Monthly Review & Commentary On Health Policy Issues From A Rural Perspective - September 1st, 1998


41 Million Uninsured with a Strong Economy
From "Gaps in Health Coverage Continuing to Grow" by Robert Pear, The New York Times, 8/9/98:
"In 1994, when President Clinton's effort to reshape the American health care system collapsed, a political consensus emerged from the rubble: In the future, any such changes should be made piecemeal, one step at a time... Despite the passage of several laws intended to expand coverage step by step, the number of Americans without insurance has risen steadily, by an average of 1 million a year. The number of uninsured has increased each year since 1987 and now exceeds 41 million, roughly one-sixth of the population."
"Congress has enacted two significant health care laws since the collapse of the Clinton plan. It created a new program to finance health care for low-income children last year. And in 1996 it passed the Kassebaum-Kennedy law, to make insurance more readily available to millions of people who change their jobs or lose them. These efforts, along with previous expansions of the Medicaid program, have made a difference; without them, the number of uninsured would be even higher."
"The plight of the uninsured may seem distant to members of the middle class riding the current economic boom. People are less anxious about losing their jobs and their benefits than they were in the recession of the early 1990s. But William Custer, an economist at Georgia State University in Atlanta, said: 'The problems that the Clinton health plan was intended to address have not gone away and may worsen in the future. If the economy slows or if health costs rise much faster than prices in general, we'll probably see more rapid growth in the number of Americans without health insurance.'"
"Nationwide, about half of all uninsured workers are either self-employed or working in businesses that have fewer than 25 employees. When coverage is available in such companies, the employees are often required to pay a large share of the cost. Small businesses give many reasons for not providing insurance to their employees. They say that premiums are too high, that their profits are too uncertain for them to make a commitment to insurance and that health benefits are not always a high priority for workers."
"Federal lawmakers in general are reluctant to dictate programs to the states. And they say they cannot find the money for the subsidies that would be needed to make insurance truly affordable to millions of low-income Americans. As a result, the plight of the uninsured appears to be a low political priority in the current Congress, much to the frustration of their advocates."
"Republicans say mandates will not work in a voluntary employer-sponsored health insurance system. There is, they say, strong evidence that employers will drop coverage (especially for workers' dependents), curtail benefits or shift costs to employees if the government imposes new requirements. And in interviews, uninsured workers say that, while they yearn for coverage, they are very sensitive to the cost. They often pass up the offer of health insurance if it will take a noticeable amount from their paychecks."
"But concern for the uninsured will not die. The Health Insurance Association of America, which helped kill Clinton's proposals with its "Harry and Louise" commercials in 1994, is now seeking ways to extend private coverage to the uninsured. Insurers worry that if the erosion of private employer-sponsored insurance continues, consumers will demand new government programs, to which the industry is opposed."
"Drew Altman, president of the Henry Kaiser Family Foundation, which has done many studies of the uninsured, said: 'This is the biggest problem we face in American health care, and it's not on the political agenda. There's no significant solution on the horizon. The country doesn't want to put up the tens of billions of dollars it would take to provide coverage for the uninsured. We have been making some progress with the small incremental reforms, but it's like shoveling sand against the tide.'"
Uninsured--Thinking Global, Working Local
From "An Old Tradition Solves a Current Crisis - In One Small Town, Residents Trade Labor for Medical Care" by Ann Blackman in Time, 8/3/98:
"In the rugged community of Farmington, Maine, pop. 7,400, where logging and farming provide seasonal work and unemployment is twice the national average, pride runs deep. So when a local writer walked unannounced into the president's office of Franklin Memorial Hospital, Richard Batt, to explain that he could not pay for his son's hospitalization, Batt wanted to help the man meet his obligation honorably. After agreeing to adjust the bill, Batt asked--in an afterthought really--if the writer would help rework the hospital's brochures. 'It was a transforming experience,' Batt says. 'This man arrived in tears and left feeling good that he could help us.'"
"The incident got Batt thinking: How could his small, 70-bed community hospital offer low-income patients a way to pay for the rising cost of healthcare? Could they trade their skills for medical treatment? After all, barter may have fallen on hard times, but it's an American tradition: for decades people exchanged services for goods, not dollars."
