Alicia Ault

ASHEVILLE, N.C. — When looking for causes of stillbirth, obstetricians and pediatricians should not overlook infection, Dr. Sean Blackwell said at the Southern Obstetric and Gynecologic Seminar.

Though the fetal death rate has declined, about half of stillbirths are due to unexplained causes, said Dr. Blackwell of the maternal fetal medicine division at William Beaumont Hospital in Royal Oak, Mich.

A recent paper (Sem. Perinatol. 2006;30:20–3) hypothesized that at least 10% of stillbirths result from infection, a rate equal to the number of deaths caused by fetal anomalies but slightly less than those caused by fetal growth restriction (14%), abruption (14%), or cord- or placenta-related problems (18%). The same study estimated that 27% of stillbirths have unexplained causes.

The number of unexplained stillbirths increases with rising gestational age, said Dr. Blackwell, adding that some of these cases may be undiagnosed or undetected infection.

A variety of pathogens have been associated with stillbirth, including spirochetes, protozoans, viruses, and bacteria, he said. There are three potential ways a fetus can acquire an infection: through systemic maternal illness; through the cervicovaginal compartment; or via a transplacental route. Maternal illness may result in a proinflammatory response that redistributes blood flow, leading to uteroplacental insufficiency.

An ascending infection will infect fetal and placental tissue, leading to sepsis. Group B streptococci, Escherichia coli, Ureaplasma, and Candida are known to use the ascending route, said Dr. Blackwell.

Similarly, a pathogen that crosses the placental barrier will infect fetal and placental tissue, leading to sepsis and anomalies. Malaria, syphilis, coxsackievirus, cytomegalovirus, and parvovirus are known to cross the placenta.

Dr. Blackwell said that several papers have shown that parvovirus may lead to fetal death by previously unknown mechanisms. In testing tissue from stillbirths with unexplained causes, Dr. Blackwell and colleagues found that though 43 of the 44 had negative cultures, there were changes in the tissue consistent with exposure to an infectious agent (J. Matern. Fetal Neonatal Med. 2003;14:151–7 and 241–6).

Recent findings show that genetics may also play a role in susceptibility to stillbirth. Some women have a polymorphism that appears to cause hyperresponsiveness to infections like bacterial vaginosis, resulting in a proinflammatory cascade that could harm the fetus. There is growing evidence also that fetal response to infection may be partly governed by phenotypes. Several papers have postulated that there may be a normal response in which the fetal immune response results in the triggering of labor, which helps the fetus escape a hostile environment, Dr. Blackwell said. He urged clinicians to conduct full work-ups on stillbirths, including taking cultures of the placenta and blood and organs of the fetus in order to get some answers.

ASHEVILLE, N.C. — When looking for causes of stillbirth, obstetricians and pediatricians should not overlook infection, Dr. Sean Blackwell said at the Southern Obstetric and Gynecologic Seminar.

Though the fetal death rate has declined, about half of stillbirths are due to unexplained causes, said Dr. Blackwell of the maternal fetal medicine division at William Beaumont Hospital in Royal Oak, Mich.

A recent paper (Sem. Perinatol. 2006;30:20–3) hypothesized that at least 10% of stillbirths result from infection, a rate equal to the number of deaths caused by fetal anomalies but slightly less than those caused by fetal growth restriction (14%), abruption (14%), or cord- or placenta-related problems (18%). The same study estimated that 27% of stillbirths have unexplained causes.

The number of unexplained stillbirths increases with rising gestational age, said Dr. Blackwell, adding that some of these cases may be undiagnosed or undetected infection.

A variety of pathogens have been associated with stillbirth, including spirochetes, protozoans, viruses, and bacteria, he said. There are three potential ways a fetus can acquire an infection: through systemic maternal illness; through the cervicovaginal compartment; or via a transplacental route. Maternal illness may result in a proinflammatory response that redistributes blood flow, leading to uteroplacental insufficiency.

An ascending infection will infect fetal and placental tissue, leading to sepsis. Group B streptococci, Escherichia coli, Ureaplasma, and Candida are known to use the ascending route, said Dr. Blackwell.

Similarly, a pathogen that crosses the placental barrier will infect fetal and placental tissue, leading to sepsis and anomalies. Malaria, syphilis, coxsackievirus, cytomegalovirus, and parvovirus are known to cross the placenta.

Dr. Blackwell said that several papers have shown that parvovirus may lead to fetal death by previously unknown mechanisms. In testing tissue from stillbirths with unexplained causes, Dr. Blackwell and colleagues found that though 43 of the 44 had negative cultures, there were changes in the tissue consistent with exposure to an infectious agent (J. Matern. Fetal Neonatal Med. 2003;14:151–7 and 241–6).

Recent findings show that genetics may also play a role in susceptibility to stillbirth. Some women have a polymorphism that appears to cause hyperresponsiveness to infections like bacterial vaginosis, resulting in a proinflammatory cascade that could harm the fetus. There is growing evidence also that fetal response to infection may be partly governed by phenotypes. Several papers have postulated that there may be a normal response in which the fetal immune response results in the triggering of labor, which helps the fetus escape a hostile environment, Dr. Blackwell said. He urged clinicians to conduct full work-ups on stillbirths, including taking cultures of the placenta and blood and organs of the fetus in order to get some answers.

ASHEVILLE, N.C. — When looking for causes of stillbirth, obstetricians and pediatricians should not overlook infection, Dr. Sean Blackwell said at the Southern Obstetric and Gynecologic Seminar.

Though the fetal death rate has declined, about half of stillbirths are due to unexplained causes, said Dr. Blackwell of the maternal fetal medicine division at William Beaumont Hospital in Royal Oak, Mich.

A recent paper (Sem. Perinatol. 2006;30:20–3) hypothesized that at least 10% of stillbirths result from infection, a rate equal to the number of deaths caused by fetal anomalies but slightly less than those caused by fetal growth restriction (14%), abruption (14%), or cord- or placenta-related problems (18%). The same study estimated that 27% of stillbirths have unexplained causes.

The number of unexplained stillbirths increases with rising gestational age, said Dr. Blackwell, adding that some of these cases may be undiagnosed or undetected infection.

A variety of pathogens have been associated with stillbirth, including spirochetes, protozoans, viruses, and bacteria, he said. There are three potential ways a fetus can acquire an infection: through systemic maternal illness; through the cervicovaginal compartment; or via a transplacental route. Maternal illness may result in a proinflammatory response that redistributes blood flow, leading to uteroplacental insufficiency.

An ascending infection will infect fetal and placental tissue, leading to sepsis. Group B streptococci, Escherichia coli, Ureaplasma, and Candida are known to use the ascending route, said Dr. Blackwell.

Similarly, a pathogen that crosses the placental barrier will infect fetal and placental tissue, leading to sepsis and anomalies. Malaria, syphilis, coxsackievirus, cytomegalovirus, and parvovirus are known to cross the placenta.

Dr. Blackwell said that several papers have shown that parvovirus may lead to fetal death by previously unknown mechanisms. In testing tissue from stillbirths with unexplained causes, Dr. Blackwell and colleagues found that though 43 of the 44 had negative cultures, there were changes in the tissue consistent with exposure to an infectious agent (J. Matern. Fetal Neonatal Med. 2003;14:151–7 and 241–6).

Recent findings show that genetics may also play a role in susceptibility to stillbirth. Some women have a polymorphism that appears to cause hyperresponsiveness to infections like bacterial vaginosis, resulting in a proinflammatory cascade that could harm the fetus. There is growing evidence also that fetal response to infection may be partly governed by phenotypes. Several papers have postulated that there may be a normal response in which the fetal immune response results in the triggering of labor, which helps the fetus escape a hostile environment, Dr. Blackwell said. He urged clinicians to conduct full work-ups on stillbirths, including taking cultures of the placenta and blood and organs of the fetus in order to get some answers.

ASHEVILLE, N.C. — Ovarian aging is often overlooked as a cause of infertility and should be considered even in younger women, Dr. Tamer M. Yalcinkaya said at the Southern Obstetric and Gynecologic Seminar.

Dr. Yalcinkaya, medical director of the in vitro fertilization program at Wake Forest University, Winston-Salem, N.C., said that ovarian aging is an evolving concept. It encompasses age-related infertility, diminished ovarian reserve, and early ovarian aging.

Ovarian aging often is hidden among the “unexplained” causes of infertility, but it is as common as many of the factors usually examined and is more severe and less treatable, said Dr. Yalcinkaya.

Ovarian aging is usually a result of progressive follicular depletion and/or abnormalities in the oocyte/follicle. Oocytes are continually declining from birth to menopause, but the decrease accelerates starting at age 38, he said, citing a 2005 study (N. Engl. J. Med. 2005;353:64–73). At the same time, there is an increase in basal follicle-stimulating hormone (FSH) levels, a decrease in fecundity, and an increase in aneuploidy. While endocrine and menstrual functions remain relatively unchanged for the next 6–8 years, menstrual irregularities generally begin at 45. By menopause, there are 1,000 or fewer follicles. The mean age of menopause is 51, though it ranges from 40 to 60. The age of onset is primarily determined by genetic factors but is slightly influenced by lifestyle, environmental, and parity factors.

Ten percent of the population will have early menopause—that is, by age 45—and another 10% will show early ovarian aging, when they are aged 27–32, said Dr. Yalcinkaya. Women in the normal range of reproductive age can experience ovarian aging, he said. However, women with diminished ovarian reserve still have the potential to conceive, and it is important to identify these women early so that various assisted reproductive techniques can be attempted, said Dr. Yalcinkaya.

Diagnostics include baseline hormone measures, including early follicular phase FSH, estradiol, inhibin B, and antimüllerian hormone. Ultrasound can be used to count the number of antral follicles if the technician is experienced; it can also measure ovarian volume. A threshold of 3 cm

Hormone tests should be challenged with clomiphene citrate, exogenous FSH reserve, and gonadotropin-releasing hormone agonist stimulation.

The clomiphene citrate challenge may be better at detecting diminished ovarian reserve than the FSH test but can only be used in patients over age 35, he said. Often, patients who have an abnormal clomiphene citrate test are told they have “ovulatory disorder” or “unexplained infertility,” but clinicians should investigate further as to whether the cause is ovarian aging, Dr. Yalcinkaya said.

The inhibin B test is new and evolving, with divergent data on its utility, he said.

Most of these tests have a low positive predictive value; good results mean the clinician can't guarantee that the patient will become pregnant. But they also have a high negative predictive value; abnormal results generally mean a pregnancy is highly unlikely, Dr. Yalcinkaya said.

Ovarian aging can't be stopped, but physicians can counsel women to maintain healthy lifestyles that promote fertility, including quitting smoking. Physicians can also consider liberal testing of ovarian reserve in all infertile women who are over age 35 or who have a single ovary; in women with a history of ovarian surgery; and in women who smoke or have unexplained infertility, recurrent unexplained early pregnancy losses, irregular periods, or a family history of early menopause, he said. Patients with mild to moderate ovarian aging should be referred to a reproductive endocrinologist for aggressive treatment with exogenous gonadotropin and intrauterine insemination or in vitro fertilization, he said.

Dr. Yalcinkaya had no conflicts of interest to disclose.

ASHEVILLE, N.C. — Ovarian aging is often overlooked as a cause of infertility and should be considered even in younger women, Dr. Tamer M. Yalcinkaya said at the Southern Obstetric and Gynecologic Seminar.

Dr. Yalcinkaya, medical director of the in vitro fertilization program at Wake Forest University, Winston-Salem, N.C., said that ovarian aging is an evolving concept. It encompasses age-related infertility, diminished ovarian reserve, and early ovarian aging.

Ovarian aging often is hidden among the “unexplained” causes of infertility, but it is as common as many of the factors usually examined and is more severe and less treatable, said Dr. Yalcinkaya.

Ovarian aging is usually a result of progressive follicular depletion and/or abnormalities in the oocyte/follicle. Oocytes are continually declining from birth to menopause, but the decrease accelerates starting at age 38, he said, citing a 2005 study (N. Engl. J. Med. 2005;353:64–73). At the same time, there is an increase in basal follicle-stimulating hormone (FSH) levels, a decrease in fecundity, and an increase in aneuploidy. While endocrine and menstrual functions remain relatively unchanged for the next 6–8 years, menstrual irregularities generally begin at 45. By menopause, there are 1,000 or fewer follicles. The mean age of menopause is 51, though it ranges from 40 to 60. The age of onset is primarily determined by genetic factors but is slightly influenced by lifestyle, environmental, and parity factors.

Ten percent of the population will have early menopause—that is, by age 45—and another 10% will show early ovarian aging, when they are aged 27–32, said Dr. Yalcinkaya. Women in the normal range of reproductive age can experience ovarian aging, he said. However, women with diminished ovarian reserve still have the potential to conceive, and it is important to identify these women early so that various assisted reproductive techniques can be attempted, said Dr. Yalcinkaya.

Diagnostics include baseline hormone measures, including early follicular phase FSH, estradiol, inhibin B, and antimüllerian hormone. Ultrasound can be used to count the number of antral follicles if the technician is experienced; it can also measure ovarian volume. A threshold of 3 cm

Hormone tests should be challenged with clomiphene citrate, exogenous FSH reserve, and gonadotropin-releasing hormone agonist stimulation.

The clomiphene citrate challenge may be better at detecting diminished ovarian reserve than the FSH test but can only be used in patients over age 35, he said. Often, patients who have an abnormal clomiphene citrate test are told they have “ovulatory disorder” or “unexplained infertility,” but clinicians should investigate further as to whether the cause is ovarian aging, Dr. Yalcinkaya said.

The inhibin B test is new and evolving, with divergent data on its utility, he said.

Most of these tests have a low positive predictive value; good results mean the clinician can't guarantee that the patient will become pregnant. But they also have a high negative predictive value; abnormal results generally mean a pregnancy is highly unlikely, Dr. Yalcinkaya said.

Ovarian aging can't be stopped, but physicians can counsel women to maintain healthy lifestyles that promote fertility, including quitting smoking. Physicians can also consider liberal testing of ovarian reserve in all infertile women who are over age 35 or who have a single ovary; in women with a history of ovarian surgery; and in women who smoke or have unexplained infertility, recurrent unexplained early pregnancy losses, irregular periods, or a family history of early menopause, he said. Patients with mild to moderate ovarian aging should be referred to a reproductive endocrinologist for aggressive treatment with exogenous gonadotropin and intrauterine insemination or in vitro fertilization, he said.

Dr. Yalcinkaya had no conflicts of interest to disclose.

ASHEVILLE, N.C. — Ovarian aging is often overlooked as a cause of infertility and should be considered even in younger women, Dr. Tamer M. Yalcinkaya said at the Southern Obstetric and Gynecologic Seminar.

