Universal Medicaid Managed Care in Kentucky: Month Five.

Long-term recommendations from the State Auditor, and a “Modest Proposal” from me.

Two days ago, Adam Edelen, Kentucky’s new Auditor of Public Accounts, began his term in office with a bang by releasing the results of his initial investigation of the performance of Kentucky’s four Medicaid managed care vendors. There is obviously a practical limit to the amount of information that can be collected and analyzed in a short time, and the Auditor’s office appropriately acknowledged this. Nonetheless, the results were consistent with anecdotal reports and legislative hearings, and were correspondingly very discouraging. The State Auditor offered suggestions in hopes of improving future services.

In early February, Mr. Edelen asked the Commonwealth’s four Medicaid Managed Care Organizations (MCOs) to provide his office with information from the months of November and December of 2011. He asked for basic statistics such as: the number of members served, the number of claims filed and paid, the dollar value of those claims, and the number and value of rejected claims with the reasons for rejection. (Note that we are only talking about two months.)

In a press release of February 29, the Auditor noted that the managed care organizations had received $708 million while paying out only 420 million as of February 15. That is a float of $288 million! Although there was plenty of criticism of the MCOs, the Auditor also shared some of the blame on the Cabinet which was said to have failed to learn the lessons of the difficult transition to Passport 14 years ago and was ill-prepared to monitor and enforce its contracts with the new MCOs. Continue reading “Universal Medicaid Managed Care in Kentucky: Month Five.”

UofL Meets Some Potential New Partners.

Pre-submission Conference for Request for Proposal RP-57-12
University of Louisville and University Medical Center, Inc.
Feb 28, 2012

Transitional Research Building

Investing In and Delivering Health Care Services, Education, and

Research in Conjunction with University of Louisville and University Medical Center

The University of Louisville and its Hospital have been seeking a new partner to help with their various diverse missions. I attended the Pre-Proposal Conference that was held today in UofL’s new, palatial, and seemingly unpopulated Transitional Research Building. This meeting is a requirement of Kentucky’s contracting and purchasing regulations. In addition to University folks that I recognized, there were perhaps 10 or 11 other individuals. The audience included representatives from Baptist, Norton, and KentuckyOne Health. There were two or three people whose affiliation was unknown to me. The meeting began with introductions of the 5 panel members from UofL and its Hospital: Attorney Glenn Bossmeyer, Dr. Gregory Postel, CEO James Taylor, Facilities VP Steve Amsler, and Asst. Purchasing Agent Curtis Monroe. (Mr. Amsler was previously Vice President for Facilities at Jewish Hospital/St. Mary’s. I cannot recall that he said anything at the conference. Neither did I recognize any questions asked by representatives of KentuckyOne.) Continue reading “UofL Meets Some Potential New Partners.”

Information About UofL and UMC Partner Search Requested

Can you help Public of Louisville understand what is happening with regard to the ongoing efforts of the University of Louisville and University Medical Center Inc. in their undiminished quest for a new partner before it it too late do anything about it?

Over the past few months, in our community and in this Policy Blog, there has been much discussion about the University of Louisville’s efforts to find a statewide partner for its clinical, teaching, and research programs.  Its first solution fell flat over issues of secrecy, intrusion of religious directives into academic and clinical life, giving away a public asset to a private corporation, and other substantial deficiencies.  Given the initial reactions by University officers, no one should be surprised that they are at it again.  A request for a proposal (RFP) has been filed seeking a new partner.  To my viewing, it looks like the RFP has been written for a single preferred responder, but you can judge for yourself.  Worst of all, the whole process is now cloaked in even more secrecy then the first go around.  There will be a total blackout until after the papers are signed.  There is no acknowledgment that the Governor or anyone else will have anything to say about it.  I would like to think that that is incorrect.  I doubt even the University would have the audacity to act against overwhelming concerns of the public it claims to be serving. However, I have yet to overestimate University’s chutzpah!

I have heard a number of things third-hand about how the University plans to rush this deal through to completion before the issue of whether or not University Medical Center Inc., is a private or public entity is settled in the courts.  I am therefore reluctant to repeat the information in this Policy Blog without corroboration.  If you have first-hand information about how UofL or UMC is proceeding, or if there is any continuing role of KentuckyOne Health in this saga, I hope you will contact me directly using the “Contact Us Link” in the right-sided panel of this page.  I am also interested in KentuckyOne Health’s plans for St. Mary’s Hospital.  Will it remain a hospital, or will its certificate of need be transferred to a new east-end facility as Norton did with the former Humana Southwest Hospital? I promise you, I will never reveal my sources.  If you wish, you may call me at the Institute’s number, 502.802.5092.  Feel free to contribute a comment here or elsewhere on the site..  Registration is not required.

The public deserves honesty and transparency.  Please help us to that end.

