Repeat customers in hospitals are seen as a big problem – not to the hospitals themselves, which can profit from some patients’ frequent visits, but to the entities that pay for the care: Medicare, Medicaid and private insurers. The U.S. Department of Health and Human Services, especially, is taking hospitals’ repeat customers very seriously. Almost one out of five Medicare patients discharged from a hospital is back within 30 days. Research suggests as many as 75 percent of those return visits could be prevented with better treatment in the hospital and better care once people are back home.

As with many other problems in the health-care system, unnecessary hospital readmissions are associated with worse treatment and health outcomes, as well as higher costs to taxpayers – $15 billion a year for Medicare alone, according to a Medicare Payment Advisory Commission study.

Starting next fall, HHS will begin penalizing hospitals if their readmission rates are higher than expected for three conditions: heart attacks, heart failure and pneumonia. In the first year that penalties kick in, one percent of hospitals’ Medicare payments will be withheld, and that penalty will climb in subsequent years – at a time when payers are reducing fees to hospitals on a number of other fronts, too.

Read more on hospital readmission control from Kaiser Health News here.

Taxpayers spend less on a Medicaid prescription for the poor and disabled than they do on the same Medicare prescription for the elderly.

So why not save money by having the government pay the same lower Medicaid price for drugs for both programs?

That idea was the biggest spending cut — $135 billion — proposed in President Obama’s deficit-reduction plan released last week. But drug makers argue it would undermine the success of the Medicare drug-benefit program and potentially cost hundreds of thousands of industry jobs.

“PhRMA opposes implementing Medicaid’s failed price controls in Medicare,” said Matt Bennett, senior vice president for the Pharmaceutical Research and Manufacturers of America, the drug industry’s trade association. “Such policies would fundamentally alter the competitive nature of the program.”

An analysis by the nonpartisan Congressional Budget Office concluded that requiring Medicaid-level rebates for low-income Medicare patients could prompt drug makers to reduce research and development. But the change shouldn’t significantly reduce the incentive to develop breakthrough drugs because those drugs could be initiated at prices high enough to offset the rebate, the analysts said.

Read more at the Tribune-Review.

The Pittsburgh Post-Gazette explains:

On Tuesday, representatives from Families USA, the American Diabetes Association, American Cancer Society’s Cancer Action Network and the American Lung Association joined to voice concerns that Medicaid recipients will take a “disastrous” hit in the ongoing debt reduction debates.

More than 750,000 of the 2.3 million Pennsylvania residents on Medicaid have chronic conditions such as cancer, chronic lung disease such as asthma or cystic fibrosis, or heart disease, and they depend on that program to pay for their treatment, according to the report. The full report is available online at http://familiesusa2.org/assets/pdfs/medicaids-impact/Pennsylvania.pdf.

“There are literally hundreds of thousands of Pennsylvanians who have one or more of these health conditions, who are dependent on Medicaid for their health coverage. This is their lifeline,” said Ron Pollock, executive director of Families USA.

The numbers, according to the report, include about 160,000 children.

The Kaiser Health News blog has the details:

Gary Alexander, the state’s Medicaid director, said his agency hopes to launch the plan by early next year in an effort to help control rising expenses in the $30 billion program.

“We are looking at a model to save hundreds of millions of dollars by steering Medicaid beneficiaries to the most cost effective settings,” Alexander told about 300 health insurance executives last week at a meeting in Washington. “To reward beneficiaries we would give them some incentive… so if the state saves $1,000 on a medical procedure we may give the beneficiary $100 or $200 as a reward.”

After his talk at a conference sponsored by the industry group America’s Health Insurance Plans, Alexander told KHN that his incentive plan would initially be targeted to the nearly 1 million Medicaid recipients still in the traditional fee-for-service Medicaid program. Later, he said, it could be expanded to the more than 1.2 million in private Medicaid managed care plans.

Alexander said he does not believe the state would need to get approval from the federal government for the incentive program, although other Medicaid officials disagree.

The administration downplayed concerns when The Associated Press reported on the glitch this summer. Officials then acknowledged a fix was needed.

The problem began after the health care law changed Medicaid rules so Social Security benefits would no longer count as income, as they do now.

Because of the glitch, married early retirees making $64,000 a year could qualify for Medicaid. Medicare’s top number cruncher, Richard Foster, said that situation didn’t make sense but policymakers weren’t interested in addressing it.

The fix saves taxpayers $14.6 billion over 10 years.

Mr. Obama proposed higher premiums and deductibles for many Medicare beneficiaries and lower Medicare payments to teaching hospitals and rural hospitals. He would start charging co-payments to frail homebound older people who receive home health services. And he would reduce the growth of federal payments to states for treating low-income people under Medicaid.

The White House said Mr. Obama’s proposals would cut $248 billion from the projected growth of Medicare in the next 10 years, while shaving $72 billion from Medicaid and other health programs. A large share of the Medicare savings would, in effect, be used to pay doctors, who would otherwise face deep cuts in the fees they receive for treating Medicare patients.

As legislators on Capitol Hill wrestle with how to reduce federal spending by $1.2 trillion over the next 10 years, proposals to cut Medicare and Medicaid programs could make it impossible for Pennsylvania hospitals to remain profitable and force Pennsylvania doctors to stop seeing Medicare patients.