Dr. Yalcinkaya, medical director of the in vitro fertilization program at Wake Forest University, Winston-Salem, N.C., said that ovarian aging is an evolving concept. It encompasses age-related infertility, diminished ovarian reserve, and early ovarian aging.

Ovarian aging often is hidden among the “unexplained” causes of infertility, but it is as common as many of the factors usually examined and is more severe and less treatable, said Dr. Yalcinkaya.

Ovarian aging is usually a result of progressive follicular depletion and/or abnormalities in the oocyte/follicle. Oocytes are continually declining from birth to menopause, but the decrease accelerates starting at age 38, he said, citing a 2005 study (N. Engl. J. Med. 2005;353:64–73). At the same time, there is an increase in basal follicle-stimulating hormone (FSH) levels, a decrease in fecundity, and an increase in aneuploidy. While endocrine and menstrual functions remain relatively unchanged for the next 6–8 years, menstrual irregularities generally begin at 45. By menopause, there are 1,000 or fewer follicles. The mean age of menopause is 51, though it ranges from 40 to 60. The age of onset is primarily determined by genetic factors but is slightly influenced by lifestyle, environmental, and parity factors.

Ten percent of the population will have early menopause—that is, by age 45—and another 10% will show early ovarian aging, when they are aged 27–32, said Dr. Yalcinkaya. Women in the normal range of reproductive age can experience ovarian aging, he said. However, women with diminished ovarian reserve still have the potential to conceive, and it is important to identify these women early so that various assisted reproductive techniques can be attempted, said Dr. Yalcinkaya.

Diagnostics include baseline hormone measures, including early follicular phase FSH, estradiol, inhibin B, and antimüllerian hormone. Ultrasound can be used to count the number of antral follicles if the technician is experienced; it can also measure ovarian volume. A threshold of 3 cm

Hormone tests should be challenged with clomiphene citrate, exogenous FSH reserve, and gonadotropin-releasing hormone agonist stimulation.

The clomiphene citrate challenge may be better at detecting diminished ovarian reserve than the FSH test but can only be used in patients over age 35, he said. Often, patients who have an abnormal clomiphene citrate test are told they have “ovulatory disorder” or “unexplained infertility,” but clinicians should investigate further as to whether the cause is ovarian aging, Dr. Yalcinkaya said.

The inhibin B test is new and evolving, with divergent data on its utility, he said.

Most of these tests have a low positive predictive value; good results mean the clinician can't guarantee that the patient will become pregnant. But they also have a high negative predictive value; abnormal results generally mean a pregnancy is highly unlikely, Dr. Yalcinkaya said.

Ovarian aging can't be stopped, but physicians can counsel women to maintain healthy lifestyles that promote fertility, including quitting smoking. Physicians can also consider liberal testing of ovarian reserve in all infertile women who are over age 35 or who have a single ovary; in women with a history of ovarian surgery; and in women who smoke or have unexplained infertility, recurrent unexplained early pregnancy losses, irregular periods, or a family history of early menopause, he said. Patients with mild to moderate ovarian aging should be referred to a reproductive endocrinologist for aggressive treatment with exogenous gonadotropin and intrauterine insemination or in vitro fertilization, he said.

Dr. Yalcinkaya had no conflicts of interest to disclose.

In a sweeping, 1,000-page proposal, the Centers for Medicare and Medicaid Services is seeking to change how it pays for procedures performed in outpatient departments and at ambulatory surgery centers. Two goals are to rein in rising outpatient expenses and to level the payment differential between ASCs and outpatient departments.

In a statement, CMS Administrator Mark McClellan said that it was time to look more closely at outpatient payments: “Doing nothing is not sustainable from the standpoint of Medicare costs and beneficiary premiums, and we want public input on the best approaches to promoting high-quality, affordable care.”

With 12% growth in 2006 and projected growth of 10% for 2007, outpatient costs are putting a squeeze on beneficiaries, who must make 25% copayments, Dr. McClellan said during a press conference sponsored by the agency.

CMS is proposing that hospitals receive an average 3% increase in outpatient payments if they submit quality data on the inpatient side. Hospitals would be required to report on patient satisfaction to receive the full inpatient and outpatient update. They would also report risk-adjusted outcome measures, including 30-day mortality for acute myocardial infarction, heart failure, and pneumonia, and three measures from the Surgical Care Improvement Project. The agency said it anticipates asking for outpatient quality data as outpatient-specific measures are developed.

Hospitals that do not submit quality data will be penalized. Instead of the full outpatient rate, they'll receive the outpatient update minus 2%. Overall, outpatient spending—which covers general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children's hospitals, and cancer hospitals—will hit $32.5 billion in 2007 under the proposed rule.

The agency is also proposing to increase from three to five the number of payment levels for visits to an outpatient clinic or emergency department. The maximum payment for clinic visits would be $133, up from $92, and emergency department visits would rise from $244 in 2006 to $345 in 2007. CMS also would create a new set of Healthcare Common Procedure Coding System (HCPCS) codes for visits to dedicated emergency departments (DEDs) subject to the Emergency Medical Treatment and Labor Act. The new codes would help CMS determine the relative cost of services provided at DEDs compared with emergent care furnished at a 24-hour-a-day, 7-day-a-week facility.

Most individual outpatient procedures will receive a small increase in reimbursement, but some are also slated for a reduction. Insertion, replacement, or repair of an implantable cardioverter defibrillator lead would be covered at $22,800 in 2007, up from $22,300 in 2006, and insertion or replacement of a pacemaker pulse generator would be paid at $16,400, up from $10,000, according to Washington Analysis, LLC, which follows Medicare developments for Wall Street.

Drug infusion devices would receive relatively large increases of 23%–56% but neurostimulator implantation would decrease from $11,600 in 2006 to $10,800, according to the report by Washington Analysis.

The rule would also change how hospitals are paid for drug infusions. Currently, hospitals are paid the same for each type of infusion, whether it takes an hour or several hours. Under the new rule, hospitals would be paid for the initial hour plus additional fees for more hours. They also would receive a larger payment for complex drug administration.

On the ASC side, the goal “is to help our beneficiaries get the outpatient care they need in the most appropriate setting, by eliminating payment differences that inappropriately favor one outpatient setting over another and that may add to Medicare costs,” said Dr. McClellan in the statement.

In 2007, CMS is proposing to cap the amount paid to ASCs at no more than the reimbursement for outpatient departments, to produce at least $150 million in savings. The agency also proposed to add 14 more procedures to the list of what it will cover at ASCs in 2007—including wound repair, percutaneous vertebroplasty, repair of venous blockage, ligation of hemorrhoids, and percutaneous transcatheter stent placement—and another 763 procedures in 2008. Any procedure that is considered safe and does not require an overnight stay would be considered eligible for Medicare reimbursement in 2008.

ASCs said they had no objection to bringing payments in line with those received by outpatient departments. But the industry was upset over CMS's proposal for a 2-year phase-in of a new payment system, beginning in 2008. By 2009, ASCs would be reimbursed at 62% of the outpatient rate. The industry—which includes about 4,500 centers—had been hoping to receive 75% of the outpatient rate.

“The proposed payment rate will result in Medicare beneficiaries and the Medicare program paying more for outpatient surgery because patients' only choice for many surgical procedures will be the more costly hospital setting,” said Kathy Bryant, president of the Federation of Ambulatory Surgery Centers, in a statement. The proposed rate will discourage many ASCs from offering certain procedures, said Ms. Bryant.

In a statement, the American Association of Ambulatory Surgery Centers called on members to submit comments to CMS objecting to the new proposal and to do the same with their congressional representatives.

CMS is receiving comments on the outpatient and ASC-payment proposal until October 10. A final rule will be published later in the fall, said the agency.

In a sweeping, 1,000-page proposal, the Centers for Medicare and Medicaid Services is seeking to change how it pays for procedures performed in outpatient departments and at ambulatory surgery centers. Two goals are to rein in rising outpatient expenses and to level the payment differential between ASCs and outpatient departments.

In a statement, CMS Administrator Mark McClellan said that it was time to look more closely at outpatient payments: “Doing nothing is not sustainable from the standpoint of Medicare costs and beneficiary premiums, and we want public input on the best approaches to promoting high-quality, affordable care.”

With 12% growth in 2006 and projected growth of 10% for 2007, outpatient costs are putting a squeeze on beneficiaries, who must make 25% copayments, Dr. McClellan said during a press conference sponsored by the agency.

CMS is proposing that hospitals receive an average 3% increase in outpatient payments if they submit quality data on the inpatient side. Hospitals would be required to report on patient satisfaction to receive the full inpatient and outpatient update. They would also report risk-adjusted outcome measures, including 30-day mortality for acute myocardial infarction, heart failure, and pneumonia, and three measures from the Surgical Care Improvement Project. The agency said it anticipates asking for outpatient quality data as outpatient-specific measures are developed.

Hospitals that do not submit quality data will be penalized. Instead of the full outpatient rate, they'll receive the outpatient update minus 2%. Overall, outpatient spending—which covers general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children's hospitals, and cancer hospitals—will hit $32.5 billion in 2007 under the proposed rule.

The agency is also proposing to increase from three to five the number of payment levels for visits to an outpatient clinic or emergency department. The maximum payment for clinic visits would be $133, up from $92, and emergency department visits would rise from $244 in 2006 to $345 in 2007. CMS also would create a new set of Healthcare Common Procedure Coding System (HCPCS) codes for visits to dedicated emergency departments (DEDs) subject to the Emergency Medical Treatment and Labor Act. The new codes would help CMS determine the relative cost of services provided at DEDs compared with emergent care furnished at a 24-hour-a-day, 7-day-a-week facility.

Most individual outpatient procedures will receive a small increase in reimbursement, but some are also slated for a reduction. Insertion, replacement, or repair of an implantable cardioverter defibrillator lead would be covered at $22,800 in 2007, up from $22,300 in 2006, and insertion or replacement of a pacemaker pulse generator would be paid at $16,400, up from $10,000, according to Washington Analysis, LLC, which follows Medicare developments for Wall Street.

Drug infusion devices would receive relatively large increases of 23%–56% but neurostimulator implantation would decrease from $11,600 in 2006 to $10,800, according to the report by Washington Analysis.

The rule would also change how hospitals are paid for drug infusions. Currently, hospitals are paid the same for each type of infusion, whether it takes an hour or several hours. Under the new rule, hospitals would be paid for the initial hour plus additional fees for more hours. They also would receive a larger payment for complex drug administration.

On the ASC side, the goal “is to help our beneficiaries get the outpatient care they need in the most appropriate setting, by eliminating payment differences that inappropriately favor one outpatient setting over another and that may add to Medicare costs,” said Dr. McClellan in the statement.

In 2007, CMS is proposing to cap the amount paid to ASCs at no more than the reimbursement for outpatient departments, to produce at least $150 million in savings. The agency also proposed to add 14 more procedures to the list of what it will cover at ASCs in 2007—including wound repair, percutaneous vertebroplasty, repair of venous blockage, ligation of hemorrhoids, and percutaneous transcatheter stent placement—and another 763 procedures in 2008. Any procedure that is considered safe and does not require an overnight stay would be considered eligible for Medicare reimbursement in 2008.

ASCs said they had no objection to bringing payments in line with those received by outpatient departments. But the industry was upset over CMS's proposal for a 2-year phase-in of a new payment system, beginning in 2008. By 2009, ASCs would be reimbursed at 62% of the outpatient rate. The industry—which includes about 4,500 centers—had been hoping to receive 75% of the outpatient rate.

“The proposed payment rate will result in Medicare beneficiaries and the Medicare program paying more for outpatient surgery because patients' only choice for many surgical procedures will be the more costly hospital setting,” said Kathy Bryant, president of the Federation of Ambulatory Surgery Centers, in a statement. The proposed rate will discourage many ASCs from offering certain procedures, said Ms. Bryant.

In a statement, the American Association of Ambulatory Surgery Centers called on members to submit comments to CMS objecting to the new proposal and to do the same with their congressional representatives.

CMS is receiving comments on the outpatient and ASC-payment proposal until October 10. A final rule will be published later in the fall, said the agency.

In a sweeping, 1,000-page proposal, the Centers for Medicare and Medicaid Services is seeking to change how it pays for procedures performed in outpatient departments and at ambulatory surgery centers. Two goals are to rein in rising outpatient expenses and to level the payment differential between ASCs and outpatient departments.

In a statement, CMS Administrator Mark McClellan said that it was time to look more closely at outpatient payments: “Doing nothing is not sustainable from the standpoint of Medicare costs and beneficiary premiums, and we want public input on the best approaches to promoting high-quality, affordable care.”

With 12% growth in 2006 and projected growth of 10% for 2007, outpatient costs are putting a squeeze on beneficiaries, who must make 25% copayments, Dr. McClellan said during a press conference sponsored by the agency.

CMS is proposing that hospitals receive an average 3% increase in outpatient payments if they submit quality data on the inpatient side. Hospitals would be required to report on patient satisfaction to receive the full inpatient and outpatient update. They would also report risk-adjusted outcome measures, including 30-day mortality for acute myocardial infarction, heart failure, and pneumonia, and three measures from the Surgical Care Improvement Project. The agency said it anticipates asking for outpatient quality data as outpatient-specific measures are developed.

Hospitals that do not submit quality data will be penalized. Instead of the full outpatient rate, they'll receive the outpatient update minus 2%. Overall, outpatient spending—which covers general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children's hospitals, and cancer hospitals—will hit $32.5 billion in 2007 under the proposed rule.

The agency is also proposing to increase from three to five the number of payment levels for visits to an outpatient clinic or emergency department. The maximum payment for clinic visits would be $133, up from $92, and emergency department visits would rise from $244 in 2006 to $345 in 2007. CMS also would create a new set of Healthcare Common Procedure Coding System (HCPCS) codes for visits to dedicated emergency departments (DEDs) subject to the Emergency Medical Treatment and Labor Act. The new codes would help CMS determine the relative cost of services provided at DEDs compared with emergent care furnished at a 24-hour-a-day, 7-day-a-week facility.

Most individual outpatient procedures will receive a small increase in reimbursement, but some are also slated for a reduction. Insertion, replacement, or repair of an implantable cardioverter defibrillator lead would be covered at $22,800 in 2007, up from $22,300 in 2006, and insertion or replacement of a pacemaker pulse generator would be paid at $16,400, up from $10,000, according to Washington Analysis, LLC, which follows Medicare developments for Wall Street.

Drug infusion devices would receive relatively large increases of 23%–56% but neurostimulator implantation would decrease from $11,600 in 2006 to $10,800, according to the report by Washington Analysis.

