Memorial Day

Tax-Exempt Status is a Privilege

Congress Examines Nonprofit Hospitals | AP | 5.27.05

Congress should review tax exemptions for nonprofit hospitals to determine whether the community benefit justifies the expense, the chairman of the tax-writing House Ways and Means Committee said Thursday.

“We really can’t tell the difference, all that much, between a for-profit and a not-for-profit,” said Rep. Bill Thomas, R-Calif. “What is the taxpayer getting in return for the tens of billions of dollars per year in tax subsidy?”

The committee opened its inquiry a day after the Senate Finance Committee began its own look at nonprofit hospitals, asking 10 of the nation’s largest for answers to detailed questions about their operations.

“It’s also my job to make sure charities are earning their generous tax breaks,” the chairman of the Senate committee, Republican Charles Grassley of Iowa, said in a statement. “Tax-exempt status is a privilege.”…

Grassley Asks Non-Profit Hospitals to Account for Activities Related to their Tax-Exempt Status | Press Release | 5.25.05

WASHINGTON — Sen. Chuck Grassley today asked some of the nation’s largest non-profit hospitals to account for their charitable activities, given the tax-exempt status they receive. The designation results in tax benefits totaling tens of billions of dollars every year.

Grassley said the inquiry is a continuation of his effort to review the non-profit sector in advance of legislation he will introduce to prevent abuse of the federal tax laws that created non-profit organizations and encourage charitable donations. Grassley is chairman of the Senate Committee on Finance, which is responsible for tax legislation and oversight.…

Grassley sent his letter was sent to the following hospitals:

1. The Cleveland Clinic, Cleveland, Ohio;
2. New York Presbyterian Hospital System, New York, N.Y.;
3. Advocate Health Care Network and Advocate Health and Hospitals Corporation, Oak Brook, Ill.;
4. Resurrection Medical Center and Resurrection Health Care, Chicago, Ill.;
5. Phoebe Putney Health Systems, Inc., Phoebe Putney Memorial Hospital, Inc., Albany, Ga.;
6. William Beaumont Hospital and Beaumont Properties, Royal Oak, Mich.;
7. North Mississippi Health Services, Inc., North Mississippi Medical Center, Tupelo, Miss.;
8. Sutter Health, Sacramento, Calif.;
9. Fairview Health Systems, Minneapolis, Minn.; and
10. Banner Health, Phoenix, Ariz.

