If you need any convincing about the urgent need for reform of provider payment, check out the latest report on hospital financial performance from the Massachusetts Division of Health Care Finance and Policy.

The report gives a very stark picture of the growing gulf between the “haves and have-nots” among hospitals in the Commonwealth.

I think the operating results are the most troubling and relevant, since they show financial performance without the effect of non-operating factors like investment gains or losses.

Among the findings in the report:

• 40% of Massachusetts hospitals had a loss from operations in Fiscal Year 2008.
• The top quarter of hospitals made a healthy 2.9% operating margin; the lowest quartile lost money, with an average negative margin of 1.1%.
• The gap between the financial performance of teaching and community hospitals is getting wider and wider: the median operating margin among teaching hospitals was 4.1%–by far the highest level in the seven-year-period shown in the report– while community hospitals barely broke even from operations, with an anemic 0.4% operating margin.

Not all community hospitals did poorly on operations. Read more…

Governor Deval Patrick will restore partial funding to cover uninsured legal immigrants in the state budget he signs tomorrow. The Governor’s budget adjustments will include $70 million for immigrants who are in a final stage of citizenship and who qualify for Commonwealth Care. The House and Senate cut the full cost of coverage for these 28,000 residents, which is about $130 million. Toby Guevin, state policy director at the Massachusetts Immigrant and Refugee Advocacy Coalition, applauds the Governor’s move, but will continue to press for full funding.

“From this point, there is still significant work that needs to take place to make sure this population has comprehensive health coverage, and we will continue to work for that, but this is a good first step.”

The Patrick administration will ask the federal government to pick up the other half of the cost of this coverage. If that doesn’t work, the Connector will design a cheaper plan for these residents. House and Senate leaders were not ready to say yesterday if they would try to reverse this budget change. The Governor will go along with the House and Senate on maintaining dental coverage for adults who earn $16,000 a year or less. He has not said what he’ll cut to free up the $70m.

Martha Bebinger

On Beacon Hill, the House has agreed to reinstate a $64-million payment to Boston Medical Center. The state promised the hospital this money last year…but House leaders had removed it from a supplemental budget…saying the state just couldn’t afford it right now. A spokeswoman says BMC is grateful to the legislative leadership for understanding the hospital’s difficult financial situation. Governor Patrick is expected to sign the bill. Legislators expect to dip into reserves, again, to make the $64m payment.

Martha Bebinger

The Boston Archdiocese and it’s hospital network, Caritas Christi, have decided that participating in a joint health insurance venture would violate the church’s mission. Caritas Christi, in partnership with a for-profit health insurer, was set to begin providing state subsidized coverage on Wednesday. But tonight, the Archdiocese announced Caritas is pulling out. Cardinal Sean O’Malley, in consultation with the National Catholic Bioethics Center, decided that having an ownership stake in a venture that provides abortions and other reproductive procedures is inconsistent with Catholic moral teaching.

The insurance plan, CeltiCare, will go ahead and enroll new members. Those members will be able to use Caritas hospitals…but Caritas may not see the same increase in patients or revenues it expected through the joint venture. This is the second setback for Celticare this week. On Tuesday, the state decided to stop automatically assigning low income residents who don’t chose a plan to the lowest price option…which was Celticare.

Martha Bebinger

Here’s the full statement from the Archdiocese…

Braintree, MA – Based on the decision of the Caritas Christi Executive Committee of the Board of Governor’s to relinquish its membership and equity interest in the previously established joint venture, CeltiCare Health Plan Holdings, LLC (formerly known as Commonwealth Family Health Plan Holdings, LLC) but maintain its important role as a provider of health care to many enrolled in the state’s Connector Program, the Archdiocese of Boston today expressed support for the new arrangement. Read more…

On Wednesday night, I had the good fortune to be among 164 invited participants in ABC News’ health care forum, Questions for the President: Prescription for America. The event itself was a hybrid of a news conference (with the public instead of reporters) and a White House social event.

After clearing security, attendees gathered on the White House lawn, and for a brief period listened to a Marine Corps trio, though we quickly retreated inside as the heat, humidity and insects made it too uncomfortable to congregate. I saw some people I knew and enjoyed meeting others—and all of us were excited to be there. It was a diverse group of health care providers, insurers, policy experts, medical/nursing students, human resources representatives, business people, and others from all walks of life and political points of view, all invited because we each have a vested interest in the final shape and success of a national health plan.

ABC asked us to submit a question in advance for the president. My question was, “We have real life experience in Massachusetts with success of covering nearly 98 percent of our population in less than three years without raising health care costs and without the expense and unintended consequences of a government-run plan. Why can’t the nation follow our example?” Read more…

Health and Human Services Secretary Kathleen Sebelius is rolling out individual reports for each state today that the White House says “highlight the urgent need for health reform across the nation.” Here’s how the White House make the case for Massachusetts:

THE HEALTH CARE STATUS QUO: Why Massachusetts Needs Health Reform

Congress and the President are working to enact health care reform legislation that protects what works about health care and fixes what is broken. Massachusetts took groundbreaking initial steps toward these goals in 2006 with the passage of the Massachusetts Health Care Reform Act. Reform measures have been successful, with more than half of the previously uninsured population now covered and high program satisfaction. Yet sky-rocketing health care costs continue to hurt families and businesses and strain state budgets. Families and businesses in Massachusetts deserve better.