The rule would also change how hospitals are paid for drug infusions. Currently, hospitals are paid the same for each type of infusion, whether it takes an hour or several hours. Under the new rule, hospitals would be paid for the initial hour plus additional fees for more hours. They also would receive a larger payment for complex drug administration.

On the ASC side, the goal “is to help our beneficiaries get the outpatient care they need in the most appropriate setting, by eliminating payment differences that inappropriately favor one outpatient setting over another and that may add to Medicare costs,” said Dr. McClellan in the statement.

In 2007, CMS is proposing to cap the amount paid to ASCs at no more than the reimbursement for outpatient departments, to produce at least $150 million in savings. The agency also proposed to add 14 more procedures to the list of what it will cover at ASCs in 2007—including wound repair, percutaneous vertebroplasty, repair of venous blockage, ligation of hemorrhoids, and percutaneous transcatheter stent placement—and another 763 procedures in 2008. Any procedure that is considered safe and does not require an overnight stay would be considered eligible for Medicare reimbursement in 2008.

ASCs said they had no objection to bringing payments in line with those received by outpatient departments. But the industry was upset over CMS's proposal for a 2-year phase-in of a new payment system, beginning in 2008. By 2009, ASCs would be reimbursed at 62% of the outpatient rate. The industry—which includes about 4,500 centers—had been hoping to receive 75% of the outpatient rate.

“The proposed payment rate will result in Medicare beneficiaries and the Medicare program paying more for outpatient surgery because patients' only choice for many surgical procedures will be the more costly hospital setting,” said Kathy Bryant, president of the Federation of Ambulatory Surgery Centers, in a statement. The proposed rate will discourage many ASCs from offering certain procedures, said Ms. Bryant.

In a statement, the American Association of Ambulatory Surgery Centers called on members to submit comments to CMS objecting to the new proposal and to do the same with their congressional representatives.

CMS is receiving comments on the outpatient and ASC-payment proposal until October 10. A final rule will be published later in the fall, said the agency.

The Centers for Medicare and Medicaid Services has allowed the moratorium on physician-owned specialty hospitals to expire, which means that those facilities—whether old or new—again can receive federal reimbursement.

But in its report to Congress that ended the moratorium, CMS said ownership arrangements at the facilities—which offer specialized cardiac, surgical, and orthopedic care—warrant more federal scrutiny.

The moratorium began in 2003; from late that year until June 2005, specialty hospitals could receive a Medicare provider number, but physician-owners could not bill for services for Medicare beneficiaries they referred to the facilities. Hospitals were prohibited from increasing the number of physician investors or the number of beds, or changing the kind of services provided.

The moratorium was essentially extended in mid-2005, when no new hospitals were allowed to enroll in Medicare. Congress directed CMS to study the hospitals' financial arrangements and provision of charity care and report back by last Aug. 8.

The final report “provides a comprehensive path forward to address the concerns that have been raised,” CMS Administrator Dr. Mark McClellan said at a press briefing sponsored by CMS to announce the moratorium's end.

Now, specialty hospitals may receive Medicare payments provided they meet certain criteria outlined in the CMS report.

The report, along with proposals on inpatient, outpatient, and ambulatory surgery center payments, “should put an end to the debate over specialty hospitals,” said Randy Fenninger, Washington representative for the American Surgical Hospital Association, an organization of specialty hospitals.

But the American Hospital Association and the Federation of American Hospitals said the report shows that specialty-oriented facilities are skirting the law. Both groups said CMS found evidence that specialty hospitals are soliciting physician-investors who can refer a high volume of patients.

For instance, CMS reported that cardiac hospitals always offered the same payment terms to noninvestor and investor-physicians, but orthopedic and surgical hospitals offered noninvestors a lower rate. According to a CMS statement, “Although not explicitly given by the hospitals as a criterion for selecting investors, it appears that the volume of referrals and revenue generated may have been a critical factor for some hospitals in determining which physicians were permitted to invest.”

Mary Beth Savary Taylor, AHA vice president for executive branch relations, said “more action is needed to really take a look at conflict of interest when physicians own and refer patients” to a facility. AHA believes that “physician referrals to limited-service hospitals should be banned,” she added.

“The CMS plan includes some potentially promising initiatives, such as increasing enforcement scrutiny, but it falls short by not addressing the core issue of conflict of interest,” the Federation of American Hospitals said in a statement.

The CMS report is based on a survey of 130 specialty hospitals and 270 general acute care competitor hospitals. The response rate was good, but there was a lack of full participation in many areas. Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) wrote to CMS just before the report was issued to complain about the paucity of responses. After the report's release, they said they would seek more data. “I'm concerned that a survey of just 140 facilities was used to develop policy for the roughly 4,000 hospitals reimbursed by Medicare,” Sen. Baucus said in a statement.

The senators are cosponsors of the Hospital Fair Competition Act of 2005 (S. 1002), which they said will “rein in the growth of physician-owned specialty hospitals.”

In the survey, specialty hospitals were asked, for instance, about returns on physician investment. CMS found that among the hospitals that responded, the returns overall were proportionate to investment. But only 47% of the hospitals surveyed responded to this question, CMS said. The agency said that it considers nonproportional returns to be violations of physician self-referral and antikickback laws, and that it would go after suspect arrangements.

Some hospitals are already being disciplined for violations under the moratorium. CMS said that four hospitals improperly sought Medicare reimbursement for patients referred by physicians who had an ownership interest in the hospital, leading to a $12.1 million overpayment. The agency is seeking repayment of those funds.

In the report, CMS also said it would require all hospitals to disclose compensation arrangements and the fact that physicians are investors. Hospitals that did not fully respond to the survey will be the first to receive forms seeking such disclosures. If they don't respond in a timely manner, they will be fined up to $10,000 a day.

Also, CMS clarified that all hospitals, including specialty hospitals—even if they don't have an emergency department—must comply with the transfer provisions of the Emergency Medical Treatment and Labor Act. That means they must accept transfers and provide emergency services for patients, regardless of their ability to pay.

Mr. Fenninger said specialty hospitals were in agreement with this provision.

As expected, CMS found that specialty hospitals provide less charity care than acute care hospitals do—an average 4% for cardiac hospitals, 1% for orthopedic hospitals, and 0.2% for surgical hospitals in fiscal 2004 and 2005, vs. 8% for general facilities.

Again, Mr. Fenninger said this was not surprising, claiming that most specialty hospitals were in geographic areas that did not serve many charity care cases.

CMS said there might be extenuating circumstances, and noted that “the profile of services offered by specialty hospitals may contribute to the differences in patient mix.” The agency said Congress should consider whether further reforms are needed to promote delivery of charity care.

Dr. McClellan said the report should not be seen as a signal that the federal government would stop monitoring physician-owned facilities. “When it comes to enforcing the requirements of the law when it comes to specialty hospitals, we mean it and we're going to do it,” he said.

The Centers for Medicare and Medicaid Services has allowed the moratorium on physician-owned specialty hospitals to expire, which means that those facilities—whether old or new—again can receive federal reimbursement.

But in its report to Congress that ended the moratorium, CMS said ownership arrangements at the facilities—which offer specialized cardiac, surgical, and orthopedic care—warrant more federal scrutiny.

The moratorium began in 2003; from late that year until June 2005, specialty hospitals could receive a Medicare provider number, but physician-owners could not bill for services for Medicare beneficiaries they referred to the facilities. Hospitals were prohibited from increasing the number of physician investors or the number of beds, or changing the kind of services provided.

The moratorium was essentially extended in mid-2005, when no new hospitals were allowed to enroll in Medicare. Congress directed CMS to study the hospitals' financial arrangements and provision of charity care and report back by last Aug. 8.

The final report “provides a comprehensive path forward to address the concerns that have been raised,” CMS Administrator Dr. Mark McClellan said at a press briefing sponsored by CMS to announce the moratorium's end.

Now, specialty hospitals may receive Medicare payments provided they meet certain criteria outlined in the CMS report.

The report, along with proposals on inpatient, outpatient, and ambulatory surgery center payments, “should put an end to the debate over specialty hospitals,” said Randy Fenninger, Washington representative for the American Surgical Hospital Association, an organization of specialty hospitals.

But the American Hospital Association and the Federation of American Hospitals said the report shows that specialty-oriented facilities are skirting the law. Both groups said CMS found evidence that specialty hospitals are soliciting physician-investors who can refer a high volume of patients.

For instance, CMS reported that cardiac hospitals always offered the same payment terms to noninvestor and investor-physicians, but orthopedic and surgical hospitals offered noninvestors a lower rate. According to a CMS statement, “Although not explicitly given by the hospitals as a criterion for selecting investors, it appears that the volume of referrals and revenue generated may have been a critical factor for some hospitals in determining which physicians were permitted to invest.”

Mary Beth Savary Taylor, AHA vice president for executive branch relations, said “more action is needed to really take a look at conflict of interest when physicians own and refer patients” to a facility. AHA believes that “physician referrals to limited-service hospitals should be banned,” she added.

“The CMS plan includes some potentially promising initiatives, such as increasing enforcement scrutiny, but it falls short by not addressing the core issue of conflict of interest,” the Federation of American Hospitals said in a statement.

The CMS report is based on a survey of 130 specialty hospitals and 270 general acute care competitor hospitals. The response rate was good, but there was a lack of full participation in many areas. Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) wrote to CMS just before the report was issued to complain about the paucity of responses. After the report's release, they said they would seek more data. “I'm concerned that a survey of just 140 facilities was used to develop policy for the roughly 4,000 hospitals reimbursed by Medicare,” Sen. Baucus said in a statement.

The senators are cosponsors of the Hospital Fair Competition Act of 2005 (S. 1002), which they said will “rein in the growth of physician-owned specialty hospitals.”

In the survey, specialty hospitals were asked, for instance, about returns on physician investment. CMS found that among the hospitals that responded, the returns overall were proportionate to investment. But only 47% of the hospitals surveyed responded to this question, CMS said. The agency said that it considers nonproportional returns to be violations of physician self-referral and antikickback laws, and that it would go after suspect arrangements.

Some hospitals are already being disciplined for violations under the moratorium. CMS said that four hospitals improperly sought Medicare reimbursement for patients referred by physicians who had an ownership interest in the hospital, leading to a $12.1 million overpayment. The agency is seeking repayment of those funds.

In the report, CMS also said it would require all hospitals to disclose compensation arrangements and the fact that physicians are investors. Hospitals that did not fully respond to the survey will be the first to receive forms seeking such disclosures. If they don't respond in a timely manner, they will be fined up to $10,000 a day.

Also, CMS clarified that all hospitals, including specialty hospitals—even if they don't have an emergency department—must comply with the transfer provisions of the Emergency Medical Treatment and Labor Act. That means they must accept transfers and provide emergency services for patients, regardless of their ability to pay.

Mr. Fenninger said specialty hospitals were in agreement with this provision.

As expected, CMS found that specialty hospitals provide less charity care than acute care hospitals do—an average 4% for cardiac hospitals, 1% for orthopedic hospitals, and 0.2% for surgical hospitals in fiscal 2004 and 2005, vs. 8% for general facilities.

Again, Mr. Fenninger said this was not surprising, claiming that most specialty hospitals were in geographic areas that did not serve many charity care cases.

CMS said there might be extenuating circumstances, and noted that “the profile of services offered by specialty hospitals may contribute to the differences in patient mix.” The agency said Congress should consider whether further reforms are needed to promote delivery of charity care.

Dr. McClellan said the report should not be seen as a signal that the federal government would stop monitoring physician-owned facilities. “When it comes to enforcing the requirements of the law when it comes to specialty hospitals, we mean it and we're going to do it,” he said.

The Centers for Medicare and Medicaid Services has allowed the moratorium on physician-owned specialty hospitals to expire, which means that those facilities—whether old or new—again can receive federal reimbursement.

But in its report to Congress that ended the moratorium, CMS said ownership arrangements at the facilities—which offer specialized cardiac, surgical, and orthopedic care—warrant more federal scrutiny.

The moratorium began in 2003; from late that year until June 2005, specialty hospitals could receive a Medicare provider number, but physician-owners could not bill for services for Medicare beneficiaries they referred to the facilities. Hospitals were prohibited from increasing the number of physician investors or the number of beds, or changing the kind of services provided.

The moratorium was essentially extended in mid-2005, when no new hospitals were allowed to enroll in Medicare. Congress directed CMS to study the hospitals' financial arrangements and provision of charity care and report back by last Aug. 8.

The final report “provides a comprehensive path forward to address the concerns that have been raised,” CMS Administrator Dr. Mark McClellan said at a press briefing sponsored by CMS to announce the moratorium's end.

Now, specialty hospitals may receive Medicare payments provided they meet certain criteria outlined in the CMS report.

The report, along with proposals on inpatient, outpatient, and ambulatory surgery center payments, “should put an end to the debate over specialty hospitals,” said Randy Fenninger, Washington representative for the American Surgical Hospital Association, an organization of specialty hospitals.

But the American Hospital Association and the Federation of American Hospitals said the report shows that specialty-oriented facilities are skirting the law. Both groups said CMS found evidence that specialty hospitals are soliciting physician-investors who can refer a high volume of patients.

For instance, CMS reported that cardiac hospitals always offered the same payment terms to noninvestor and investor-physicians, but orthopedic and surgical hospitals offered noninvestors a lower rate. According to a CMS statement, “Although not explicitly given by the hospitals as a criterion for selecting investors, it appears that the volume of referrals and revenue generated may have been a critical factor for some hospitals in determining which physicians were permitted to invest.”

Mary Beth Savary Taylor, AHA vice president for executive branch relations, said “more action is needed to really take a look at conflict of interest when physicians own and refer patients” to a facility. AHA believes that “physician referrals to limited-service hospitals should be banned,” she added.

“The CMS plan includes some potentially promising initiatives, such as increasing enforcement scrutiny, but it falls short by not addressing the core issue of conflict of interest,” the Federation of American Hospitals said in a statement.

The CMS report is based on a survey of 130 specialty hospitals and 270 general acute care competitor hospitals. The response rate was good, but there was a lack of full participation in many areas. Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) wrote to CMS just before the report was issued to complain about the paucity of responses. After the report's release, they said they would seek more data. “I'm concerned that a survey of just 140 facilities was used to develop policy for the roughly 4,000 hospitals reimbursed by Medicare,” Sen. Baucus said in a statement.

The senators are cosponsors of the Hospital Fair Competition Act of 2005 (S. 1002), which they said will “rein in the growth of physician-owned specialty hospitals.”

