Systems has consistently supported expanding Medicaid, said NAPH President Larry Gage. Expanding Medicaid probably would be cheaper than trying to provide private insurance to the Medicaid-eligible population. "Medicaid is a flawed program, but it already exists. You don't have to create it."

Both the Senate Finance and House bills would reduce by billions federal payments to hospitals that care for the uninsured, but the Finance measure would do so more quickly, Gage said.

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Family health insurance premiums in 2009 increased by a relatively moderate 5% for the third consecutive year, while premiums for single coverage remained virtually unchanged. But many workers felt a greater impact this year due to the recession and steadily growing out-of-pocket costs.

"To working people and employers, moderation just looks like another year of health care costs going up, up and up," said Kaiser Family Foundation President and CEO Drew Altman, PhD. On Sept. 15, the foundation and the Health Research and Educational Trust released the 2009 version of its Employer Health Benefits Survey, an annual report detailing trends in employer-sponsored health insurance.

Family coverage reached an average of $13,375 in 2009 -- a hike of 5%, or $695 -- while single coverage premiums increased by $120 to reach an average of $4,824 annually, an increase of less than 0.3%.

Although family premiums increased by the same percentage as they have in recent years, workers likely felt the impact more this time around, said Roger Feldman, PhD, Blue Cross Professor of Health Insurance at the University of Minnesota. This year, with inflation decreasing by 0.7%, the difference between the growth of premiums and of inflation was 5.7 percentage points. Last year this "real" increase in premiums was only 1.1 percentage points. Typically the figure stands at two to three percentage points, Feldman said.

Consumers also faced larger deductibles and a significant increase in co-pays this year, according to the report. For example, 22% of all workers with employer-sponsored coverage in 2009 had a general annual deductible of $1,000 or more, up from 18% of workers in 2008. The trend occurred in both small and large firms.

8% of insured workers were enrolled in health plans with high deductibles in 2009.

Patients also paid more for office visits. Co-payments for in-network primary care physician visits increased by $1 to reach $20; co-pays for visits to specialists grew by $2 to reach $28. Although small, those hikes were statistically significant, meaning they were outside the margin of error, according to Gary Claxton, lead author of the study and director of the Kaiser Family Foundation's marketplace research.

Altman said continued higher health insurance costs are driving support for health reform legislation in Congress this year. "It's this, really -- the transformation of health into an economic pocketbook issue -- that has fueled the health reform debate."

Senate Finance Committee Chair Max Baucus (D, Mont.) said the increasing costs of health insurance are another source of motivation for him. "This survey provides yet another illustration of the need to reform America's health care system and ensure fiscal security."

The number of employers offering coverage dropped to 60% in 2009, down from 63% in 2008.

A plateau for consumer health plans?

Enrollment in high-deductible health plans with savings options held steady in 2009. Eight percent of workers with health insurance enrolled in these plans, which have deductibles of at least $2,000 for family coverage and which allow enrollees to put pre-tax income into savings accounts for health spending.

For the first time, the percentage of small employers -- those with three to 199 workers -- that offered high-deductible plans with health savings accounts did not increase, according to the Kaiser/HRET report. "Large firms are offering them, but large firms tend to offer a choice of plans. And while they're offering them, their workers are not responding," Claxton said.

22% of workers with employer coverage in 2009 had an annual deductible of $1,000 or more.

Roy Ramthun, MPH, senior health policy adviser to President George W. Bush on health savings accounts, was skeptical that small businesses were dropping consumer-directed plans. Other surveys, focusing on larger employers, found that the number of firms that offered or planned to offer such plans rose more than seven to eight percentage points in 2009, he said.

"This is the first survey that I've seen that suggests there is a slightly different trend going on," said Ramthun, now president of HSA Consulting Services, a Silver Spring, Md., firm specializing in consumer-directed health care. The dip might be explained by smaller firms dropping coverage in general because of the recession, he said.

In addition, PPOs are increasing deductibles and growing to resemble high-deductible plans that offer savings accounts, Ramthun said. The percentage of PPOs with an annual deductible of $2,000 or more grew from 12% in 2006 to 23% this year, the report found, and the trend was even stronger for HMOs and point-of-service plans.

The general trend toward higher-deductible health plans is changing the nature of health insurance, Altman said. "The broader trend is simply the growth of high-deductible health plans. You could also say less comprehensive insurance for people ... particularly for small employers."

Employers have favored increasing deductibles and cost sharing over hiking premiums, but even the latter will probably happen eventually, Altman said.

"A return to the more typical increase rates we've seen over the last 10 years is entirely a possibility," Altman said, adding that 7% to 9% hikes would be typical. "There's absolutely no reason to believe that we've done anything meaningful to deal with the fundamental drivers behind the rates of increase we see in health care costs."

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