Charity Care and Community Benefit

1. How does your organization define charity care? What types of activities or programs does your organization include in its definition or determination of charity care? Which of these activities or programs would your organization not incur, at all or to the same extent, if you were organized and operated as a for-profit hospital? Does your organization maintain a charity policy? If so, please describe the policy or provide a copy of such policy. Does this policy require that certain types and amounts of charity care be provided?
2. What are the 10 largest categories of charity care expenditures incurred by your hospital for the past five years? How does this differ from 10 years ago? 25 years ago?
3. What percentage of your patients for your most recent fiscal year were: (a) uninsured, (b) covered by Medicare, (c) covered by Medicaid or other state or other governmental program providing medical care benefits for low income individuals, or (d) otherwise covered by private insurance?
4. Does your hospital ever agree to waive its fees immediately upon admission of a patient? If so, under what circumstances?
5. What effect, if any, has the increase in patient co-payments and deductibles had on patient bad debt writeoffs of your hospital over the past five years?
6. Has your hospital or other members of your hospital system group entered into joint ventures with other nonprofit, tax-exempt hospitals to provide charity care or health care services? If so, please describe the nature of such joint ventures.
7. Has your hospital or other members of your hospital system group entered into joint ventures with physicians or other for-profit companies or investors to conduct unrelated trade or business activities? If so, please describe the nature of such joint ventures.
8. Has your hospital or other members of your hospital system group entered into joint ventures with physicians or other for-profit companies or investors to conduct health care activities you consider to be substantially related to your core charitable mission? If so, please describe the nature of such joint ventures.
9. Do any of your hospital or hospital system joint ventures have charity care policies that require certain types or amounts of charity care to be provided? If so, please describe such policies, and how they are similar to or different from your hospital’s charity care policy. Also explain the role your hospital has in assuring that the charity care policy of the joint venture is enforced. If your organization does not track charity care expense by such categories, please explain why not, and provide a narrative response that explains whether there are certain categories of care for which charity care is more important or is not relevant.
10. Please respond to the following assertion: Many nonprofit, tax-exempt hospitals engage in joint ventures that shift the most profitable and valuable procedures, practices, and income streams to the joint ventures so that the greater profits and value may be shared with physicians and other for-profit persons.
11. How do you assure that your joint ventures with others do not deplete your hospital’s resources that otherwise would be available for charity care, such as by tying up cash and other liquid assets in the investments in the joint venture?
12. Please provide a charity care breakdown for each entity that is a member of your hospital system group. In your opinion, should charity care be measured on an aggregate group basis or on an organization-by-organization basis?
13. In your judgment, should the Federal tax law require each joint venture in which a tax-exempt hospital participates to have a charity care requirement? If so, should the amount of the requirement differ depending upon the extent of ownership by exempt hospitals in the joint venture?
14. How does your hospital account for charity care provided by a joint venture in which the hospital participates? For example, if your hospital is a 50% owner of a joint venture, and the joint venture provides $100 of charity care, do you count $0, $50, $100, or some other amount, as charity care provided directly by your hospital?
15. What types of research and teaching are performed by your hospital as a charitable or educational activity?
16. Please describe any fund-raising activities conducted by your hospital in an attempt to supplement fees for services and other revenues. Specifically, provide for the last three years the amount of charitable donations received by your hospital. Does your organization ever conduct fund-raising activities which commit the donations raised by the activity to be used to provide medical care to low-income or uninsured individuals or families?
17. In general, does partnering with for-profits in a joint venture arrangement have implications on the provision of charity care and the satisfaction of the community benefit standard by the joint venture or by the overall hospital system that participates in the joint venture?
18. Do your compensation arrangements with physicians and other professionals in any way encourage or discourage the provision of charity care by your hospital or hospital system? If so, how?
19. Please provide a breakdown of your charity care expenditures, across emergency room services, urgent care services, intensive care services, rehabilitation, maternity care, mental health care, cosmetic surgery, chemical dependency and outreach, and any other categories you consider to be appropriate.
20. What kinds of community outreach and education activities does your hospital conduct, and how much is expended on such activities (in absolute dollars and as a percent of your budget)?
21. Please explain how the amount of charity care you provide differs in magnitude and kind from that provided by your for-profit competitors?
22. How much does your hospital spend on free or below-cost infant and child care programs, such as childhood immunization programs?
23. Does your organization conduct clinical trial programs, and if so, how does your organization treat such programs for purposes of determining charity care?
24. How do you allocate expenses (direct labor and materials, indirect labor and materials, management, general and administrative, fund-raising, investment, and other) for purposes of determining the amounts you consider to have been expended on your charity care programs? Does this allocation include costs incurred pursuant to a cost-sharing arrangement with other members of your hospital system group? Is this allocation mechanism dictated by internal policy, Federal or State regulatory requirements, financial accounting principles, or other standards? Is your allocation of expenses to charity care consistent with expense allocation procedures you use to allocate expenses for other purposes, regulatory or otherwise? Please explain any similarities and differences.
25. Please provide a statistical breakdown of the hospital’s average cost per patient and the average length of stay of your patients. Feel free to provide as much detail as you consider to be appropriate to demonstrate the range of costs and stays across different types of treatment.