In the survey, specialty hospitals were asked, for instance, about returns on physician investment. CMS found that among the hospitals that responded, the returns overall were proportionate to investment. But only 47% of the hospitals surveyed responded to this question, CMS said. The agency said that it considers nonproportional returns to be violations of physician self-referral and antikickback laws, and that it would go after suspect arrangements.

Some hospitals are already being disciplined for violations under the moratorium. CMS said that four hospitals improperly sought Medicare reimbursement for patients referred by physicians who had an ownership interest in the hospital, leading to a $12.1 million overpayment. The agency is seeking repayment of those funds.

In the report, CMS also said it would require all hospitals to disclose compensation arrangements and the fact that physicians are investors. Hospitals that did not fully respond to the survey will be the first to receive forms seeking such disclosures. If they don't respond in a timely manner, they will be fined up to $10,000 a day.

Also, CMS clarified that all hospitals, including specialty hospitals—even if they don't have an emergency department—must comply with the transfer provisions of the Emergency Medical Treatment and Labor Act. That means they must accept transfers and provide emergency services for patients, regardless of their ability to pay.

Mr. Fenninger said specialty hospitals were in agreement with this provision.

As expected, CMS found that specialty hospitals provide less charity care than acute care hospitals do—an average 4% for cardiac hospitals, 1% for orthopedic hospitals, and 0.2% for surgical hospitals in fiscal 2004 and 2005, vs. 8% for general facilities.

Again, Mr. Fenninger said this was not surprising, claiming that most specialty hospitals were in geographic areas that did not serve many charity care cases.

CMS said there might be extenuating circumstances, and noted that “the profile of services offered by specialty hospitals may contribute to the differences in patient mix.” The agency said Congress should consider whether further reforms are needed to promote delivery of charity care.

Dr. McClellan said the report should not be seen as a signal that the federal government would stop monitoring physician-owned facilities. “When it comes to enforcing the requirements of the law when it comes to specialty hospitals, we mean it and we're going to do it,” he said.

Boston Scientific's rapid response to yet another potential safety issue with its pacemakers and implantable cardioverter defibrillators early this summer has brought praise from cardiologists who helped draft a proposal to guide responses to safety problems.

On June 23, Boston Scientific sent a letter to physicians informing them of a possibility of malfunction in a subset of two pacemaker models (Insignia and Nexus), as well as in the Contak Renewal TR and TR2 cardiac resynchronization pacemakers, and the Ventak Prizm 2, Vitality, and Vitality 2 ICDs. The company said that although the Food and Drug Administration might classify the action as a recall, it was initiating an “action to retrieve from hospital and sales force inventory all nonimplanted devices within this well-defined subset.”

Dr. Mark D. Carlson, chair of the Heart Rhythm Society Task Force on Device Performance Policies and Guidelines, lauded the company for not using the term “recall.” That was one of the recommendations in the task force's April draft guidelines.

The word “has so many implications that don't necessarily apply to implantable devices,” Dr. Carlson said in an interview. Recall “suggests that an action should be taken, and that places physicians in an awkward and sometimes clinically inappropriate situation,” added Dr. Carlson, who is a professor of medicine and associate vice president for government relations at Case Western Reserve University in Cleveland.

In most cases, explanting a device is riskier than leaving it in, he said.

Boston Scientific said that 49,800 of the devices had been distributed, and that 27,200 had been implanted worldwide. Of those ICDs, there were five confirmed reports of malfunction associated with failure of a low-voltage capacitor from a single supplier.

Even though the company had not completed its root-cause analysis, it decided to notify physicians, patients, and the FDA of the potential problem. An analysis of the retrieved devices should be completed by the fall, according to the FDA.

The agency said in a statement that it backed Boston Scientific's plan to remove the devices from hospital inventories and to direct physicians to conduct follow-up exams with patients.

“While information about the problem with these devices is still very preliminary, FDA is committed to keeping the public informed,” said Dr. Daniel Schultz, director of the agency's Center for Radiological Devices and Health.

Dr. Dwight Reynolds, president of the Heart Rhythm Society, agreed that the company's move was prudent and in line with the task force's recommendations. “I think the fact that they've announced fairly early in their evaluation process that this problem exists is a testament to their commitment to what everyone has espoused: that early disclosure of events is appropriate,” Dr. Reynolds told INTERNAL MEDICINE NEWS.

The day after the society's draft was released, Boston Scientific, which had just completed its purchase of Guidant Corp., said that it would follow all of the recommendations.

Guidant's devices have been the subject of multiple safety notices and recalls since early 2005, including the one in June. The company has been repeatedly criticized for a failure to notify physicians or patients on a timely basis.

The perception that the devices are unsafe has led to anxiety among patients, Dr. Reynolds said. Although the numbers of those who have sought explantation or refused implantation are hard to quantify, he said he has heard many anecdotal reports. A colleague told him last fall that two patients who were ICD candidates told the cardiologist they would not consider the implants “because they don't trust them.” The fear seems to have dissipated recently, however, he said.

He added that physicians have been concerned about quality issues and have reflected that concern in less enthusiasm for implanting the Guidant devices. But, he said, it's not an attitude that is “either pervasive or likely to be sustained.”

And both he and Dr. Carlson said that Boston Scientific is doing a good job of moving forward.

“I think they've now acknowledged that the patients' and physicians' right to know supersedes concerns about what their responses might be,” Dr. Reynolds said.

Physicians have been concerned about the communications process in the last year, Dr. Carlson said. However, he added, “I'm hopeful and extremely optimistic that those problems are behind us.”

Dr. Carlson has consulting or speaking relationships with Guidant, St. Jude Medical Inc., and Medtronic Inc. Dr. Reynolds is a consultant, and has received honoraria as a speaker, for Medtronic.

Boston Scientific also recently has hired someone to be a point person on product safety: William E. Young, who will have the title of vice president of quality assurance and reliability for the cardiac rhythm management group.

The Heart Rhythm Society's guidelines are expected to be published in October, most likely in the society's journal, Heart Rhythm, Dr. Carlson said.

Boston Scientific's rapid response to yet another potential safety issue with its pacemakers and implantable cardioverter defibrillators early this summer has brought praise from cardiologists who helped draft a proposal to guide responses to safety problems.

On June 23, Boston Scientific sent a letter to physicians informing them of a possibility of malfunction in a subset of two pacemaker models (Insignia and Nexus), as well as in the Contak Renewal TR and TR2 cardiac resynchronization pacemakers, and the Ventak Prizm 2, Vitality, and Vitality 2 ICDs. The company said that although the Food and Drug Administration might classify the action as a recall, it was initiating an “action to retrieve from hospital and sales force inventory all nonimplanted devices within this well-defined subset.”

Dr. Mark D. Carlson, chair of the Heart Rhythm Society Task Force on Device Performance Policies and Guidelines, lauded the company for not using the term “recall.” That was one of the recommendations in the task force's April draft guidelines.

The word “has so many implications that don't necessarily apply to implantable devices,” Dr. Carlson said in an interview. Recall “suggests that an action should be taken, and that places physicians in an awkward and sometimes clinically inappropriate situation,” added Dr. Carlson, who is a professor of medicine and associate vice president for government relations at Case Western Reserve University in Cleveland.

In most cases, explanting a device is riskier than leaving it in, he said.

Boston Scientific said that 49,800 of the devices had been distributed, and that 27,200 had been implanted worldwide. Of those ICDs, there were five confirmed reports of malfunction associated with failure of a low-voltage capacitor from a single supplier.

Even though the company had not completed its root-cause analysis, it decided to notify physicians, patients, and the FDA of the potential problem. An analysis of the retrieved devices should be completed by the fall, according to the FDA.

The agency said in a statement that it backed Boston Scientific's plan to remove the devices from hospital inventories and to direct physicians to conduct follow-up exams with patients.

“While information about the problem with these devices is still very preliminary, FDA is committed to keeping the public informed,” said Dr. Daniel Schultz, director of the agency's Center for Radiological Devices and Health.

Dr. Dwight Reynolds, president of the Heart Rhythm Society, agreed that the company's move was prudent and in line with the task force's recommendations. “I think the fact that they've announced fairly early in their evaluation process that this problem exists is a testament to their commitment to what everyone has espoused: that early disclosure of events is appropriate,” Dr. Reynolds told INTERNAL MEDICINE NEWS.

The day after the society's draft was released, Boston Scientific, which had just completed its purchase of Guidant Corp., said that it would follow all of the recommendations.

Guidant's devices have been the subject of multiple safety notices and recalls since early 2005, including the one in June. The company has been repeatedly criticized for a failure to notify physicians or patients on a timely basis.

The perception that the devices are unsafe has led to anxiety among patients, Dr. Reynolds said. Although the numbers of those who have sought explantation or refused implantation are hard to quantify, he said he has heard many anecdotal reports. A colleague told him last fall that two patients who were ICD candidates told the cardiologist they would not consider the implants “because they don't trust them.” The fear seems to have dissipated recently, however, he said.

He added that physicians have been concerned about quality issues and have reflected that concern in less enthusiasm for implanting the Guidant devices. But, he said, it's not an attitude that is “either pervasive or likely to be sustained.”

And both he and Dr. Carlson said that Boston Scientific is doing a good job of moving forward.

“I think they've now acknowledged that the patients' and physicians' right to know supersedes concerns about what their responses might be,” Dr. Reynolds said.

Physicians have been concerned about the communications process in the last year, Dr. Carlson said. However, he added, “I'm hopeful and extremely optimistic that those problems are behind us.”

Dr. Carlson has consulting or speaking relationships with Guidant, St. Jude Medical Inc., and Medtronic Inc. Dr. Reynolds is a consultant, and has received honoraria as a speaker, for Medtronic.

Boston Scientific also recently has hired someone to be a point person on product safety: William E. Young, who will have the title of vice president of quality assurance and reliability for the cardiac rhythm management group.

The Heart Rhythm Society's guidelines are expected to be published in October, most likely in the society's journal, Heart Rhythm, Dr. Carlson said.

Boston Scientific's rapid response to yet another potential safety issue with its pacemakers and implantable cardioverter defibrillators early this summer has brought praise from cardiologists who helped draft a proposal to guide responses to safety problems.

On June 23, Boston Scientific sent a letter to physicians informing them of a possibility of malfunction in a subset of two pacemaker models (Insignia and Nexus), as well as in the Contak Renewal TR and TR2 cardiac resynchronization pacemakers, and the Ventak Prizm 2, Vitality, and Vitality 2 ICDs. The company said that although the Food and Drug Administration might classify the action as a recall, it was initiating an “action to retrieve from hospital and sales force inventory all nonimplanted devices within this well-defined subset.”

Dr. Mark D. Carlson, chair of the Heart Rhythm Society Task Force on Device Performance Policies and Guidelines, lauded the company for not using the term “recall.” That was one of the recommendations in the task force's April draft guidelines.

The word “has so many implications that don't necessarily apply to implantable devices,” Dr. Carlson said in an interview. Recall “suggests that an action should be taken, and that places physicians in an awkward and sometimes clinically inappropriate situation,” added Dr. Carlson, who is a professor of medicine and associate vice president for government relations at Case Western Reserve University in Cleveland.

In most cases, explanting a device is riskier than leaving it in, he said.

Boston Scientific said that 49,800 of the devices had been distributed, and that 27,200 had been implanted worldwide. Of those ICDs, there were five confirmed reports of malfunction associated with failure of a low-voltage capacitor from a single supplier.

Even though the company had not completed its root-cause analysis, it decided to notify physicians, patients, and the FDA of the potential problem. An analysis of the retrieved devices should be completed by the fall, according to the FDA.

The agency said in a statement that it backed Boston Scientific's plan to remove the devices from hospital inventories and to direct physicians to conduct follow-up exams with patients.

“While information about the problem with these devices is still very preliminary, FDA is committed to keeping the public informed,” said Dr. Daniel Schultz, director of the agency's Center for Radiological Devices and Health.

Dr. Dwight Reynolds, president of the Heart Rhythm Society, agreed that the company's move was prudent and in line with the task force's recommendations. “I think the fact that they've announced fairly early in their evaluation process that this problem exists is a testament to their commitment to what everyone has espoused: that early disclosure of events is appropriate,” Dr. Reynolds told INTERNAL MEDICINE NEWS.

The day after the society's draft was released, Boston Scientific, which had just completed its purchase of Guidant Corp., said that it would follow all of the recommendations.

Guidant's devices have been the subject of multiple safety notices and recalls since early 2005, including the one in June. The company has been repeatedly criticized for a failure to notify physicians or patients on a timely basis.

The perception that the devices are unsafe has led to anxiety among patients, Dr. Reynolds said. Although the numbers of those who have sought explantation or refused implantation are hard to quantify, he said he has heard many anecdotal reports. A colleague told him last fall that two patients who were ICD candidates told the cardiologist they would not consider the implants “because they don't trust them.” The fear seems to have dissipated recently, however, he said.

He added that physicians have been concerned about quality issues and have reflected that concern in less enthusiasm for implanting the Guidant devices. But, he said, it's not an attitude that is “either pervasive or likely to be sustained.”

And both he and Dr. Carlson said that Boston Scientific is doing a good job of moving forward.

“I think they've now acknowledged that the patients' and physicians' right to know supersedes concerns about what their responses might be,” Dr. Reynolds said.

Physicians have been concerned about the communications process in the last year, Dr. Carlson said. However, he added, “I'm hopeful and extremely optimistic that those problems are behind us.”

Dr. Carlson has consulting or speaking relationships with Guidant, St. Jude Medical Inc., and Medtronic Inc. Dr. Reynolds is a consultant, and has received honoraria as a speaker, for Medtronic.

Boston Scientific also recently has hired someone to be a point person on product safety: William E. Young, who will have the title of vice president of quality assurance and reliability for the cardiac rhythm management group.

The Heart Rhythm Society's guidelines are expected to be published in October, most likely in the society's journal, Heart Rhythm, Dr. Carlson said.

The Centers for Medicare and Medicaid Services has allowed the moratorium on physician-owned specialty hospitals to expire, which means that those facilities—whether old or new—again can receive federal reimbursement.

However, in its report to Congress that ended the moratorium, CMS said that ownership arrangements at the facilities—which offer specialized care in the cardiac, surgical, and orthopedic areas—warrant more federal scrutiny.

The moratorium began in 2003; from late that year until June 2005, specialty hospitals could open and receive a Medicare provider number, but physician-owners could not bill for services for Medicare beneficiaries they referred to the facilities. Hospitals also were prohibited from increasing the number of physician investors or the number of beds or changing the kind of services provided.

The moratorium was essentially extended in mid-2005, when no new hospitals were allowed to enroll in Medicare. In the meantime, Congress directed CMS to study the hospitals' financial arrangements and provision of charity care and report back by last Aug. 8.