"Alisa and Christopher Everett faced a $14,000-plus bill following the birth last August of their son, Alston. The pregnancy, complicated by Alisa's diabetes, had required numerous medical tests. And while Everett, 37, a $26,000-a-year mechanic in a local woolen mill, has health insurance, he was still responsible for almost $3,000 in unreimbursed expenses. The hospital's solution: to pay half the bill, Everett agreed to sand, repaint and refurbish hospital lawn chairs; Alisa is assembling a hospital photo album of doctors, staff and equipment to explain medical care to children who become patients. 'I used to be ashamed to go to the post office and get all those hospital bills,' Alisa says. 'But when you give back a little something, you feel better about yourself.'"
"Encouraged, the hospital last May formally launched Contract for Care, a program aimed at individuals who fall just above the federal poverty level--$1,138 a month for a family of three."
"Maine attorneys and advocates for the poor have reacted skeptical to the program. Christopher St. John, executive director of the Main Center for Economic Policy, says asking poor working families to take on another job is an imposition. "These families need every ounce of their effort to pay for rent and food," he says. "An extra job could be the straw that breaks the camel's back." Others fear that if the IRS rules the labor is revenue, some people may lose some of their Medicaid, food stamps or earned-income tax credit. To avoid that problem, hospital attorneys insisted that the program be voluntary. No money changes hands. A task not completed is the hospital's loss."
"Would the program work elsewhere? 'It can work anywhere,' says Batt, who came to the region from Denver, where he ran a 565-bed hospital. "It's a way to help patients help themselves." O'Leary puts it this way: 'It gives you a good feeling that you aren't a charity case.'"
Medicare's Rural Wage Bias, Chapter 99
So many special interest "perks" have been loaded onto the Medicare area wage index to adjust for so-called geographic differences in wage rates that it is finally collapsing from its own bloated disfigurement. It fails to serve the purpose for which it was originally intended--that is to simply adjust for any variation in area wage rates from one part of the country to another. In other words, if people were cars, Medicare with the wage index is supposed to make an allowance for a Chevrolet costing more in one area versus another but not pay for the additional cost of buying a BMW.
Medicare reported in the 7/31 Federal Register (page 40967) that the final rule for the 1999 wage index would be as originally proposed but there was one piece of good news buried in the pages of fine print (some of us don't have very exciting private lives). They reported, as required by law, that "MedPac (the Congressional oversight commission for Medicare) submitted a general comment on the wage index. First the Commission stated that several of the issues raised in the proposed rule stem from the failure of the wage index to account for the mix of occupational categories employed by each hospital and that if the wage index reflected this mix it would be more accurate... and that MedPac intends to examine this issue during the upcoming year." As has become the tradition on this issue, Medicare dismissed this objection with all others but MedPac's advocacy is a another small step towards curtailing Medicare's current anti-rural payment bias.
The American Hospital Association, as reported last month, is sponsoring an attempt at mediation among the various hospital sectors on this increasingly divisive issue. If agreement is not reached by September 21st, the diverse parties will be lobbying Congress directly. The short term resolution of this most current food fight among our country's hospitals will probably be more pragmatic than rational. In the long run, if hospitals are going to maintain anything resembling a united front with Congress, any geographic adjustments must be based on something more credible than whose state currently has which Senator on the right committee.
Caution Advised Re Rural Medicare HMOs
From "Solvency Standards Released for Medicare PSO's--States and Provider Groups React", State Initiatives in Healthcare Reform, 7/98:
"With the May release of solvency standards for Medicare+Choice provider-sponsored organizations (PSOs), the Health Care Financing Administration (HCFA) provided an essential piece of the guidance required for interested provider groups to move ahead in forming provider-owned organizations that contract directly with Medicare and serve only Medicare beneficiaries."
