U.S. Department of Health and Human Services (HHS) Secretary Michael Leavitt announced two final rules that will be published in the August 8, 2006, Federal Register. These rules are intended to foster the spread of health information technology.

The Centers for Medicare and Medicaid Services will be creating two exceptions from the physician self-referral prohibitition (Social Security Act § 1877) — one for donations of electronic prescribing (“e-prescribing”) equipment that meets Medicare Part D standards and the other for interoperable electronic health record (“EHR”) software. Recipient physicians must contribute at least 15% of the donor’s cost for the interoperable EHR software, but can accept the e-prescribing equipment for no charge, but subject to other prerequisites described in the rule.

The HHS Inspector General will be creating e-prescribing equipment and interoperable EHR software safe harbors from the federal health programs anti-kickback act (from which the Federal Employees Health Benefits Program is exempt.) These safe harbors like the physician self-referral law exceptions impose no limit on the value of e-prescribing equipment but require a 15% copay toward the value of EHR software.

According to HHS’s press release,

The scope of donors and recipients under the final rules is considerably broader than in the proposed rules. Donations protected under the exception may be made to any physician by entities furnishing DHS. The exception requires compliance with criteria similar to those listed in the electronic prescribing exception, as well as additional criteria, such as those requiring cost sharing and selection of physician recipients of donated technology. The corresponding OIG safe harbor is similar. However, consistent with underlying statutory differences, the safe harbor covers a broad array of providers, suppliers, practitioners and health plans when they provide electronic health records technology to physicians and others engaged in the delivery of health care.

These rules take effect sixty days after Federal Register publication. The self-referral law exception and safe harbor for EHR software donations will expire at the end of 2013. There is no corresponding sunset limitation on the exception and safe harbor for e-prescribing equipment.On a related note, CCHIT certified two new EHR products as interoperable yesterday.

On July 17, the FEHBlog noted Robert Pear’s article in the New York Times warning that the Centers for Medicare and Medicaid Services’ proposed Medicare diagnostic related group (DRG) reforms would whack Medicare reimbursements to hospitals by 20 to 30%. Modern Healthcare.com reports that CMS Administrator Mark McClellan stated at a press conference today that CMS now is planning to phase in the reforms over a three year period and that only 2% of hospitals would experience Medicare reimbursement reductions as a result of the reforms.

On Friday July 28, the Treasury Department and the Internal Revenue Service (IRS) issued final rules governing the required comparability of employer contributions to employees’ health savings accounts. The proposed rule was published in August 2005.

The Treaury Department’s press release explains that

Comparability rules provide that an employer contributing to one employee’s HSA must contribute comparable amounts to all employees who have HSAs. The final regulations expand the flexibility of the proposed rules issued in August 2005.In particular, the final regulations include the following features:

• An exception from the comparability requirement for groups of collectively bargained employees;
• The ability to make different comparable contributions based on different variations of family coverage;
• Further clarification of the exclusion from the comparability requirement for employer contributions made through a cafeteria plan.Generally, under the final rules if employees are allowed to contribute to an HSA by salary reduction through a cafeteria plan, all employer contributions to the employee’s HSA will be treated as being made through a cafeteria plan (and thus excluded from the comparability rules).

The new rules apply to employer contributions made on or after January 1, 2007.

The Wall Street Journal yesterday featured an article about the 83 year old philanthropist David Murdock who owns Dole Foods, among other companies. Mr. Murdock is building the California Wellbeing Institute outside Los Angeles. The Journal describes the Institute as ” a combination Four Seasons luxury resort, conference center and nutrition-counseling school.”

It was most interesting to me that the health insurer Wellpoint has assumed a 15% ownership interest in the Institute. The Jurnal article further explains that in 2004, “Mr. Murdock convinced [then Wellpoint CEO Leonard] Schaeffer that WellPoint should team up with him. Mr. Schaeffer saw wellness as a promising business area, with good boomer demographics and the potential to attract cash-paying customers, free from the constraints of medical insurance.” The Institute is scheduled to open in November 2006.