The final report “provides a comprehensive path forward to address the concerns that have been raised,” said CMS Administrator Mark McClellan at a press conference sponsored by CMS to announce the moratorium's end.

Now, specialty hospitals may receive Medicare payments provided they meet certain criteria outlined in the CMS report.

The report, combined with new proposals governing inpatient, outpatient, and ambulatory surgery center payments, “should put an end to the debate over specialty hospitals,” said Randy Fenninger, Washington representative for the American Surgical Hospital Association, an organization of specialty hospitals.

But, the American Hospital Association and the Federation of American Hospitals said the report shows that specialty-oriented facilities are skirting the law. Both organizations said CMS found evidence that specialty hospitals are soliciting physician-investors who can refer a high volume of patients.

For instance, CMS reported that cardiac hospitals always offered the same payment terms to noninvestor- and investor-physicians, but that orthopedic and surgical hospitals offered noninvestors a lesser rate. According to a CMS statement, “Although not explicitly given by the hospitals as a criterion for selecting investors, it appears that the volume of referrals and revenue generated may have been a critical factor for some hospitals in determining which physicians were permitted to invest.”

Mary Beth Savary Taylor, vice president for executive branch relations at the AHA, said, “More action is needed to really take a look at conflict of interest when physicians own and refer patients [to a facility].” She added that AHA believes that “physician referrals to limited-service hospitals should be banned.”

“The CMS plan includes some potentially promising initiatives, such as increasing enforcement scrutiny, but it falls short by not addressing the core issue of conflict of interest,” said the Federation of American Hospitals in a statement.

The CMS report is based on a survey of 130 specialty hospitals and 270 general acute care competitor hospitals.

While the response rate overall was good, there was a lack of full participation in many areas. Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) wrote to CMS just before the report was issued to complain about the paucity of responses.

After the report's release, they said they would still seek more data. “I'm concerned that a survey of just 140 facilities was used to develop policy for the roughly 4,000 hospitals reimbursed by Medicare,” said Sen. Baucus in a statement.

The senators are cosponsors of the Hospital Fair Competition Act of 2005 (S. 1002), which they said will “rein in the growth of physician-owned specialty hospitals.”

In the survey, specialty hospitals were asked, for instance, to report on returns on physician investment. CMS found that among the hospitals that responded, the returns overall were proportionate to investment. But, said CMS, only 47% of the hospitals surveyed responded to this question.

The agency said it considers nonproportional returns to be violations of physician self-referral and antikickback laws, and that it would go after suspect arrangements.

Some hospitals are already being disciplined for violations under the moratorium. CMS said that four hospitals improperly sought Medicare reimbursement for patients who had been referred by physicians who had an ownership interest in the hospital, resulting in an overpayment of $12.1 million. The agency is seeking repayment of those funds.

In the report, CMS also said it would require all hospitals to disclose compensation arrangements and the fact that physicians are investors.

Hospitals that did not fully respond to the survey will be the first to receive forms seeking such disclosures. If they don't respond in a timely manner, they will be fined up to $10,000 a day.

Also, CMS clarified that all hospitals, including specialty hospitals—even if they don't have an emergency department—will be required to comply with the transfer provisions of the Emergency Medical Treatment and Labor Act. That means they must accept transfers and provide emergency services for patients, regardless of their ability to pay.

Mr. Fenninger said specialty hospitals were in agreement with this provision.

As expected, CMS found that specialty hospitals provide less charity care than acute care hospitals do—an average 4% for cardiac hospitals, 1% for orthopedic hospitals, and 0.2% for surgical hospitals in fiscal 2004 and 2005, compared to 8% for general facilities.

Again, Mr. Fenninger said this was not surprising, claiming that most specialty hospitals were in geographic areas that did not serve many charity care cases.

CMS agreed that there might be extenuating circumstances, and pointed out that “the profile of services offered by specialty hospitals may contribute to the differences in patient mix.”

The agency said that Congress should consider whether further reforms are needed to ensure greater delivery of charity care by the facilities.

Dr. McClellan said the report should not be seen as a signal that the federal government would stop monitoring physician-owned facilities.

“When it comes to enforcing the requirements of the law when it comes to specialty hospitals, we mean it and we're going to do it,” he said.

The Centers for Medicare and Medicaid Services has allowed the moratorium on physician-owned specialty hospitals to expire, which means that those facilities—whether old or new—again can receive federal reimbursement.

However, in its report to Congress that ended the moratorium, CMS said that ownership arrangements at the facilities—which offer specialized care in the cardiac, surgical, and orthopedic areas—warrant more federal scrutiny.

The moratorium began in 2003; from late that year until June 2005, specialty hospitals could open and receive a Medicare provider number, but physician-owners could not bill for services for Medicare beneficiaries they referred to the facilities. Hospitals also were prohibited from increasing the number of physician investors or the number of beds or changing the kind of services provided.

The moratorium was essentially extended in mid-2005, when no new hospitals were allowed to enroll in Medicare. In the meantime, Congress directed CMS to study the hospitals' financial arrangements and provision of charity care and report back by last Aug. 8.

The final report “provides a comprehensive path forward to address the concerns that have been raised,” said CMS Administrator Mark McClellan at a press conference sponsored by CMS to announce the moratorium's end.

Now, specialty hospitals may receive Medicare payments provided they meet certain criteria outlined in the CMS report.

The report, combined with new proposals governing inpatient, outpatient, and ambulatory surgery center payments, “should put an end to the debate over specialty hospitals,” said Randy Fenninger, Washington representative for the American Surgical Hospital Association, an organization of specialty hospitals.

But, the American Hospital Association and the Federation of American Hospitals said the report shows that specialty-oriented facilities are skirting the law. Both organizations said CMS found evidence that specialty hospitals are soliciting physician-investors who can refer a high volume of patients.

For instance, CMS reported that cardiac hospitals always offered the same payment terms to noninvestor- and investor-physicians, but that orthopedic and surgical hospitals offered noninvestors a lesser rate. According to a CMS statement, “Although not explicitly given by the hospitals as a criterion for selecting investors, it appears that the volume of referrals and revenue generated may have been a critical factor for some hospitals in determining which physicians were permitted to invest.”

Mary Beth Savary Taylor, vice president for executive branch relations at the AHA, said, “More action is needed to really take a look at conflict of interest when physicians own and refer patients [to a facility].” She added that AHA believes that “physician referrals to limited-service hospitals should be banned.”

“The CMS plan includes some potentially promising initiatives, such as increasing enforcement scrutiny, but it falls short by not addressing the core issue of conflict of interest,” said the Federation of American Hospitals in a statement.

The CMS report is based on a survey of 130 specialty hospitals and 270 general acute care competitor hospitals.

While the response rate overall was good, there was a lack of full participation in many areas. Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) wrote to CMS just before the report was issued to complain about the paucity of responses.

After the report's release, they said they would still seek more data. “I'm concerned that a survey of just 140 facilities was used to develop policy for the roughly 4,000 hospitals reimbursed by Medicare,” said Sen. Baucus in a statement.

The senators are cosponsors of the Hospital Fair Competition Act of 2005 (S. 1002), which they said will “rein in the growth of physician-owned specialty hospitals.”

In the survey, specialty hospitals were asked, for instance, to report on returns on physician investment. CMS found that among the hospitals that responded, the returns overall were proportionate to investment. But, said CMS, only 47% of the hospitals surveyed responded to this question.

The agency said it considers nonproportional returns to be violations of physician self-referral and antikickback laws, and that it would go after suspect arrangements.

Some hospitals are already being disciplined for violations under the moratorium. CMS said that four hospitals improperly sought Medicare reimbursement for patients who had been referred by physicians who had an ownership interest in the hospital, resulting in an overpayment of $12.1 million. The agency is seeking repayment of those funds.

In the report, CMS also said it would require all hospitals to disclose compensation arrangements and the fact that physicians are investors.

Hospitals that did not fully respond to the survey will be the first to receive forms seeking such disclosures. If they don't respond in a timely manner, they will be fined up to $10,000 a day.

Also, CMS clarified that all hospitals, including specialty hospitals—even if they don't have an emergency department—will be required to comply with the transfer provisions of the Emergency Medical Treatment and Labor Act. That means they must accept transfers and provide emergency services for patients, regardless of their ability to pay.

Mr. Fenninger said specialty hospitals were in agreement with this provision.

As expected, CMS found that specialty hospitals provide less charity care than acute care hospitals do—an average 4% for cardiac hospitals, 1% for orthopedic hospitals, and 0.2% for surgical hospitals in fiscal 2004 and 2005, compared to 8% for general facilities.

Again, Mr. Fenninger said this was not surprising, claiming that most specialty hospitals were in geographic areas that did not serve many charity care cases.

CMS agreed that there might be extenuating circumstances, and pointed out that “the profile of services offered by specialty hospitals may contribute to the differences in patient mix.”

The agency said that Congress should consider whether further reforms are needed to ensure greater delivery of charity care by the facilities.

Dr. McClellan said the report should not be seen as a signal that the federal government would stop monitoring physician-owned facilities.

“When it comes to enforcing the requirements of the law when it comes to specialty hospitals, we mean it and we're going to do it,” he said.

The Centers for Medicare and Medicaid Services has allowed the moratorium on physician-owned specialty hospitals to expire, which means that those facilities—whether old or new—again can receive federal reimbursement.

However, in its report to Congress that ended the moratorium, CMS said that ownership arrangements at the facilities—which offer specialized care in the cardiac, surgical, and orthopedic areas—warrant more federal scrutiny.

The moratorium began in 2003; from late that year until June 2005, specialty hospitals could open and receive a Medicare provider number, but physician-owners could not bill for services for Medicare beneficiaries they referred to the facilities. Hospitals also were prohibited from increasing the number of physician investors or the number of beds or changing the kind of services provided.

The moratorium was essentially extended in mid-2005, when no new hospitals were allowed to enroll in Medicare. In the meantime, Congress directed CMS to study the hospitals' financial arrangements and provision of charity care and report back by last Aug. 8.

The final report “provides a comprehensive path forward to address the concerns that have been raised,” said CMS Administrator Mark McClellan at a press conference sponsored by CMS to announce the moratorium's end.

Now, specialty hospitals may receive Medicare payments provided they meet certain criteria outlined in the CMS report.

The report, combined with new proposals governing inpatient, outpatient, and ambulatory surgery center payments, “should put an end to the debate over specialty hospitals,” said Randy Fenninger, Washington representative for the American Surgical Hospital Association, an organization of specialty hospitals.

But, the American Hospital Association and the Federation of American Hospitals said the report shows that specialty-oriented facilities are skirting the law. Both organizations said CMS found evidence that specialty hospitals are soliciting physician-investors who can refer a high volume of patients.

For instance, CMS reported that cardiac hospitals always offered the same payment terms to noninvestor- and investor-physicians, but that orthopedic and surgical hospitals offered noninvestors a lesser rate. According to a CMS statement, “Although not explicitly given by the hospitals as a criterion for selecting investors, it appears that the volume of referrals and revenue generated may have been a critical factor for some hospitals in determining which physicians were permitted to invest.”

Mary Beth Savary Taylor, vice president for executive branch relations at the AHA, said, “More action is needed to really take a look at conflict of interest when physicians own and refer patients [to a facility].” She added that AHA believes that “physician referrals to limited-service hospitals should be banned.”

“The CMS plan includes some potentially promising initiatives, such as increasing enforcement scrutiny, but it falls short by not addressing the core issue of conflict of interest,” said the Federation of American Hospitals in a statement.

The CMS report is based on a survey of 130 specialty hospitals and 270 general acute care competitor hospitals.

While the response rate overall was good, there was a lack of full participation in many areas. Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) wrote to CMS just before the report was issued to complain about the paucity of responses.

After the report's release, they said they would still seek more data. “I'm concerned that a survey of just 140 facilities was used to develop policy for the roughly 4,000 hospitals reimbursed by Medicare,” said Sen. Baucus in a statement.

The senators are cosponsors of the Hospital Fair Competition Act of 2005 (S. 1002), which they said will “rein in the growth of physician-owned specialty hospitals.”

In the survey, specialty hospitals were asked, for instance, to report on returns on physician investment. CMS found that among the hospitals that responded, the returns overall were proportionate to investment. But, said CMS, only 47% of the hospitals surveyed responded to this question.

The agency said it considers nonproportional returns to be violations of physician self-referral and antikickback laws, and that it would go after suspect arrangements.

Some hospitals are already being disciplined for violations under the moratorium. CMS said that four hospitals improperly sought Medicare reimbursement for patients who had been referred by physicians who had an ownership interest in the hospital, resulting in an overpayment of $12.1 million. The agency is seeking repayment of those funds.

In the report, CMS also said it would require all hospitals to disclose compensation arrangements and the fact that physicians are investors.

Hospitals that did not fully respond to the survey will be the first to receive forms seeking such disclosures. If they don't respond in a timely manner, they will be fined up to $10,000 a day.

Also, CMS clarified that all hospitals, including specialty hospitals—even if they don't have an emergency department—will be required to comply with the transfer provisions of the Emergency Medical Treatment and Labor Act. That means they must accept transfers and provide emergency services for patients, regardless of their ability to pay.

Mr. Fenninger said specialty hospitals were in agreement with this provision.

As expected, CMS found that specialty hospitals provide less charity care than acute care hospitals do—an average 4% for cardiac hospitals, 1% for orthopedic hospitals, and 0.2% for surgical hospitals in fiscal 2004 and 2005, compared to 8% for general facilities.

Again, Mr. Fenninger said this was not surprising, claiming that most specialty hospitals were in geographic areas that did not serve many charity care cases.

CMS agreed that there might be extenuating circumstances, and pointed out that “the profile of services offered by specialty hospitals may contribute to the differences in patient mix.”

The agency said that Congress should consider whether further reforms are needed to ensure greater delivery of charity care by the facilities.

Dr. McClellan said the report should not be seen as a signal that the federal government would stop monitoring physician-owned facilities.

“When it comes to enforcing the requirements of the law when it comes to specialty hospitals, we mean it and we're going to do it,” he said.

In an assessment of performance by one of the nation's largest physician revenue management companies, Humana and Medicare were rated highest when it came to issuing payment quickly and being easy to work with.

The performance data were tabulated and made public by AthenaHealth, a Watertown, Mass.-based company that manages $2 billion in revenues for 7,000 physicians, nurses, and other health care providers practicing in 33 states.

In explaining why the company decided to make the data available—free of charge—Jeremy Delinsky, director of process innovation at AthenaHealth, said, “We were a little skittish about making it public, but we found the story was too compelling to sit on.” And, physicians who know more about their insurers will have more leverage in contracting and a better opportunity to improve their bottom line, he said.