INSURANCE COVERAGE HAS INCREASED IN MASSACHUSETTS AS A RESULT OF REFORM

2.6 percent of people in Massachusetts are uninsured, a decrease from 5.7 percent in 2007. (1)
Almost 450,000 individuals have enrolled in private or subsidized health insurance plans since reform implementation. (2)
Employer-based coverage in Massachusetts is increasing, with 85,000 new enrollees between 2007 and 2008. (3)
Employers offering coverage in Massachusetts held steady around 72 percent between 2001 and 2007, while the percent of employers offering coverage nationally declined from 68 to 60 percent. (4)
Despite improvement due to the Connector, insurance choices remain limited. Blue Cross Blue Shield MA alone constitutes 50 percent of the health insurance market share in the state. (5) Read more…

Editor’s Note: There are a number of white papers on health care making the rounds in Washington, D.C. This one focuses on reorganizing the health care system around primary care. The executive summary is below. You can read the full paper here.

The failure of the US Health Care system to deliver population health to all, and do so affordability, is not likely to be impacted significantly by health insurance reform. Efficient, effective, and affordable health care is the product of an organized delivery system that provides needed services to all citizens. Most health care systems start with primary care, provided universally to the entire population.

Primary Care for All is a proposal to bring together three existing systems – existing private primary care practices, Community Health Centers, and Accountable Health Care Organizations (large, vertically integrated health systems) that currently provide primary care, and out of them creates an infrastructure that provides primary care to all Americans. Every American would have a primary care medical home – and a personal physician –nearby. The nation would be blanketed with robust multidisciplinary primary care practices – one practice of five to eight physicians, working as a team with other health professionals –for every 10,000 to 15,000 people. The majority of citizens would have a primary care practice just down the street that is open until eight or nine every night; open on weekends; and offers most of the medical services patients need on a regular basis.

This health care infrastructure would be supported by a national, statewide, and local organizations that would provide funding, support, oversight, and advocacy, so that primary care centers could remain patient centered, community focused, accessible to all, and effective at improving the health of the population.

Primary Care for All presents two mechanisms for funding the nation’s primary care infrastructure, both of which remove primary care funding from existing ineffective and wasteful fee-for-service reimbursement.

Financing health care system reform can succeed best if it is accompanied by focused improvement in primary care delivery and organization. The development of Primary Care for All presents an essential and affordable first step toward an effective and efficient health care delivery system, and sustainable health care reform.

Shannon Brownlee, MS, is a journalist and a visiting fellow in the Department of Bioethics at NIH.
Michael Fine MD is a family physician, community organizer and Clinical Assistant Professor of Family Medicine at Brown University.

The economy is hitting the state’s free and subsidized health insurance program, Commonwealth Care, from 2 angles. First, more state residents affected by the shrinking job market are signing up. Second, the state has less money to spend on this…and hundreds of other programs. As a result, the Health Insurance Connector Authority presented a package yesterday that would save $114 million. The biggest change affects about 17,000 residents who qualify for free health insurance…but who have not combed through their insurance options to pick a plan. They’ve waited for the state place them in one. Now the state will stop doing that. Leslie Kirwan chairs the Health Connector board.

LESLIE KIRWAN: Eligible Commonwealth Care enrollees, need only pick a plan and they will have health insurance. In the scheme of things, and many of the other choices we have to make in the budget, that seems like a reasonable shared sacrifice.

Letting coverage lapse for this group is expected to save about $63-million next year. These residents would still be eligible for Commonwealth Care and could enroll or re-enroll when they go to a clinic or hospital. Kirwan, who is also Secretary for Administration and Finance, argues that this change is less disruptive because it does not affect eligibility and can easily be reversed as revenues improve.

KIRWAN: As opposed to taking large segments of the population out of the program, which we hoped to avoid and which we’re now struggling to cope with.

That struggle is over 28,000 legal immigrants the House and Senate proposed cutting from Commonwealth Care to save money. Read more…

Some hospitals across the state will not receive millions of dollars the state owes them for Medicaid patients until the next fiscal year begins July 1st. Hospital leaders are frustrated the state didn’t warn them about the cash flow problem before it missed a payment. Bob Gibbons with the Massachusetts Hospital Association says the delay is especially difficult for institutions with large numbers of Medicaid patients.

“It is those hospitals in particular that we’re concerned about because they may well be the same hospitals that have very few days of cash on hand.”

The state says it has hit a cash flow crunch because a new accounting system sped up payments to providers earlier this year. Assistant Secretary for Health and Human Services, Terry Dougherty, says most providers should not be behind, but the state will consider requests from hospitals that can’t absorb this delay.

“Our management team has been looking at those and we will be cutting some special payments out to make sure providers are not stuck if you will, due to the loss of cash flow.”

The hospital association says about 25% of hospitals in the state have the cash to cover 45 days or less.

Martha Bebinger

This article/assessment is in the Massachusetts Hospital Association’s “Monday Report.”
The most sweeping national healthcare reform effort since the creation of Medicare is currently underway and the initial number-crunching shows that hospitals could take an enormous financial hit.

The White House proposals outlined last week include cuts to provider updates, the bulk of which come from hospitals, as well as a 75% reduction in funding for the Medicare Disproportionate Share Hospital (DSH) payments by 2019. In Massachusetts, the proposal would mean a cut of $1.1 billion to Medicare DSH payments over 10 years and $2.5 billion in ‘productivity’ and update cuts over the same period. President Barack Obama also has proposed a reduction in Medicaid DSH funding beginning in 2013 that will result in a 75% reduction by 2019. Massachusetts stands to lose approximately $1.48 billion dollars in Medicaid DSH funding, which could threaten the state’s Commonwealth Care, Health Safety Net program, and governmental hospitals. It also would reduce funding that could be used to help address future Medicaid underpayment to hospitals. Read more…