As part of a deal struck earlier this month to raise the nation’s debt ceiling, a bi-partisan “supercommittee” has until Nov. 23 to make recommendations for spending cuts. If Congress cannot agree on a plan, automatic spending cuts will begin in 2013 – including a 2 percent reduction in Medicare reimbursements to hospitals and health care providers.

That change will result in the loss of $1.3 billion for Pennsylvania hospitals alone over a nine-year period, according to Michael Strazzella, vice president of federal relations for the Hospital and Healthsystems Association of Pennsylvania.

But proposals being studied to avoid the automatic cuts may end up being worse for hospitals, doctors and patients, experts said. Suggestions include:

A 30 percent cut to Medicare reimbursements to physicians, which many doctors say would force many in their ranks out of business.

Converting Medicaid to a block grant program, which would cut Pennsylvania’s share of federal funding by about 31 percent.

“If those decisions are made by the federal government, then hospitals will have to make choices, too,” Mr. Strazzella said. “It’s going to get difficult for hospitals to continue to provide care to the community.”

Read more from the Times-Tribune

It won’t cause the uproar of the Standard & Poor’s downgrade of the U.S. long-term credit rating, but a new report is forecasting that nonprofit hospitals could be next.

Moody’s Investors Service says it expects ratings downgrades among not-for-profit hospitals “will likely increase in the short term” unless those hospitals can cut costs and increase patient volumes.

That’s not surprising news to hospital executives, who have been long sounding the alarm that reduced reimbursements and greater numbers of uninsured patients were squeezing them financially.

Patient revenues nationwide have gone down steadily since 2002, and hospitals have cut expenses accordingly. But Moody’s says they are going to find those cost reductions harder to come by, and revenues are looking more vulnerable than ever.

Bond ratings provide investors with a snapshot of a hospital’s financial health. Ratings help to determine the costs to an institution of borrowing money on the bond market.

With the formation of Congress’ “super” debt reduction committee, “they are obviously going to be looking at the entitlements” such as Medicare and Medicaid, said A.J. Harper, president of the Hospital Council of Western Pennsylvania.

Read more from the Pittsburgh Post-Gazette

WASHINGTON — The House Democratic leader, Nancy Pelosi, rounded out the membership of a powerful new deficit-reduction panel on Thursday by appointing three of her top lieutenants who have led opposition to cuts in Social Security, Medicare and Medicaid.

The new appointees are Representatives Xavier Becerra of California, the vice chairman of the House Democratic Caucus; James E. Clyburn of South Carolina, the assistant House Democratic leader; and Chris Van Hollen of Maryland, the senior Democrat on the Budget Committee.

In announcing her picks, Ms. Pelosi said the new panel, the Joint Select Committee on Deficit Reduction, must find ways to stimulate economic growth and create jobs.

Mr. Van Hollen articulated the Democrats’ theme: “Putting America back to work is the best and most immediate way to reduce our deficit.”

Within hours of the announcement, the Investment Company Institute, a trade association for mutual fundcompanies, sent out invitations to a fund-raiser for Mr. Becerra prominently citing his role on the panel.

“This will be Mr. Becerra’s first event since being named” to the panel and “could give all attendees a glimpse into what will most assuredly be the primary topic of discussion between now and the end of the year,” said invitations to the Aug. 31 event, sent by James R. Hart, a lobbyist for the institute. The suggested contribution is $1,500 a person.

The event was planned before Mr. Becerra’s selection. Ianthe Zabel, a spokeswoman for the institute, said the group “takes full responsibility for the language in the outgoing e-mail and the decision to send it out Thursday afternoon.”

Visit The New York Times to find out more

In an unusual break with the White House, the Democratic leaders of Congress told the Supreme Court on Monday that President Obama was pursuing a misguided interpretation of federal Medicaid law that made it more difficult for low-income people to obtain health care.

The Democratic leaders said Medicaid beneficiaries must be allowed to file suit to enforce their right to care — and to challenge Medicaid cuts being made by states around the country.

The Obama administration maintains that beneficiaries and health care providers cannot sue state officials to challenge cuts in Medicaid payment rates, even if such cuts compromise access to care for the poor.

In a friend-of-the-court brief, the lawmakers said the administration’s position “would undermine the effectiveness of Medicaid.” In addition, they said, it conflicts with more than a century of court precedents that allow people to sue to block state actions that are inconsistent with federal law.

The brief was filed by seven influential Democrats, including Representative Henry A. Waxman of California, an architect of Medicaid; Representative Nancy Pelosi of California, the House minority leader; Senator Harry Reid of Nevada, the Senate majority leader; and Senator Max Baucus of Montana, the chairman of the Finance Committee.

Similar arguments were made in a separate brief filed by a dozen former federal health officials, including Donna E. Shalala, the secretary of health and human services under President Bill Clinton; Joseph A. Califano Jr., who was health secretary under President Jimmy Carter; and Bruce C. Vladeck, who was in charge of Medicaid and Medicare in the Clinton administration.

For the rest of the story, read The New York Times