Payments/Charges/Debt Collection/Tax-Exempt Status and Other Issues

1. Please explain what is the average mark-up of charges over costs? What is the average private pay contractual allowance (charges to payments) weighted by payer?
2. Please explain the reason for charging “chargemaster” rates to uninsured individuals particularly in light of the Secretary of Health and Human Services’ letter of February 19, 2004 to the President of the American Hospital Association and also in light of your not-for-profit and tax-exempt status.
3. Please explain how fairness or reasonableness of charges to the uninsured can be assured even in instances where you offer discounts where those discounts are discounts from the already high chargemaster rate? What is your discount policy? What is the collection rate for self-pay?
4. If government programs pay for hospital services for its enrollees without regard to the chargemaster rate and commercial insurance carriers throughout the country likewise pay not based on the chargemaster rate, please explain why the uninsured continue to be charged the chargemaster rate?
5. Please explain what is the economic benefit to your hospital of charging uninsureds the high chargemaster rate when uninsured people generally have less of an ability to pay hospital charges and do in fact generally pay only a fraction of what has been charged? Does this benefit justify your action particularly in light of your not-for-profit tax-exempt status?
6. The Committee has heard statements from individuals that have gone to many not-for-profit, tax-exempt hospitals in the very recent past and have seen no evidence of the fact that they make their tax-exempt and charitable missions known to patients via signs in patient access areas, brochures, booklets and the like. Please comment on what your hospital does to provide such visible information on the subject.
7. Please identify what steps your hospital has taken to insure that lower level staff, who are actually the front-line staff, are aware of your not-for-profit status and charitable mission and have been instructed to implement the same in their treatment of uninsured patients. Please produce any documents conveying such information to your staff.
8. If your hospital believes that Medicare rules created roadblocks to providing discounts to the uninsured, as is evidenced by the President of the American Hospital Association’s (AHA) December 2003 letter to the Department of Health and Human Services, why did your hospital, or your hospital through the AHA not raise the same with the Department at an earlier date? In considering this question it is noteworthy that in December of 2002, Trevor Fetter, the CEO of Tenet Healthcare, stated in an investor conference call “I would like to turn to an issue that has bothered me for years. I mentioned earlier that Medicare requires hospitals to set charges the same for everyone. This means that the uninsured or underinsured patient receives a bill of gross charges. In other words, the entire hospital industry renders its highest bills to the customers who are least able or likely to pay.”
   In addition, please state whether your organization ever grossed up their charges on the Medicare cost report because they had a lower OPD fee schedule? Please state your views on whether it is allowable or acceptable for hospitals to lower their charges for the insured and not the uninsured?
9. It has been suggested that one of the reasons that a hospital may have maintained these high chargemaster rates is that it allows the hospital to obtain more in the way of Medicare outlier payments thus further costing the government additional money for the care of the uninsured. Please explain why your hospital, as a tax-exempt not-for-profit hospital, feels that this is appropriate or inappropriate. What was the growth rate in your Medicare outlier payments from 1998 to 2002?
10. Secretary Thompson, in his letter mentioned above, noted that “Medicare and Medicaid have a long history of doing their part to help the uninsured that includes paying hospitals $22 billion each year through the disproportionate share hospitals’ provision to help hospitals bear the cost of caring for the poor and uninsured.” In light of the fact that you are a tax-exempt not-for-profit hospital, please comment on whether or not you believe it is appropriate for your hospital to receive such aid from the government. Please list your payments under disproportionate share for the past three years as compared to uncompenstated care, separating out bad debt.
11. Do you agree that the chargemaster method of charging uninsureds should be discontinued? In answering, I would ask that you consider the statement of Mr. Jack Bovender, the Chairman and CEO of Hospitals Corporation of America, one of the largest for-profit hospitals in the country. Mr. Bovender has stated, “the chargemaster system on which hospitals rely to set pricing and billing codes have a 40 year history of changes that have distorted the relationship between price and cost. It grew out of a time when decreasing Medicare reimbursement prompted cost shifting to the private sector and this was exacerbated in the 90’s by aggressive managed care discounting. I am not here to try to justify this and it really needs to be fixed.”
12. At the hearing of the Oversight Investigation Subcommittee of the House Energy and Commerce Committee on hospital billing dated June 24, 2004, Mr. Bovender stated that he “was told by both inside and outside legal counsel . . . [in late 2002] that we had to get clearance [for discounting to the uninsured] through CMS.” Please identify whether your hospital has received such legal advice and if so, please provide any written documentation of that advice.
13. Please provide all documents related to your hospital’s consideration of medical charges for billing practices, charity or indigent care, discounts or write-offs to uninsured patients.
14. Please provide al