"While they applaud this opportunity for providers to break into the managed care business without having to compete in the heavily saturated commercial market, both the AHA and the American Medical Association have urged their members to move cautiously into the arena of full risk bearing. Some of the questions providers are being encouraged to answer before they proceed are: 1) Is the market ripe?; 2) Can the necessary scale of enrollment be achieved?; 3) Is your network viable?; 4) Are you ready to manage risk?; and 5) Do you have the necessary skill sets? Based on the same issues outlined above, regulators are raising even stronger questions about the wisdom of pursuing the Medicare-only route--even if the initial solvency requirements are not a problem."
"First, and perhaps most obvious is the potential expense of running a PSO with only Medicare enrollees. "A lot of MCOs start well, but with an elderly population, expenses can ring up quickly," says May. In addition, May suggests that the minimum requirement of only 500 enrollees to start up may be unrealistic. "The 500-enrollee minimum is well-intentioned, but it mostly sounds like something created by people who have not been around insolvent managed care entities," says William May, Deputy Director of Ohio Department of Insurance. May explains that his department's experience in Ohio has shown that 50,000 enrollees is a more accurate figure for the enrollment it takes for an MCO to succeed."
"Second, regulators question the business wisdom of taking advantage of the federal waiver option. "If you look at it from a business perspective, Medicare is a drastically reduced market, and you are going to the expense of putting together an administrative network. It does not make sense to go to the federal market for a limited duration," says May."
Jack Ehnes, Colorado Insurance Commissioner, "agrees that remaining a part of the local regulatory system is generally a smarter business decision than going temporarily to the federal, but, he explains, 'Some state regulators play games in the process. The waiver provision is meant to be a safety valve for those providers faced with insurance regulators that are not treating PSOs fairly. The new rules will put pressure on all states to measure time properly, and I hope to see states speed their approval process and narrow the application time frame.'"
New Payment Option For Rural Hospitals
Wisconsin's Rural Health Plan for Critical Access Hospitals (CAHs) has been approved in its draft form by Medicare staff. CAHs are a new Medicare provider type which, unlike most hospitals categories, will be reimbursed on the more favorable "reasonable cost basis." Approval of the draft indicates that the Feds accepted the State's proposed criteria for selection of CAHs.
CAHs are rural acute care facility that provides short-term inpatient, outpatient, and emergency services. The major eligibility requirement is that CAHs may have no more than 15 beds (25 including nursing home type "swing beds"), with a maximum stay for acute care patients of 96 hours. They can be no closer than 35 miles to another hospital unless certified by the state as a "necessary provider of health care services." Hospitals between 20 and 34 miles apart must satisfy at least two criteria and those less than 20 miles apart, at least five criteria. Criteria include above average rates of elderly, poverty, unemployment, bad weather, health professional shortages, etc.. Wisconsin has 33 hospitals that might consider becoming a CAH given their potential eligibility; four to five are expected to apply immediately.
Approval of the final plan by the Feds is expected early this Fall with the State then being authorized to certify rural hospitals that chose to apply and meet its federally approved criteria as a CAH. At that point, the key barrier will become the State's readiness to survey and process individual hospital applications. According to Tom Jones at the Wisconsin Hospital & Health Association, the State intends to begin accepting applications on September 1st. He estimate that it will take 3-6 months for the initial applications to receive final approval.
Complimenting the new federal CAH is Wisconsin's Rural Medical Center (RMC) licensure category. A stand-alone CAH will be more financially challenged than one coupled with other services-the core concept of the RMC--allowing for the spreading of fixed overhead over a number of community programs and services.
According to the Rural Health Plan, "In Wisconsin, some rural hospitals and nursing homes have begun to group related programs within their facilities, redefining their organizational profiles as integrated multi-service health facilities, a single-service entry point for a wide range of health care services.... Rural medical centers integrate Medicare- and Medicaid funded and other non-regulated services under a single management structure. Examples of services that might be offered are: hospital, nursing home, rehabilitation, home health, occupational and physical therapies, end-stage renal dialysis and ambulatory surgery."
These new organizational types were recognized by the state in 1996 when the Wisconsin Legislature created by statute the rural medical center licensure category. Unfortunately, the relevant RMC state regulations have not been finalized and the request for the federal waivers necessary to fully implement the RMC model remains largely uninitiated. Hopefully once the CAH program is tied down, the State will be able to finalize its full implementation of the RMC license..