The company assessed 5 million “charge lines” worth of claims data from the fourth quarter of 2005. To be a part of the ranking, national payers had to have at least 10,000 “charge lines,” or line items, and regional payers at least 3,000.

Insurers were ranked according to an overall index that gave the most weight to financial performance. That performance included days in accounts receivable, percentage of claims paid and closed on the first pass, and percentage of charges transferred to the patient.

In addition to financial performance, the index included an administrative measure encompassing the claims denial rate, the percentage requiring a phone call to clarify a response from the insurer, and the percentage of claims lost. Finally, a small amount of weight was given to the difficulty of working within the payer's rules.

Nationally, Humana ranked No. 1, followed by Medicare, United Health Group, Aetna, Cigna, Champus Tricare, and Wellpoint. According to AthenaHealth, Aetna denies claims twice as often as Humana, and the reasons are so unclear that 17% of claims need follow-up calls.

Wellpoint tended to take the longest to pay, and more than any other payer, the company aggressively shifts responsibility to physicians to get payment from the patient.

For all payers, claims stay in accounts receivable for an average of 38 days. On the regional level, there was a wide variation in performance.

In the northeast, for example, BlueCross BlueShield of Pennsylvania/Independence BlueCross was the top-ranked plan, followed by Tufts Health Plan and Fallon Health Plan. In the west, PacifiCare was first, followed by Medicare B in Texas and United Health Group.

The largest regional payers mostly provided clear reasons for denials, rarely shifted the responsibility to physicians to secure payment, and paid most claims upon first submission and within 30 days.

Regional payers appeared to be more efficient and perhaps even more powerful than the national insurers, said Mr. Delinsky. National payers have been growing in size, but “it's unclear to us whether consolidation has resulted in the scale they hoped for,” he said.

AthenaHealth did not assess payers' relative reimbursement rates because it would not be legal to publicize those rates, Mr. Delinsky said. However, he suggested that physicians could use his company's rankings to negotiate for a higher fee if the payer is hard to work with, or potentially accept a lower payment rate if the insurer pays more quickly and imposes less of an administrative burden.

The insurance industry did not respond directly to the rankings, but America's Health Insurance Plans, a national trade association, completed a study recently showing that 98% of claims submitted electronically are processed within a month of receipt. The study, based on aggregated data from 25 million claims processed by a sample of 26 health insurers, found that 75% of all claims are submitted electronically, up from 24% in 1995.

If there is a delay in payment, it's often because the claim has not been received in a timely manner from the physician's office, according to AHIP.

The rankings are posted at www.athenapayerview.com

In an assessment of performance by one of the nation's largest physician revenue management companies, Humana and Medicare were rated highest when it came to issuing payment quickly and being easy to work with.

The performance data were tabulated and made public by AthenaHealth, a Watertown, Mass.-based company that manages $2 billion in revenues for 7,000 physicians, nurses, and other health care providers practicing in 33 states.

In explaining why the company decided to make the data available—free of charge—Jeremy Delinsky, director of process innovation at AthenaHealth, said, “We were a little skittish about making it public, but we found the story was too compelling to sit on.” And, physicians who know more about their insurers will have more leverage in contracting and a better opportunity to improve their bottom line, he said.

The company assessed 5 million “charge lines” worth of claims data from the fourth quarter of 2005. To be a part of the ranking, national payers had to have at least 10,000 “charge lines,” or line items, and regional payers at least 3,000.

Insurers were ranked according to an overall index that gave the most weight to financial performance. That performance included days in accounts receivable, percentage of claims paid and closed on the first pass, and percentage of charges transferred to the patient.

In addition to financial performance, the index included an administrative measure encompassing the claims denial rate, the percentage requiring a phone call to clarify a response from the insurer, and the percentage of claims lost. Finally, a small amount of weight was given to the difficulty of working within the payer's rules.

Nationally, Humana ranked No. 1, followed by Medicare, United Health Group, Aetna, Cigna, Champus Tricare, and Wellpoint. According to AthenaHealth, Aetna denies claims twice as often as Humana, and the reasons are so unclear that 17% of claims need follow-up calls.

Wellpoint tended to take the longest to pay, and more than any other payer, the company aggressively shifts responsibility to physicians to get payment from the patient.

For all payers, claims stay in accounts receivable for an average of 38 days. On the regional level, there was a wide variation in performance.

In the northeast, for example, BlueCross BlueShield of Pennsylvania/Independence BlueCross was the top-ranked plan, followed by Tufts Health Plan and Fallon Health Plan. In the west, PacifiCare was first, followed by Medicare B in Texas and United Health Group.

The largest regional payers mostly provided clear reasons for denials, rarely shifted the responsibility to physicians to secure payment, and paid most claims upon first submission and within 30 days.

Regional payers appeared to be more efficient and perhaps even more powerful than the national insurers, said Mr. Delinsky. National payers have been growing in size, but “it's unclear to us whether consolidation has resulted in the scale they hoped for,” he said.

AthenaHealth did not assess payers' relative reimbursement rates because it would not be legal to publicize those rates, Mr. Delinsky said. However, he suggested that physicians could use his company's rankings to negotiate for a higher fee if the payer is hard to work with, or potentially accept a lower payment rate if the insurer pays more quickly and imposes less of an administrative burden.

The insurance industry did not respond directly to the rankings, but America's Health Insurance Plans, a national trade association, completed a study recently showing that 98% of claims submitted electronically are processed within a month of receipt. The study, based on aggregated data from 25 million claims processed by a sample of 26 health insurers, found that 75% of all claims are submitted electronically, up from 24% in 1995.

If there is a delay in payment, it's often because the claim has not been received in a timely manner from the physician's office, according to AHIP.

The rankings are posted at www.athenapayerview.com

In an assessment of performance by one of the nation's largest physician revenue management companies, Humana and Medicare were rated highest when it came to issuing payment quickly and being easy to work with.

The performance data were tabulated and made public by AthenaHealth, a Watertown, Mass.-based company that manages $2 billion in revenues for 7,000 physicians, nurses, and other health care providers practicing in 33 states.

In explaining why the company decided to make the data available—free of charge—Jeremy Delinsky, director of process innovation at AthenaHealth, said, “We were a little skittish about making it public, but we found the story was too compelling to sit on.” And, physicians who know more about their insurers will have more leverage in contracting and a better opportunity to improve their bottom line, he said.

The company assessed 5 million “charge lines” worth of claims data from the fourth quarter of 2005. To be a part of the ranking, national payers had to have at least 10,000 “charge lines,” or line items, and regional payers at least 3,000.

Insurers were ranked according to an overall index that gave the most weight to financial performance. That performance included days in accounts receivable, percentage of claims paid and closed on the first pass, and percentage of charges transferred to the patient.

In addition to financial performance, the index included an administrative measure encompassing the claims denial rate, the percentage requiring a phone call to clarify a response from the insurer, and the percentage of claims lost. Finally, a small amount of weight was given to the difficulty of working within the payer's rules.

Nationally, Humana ranked No. 1, followed by Medicare, United Health Group, Aetna, Cigna, Champus Tricare, and Wellpoint. According to AthenaHealth, Aetna denies claims twice as often as Humana, and the reasons are so unclear that 17% of claims need follow-up calls.

Wellpoint tended to take the longest to pay, and more than any other payer, the company aggressively shifts responsibility to physicians to get payment from the patient.

For all payers, claims stay in accounts receivable for an average of 38 days. On the regional level, there was a wide variation in performance.

In the northeast, for example, BlueCross BlueShield of Pennsylvania/Independence BlueCross was the top-ranked plan, followed by Tufts Health Plan and Fallon Health Plan. In the west, PacifiCare was first, followed by Medicare B in Texas and United Health Group.

The largest regional payers mostly provided clear reasons for denials, rarely shifted the responsibility to physicians to secure payment, and paid most claims upon first submission and within 30 days.

Regional payers appeared to be more efficient and perhaps even more powerful than the national insurers, said Mr. Delinsky. National payers have been growing in size, but “it's unclear to us whether consolidation has resulted in the scale they hoped for,” he said.

AthenaHealth did not assess payers' relative reimbursement rates because it would not be legal to publicize those rates, Mr. Delinsky said. However, he suggested that physicians could use his company's rankings to negotiate for a higher fee if the payer is hard to work with, or potentially accept a lower payment rate if the insurer pays more quickly and imposes less of an administrative burden.

The insurance industry did not respond directly to the rankings, but America's Health Insurance Plans, a national trade association, completed a study recently showing that 98% of claims submitted electronically are processed within a month of receipt. The study, based on aggregated data from 25 million claims processed by a sample of 26 health insurers, found that 75% of all claims are submitted electronically, up from 24% in 1995.

If there is a delay in payment, it's often because the claim has not been received in a timely manner from the physician's office, according to AHIP.

The rankings are posted at www.athenapayerview.com

CMS Unveils 2007 Imaging Rates

As part of a its physician fee schedule proposal for 2007, the Centers for Medicare and Medicaid Services also has detailed how much it will pay for certain imaging procedures next year. In 2007, the CMS is proposing to pay in full for the first of multiple images on contiguous body parts, but to cut the payment by 25% for subsequent images. The cut is not as large as had been anticipated: Last year, the agency projected second images would be reduced by 50%. The CMS also is proposing to limit the technical component payment to the outpatient department payment. This is mandated by the Deficit Reduction Act, enacted in February.

Fix SGR, Delay Imaging Cuts

Several members of Congress attempted to head off the CMs' proposals just before the August recess. A bill (H.R. 5866) by Rep. Michael Burgess (R-Tex.) would put an end to physician fee cuts under Medicare by halting application of the sustainable growth rate by Jan. 1, 2007. Each year, the SGR has contributed to a decrease in payments; in 2007, that cut will be 5.1% (see “Medicare Proposes 5.1% Physician Pay Cut in 2007,” p. 6). Rep. Burgess is proposing to tie physician fees to one factor only: the Medicare Economic Index minus 1%. According to Rep. Burgess, this places “more value on actual cost inputs.” The bill also would delay by 1 year proposed imaging payment cuts, and require the Institute of Medicine to study whether imaging saves money. The American Medical Association called the Medicare Physician Payment Reform Bill and Quality Improvement Act of 2006 an “important step toward replacing the flawed Medicare physician payment formula.” Rep. Burgess' bill is the third in the House to seek to delay or repeal the imaging fee cuts. Rep. Joseph Pitts (R-Pa.) has called for a 2-year delay in H.R. 5704. A similar bill was recently introduced in the Senate by Gordon Smith (R-Ore.) and Jay Rockefeller (D-W.Va.).

Unique IDs for Medical Devices?

The Food and Drug Administration is seeking comments on how to create unique identifiers for medical devices and whether such a system might reduce errors or help improve adverse event reporting and make withdrawals easier. The agency has held several meetings with interested parties, but still has not proposed any requirements—even though in a final rule in 2004 it said it will require all pharmaceuticals to include identifying bar codes. According to an FDA statement, any input it receives during the 90-day comment period, which ends in early November, will help “determine what next steps the agency should take” on devices. An identifier might include the manufacturer; make and model; size, length, and software version; lot number; and expiration date.

Senate Bill to Boost Drug Safety

After months of public discourse, Sen. Edward Kennedy (D-Mass.) and Sen. Mike Enzi (R-Wyo.) have introduced a bill that aims to increase assurances that drugs are safe before they reach the market, or at least that there is a plan in place to more closely monitor when they need to be withdrawn. The Enhancing Drug Safety and Innovation Act would require pharmaceutical manufacturers to be more proactive. Companies would have to establish risk evaluation and management strategies that would be agreed upon by the manufacturer and the FDA before the product is approved. The companies would have to submit adverse event reports every 15 days, quarterly, and annually. If a company knowingly fails to comply with the agreed-upon strategy, the FDA could impose monetary penalties. The Senators also proposed that manufacturers make clinical trial results public. Fuller disclosure “will help patients and their health care providers make better informed decisions about treatment,” Sen. Kennedy said in a statement. Finally, the bill would overhaul the FDA's process for vetting outside advisory panel members, with a goal of minimizing conflicts of interest and then ensuring that they are fully disclosed.

Poll: Live Unhealthy, Pay the Price

More than half of respondents to a Wall Street Journal/Harris Interactive poll say that people who smoke or choose not to wear seat belts should pay a higher health insurance premium than people who don't engage in those behaviors, but most people did not feel the same way about people who were overweight or didn't exercise enough. Only 27% of the poll's 2,200 respondents thought that overweight people should pay more for insurance than slimmer people; the same percentage favored having people who did not exercise regularly pay more. Respondents with some college education were more likely to agree that those with unhealthy lifestyles should pay higher premiums, compared with respondents with a high school education or less. The poll had a 3.3% margin of error.

CMS Unveils 2007 Imaging Rates

As part of a its physician fee schedule proposal for 2007, the Centers for Medicare and Medicaid Services also has detailed how much it will pay for certain imaging procedures next year. In 2007, the CMS is proposing to pay in full for the first of multiple images on contiguous body parts, but to cut the payment by 25% for subsequent images. The cut is not as large as had been anticipated: Last year, the agency projected second images would be reduced by 50%. The CMS also is proposing to limit the technical component payment to the outpatient department payment. This is mandated by the Deficit Reduction Act, enacted in February.

Fix SGR, Delay Imaging Cuts

Several members of Congress attempted to head off the CMs' proposals just before the August recess. A bill (H.R. 5866) by Rep. Michael Burgess (R-Tex.) would put an end to physician fee cuts under Medicare by halting application of the sustainable growth rate by Jan. 1, 2007. Each year, the SGR has contributed to a decrease in payments; in 2007, that cut will be 5.1% (see “Medicare Proposes 5.1% Physician Pay Cut in 2007,” p. 6). Rep. Burgess is proposing to tie physician fees to one factor only: the Medicare Economic Index minus 1%. According to Rep. Burgess, this places “more value on actual cost inputs.” The bill also would delay by 1 year proposed imaging payment cuts, and require the Institute of Medicine to study whether imaging saves money. The American Medical Association called the Medicare Physician Payment Reform Bill and Quality Improvement Act of 2006 an “important step toward replacing the flawed Medicare physician payment formula.” Rep. Burgess' bill is the third in the House to seek to delay or repeal the imaging fee cuts. Rep. Joseph Pitts (R-Pa.) has called for a 2-year delay in H.R. 5704. A similar bill was recently introduced in the Senate by Gordon Smith (R-Ore.) and Jay Rockefeller (D-W.Va.).

Unique IDs for Medical Devices?