All dressed up, and nothing to see

Impotence-Drug Users’ Reports of Blindness are Examined | WSJ | 5.27.05

WASHINGTON — Federal health officials are probing reports of blindness among dozens of men who used Pfizer Inc.’s Viagra and other impotence drugs — but at the same time cautioning that the vision loss can be linked to the same illnesses that lead to impotence.

The Food and Drug Administration disclosed Friday that it was in discussions with the makers of Viagra, Cialis and Levitra about what the labels of those drugs should say about the rare cases of varying degrees of vision loss, including blindness. The maker of Cialis already has voluntarily added a one-line mention to its label.…

Medical Warning: if you have blindness lasting for more than four hours, consult a physician.

Impotence to Act May Cost $2B

Feds Move to Stop Viagra for Sex Offenders | AP | 5.25.05

Lawmakers moved Tuesday to eliminate federal payments for Viagra and other drugs that treat impotence, as a federal agency warned states that they could face sanctions if they don’t end Medicaid coverage for such drugs for convicted sex offenders.

The Centers for Medicare and Medicaid Services estimated Tuesday that Medicaid spends about $38 million a year on erectile dysfunction drugs, all but $2 million for Viagra.

That’s too much for Sen. Charles Grassley, R-Iowa, who introduced legislation that would eliminate all federal payments, both Medicaid and Medicare, for these drugs.

Absent a ban, he said, Medicaid and Medicare would spend $2 billion on impotence drugs between 2006 and 2015. …

12K+

Average Family Medical Costs Will Exceed $12,200 This Year | WSJ | 5.26.05

NEW YORK — The average family of four with an employer-sponsored health plan will spend more than $12,200 on medical expenses in 2005, up from just $8,400 a year in 2001, according to a new report.

Employers, however, continue to absorb the bulk of that cost, leaving the average family of four covering just 17% of the overall cost, according to the report conducted by actuarial and consulting firm Milliman.

That’s not to say that employees haven’t been burdened by the rapid rise in medical costs in recent years. Employees’ total share of the overall cost has remained steady at about 17% since 2001, according to the report. As spending rises, however, employees are coughing up more to meet their share. In 2005, the average family of four is expected to hand over roughly $2,035 in out-of-pocket expenses, up from $1,925 in 2004 and $1,480 in 2001.

The biggest expenditure is hospital care in 2005, at 45% of the total, followed by physician costs at 37%, pharmaceuticals at 15%. Overall, costs rose 9.1% in 2005, down slightly from 10.1% in 2004 and 2003. …

MMI Report (PDF)

Approximately 10% increase in family costs/year for the last four years!

Tell-a-Doc

These docs are literally on call | USA Today | 5.25.05

A group of entrepreneurs is gambling that patients are willing to pay for fast, low-cost medical care — by telephone, with doctors they’ve never met.

The controversial new business, a twist on the decades-old practice of doctors responding to phone calls from their own patients, is aimed at two modern issues: demanding, time-crunched people; and those who lack health insurance.

The service’s promoters say patients, both the insured and the uninsured, can save money by using TelaDoc instead of urgent care clinics or the emergency room. For individuals, the service costs $18 to join, and $4.25 a month. Each call to a doctor is $35.

TelaDoc might simply be the latest offering in what some see as a new health care niche: convenience.