Wisconsin rural hospitals interested in considering the CAH provider option review the draft Rural Health Plan for the Medicare Rural Hospital Flexibility Program which can be obtained by contacting Lillian Redding at the State's Bureau of Quality Assurance, REDDILE@dhfs.state.wi.us or 608-266-8482.
Hospitals' Assisted-Living Opportunity?
From "Growing Like Wild--Hospitals Enter Booming Assisted-Living Business" by Ngeo, Christine, in Modern Healthcare, 8/3/98:
"As assisted-living communities blossom across the U.S. like so many wildflowers, many hospitals are viewing these senior residences as buds on their continuum of care. In assisted-living residences, seniors remain as independent as possible, while they "age in place" in homelike settings that offer social interaction and provide assistance with daily activities--such as bathing and dressing--as well as access to healthcare."
"Meanwhile, the cost of assisted living is significantly less than nursing home care. Skilled-nursing care can exceed $6,000 per month for private-pay patients, according to a fall 1997 report by Shattuck Hammond. In comparison, some assisted-living facilities in the Northeast can charge monthly rental rates of up to $3,500, including a basic package of services. In other parts of the country, rates can be as low as $800 to $1,000."
"The rosy aspects of hospital partnerships with assisted-living companies:
+ Demand for assisted-living projects is growing because of shifting demographics, less expensive care.
+ Hospitals can fill out their continuum of care.
+ Hospitals can be more visible.
+ Hospitals can reap added revenues through ancillary services and emergency care.
+ Hospital involvement builds confidence."
 
"The thorny aspects of hospital partnerships with assisted-living companies:
- Lack of government regulations might lead to overbuilding and increased competition.
- Assisted-living residents might perceive the facility as overly medical.
- The hospital business is very different from the assisted-living business.
- Some are averse to hospital partnerships.
- Managed care could soon play a role.
 
All HMOs Are Not Equal
Wisconsin, like most of the country, has chosen a competitive market approach as the primary model for the allocation and delivery of health care. Unfortunately a fundamental requirement for competitive markets to function well is that there is good, readily available information about how the market is working. Easier said than done. The chart on right is a summary of some of the relatively scarce comparative HMO data available, recently reported by the Office of the Insurance Commissioner <http://badger.state.wi.us/agencies/oci/oci_home.htm>.
Looking at those HMOs with whom RWHC providers most frequently contract, the OCI information is very helpful in giving us useful comparative information on key elements, such as hospital utilization rates, rate of consumer complaints and the percent of premium dollars that go to HMO administration. This information gives providers critical perspective about what is or is not "normal" in the market when discussions are held regarding "medical management" or provider reimbursement.
Cooperative Technical Assistance on Web
The University of Wisconsin Center for Cooperatives (UWCC) <www.wisc.edu/uwcc> studies and promotes cooperative action as a means of meeting people's economic and social needs. It develops, promotes, and coordinates educational programs, technical assistance and research on the cooperative form of business. The UW Center for Cooperatives' Library is increasingly accessible through the Internet, including many links to publications, articles and co-op web sites.
Local Control Matters, But How?
From "The Ability to Resist or Respond to Market Pressures Depends on a Community's Cohesive Infrastructure" by Caroline Rossi Steinberg & Raymond J. Baxter in Health Affairs, 7/98:
"Many of the forces driving health system change are similar from community to community, regardless of size or location. They include pressures from purchasers to reduce prices, the shift to managed care in both the public and private sectors, excess capacity, technological developments, and state and federal policy initiatives. These forces are driving market consolidation, changing the locus of risk management, and altering the relationships between providers and patients and between providers and their communities. Communities are reacting to these changes in different ways, based in part on their underlying history, culture, and values."