Peter Hasselbacher, M.D.
Feb 27, 2012

University Medical Center Inc., Ad Hoc Operations Review Committee Meets.

Background of Internal University Review.

Last January, the University of Louisville announced that it was forming its own Internal Review Committee for University Hospital. In large measure, this must have been in reaction to the increasing calls for an audit of the Hospital’s use of the QCCT fund for indigent medical care. Indeed, the Auditor of State Accounts had already announced he would perform such an audit. Surely the University and its Hospital must already know a great deal about its own finances. After all, having a handle on internal finances is part of the job of running a hospital. Furthermore, for several years the University had been preparing for a merger/acquisition for which both internal and external reviews by the potential partners would have been mandatory as part of due diligence. University leadership admits it knows enough about the Hospital’s finances to submit an RFP to take on a new partner. Nonetheless, there is nothing wrong with taking a fresh look at the way any business is being run. Good for them!

This new committee did not emerge in a vacuum however. The University is emerging from a period of intense criticism of the way it interacts with its community– indeed that criticism continues. In my opinion the committee’s formation at this time is also part of an intensive and comprehensive public relations effort to improve or at least paper over its image. I believe this is a major reason why the offer was made that the review committee’s meetings would be open to the public. That is a major reversal of the tactics used by the University when it tried to merge with Catholic Health Initiatives and Jewish Hospital/St. Mary’s. In those proceedings, the University attempted to operate in secrecy until the last minute when it was forced to reveal at least part of its plans. The community did not like those plans. We now have an opportunity to see if the University and its leadership have changed their spots. This jury of one is still out.

Summary of the first meeting continued below. Continue reading “University Medical Center Inc., Ad Hoc Operations Review Committee Meets.”

UofL and UMC File an RFP for a New Hospital Partner

The University of Louisville and University Medical Center Inc. seek a knight in shining armor to bail them out.

“Investing in and delivering healthcare services, education and research in conjunction with the University of Louisville and University Medical Center.”

The University of Louisville and University Medical Center, Inc. have jointly filed an RFP “to seek a business partner that will bring capabilities, experience, and commitment to include but not limited to: Critical Care, Facilities/Operations, Teaching/ Training and Research.

The following represents my initial thoughts as I read through the request for proposal (RFP) and the attached current Affiliation Agreement by which UMC operates University Hospital for the Commonwealth and the University. I apologize for typos and bad grammar. I am trading off timeliness for polish. I will attempt to clean it up in the days ahead. Because the timeline chosen by UMC and the University is deliberately and unduly brief, I would rather have something out there to work from then nothing at all.

Executive Summary
By way of an executive summary of my initial thoughts, shaped as they are by other recent events in our community, I offer the following.

The qualifications and criteria for judging responses to this RFP parallel exactly the justifications and solutions advanced at the time of the recently failed acquisition of University Hospital by Catholic Health Initiatives. I am having the feeling of déjà vu all over again. The extraordinarily short timeframe of action, together with the severely constricted avenues by which an external agency can gather information are not compatible with the due diligence that should be required of any third party not already intimately involved in the operation of the downtown medical center. The criteria for processing applications described in the RFP gives the University and UMC great leeway in whom they might select or refuse to consider. I cannot in my own mind come to any other conclusion than that this RFP was written solely with a single applicant in mind who has already signaled interest in close affiliation with University Hospital and with whom the structure of agreements has already been agreed. I cannot force the word, “sham,” from my thoughts. What a shame. I will be glad to be proven wrong.

The RFP process does not permit any public disclosure until after an agreement is signed. There is no recognition that any acceptance by the Commonwealth of Kentucky is required. The University of Louisville and UMC appear to have ignored any lessons they might have learned from the fiasco of last fall and winter. This community demanded the right to know what decisions were being made about their healthcare and by whom.

The rush to conclusion seems incongruous with the magnitude of the undertaking. I cannot personally ignore the conclusion that the haste is intended to allow documents to be signed before the Kentucky Appeals court has ruled on the issue of whether University Medical Inc. is a private entity free to do as it pleases, or whether it is an arm of the University and of the Commonwealth. What rational corporation would take on the responsibilities of this RFP without such determination made and finalized?

Many numbers are thrown out but fewer definitions and even fewer comparative data. An attempt is being made to compare our situation here in Louisville with other Academic centers around the country. This is justifiable and worthwhile, but cannot alone determine the direction our community should take. The current consultants to UMC have stressed that every medical center is different. We want ours to be different to. We want it to be better.

All the comments in this brief represent my personal opinions but I would like to think they are informed opinions. There is no one in Louisville more committed than I to the long-term survival of University Hospital as an ethical and excellent teaching facility, and for a healthcare support system for the underserved that is characterized by quality, dignity, and justice.