On one end of the convenience spectrum are “concierge” practices for patients willing to pay sometimes steep stipends to their doctors to guarantee 24-hour access, quick return calls and other perks. On the other, “nurse-in-a-box” miniclinics in retail outlets offer a menu of low-cost tests with no-appointment-necessary speed. …

TelaDoc

{assorted snips from the Teladoc site}

Telephone Medical Consults: a Form of Telemedicine

Telephone medical consults is the art and science of providing standard medical assessments, treatments, care and services to patients located remotely from the treating physician. TelaDoc specializes in non-emergent (non-emergency), non-interventional primary care, thereby eliminating unnecessary and inefficient trips to a doctor or emergency room.

Telephone consults have been broadly utilized since 1997. Over 36 million Americans have been treated using this technology, and data from the University of Texas shows that over 70-75% of non-urgent primary care requests can be treated by a doctor with a telephone medical consult.

About Our Doctors

• Internists, family practitioners and urgent care doctors with years of experience
• Specialize in talking to patients and diagnosing problems over the phone
• All board eligible, most board certified
• Average hundreds of consults per week
• Must pass a rigorous background check that verifies the absence of any medical malpractice claims, checks references, and confirms the status of each doctor’s license
• Live and work in the United States
• English speaking doctors available in all states. Spanish interpreter available.

Services Provided

FAQs

• What is the TelaDoc service?
• Can members get prescriptions filled from TelaDoc physicians?
• Do patients talk to “real doctors”?
• How is the diagnosis performed?
• What are the qualifications of TelaDoc physicians?
• What are the costs associated with TelaDoc?

Board Eligible: These physicians have attained required education and certification to practice medicine in their respective states.

First, an interesting and parochial definition for “board eligible.” Is it purposefully meant to be vague? Board eligible means that a physician has completed a specialty residency and has not yet taken or passed his/her boards. By their definition, board eligible is anyone who has completed medical “education” (medical school and has a degree) and is licensed in a state. That is a world of difference!

Second, the practice of medicine is regulated at the state level under the state’s inherent police powers (health and welfare). It is wholly unexplained how a good faith basis for diagnosis and treatment is provided when there is no physical evaluation (even by proxy evaluation, e.g., paramedic or mid-level). Are they assigning the client (patient), calling in, to a physician licensed in the state the client is calling from? How is this any different from a physician practicing over the internet, instead of telephonically.

Third, state licensure, state discipline, state regulation, and what about malpractice (and in particular, what state to bring an action in) all glossed over. But then this is just an advertising piece…

V’ger

Voyager at Edge of Solar System | WP | 5.25.05

Scientists Predict ‘Historic Step’

After a storied, 28-year odyssey, NASA’s venerable Voyager 1 spacecraft appears to have reached the edge of the solar system, a turbulent zone of near-nothingness where the solar wind begins to give way to interstellar space in a cosmic cataclysm known as “termination shock,” scientists said yesterday.

“This is an historic step in Voyager’s race,” said California Institute of Technology physicist Edward C. Stone, the mission’s chief scientist since Voyager 1 and its twin, Voyager 2, were launched in the summer of 1977. “We have a totally new region of space to explore, and it’s a once-in-a-lifetime opportunity.”…

V’ger leaves the solar system.

Price of Knowledge

Scholarly Journals’ Premier Status Is Diluted by Web | WSJ | 5.23.05

More Research Is Free Online
Amid Spurt of Start-Ups;
Publishers’ Profits at Risk
A Revolt on UC’s Campuses

BERKELEY, Calif. — From a stool at Yali’s café, near the University of California campus, Michael Eisen is loudly trashing the big players in academic publishing. Hefty subscription fees for journals are blocking scientific progress, he says, and academics who think they have full access to timely literature are kidding themselves. “They’re just wrong,” Dr. Eisen says. He suggests scholarly journals be free and accessible to everyone on the Web.