"In many of the sites we visited, communities were mustering resources to oppose these perceived threats. They were using various mechanisms of accountability to preserve the status quo, create barriers to entry, protect institutions, keep competition in check, and promote quality, efficiency, and access. In some cases, these structures and processes are explicit and visible, and their impact is apparent. These included means of collective action such as coalitions, union activities, various collaborative efforts, and the widespread collection and dissemination of information; press coverage of major events or trends in the healthcare system; formal or legal structures such as boards and contractual agreements; and leadership structures. In other cases, cultural norms seemed to be a strong force, but the mechanisms for enforcing them were less obvious, described by respondents as a 'way of doing business' or 'professional culture.' All of these mechanisms feed into the political, legislative, and judicial processes whereby many important decisions are made."
"In sites where evidence suggests a breakdown in these mechanisms, will outsiders and for-profits be better able to make inroads? Will respondents' fears of loss of control be realized? Will institutions maintain their historic missions in the face of market challenges? If not, what will be the impact on people in terms of cost, quality, and access? In markets with emerging mechanisms of accountability, will new entrants encounter more resistance? Will communities increase the pressure on healthcare organizations to document and disseminate performance information? Will these new mechanisms have a visible impact on the pace and direction of health system change? Looking toward the future, will markets continue to keep the unique identities that result from their different norms and values, or will competitive forces make them begin to look more similar?"
Deinstitutionalization's Unfinished Business
From "The Other Victims" in USA Today, 7/28/98:
"As mourners wept in the Capitol Rotunda for the death of two U.S. Capitol police officers, a companion message of grief and victimhood echoed out of rural Illinois. From there, the expressions of love, helplessness and remorse by the father of the accused shooter, have been plain-spoken and heartbreaking. If blame must be assigned, lay it on the 50 years of meandering mental health policy known as 'deinstitutionalization.'"
"It had its roots in the 1940s, with the exposes of the horrible conditions in state institutions. In the 1950s, new drugs made it possible to think about out-patient care, and a mass exodus occurred in the 1960s and '70s as federal and state governments concluded that the institutions were so grim and ineffective, most patients would be better off in other settings. Between 1955 and 1994, the number of patients in state hospitals fell from 560,000 to 72,000."
"Currently, only about 60% of the 5 million-plus Americans with severe mental illnesses receive treatment. And for those on the street, fewer than half the states support even community treatment teams to help ensure that sufferers stay in contact with providers and take their medicine. As for the families of sufferers, only about 7% nationwide receive even basic help, according to the National Alliance for the Mentally Ill: education about the diagnosis; how to treat it; how to manage volatile sufferers who won't take medication."
"At the same time, the legal standards for involuntary hospitalization are ambiguous and hard to establish. In many states, a person must pose a clear danger to himself or others. But sometimes, the first sign of danger is violence against an animal. Or the behavior is so strange that it's not taken seriously. What then? And what about people whose illnesses are so disabling that they are driven into poverty, homelessness, substance abuse and all the other conditions that amplify their disorders? The nation is reminded that deinstitutionalization is unfinished business, and that the price is profound. In extreme cases, innocent people and heroes die. But every day our towns and cities struggle with a seeming endless parade of screamers, and helpless parents are left to wonder whether their child will be the next one to attack, to kill, to shatter their family, and others."
RWHC Competency Program
Health care leaders are responsible for designing mechanisms to assess, maintain and improve the competency of all staff, including clinical as well as non-clinical departments. This responsibility has emerged from JCAHO and professional standards, the ever- changing health care environment and consumer demand for quality service. For the past 6 years, RWHC staff have been assisting organizations in implementing the RWHC Competency Program, a model designed to integrate competency assessment into critical staff roles at every stage, from interviewing and orientation to training and skills development.
Defining competency as the ability to perform a task with desirable outcomes under the varied circumstances of the real world, RWHC provides assessment tools for 28 specific clinical and non-clinical positions and 2 general skills packages, one for age-specific care and another for health and safety. Each competency package includes 4 tools: Master Competency Statements, Behavioral Criteria, Position Description and Performance Appraisal. Currently in development are an additional 14 non-clinical packages as well as new clinical packages and revisions to existing tools. Along with on-site consulting services, these products are marketed nationally. Organizations implementing the RWHC Competency Model as well as JCAHO surveyors have been impressed with the versatility and completeness of the competency assessment tools.