In my mind, the least positive implication of this rush to conclude a deal is that we will memorialize in stone for yet another generation, a segregated and second-class system of healthcare for those who do not qualify for mainstream medical services. The comments below are not mine, but I could not have expressed them better. A respected authority describes the system we have now in Louisville.

“If someone decides there are some hospitals in Louisville whose job it is to take care of the poor black and the marginalized and that it’s okay if they have to be kept waiting for a couple of weeks and it’s okay if the carpet is frayed, it’s okay if the phones don’t get answered, and it’s okay if the doctor is late, but there are other hospitals in Louisville where upper-class white people get taken care of by doctors who answer the phone on the first ring and smile a lot. There’s shag carpeting, and wood wainscoting on the wall. Was there a plebiscite … in Louisville where people voted and said they wanted to have segregated medical care? I don’t think so. But, there is a very strong theme that it’s okay for medical students and interns and residents to learn on poor people, but when you’re done, then you’ll be able to take care of private patients.”

Edward C. Halperin, MD
From: “Slave Medicine and the Banality of Evil.”
Gheens Foundation Lectureship,
University of Louisville School of Medicine, Feb 2, 2012

To participate in the above system of contemporary segregation is to participate in an evil.  I think it is time for a plebiscite in Louisville, and I trust that our citizens to favor a different set of priorities. Those decisions must not be made behind closed doors by a self-selected privileged few. The leadership of our University and our health care systems need to hear from all of us.

Peter Hasselbacher, MD

Analysis of RFP continued below. Continue reading “UofL and UMC File an RFP for a New Hospital Partner”

Kentucky Medicaid Still a Mess: Month 4

Primum non noccre.  First do no harm.

Attributed to Hippocrates, the above aphorism is often cited in discussions of medical ethics.  The fact is that it is impossible to practice medicine without causing some harm.  Nothing from taking a medical history to administering chemotherapy and everything in between is free of potential harm.  As in life, few things are simple and a ballance of risk and benefit is always made.  The aphorism should be rewritten as:

Primum minimus noccre.  First do the least harm.

I no longer see patients and have no first-hand experience with the new state-wide Medicaid Managed Care systems.  I can however still read, and it is clear that things are not going very well, at least if the testimony at Frankfort hearings is generalizable.  Some of the reports sound just plain awful.  I cannot conceive that a stable epileptic would have medicines dolled out two weeks at a time.  Is there a copay involved that would also double?

Managed care companies are charged with weeding out the unnecessary or poor quality medical care that physicians and other providers are unable or unwilling to tackle themselves.  I acknowledge and even applaud those efforts. Active managed care however is very difficult to do and requires cooperation from both patients and providers– cooperation that has never been in abundance.  As a result, managed care companies have evolved to depend more on things like preauthorizations, copays, formularies, and restricted payments.  Cynics will call this rationing by inconvenience.  Modern insurers are certainly practicing medicine in the sense that they are determining treatments or withholding them.  (Sometime they practice better than free-range doctors.)  All this micromanagement might trim medical expenditures, but it also increases overhead costs to both the insurer and the providers.  Where is the balance point?   If needed services are delayed, then the cost will be more than just in dollars.  I honestly do not know how much is really saved by managed care as it currently is practiced.  Perhaps not much at all.  It has never been shown to me that Passport (which provided good care) ever saved the state money.

What to do now?

I do not believe things will be sorted out quickly.  Not only are the systems all new to the state and providers, but also to patients who do not know what to expect.  An attempt to apply the full bore of managed care protocols that might have worked elsewhere to a new population was probably doomed to failure here, at least I think so.  What the state needs to do now is to signal the three new Medicaid companies to back off a little and apply their controls in a more gradual manner.  This will require that some money be allowed to flow into the system.  Don’t waste time trying to adjudicate bills from last November or you will never catch up.   The overbearing principal here is that sick people should be protected.  This will hurt the bottom lines of doctors, hospitals, pharmacies, insurance companies, and the state treasury.  This was never going to be easy or cheap. Real reforms are not going to me made by requiring long phone calls between doctor’s offices and drugstores to authorize prescriptions.  Effective reforms must be made in the entire medical marketplace, and not just in the market of the most vulnerable.  Bite the bullet and make a nationwide medical system that is a coherent whole, not one in which some benefit at the expense of others.   Any Medicaid problem will then melt away.  This will take more political courage and true professionalism than we have been able to manage up to now.  I am not optimistic.  In the meantime, do less harm.

Medicus quidem faciendum malum.

Peter Hasselbacher
Feb 24, 2012

How does UofL hospital compare to other hospitals?

Let’s look at some numbers.

The University of Louisville is going to try and make a case that it has unique requirements that will require additional non-patient revenue to fix. Specifically, they are asking for more state money, or alternatively, permission to partner with an outside business entity that is willing to give them more money. The claim will be made they are caring for a disproportionate share of nonpaying patients, and do not have enough profitable patients to subsidize the losses the way other hospitals do. This is a reasonable argument to make but it is an incomplete one. The University’s problem will not be fixed by money alone. There are a host of other issues that must be addressed simultaneously. I have begun to discuss these elsewhere.