The Food and Drug Administration is seeking comments on how to create unique identifiers for medical devices and whether such a system might reduce errors or help improve adverse event reporting and make withdrawals easier. The agency has held several meetings with interested parties, but still has not proposed any requirements—even though in a final rule in 2004 it said it will require all pharmaceuticals to include identifying bar codes. According to an FDA statement, any input it receives during the 90-day comment period, which ends in early November, will help “determine what next steps the agency should take” on devices. An identifier might include the manufacturer; make and model; size, length, and software version; lot number; and expiration date.

Senate Bill to Boost Drug Safety

After months of public discourse, Sen. Edward Kennedy (D-Mass.) and Sen. Mike Enzi (R-Wyo.) have introduced a bill that aims to increase assurances that drugs are safe before they reach the market, or at least that there is a plan in place to more closely monitor when they need to be withdrawn. The Enhancing Drug Safety and Innovation Act would require pharmaceutical manufacturers to be more proactive. Companies would have to establish risk evaluation and management strategies that would be agreed upon by the manufacturer and the FDA before the product is approved. The companies would have to submit adverse event reports every 15 days, quarterly, and annually. If a company knowingly fails to comply with the agreed-upon strategy, the FDA could impose monetary penalties. The Senators also proposed that manufacturers make clinical trial results public. Fuller disclosure “will help patients and their health care providers make better informed decisions about treatment,” Sen. Kennedy said in a statement. Finally, the bill would overhaul the FDA's process for vetting outside advisory panel members, with a goal of minimizing conflicts of interest and then ensuring that they are fully disclosed.

Poll: Live Unhealthy, Pay the Price

More than half of respondents to a Wall Street Journal/Harris Interactive poll say that people who smoke or choose not to wear seat belts should pay a higher health insurance premium than people who don't engage in those behaviors, but most people did not feel the same way about people who were overweight or didn't exercise enough. Only 27% of the poll's 2,200 respondents thought that overweight people should pay more for insurance than slimmer people; the same percentage favored having people who did not exercise regularly pay more. Respondents with some college education were more likely to agree that those with unhealthy lifestyles should pay higher premiums, compared with respondents with a high school education or less. The poll had a 3.3% margin of error.

CMS Unveils 2007 Imaging Rates

As part of a its physician fee schedule proposal for 2007, the Centers for Medicare and Medicaid Services also has detailed how much it will pay for certain imaging procedures next year. In 2007, the CMS is proposing to pay in full for the first of multiple images on contiguous body parts, but to cut the payment by 25% for subsequent images. The cut is not as large as had been anticipated: Last year, the agency projected second images would be reduced by 50%. The CMS also is proposing to limit the technical component payment to the outpatient department payment. This is mandated by the Deficit Reduction Act, enacted in February.

Fix SGR, Delay Imaging Cuts

Several members of Congress attempted to head off the CMs' proposals just before the August recess. A bill (H.R. 5866) by Rep. Michael Burgess (R-Tex.) would put an end to physician fee cuts under Medicare by halting application of the sustainable growth rate by Jan. 1, 2007. Each year, the SGR has contributed to a decrease in payments; in 2007, that cut will be 5.1% (see “Medicare Proposes 5.1% Physician Pay Cut in 2007,” p. 6). Rep. Burgess is proposing to tie physician fees to one factor only: the Medicare Economic Index minus 1%. According to Rep. Burgess, this places “more value on actual cost inputs.” The bill also would delay by 1 year proposed imaging payment cuts, and require the Institute of Medicine to study whether imaging saves money. The American Medical Association called the Medicare Physician Payment Reform Bill and Quality Improvement Act of 2006 an “important step toward replacing the flawed Medicare physician payment formula.” Rep. Burgess' bill is the third in the House to seek to delay or repeal the imaging fee cuts. Rep. Joseph Pitts (R-Pa.) has called for a 2-year delay in H.R. 5704. A similar bill was recently introduced in the Senate by Gordon Smith (R-Ore.) and Jay Rockefeller (D-W.Va.).

Unique IDs for Medical Devices?

The Food and Drug Administration is seeking comments on how to create unique identifiers for medical devices and whether such a system might reduce errors or help improve adverse event reporting and make withdrawals easier. The agency has held several meetings with interested parties, but still has not proposed any requirements—even though in a final rule in 2004 it said it will require all pharmaceuticals to include identifying bar codes. According to an FDA statement, any input it receives during the 90-day comment period, which ends in early November, will help “determine what next steps the agency should take” on devices. An identifier might include the manufacturer; make and model; size, length, and software version; lot number; and expiration date.

Senate Bill to Boost Drug Safety

After months of public discourse, Sen. Edward Kennedy (D-Mass.) and Sen. Mike Enzi (R-Wyo.) have introduced a bill that aims to increase assurances that drugs are safe before they reach the market, or at least that there is a plan in place to more closely monitor when they need to be withdrawn. The Enhancing Drug Safety and Innovation Act would require pharmaceutical manufacturers to be more proactive. Companies would have to establish risk evaluation and management strategies that would be agreed upon by the manufacturer and the FDA before the product is approved. The companies would have to submit adverse event reports every 15 days, quarterly, and annually. If a company knowingly fails to comply with the agreed-upon strategy, the FDA could impose monetary penalties. The Senators also proposed that manufacturers make clinical trial results public. Fuller disclosure “will help patients and their health care providers make better informed decisions about treatment,” Sen. Kennedy said in a statement. Finally, the bill would overhaul the FDA's process for vetting outside advisory panel members, with a goal of minimizing conflicts of interest and then ensuring that they are fully disclosed.

Poll: Live Unhealthy, Pay the Price

More than half of respondents to a Wall Street Journal/Harris Interactive poll say that people who smoke or choose not to wear seat belts should pay a higher health insurance premium than people who don't engage in those behaviors, but most people did not feel the same way about people who were overweight or didn't exercise enough. Only 27% of the poll's 2,200 respondents thought that overweight people should pay more for insurance than slimmer people; the same percentage favored having people who did not exercise regularly pay more. Respondents with some college education were more likely to agree that those with unhealthy lifestyles should pay higher premiums, compared with respondents with a high school education or less. The poll had a 3.3% margin of error.

The Centers for Medicare and Medicaid Services has allowed the moratorium on physician-owned specialty hospitals to expire, which means that those facilities—whether old or new—again can receive federal reimbursement.

However, in its report to Congress that ended the moratorium, CMS said that ownership arrangements at the facilities—which offer specialized care in the cardiac, surgical, and orthopedic areas—warrant more federal scrutiny.

The moratorium began in 2003; from late that year until June 2005, specialty hospitals could open and receive a Medicare provider number, but physician-owners could not bill for services for Medicare beneficiaries they referred to the facilities. Hospitals also were prohibited from increasing the number of physician investors or the number of beds or changing the kind of services provided.

The moratorium was essentially extended in mid-2005, when no new hospitals were allowed to enroll in Medicare. In the meantime, Congress directed CMS to study the hospitals' financial arrangements and provision of charity care and report back by last Aug. 8.

The final report “provides a comprehensive path forward to address the concerns that have been raised,” said CMS Administrator Mark McClellan at a press conference sponsored by CMS.

Now, specialty hospitals may receive Medicare payments provided they meet certain criteria outlined in the CMS report.

The report, combined with new proposals governing inpatient, outpatient, and ambulatory surgery center payments, “should put an end to the debate over specialty hospitals,” said Randy Fenninger, Washington representative for the American Surgical Hospital Association, an organization of specialty hospitals.

But, the American Hospital Association and the Federation of American Hospitals said the report shows that specialty-oriented facilities are skirting the law. Both organizations said CMS found evidence that specialty hospitals are soliciting physician-investors who can refer a high volume of patients.

For instance, CMS reported that cardiac hospitals always offered the same payment terms to noninvestor and investor physicians, but that orthopedic and surgical hospitals offered noninvestors a lesser rate. According to a CMS statement, “Although not explicitly given by the hospitals as a criterion for selecting investors, it appears that the volume of referrals and revenue generated may have been a critical factor for some hospitals in determining which physicians were permitted to invest.”

Mary Beth Savary Taylor, vice president for executive branch relations at the AHA, said, “More action is needed to really take a look at conflict of interest when physicians own and refer patients [to a facility].” She added that AHA believes that “physician referrals to limited-service hospitals should be banned.”

“The CMS plan includes some potentially promising initiatives, such as increasing enforcement scrutiny, but it falls short by not addressing the core issue of conflict of interest,” said the Federation of American Hospitals in a statement.

The CMS report is based on a survey of 130 specialty hospitals and 270 general acute care competitor hospitals.

While the response rate overall was good, there was a lack of full participation in many areas. Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) wrote to CMS just before the report was issued to complain about the paucity of responses. After the report's release, they said they would still seek more data. “I'm concerned that a survey of just 140 facilities was used to develop policy for the roughly 4,000 hospitals reimbursed by Medicare,” said Sen. Baucus in a statement.

The senators are cosponsors of the Hospital Fair Competition Act of 2005 (S. 1002), which they said will “rein in the growth of physician-owned specialty hospitals.”

In the survey, specialty hospitals were asked, for instance, to report on returns on physician investment. CMS found that among the hospitals that responded, the returns overall were proportionate to investment. But, said CMS, only 47% of the hospitals surveyed responded to this question.

The agency said it considers nonproportional returns to be violations of physician self-referral and antikickback laws, and that it would go after suspect arrangements.

Some hospitals are already being disciplined for violations under the moratorium. CMS said that four hospitals improperly sought Medicare reim- bursement for patients who had been referred by physicians who had an ownership interest in the hospital, resulting in an overpayment of $12.1 million. The agency is seeking repayment of those funds.

In the report, CMS also said it would require all hospitals to disclose compensation arrangements and the fact that physicians are investors. Hospitals that did not fully respond to the survey will be the first to receive forms seeking such disclosures. If they don't respond in a timely manner, they will be fined up to $10,000 a day.

Also, CMS clarified that all hospitals, including specialty hospitals—even if they don't have an emergency department—will be required to comply with the transfer provisions of the Emergency Medical Treatment and Labor Act. That means they must accept transfers and provide emergency services for patients, regardless of their ability to pay.

Mr. Fenninger said specialty hospitals were in agreement with this provision.

As expected, CMS found that specialty hospitals provide less charity care than acute care hospitals do—an average 4% for cardiac hospitals, 1% for orthopedic hospitals, and 0.2% for surgical hospitals in fiscal 2004 and 2005, compared with 8% for general facilities.

Again, Mr. Fenninger said this was not surprising, claiming that most specialty hospitals were in geographic areas that did not serve many charity care cases.

CMS agreed that there might be extenuating circumstances, and pointed out that “the profile of services offered by specialty hospitals may contribute to the differences in patient mix.” The agency said that Congress should consider whether further reforms are needed to ensure greater delivery of charity care by the facilities.

Dr. McClellan said the report should not be seen as a signal that the federal government would stop monitoring physician-owned facilities.

“When it comes to enforcing the requirements of the law when it comes to specialty hospitals, we mean it and we're going to do it,” he said.

The Centers for Medicare and Medicaid Services has allowed the moratorium on physician-owned specialty hospitals to expire, which means that those facilities—whether old or new—again can receive federal reimbursement.

However, in its report to Congress that ended the moratorium, CMS said that ownership arrangements at the facilities—which offer specialized care in the cardiac, surgical, and orthopedic areas—warrant more federal scrutiny.

The moratorium began in 2003; from late that year until June 2005, specialty hospitals could open and receive a Medicare provider number, but physician-owners could not bill for services for Medicare beneficiaries they referred to the facilities. Hospitals also were prohibited from increasing the number of physician investors or the number of beds or changing the kind of services provided.

The moratorium was essentially extended in mid-2005, when no new hospitals were allowed to enroll in Medicare. In the meantime, Congress directed CMS to study the hospitals' financial arrangements and provision of charity care and report back by last Aug. 8.

The final report “provides a comprehensive path forward to address the concerns that have been raised,” said CMS Administrator Mark McClellan at a press conference sponsored by CMS.

Now, specialty hospitals may receive Medicare payments provided they meet certain criteria outlined in the CMS report.

The report, combined with new proposals governing inpatient, outpatient, and ambulatory surgery center payments, “should put an end to the debate over specialty hospitals,” said Randy Fenninger, Washington representative for the American Surgical Hospital Association, an organization of specialty hospitals.

But, the American Hospital Association and the Federation of American Hospitals said the report shows that specialty-oriented facilities are skirting the law. Both organizations said CMS found evidence that specialty hospitals are soliciting physician-investors who can refer a high volume of patients.

For instance, CMS reported that cardiac hospitals always offered the same payment terms to noninvestor and investor physicians, but that orthopedic and surgical hospitals offered noninvestors a lesser rate. According to a CMS statement, “Although not explicitly given by the hospitals as a criterion for selecting investors, it appears that the volume of referrals and revenue generated may have been a critical factor for some hospitals in determining which physicians were permitted to invest.”

Mary Beth Savary Taylor, vice president for executive branch relations at the AHA, said, “More action is needed to really take a look at conflict of interest when physicians own and refer patients [to a facility].” She added that AHA believes that “physician referrals to limited-service hospitals should be banned.”

“The CMS plan includes some potentially promising initiatives, such as increasing enforcement scrutiny, but it falls short by not addressing the core issue of conflict of interest,” said the Federation of American Hospitals in a statement.

The CMS report is based on a survey of 130 specialty hospitals and 270 general acute care competitor hospitals.

While the response rate overall was good, there was a lack of full participation in many areas. Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) wrote to CMS just before the report was issued to complain about the paucity of responses. After the report's release, they said they would still seek more data. “I'm concerned that a survey of just 140 facilities was used to develop policy for the roughly 4,000 hospitals reimbursed by Medicare,” said Sen. Baucus in a statement.

The senators are cosponsors of the Hospital Fair Competition Act of 2005 (S. 1002), which they said will “rein in the growth of physician-owned specialty hospitals.”

In the survey, specialty hospitals were asked, for instance, to report on returns on physician investment. CMS found that among the hospitals that responded, the returns overall were proportionate to investment. But, said CMS, only 47% of the hospitals surveyed responded to this question.

The agency said it considers nonproportional returns to be violations of physician self-referral and antikickback laws, and that it would go after suspect arrangements.

Some hospitals are already being disciplined for violations under the moratorium. CMS said that four hospitals improperly sought Medicare reim- bursement for patients who had been referred by physicians who had an ownership interest in the hospital, resulting in an overpayment of $12.1 million. The agency is seeking repayment of those funds.

In the report, CMS also said it would require all hospitals to disclose compensation arrangements and the fact that physicians are investors. Hospitals that did not fully respond to the survey will be the first to receive forms seeking such disclosures. If they don't respond in a timely manner, they will be fined up to $10,000 a day.