The RWHC Competency Project Team is committed to on-going growth and development to respond to the demand for industry approved materials. The team has developed goals in the areas of competency package development, national marketing strategies and expansion of consultation services. RWHC offers numerous on-site consultations both within and outside of Wisconsin, Competency Educational Programs and a Competency Program Teleconference Series. One important area of emphasis has been to assist organizations in implementing a system wide model for clinical as well as non-clinical departments that can be integrated with positions descriptions, orientation, performance appraisal, policies and procedures and performance improvement activities.
To obtain more information on RWHC's Competency Program, contact Linda Briggs or Mary Jon Hauge.
Turning Point to Proceed
The State is going to proceed in its efforts to "modernize and revitalize" public health in Wisconsin, according to John Chapin, Administrator of the Wisconsin Division of Health. This effort, known as Turning Point, was originally designed as a grant application to the Robert Wood Johnson and W.K. Kellogg Foundations; while gaining high accolades for its concept, it was not funded. After a period of internal discussion, the State has decided to go ahead anyway and begin the implementation of Turning Point.
Chapin says "This transformation will improve the public health system by pulling together resources, developing a shared vision and common goals between government, its people and its institutions. Through this transformation we will obtain fresh, creative ideas and useful information to benefit the health for all. Important products will include:
· a definition of public health to include what it is, what it does, what we want it to do, and how it should be structured;
· identification of Wisconsin's top public health priorities and the resources and strategies necessary to protect all, especially our most vulnerable citizens;
· a Public Health Improvement Plan for 2010 with policy changes to support sustainable transformation for the future; and
· action steps that consider resources, partnerships, information and technology, and development of the public health workforce."
Turning Point's hope for public-private, multi-organization cooperation is comparable to the public health goals embedded in the Wisconsin Rural Zones of Collaboration Initiative, a federally funded network development grant administered by the Rural Wisconsin Health Cooperative. With the State's commitment to proceed with Turning Point and their ongoing participation with the Zones of Collaboration work, both initiatives are likely to reinforce each other.
Larry Nine's Honored for 15 Years' Service
The Board of the Wisconsin Health and Educational Facilities Authority (tax-exempt bonds for non-profit health care providers and colleges) and a long list of friends recently honored Larry Nines on the occasion of his completing fifteen years as the authority's executive director. WHEFA, due to Larry's leadership is well respected nationally for its pioneering work in supporting rural health providers as well as providing expert, objective technical assistance to Wisconsin eligible non-profits, whether or not they intend to borrow money through the Authority.
Rural Health/Economics Video Available
From Oklahoma AHEC News, 7/98:
A new video, Healthy, Wealthy & Wise: Improving Rural Health Care & Rural Economics targets "business and civic leaders, public officials, health care providers and consumers to inform them of the influence of local health care on rural economic development. Each year the average rural county generates $73 million from health care. Unfortunately over 50% of those dollars leave rural communities to go to big cities."
"The 22-minute video shows how to keep more of those dollars at home and improve local health care in the process. Residents study health care needs and build support for the local health system. Consumers and providers discuss their new found understanding that quality health care is a fundamental cornerstone to building a sound local economy. Not only does the industry generate a significant amount of employment and income, a viable health care system is essential for encouraging new business and expansion of local firms while attracting new jobs, residents and retirees." A copy of this video can be obtained by calling 800-545-7467 or email appalshop@aol.com; the cost is $35.00.
Natural Network vs. Individual Tensions
Thanks to Roberto Anson from the Federal Office of Rural Health Policy for this quote from Jean Lipman-Bluman in her book, The Connective Edge: Leading in an Interdependent World:
"The Connective era is marked by two contradictory tensions that leaders must address to be successful: interdependence (collaboration, alliances, networks,, teams) and diversity (distinctiveness, uniqueness, independence)...Interdependence pushes leaders to use collaboration, community and politics of commonality-that is, to look for common ground among constituents. Diversity demands of leaders a regard for independence, individuality and the politics of differences. The "connective" leader looks for areas for intersection among groups that can't see their common ground."


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