This may sound like the ranting of a campus radical, but Dr. Eisen is a well known computational biologist at a nearby national laboratory and a Berkeley faculty member. He is also a co-founder of a nonprofit startup called the Public Library of Science, which produces its own scholarly journals, in competition with established publishers, distributed free online.…

The debate comes at a time when it’s easier than ever to find scholarly articles by using simple Internet tools such as Google. In late 2004, Google Inc., in Mountain View, Calif., launched Google Scholar, a free service that can search for peer-reviewed articles as well as theses, abstracts and other scholarly material, much of it in scientific fields.…

Some scholars think publishing should operate like the Linux computer operating system, where programmers build on each other’s work in an ongoing, collaborative project. In the scholarly realm, a database called arXiv — pronounced “archive,” as if the “x” were the Greek letter “chi” — has become a repository of scholarship in the physics field. It’s owned and operated by Cornell University and partially supported by the National Science Foundation. If the UC administration has its way, something like that would be the norm throughout academia.

The UCs got a 25% reduction (or $7.7 million fro 1,200 Elsevier periodicals) in 2003 — that is a significant bargain by a bargaining powerhouse. The price of knowledge continues to rise. In 1986 the median expenditure on periodicals per library was approximately $1.4 million annually. In 2003 that has rise to approximately $5.5 million.

Stiffing Medicaid

States Don’t Have to Cover Viagra | WP | 5.23.05

ALBANY, N.Y. — A federal agency began notifying states Monday that they do not have to pay for Viagra for convicted rapists and other high-risk sex offenders.

The Centers for Medicare & Medicaid Services acted one day after the New York comptroller’s office said audits from 2000 through March found that 198 sex offenders in the state received Medicaid-reimbursed Viagra after their convictions. Their crimes included offenses against children as young as 2, Comptroller Alan Hevesi said. …

Inappropriate Medicaid Payments for Drugs in the Case of Sex Offenders (Viagra) PDF | CMS | 5.23.05

Dear State Medicaid Director:

It has recently come to our attention that the Medicaid program in a state is paying for the cost of drugs and treatment of impotence for certain individuals who have been convicted of a sex offense. The purpose of this guidance is to remind states there are a number of options to prevent the inappropriate use of such drugs and to inform states that we believe they should restrict the coverage of such drugs in the case of individuals convicted of a sex offense.

Under the Medicaid statute, states are obligated to prevent fraud, abuse, gross overuse, or inappropriate or medically unnecessary care, among physicians, pharmacists, and patients. A state can find that the use of certain drugs and the treatment of impotence for such individuals could constitute fraud, abuse, or inappropriate use. We believe that, in accordance with such provisions, the use of these drugs in the case of a sex offender is not appropriate and Medicaid should not pay for the cost of such drugs in such circumstances.

Effective immediately, states should use their drug use review program and procedures under 1927(g) of the Social Security Act and work with physicians and pharmacists to prevent inappropriate Medicaid payment for such drugs in the case of a sex offender. Failure to perform such a review and implement appropriate controls may result in sanctions.

Good, the states no longer have to supply the ammunition and load the guns.

Helping Consent

Hospital helps patients make medical decisions | Baltimore Sun | 5.22.05

Hospital helps patients make medical decisions N.H. program offers counseling, videos, DVDs

LEBANON, N.H. - For 35 years after he accidentally shot himself in the leg, John Bevacqua managed fine. But when a long-dormant bone infection reappeared, and three surgeries did nothing to stop it, he agreed to an amputation.

The decision wasn’t easy, but a program at Dartmouth Hitchcock Medical Center helped him realize that getting rid of his leg was the best way to get on with his life. …

The center provides free one-on-one counseling, along with videos and DVDs that explain the pros and cons of dozens of medical procedures.…

“People who are struggling with a decision start to think in a very circular way, so their thoughts are chasing each other. You can almost see it physically when they walk through the door,” said Kate Clay, the center’s program director. “What I bring to the table is my expertise as a nurse and the ability to pick out what it is that seems to be really troubling them or what it is they need to move forward.”…

McNutt thinks that “shared decision-making” is a misnomer that is keeping the idea from gaining widespread support.

“Patients are the only ones who make choices. All you can do is share information,” he said.

A very nice ethical piece on a very important nexus of law and medicine.

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