Also, CMS clarified that all hospitals, including specialty hospitals—even if they don't have an emergency department—will be required to comply with the transfer provisions of the Emergency Medical Treatment and Labor Act. That means they must accept transfers and provide emergency services for patients, regardless of their ability to pay.

Mr. Fenninger said specialty hospitals were in agreement with this provision.

As expected, CMS found that specialty hospitals provide less charity care than acute care hospitals do—an average 4% for cardiac hospitals, 1% for orthopedic hospitals, and 0.2% for surgical hospitals in fiscal 2004 and 2005, compared with 8% for general facilities.

Again, Mr. Fenninger said this was not surprising, claiming that most specialty hospitals were in geographic areas that did not serve many charity care cases.

CMS agreed that there might be extenuating circumstances, and pointed out that “the profile of services offered by specialty hospitals may contribute to the differences in patient mix.” The agency said that Congress should consider whether further reforms are needed to ensure greater delivery of charity care by the facilities.

Dr. McClellan said the report should not be seen as a signal that the federal government would stop monitoring physician-owned facilities.

“When it comes to enforcing the requirements of the law when it comes to specialty hospitals, we mean it and we're going to do it,” he said.

The Centers for Medicare and Medicaid Services has allowed the moratorium on physician-owned specialty hospitals to expire, which means that those facilities—whether old or new—again can receive federal reimbursement.

However, in its report to Congress that ended the moratorium, CMS said that ownership arrangements at the facilities—which offer specialized care in the cardiac, surgical, and orthopedic areas—warrant more federal scrutiny.

The moratorium began in 2003; from late that year until June 2005, specialty hospitals could open and receive a Medicare provider number, but physician-owners could not bill for services for Medicare beneficiaries they referred to the facilities. Hospitals also were prohibited from increasing the number of physician investors or the number of beds or changing the kind of services provided.

The moratorium was essentially extended in mid-2005, when no new hospitals were allowed to enroll in Medicare. In the meantime, Congress directed CMS to study the hospitals' financial arrangements and provision of charity care and report back by last Aug. 8.

The final report “provides a comprehensive path forward to address the concerns that have been raised,” said CMS Administrator Mark McClellan at a press conference sponsored by CMS.

Now, specialty hospitals may receive Medicare payments provided they meet certain criteria outlined in the CMS report.

The report, combined with new proposals governing inpatient, outpatient, and ambulatory surgery center payments, “should put an end to the debate over specialty hospitals,” said Randy Fenninger, Washington representative for the American Surgical Hospital Association, an organization of specialty hospitals.

But, the American Hospital Association and the Federation of American Hospitals said the report shows that specialty-oriented facilities are skirting the law. Both organizations said CMS found evidence that specialty hospitals are soliciting physician-investors who can refer a high volume of patients.

For instance, CMS reported that cardiac hospitals always offered the same payment terms to noninvestor and investor physicians, but that orthopedic and surgical hospitals offered noninvestors a lesser rate. According to a CMS statement, “Although not explicitly given by the hospitals as a criterion for selecting investors, it appears that the volume of referrals and revenue generated may have been a critical factor for some hospitals in determining which physicians were permitted to invest.”

Mary Beth Savary Taylor, vice president for executive branch relations at the AHA, said, “More action is needed to really take a look at conflict of interest when physicians own and refer patients [to a facility].” She added that AHA believes that “physician referrals to limited-service hospitals should be banned.”

“The CMS plan includes some potentially promising initiatives, such as increasing enforcement scrutiny, but it falls short by not addressing the core issue of conflict of interest,” said the Federation of American Hospitals in a statement.

The CMS report is based on a survey of 130 specialty hospitals and 270 general acute care competitor hospitals.

While the response rate overall was good, there was a lack of full participation in many areas. Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) wrote to CMS just before the report was issued to complain about the paucity of responses. After the report's release, they said they would still seek more data. “I'm concerned that a survey of just 140 facilities was used to develop policy for the roughly 4,000 hospitals reimbursed by Medicare,” said Sen. Baucus in a statement.

The senators are cosponsors of the Hospital Fair Competition Act of 2005 (S. 1002), which they said will “rein in the growth of physician-owned specialty hospitals.”

In the survey, specialty hospitals were asked, for instance, to report on returns on physician investment. CMS found that among the hospitals that responded, the returns overall were proportionate to investment. But, said CMS, only 47% of the hospitals surveyed responded to this question.

The agency said it considers nonproportional returns to be violations of physician self-referral and antikickback laws, and that it would go after suspect arrangements.

Some hospitals are already being disciplined for violations under the moratorium. CMS said that four hospitals improperly sought Medicare reim- bursement for patients who had been referred by physicians who had an ownership interest in the hospital, resulting in an overpayment of $12.1 million. The agency is seeking repayment of those funds.

In the report, CMS also said it would require all hospitals to disclose compensation arrangements and the fact that physicians are investors. Hospitals that did not fully respond to the survey will be the first to receive forms seeking such disclosures. If they don't respond in a timely manner, they will be fined up to $10,000 a day.

Also, CMS clarified that all hospitals, including specialty hospitals—even if they don't have an emergency department—will be required to comply with the transfer provisions of the Emergency Medical Treatment and Labor Act. That means they must accept transfers and provide emergency services for patients, regardless of their ability to pay.

Mr. Fenninger said specialty hospitals were in agreement with this provision.

As expected, CMS found that specialty hospitals provide less charity care than acute care hospitals do—an average 4% for cardiac hospitals, 1% for orthopedic hospitals, and 0.2% for surgical hospitals in fiscal 2004 and 2005, compared with 8% for general facilities.

Again, Mr. Fenninger said this was not surprising, claiming that most specialty hospitals were in geographic areas that did not serve many charity care cases.

CMS agreed that there might be extenuating circumstances, and pointed out that “the profile of services offered by specialty hospitals may contribute to the differences in patient mix.” The agency said that Congress should consider whether further reforms are needed to ensure greater delivery of charity care by the facilities.

Dr. McClellan said the report should not be seen as a signal that the federal government would stop monitoring physician-owned facilities.

“When it comes to enforcing the requirements of the law when it comes to specialty hospitals, we mean it and we're going to do it,” he said.

Hospitals and medical device makers have escaped deep cuts that had been proposed by Medicare for procedures such as implanting drug-eluting stents, defibrillators, and pacemakers.

The fiscal 2007 Inpatient Prospective Payment System final rule “is the most important reform for hospital payment in decades,” said Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan at a press conference sponsored by CMS.

The rule marks a return to a cost-based system, but no longer contains the drastic cuts first proposed for many procedures—33% for drug-eluting stents, 24% for implantable cardioverter defibrillators (ICDs), 15% for pacemakers, and 28% for ablations.

As such, it marks a victory of sorts for physicians' and hospital organizations and medical device makers. Such groups had voiced concern that the rule, as first proposed, would likely reduce access to many cardiac and orthopedic procedures because the reductions in reimbursement were so severe.

The American Hospital Association and the Federation of American Hospitals worried that the impact would be too much too soon, and—along with the medical-device industry group AdvaMed—called for at least a 1-year delay in implementation of the rule.

During the press briefing, Dr. McClellan said that CMS did not feel a delay was necessary. The agency took everyone's concerns into account, and instead decided to phase in the changes first proposed in April, he said.

Overall, Medicare will increase payment rates by 3.5% on average, for an increase of $3.4 billion. Cardiac specialty hospitals will receive a slightly lower boost—1.2% on average—in an effort to make payments more accurate, according to CMS.

And, answering critics, CMS will use cost reports from fiscal 2004—instead of fiscal 2003—for its 2007 payment calculations. Surgeons and device makers had noted that some devices, such as drug-eluting stents, had just barely hit the market in 2003.

The agency also is embarking on an overhaul of the diagnosis-related groups by creating 20 new DRGs and modifying 32 existing DRGs in 2007 to more accurately adjust for patients' severity of illness. By 2008, CMS hopes to have a new severity evaluation method; it is seeking input from outside contractors starting in September, said Dr. McClellan. After a report, the agency will take public comment before making changes for 2008.

Finally, hospitals that report on the 20 Hospital Quality Alliance-approved quality measures to the agency for posting on its Hospital Compare Web site will receive a full market basket increase in their payment rates.

Hospital and physician groups reacted positively. “We're gratified actually by the changes that have been made in the final rule,” said Dwight W. Reynolds, president of the Heart Rhythm Society, in an interview. For example, ICDs are scheduled for only a 2% cut in 2007, compared with 24%. Further, the society is more comfortable with how payments are being calculated: “No one likes to see reductions, but these are much more manageable for the hospitals than the ones proposed in the draft.”

AdvaMed also pronounced itself gratified, especially with the phase-in, according to a statement by president and CEO Stephen J. Ubl.

The rule addressed most of the AHA's concerns, but the organization was not entirely satisfied, said Rick Pollack, executive vice president, in a statement. “While we continue to believe a 1-year delay is needed given the rule's complexity, we are committed to working with CMS to ensure any needed changes are addressed in future years.”

Hospitals and medical device makers have escaped deep cuts that had been proposed by Medicare for procedures such as implanting drug-eluting stents, defibrillators, and pacemakers.

The fiscal 2007 Inpatient Prospective Payment System final rule “is the most important reform for hospital payment in decades,” said Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan at a press conference sponsored by CMS.

The rule marks a return to a cost-based system, but no longer contains the drastic cuts first proposed for many procedures—33% for drug-eluting stents, 24% for implantable cardioverter defibrillators (ICDs), 15% for pacemakers, and 28% for ablations.

As such, it marks a victory of sorts for physicians' and hospital organizations and medical device makers. Such groups had voiced concern that the rule, as first proposed, would likely reduce access to many cardiac and orthopedic procedures because the reductions in reimbursement were so severe.

The American Hospital Association and the Federation of American Hospitals worried that the impact would be too much too soon, and—along with the medical-device industry group AdvaMed—called for at least a 1-year delay in implementation of the rule.

During the press briefing, Dr. McClellan said that CMS did not feel a delay was necessary. The agency took everyone's concerns into account, and instead decided to phase in the changes first proposed in April, he said.

Overall, Medicare will increase payment rates by 3.5% on average, for an increase of $3.4 billion. Cardiac specialty hospitals will receive a slightly lower boost—1.2% on average—in an effort to make payments more accurate, according to CMS.

And, answering critics, CMS will use cost reports from fiscal 2004—instead of fiscal 2003—for its 2007 payment calculations. Surgeons and device makers had noted that some devices, such as drug-eluting stents, had just barely hit the market in 2003.

The agency also is embarking on an overhaul of the diagnosis-related groups by creating 20 new DRGs and modifying 32 existing DRGs in 2007 to more accurately adjust for patients' severity of illness. By 2008, CMS hopes to have a new severity evaluation method; it is seeking input from outside contractors starting in September, said Dr. McClellan. After a report, the agency will take public comment before making changes for 2008.

Finally, hospitals that report on the 20 Hospital Quality Alliance-approved quality measures to the agency for posting on its Hospital Compare Web site will receive a full market basket increase in their payment rates.

Hospital and physician groups reacted positively. “We're gratified actually by the changes that have been made in the final rule,” said Dwight W. Reynolds, president of the Heart Rhythm Society, in an interview. For example, ICDs are scheduled for only a 2% cut in 2007, compared with 24%. Further, the society is more comfortable with how payments are being calculated: “No one likes to see reductions, but these are much more manageable for the hospitals than the ones proposed in the draft.”

AdvaMed also pronounced itself gratified, especially with the phase-in, according to a statement by president and CEO Stephen J. Ubl.

The rule addressed most of the AHA's concerns, but the organization was not entirely satisfied, said Rick Pollack, executive vice president, in a statement. “While we continue to believe a 1-year delay is needed given the rule's complexity, we are committed to working with CMS to ensure any needed changes are addressed in future years.”

Hospitals and medical device makers have escaped deep cuts that had been proposed by Medicare for procedures such as implanting drug-eluting stents, defibrillators, and pacemakers.

The fiscal 2007 Inpatient Prospective Payment System final rule “is the most important reform for hospital payment in decades,” said Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan at a press conference sponsored by CMS.

The rule marks a return to a cost-based system, but no longer contains the drastic cuts first proposed for many procedures—33% for drug-eluting stents, 24% for implantable cardioverter defibrillators (ICDs), 15% for pacemakers, and 28% for ablations.

As such, it marks a victory of sorts for physicians' and hospital organizations and medical device makers. Such groups had voiced concern that the rule, as first proposed, would likely reduce access to many cardiac and orthopedic procedures because the reductions in reimbursement were so severe.

The American Hospital Association and the Federation of American Hospitals worried that the impact would be too much too soon, and—along with the medical-device industry group AdvaMed—called for at least a 1-year delay in implementation of the rule.

During the press briefing, Dr. McClellan said that CMS did not feel a delay was necessary. The agency took everyone's concerns into account, and instead decided to phase in the changes first proposed in April, he said.

Overall, Medicare will increase payment rates by 3.5% on average, for an increase of $3.4 billion. Cardiac specialty hospitals will receive a slightly lower boost—1.2% on average—in an effort to make payments more accurate, according to CMS.

And, answering critics, CMS will use cost reports from fiscal 2004—instead of fiscal 2003—for its 2007 payment calculations. Surgeons and device makers had noted that some devices, such as drug-eluting stents, had just barely hit the market in 2003.

The agency also is embarking on an overhaul of the diagnosis-related groups by creating 20 new DRGs and modifying 32 existing DRGs in 2007 to more accurately adjust for patients' severity of illness. By 2008, CMS hopes to have a new severity evaluation method; it is seeking input from outside contractors starting in September, said Dr. McClellan. After a report, the agency will take public comment before making changes for 2008.

Finally, hospitals that report on the 20 Hospital Quality Alliance-approved quality measures to the agency for posting on its Hospital Compare Web site will receive a full market basket increase in their payment rates.

Hospital and physician groups reacted positively. “We're gratified actually by the changes that have been made in the final rule,” said Dwight W. Reynolds, president of the Heart Rhythm Society, in an interview. For example, ICDs are scheduled for only a 2% cut in 2007, compared with 24%. Further, the society is more comfortable with how payments are being calculated: “No one likes to see reductions, but these are much more manageable for the hospitals than the ones proposed in the draft.”

AdvaMed also pronounced itself gratified, especially with the phase-in, according to a statement by president and CEO Stephen J. Ubl.

The rule addressed most of the AHA's concerns, but the organization was not entirely satisfied, said Rick Pollack, executive vice president, in a statement. “While we continue to believe a 1-year delay is needed given the rule's complexity, we are committed to working with CMS to ensure any needed changes are addressed in future years.”