Last month, as noted in the FEHBlog, the House Ways and Means Committee and the House Energy and Commerce Committee passed their own versions of HR 4157, the Health Information Technology Improvement Act. Yesterday, the House Rules Committee passed a resolution (H. Res. 952) reconciling the two measures and permitting various amendments to be considered on the floor of the House. This afternoon, the House considered and passed the bill by a 270-138 vote. The White House issued a statement of support for the House bill.Of greatest importance to health plans, the House bill would require implementation of the ICD-10 diagnosis and inpatient procedure codes in October 2010 (rather than October 2009 as provided in the Ways and Means Committee report and October 2012 as urged by AHIP).

The House and the Senate now will hold a conference committee to reconcile HR 4157 and S. 1418 which the Senate passed last November.

Recently, I noted in the FEHBlog that the CVS pharmacy chain had purchased MinuteClinic, a much smaller chain of walk-in clinics staffed by nurse practitioners and physician’s assistants. Laura Landro reports in yesterday’s Wall Street Journal that CVS plans to incorporate MinuteClinics in 1000 of its pharmacies over the next three years.

Even more interestingly, Ms. Landro reports that regional healthcare systems such as Atlanticare in New Jersey are establishing their own walk-in clinics on a divide and conquer theory. The walk-in clinics will treat the mildly ill at low prices but feed the more seriously ill to the system’s doctor network.

In a similar arrangement, the TakeCare chain of walk-in clinics has arranged for support and cross-referrals from Advocate Health Partners in Chicagoland. She cites to several other examples.

According to Ms. Landro, Blue Cross and Blue Shield of Minnesota “which analyzed 22,956 visits by its members to MinuteClinics from June 2004 to June 2005, found the clinics cost about half an office visit — or $43 versus $87 — and less than half for other related costs such as lab services.”

The AMA News in its July 24/31 issue reports on a “pay for quality” pilot conducted by Healthspring‘s Medicare Advantage plan and the Sumner Medical Group, a 15 doctor group in Tennessee. (I was in Nashville this week and greatly enjoyed a Tuesday performance of the Grand Ole Opry.)

In this program, Healthspring retained Healthways, a local disease management company, to provide Sumner Medical with free nursing support to track patients with chronic illnesses between visits, among other services. Healthspring also offered the Sumner Group doctors a 20% pay bonus for hitting quality targets.

Sumner Medical informed the AMA News that the program resulted in an improvement in their patients’ health outcomes. The doctors appreciated that the health plan assumed the cost of the disease management nurses and did not impose a financial penalty on the doctors. The health plan enjoyed the medical underwriting gain from the program. Healthspring is planning to extend the program to 12 other markets. Other health plans are evaluating Healthspring’s model.

The Centers for Medicare and Medicaid Services (CMS) announced last Friday its six month long project to determine the feasibility of integrating Medicare claims information into a personal health record for Medicare beneficiaries. “’By using emerging technologies and tools, people with Medicare will be better able to manage their health care, resulting in improved quality in the care they receive and ensuring that care is provided more efficiently,’” said CMS Administrator Mark B. McClellan, M.D., Ph.D. ‘The steps we are taking today will test whether Medicare’s current data will help to populate useful personal health records for Medicare beneficiaries.’” The work will be performed by ViPS and Capstone Government Solutions under CMS contracts, and the total cost of the project is $500,000.

OPM has posted information about the upcoming initial Supplemental Dental and Vision Benefits Open Season on its web site.

In 2001, Harvard Professor David Himmelstein created a stir with a paper concluding that unpaid medical bills are leading cause of bankruptcy filings. Since then several academics have debunked that conclusion. The latest is Aparna Mathur, a reseach fellow with the American Enterprise Institute, who released a paper on Medical Bills and Bankruptcy Filings last week.

The report explains that

Studies based on surveys of bankruptcy filers, such as Himmelstein et al. (2005) using data from the Consumer Bankruptcy Project, claim that families with medical problems and medical debts account for nearly half of all bankruptcy filings.4 However, their classification of a medical bankruptcy is too broad.5 A big drawback of the study is that it does not include non-filers in the sample. This is a problem because there may be non-filers who experienced similar problems but did not
file for bankruptcy. Thus the sample lacks an effective control group.

The AEI study “finds that while medical debts are significantly related to bankruptcy filings, the magnitude is not as high as is claimed by other authors” such as Professor Himmelstein.