There are 3502 acute care hospitals that participate in the Medicare program. Of these, 1047 are teaching hospitals, and 601 are large urban teaching hospitals like the University of Louisville Hospital. It would be easy for the University or its consultants to pick and choose hospitals to compare with that would bolster its case. Picking your own benchmarks is one way to make yourself look good, or in this case bad. Much of the University’s credibility will hinge on the choice of comparable institutions. Fortunately, there is an ocean of comparative data available that I believe helps put things in perspective and can provide a starting point for a broad-based study of our medical school and its principal teaching hospital. I will try to present such information on the Institute’s website. Such analysis often challenges popular wisdom.

For example, teaching hospitals get billions of dollars of special funding from Medicare (and Medicaid) solely because they have medical residents on their wards. These Direct and Indirect payments for Graduate Medical Education (interns and residents) increased substantially over the years as a result of effective lobbying. It was argued from the start that teaching hospitals deserve more money because they have extra expenses related to faculty salary, inefficiencies of care, and for other reasons that may or may not be relevant today. Federal analysts estimate that Medicare pays teaching hospitals twice as much for graduate medical education than the actual cost of those programs to the hospitals. Not to be denied, the teaching hospital lobby continues to argue that they are entitled to the extra money because of their disproportionate service to the poor. Is it in fact true that teaching hospitals take care of more of the poor than non-teaching hospitals? I was frankly surprised when my first attempt to find out showed that in fact, the proposition does not appear to be true. Continue reading “How does UofL hospital compare to other hospitals?”

The Cardiac Gloves Come Off!

Why is your heart the punching bag?

My cardiologist is just as good as yours.

On the way to my gym on Shelbyville Rd., I noticed a billboard advertising Baptist Health’s cardiology service.  It advises me that “some of the best cardiologists around don’t practice downtown.”  This, of course, is true.  The ad is an obvious riposte to some of the advertisements of downtown hospitals, one of which advised that for your best chance of surviving a heart attack, you should take the next exit.  If corporations are people, it is now getting personal!

It’s hard not to notice that our area hospitals advertise their cardiac services heavily.  Each one is said be the better for you, and amazingly, many can produce reports from external review organizations appearing to back up their assertions.  What is distinctly lacking, in my opinion, is objective evidence in the promotional material to support claims of excellence.  For most of the Fall and Spring of 2008-09, I drove several times a week past the sign (and the exit) on Interstate 65 that promised my best chance of surviving a heart attack.  I wondered on what basis the hospital could make such a claim.  When I learned that Medicare’s Hospital Compare was then calculating risk-adjusted mortality following heart attack, I had to check it out.  In fact, not only did the advertising hospital not have the best survival rate in the city, it had the lowest.  Nevertheless, the sign stayed up for many months.  Today the mortality rates have evened out, but is all such advertising so much puffery?  How are we to know?

Why are cardiology patients fought over?

It is not a state secret why cardiology, cancer, orthopedics, or neurosurgery are advertised so heavily by hospitals. These are among hospitals’ most profitable services. My former hospital lobbyist colleagues were quite open in admitting that cardiology services are overpaid by Medicare and other insurance companies.  According to the bank robber Willie Sutton’s law of medicine, that’s where the money is. I will say more about this in another post because an absence of profitable services is relevant to the financial difficulties of Louisville’s University Hospital.  In my opinion, the other downtown hospitals have helped to keep University Hospital in its place.

The Baptist billboard is clever, and reminds me of the series of billboard ads for hotdogs and whiskey also containing witty one-liners that we all chuckle at.  I would not be surprised if the same advertising agency was responsible for some of the medical ads as well. That is, a very depressing thought however.  At a time when food and dietary supplements are marketed as though they were medicines, medicine is marketed as though it was soap powder.  Are we really that gullible or so easy to manipulate?  I have already told you how I feel about the quality and ethics of some of these advertising campaigns.  If you believe everything you see and hear, you will be badly served. Continue reading “The Cardiac Gloves Come Off!”

University of Louisville Looking for New Hospital Partner, or an Old Flame?

No one who has corresponded with me believes that the University has given up its quest to be acquired by Catholic Health Initiatives. The Chairman of the Hospital’s Board of Trustees pointedly refused to answer a direct question on the matter. One correspondent at Jewish Hospital believes the institution is treading water until the University can jump in the pool. I have already commented on what I believe is the University’s strategy to present the governor with an offer he cannot refuse. Indeed, I am hearing secondhand that President Ramsey is telling supporters he will push this thing through. It certainly seems as though that is true.  (If you have first-hand knowledge, I would love to hear from you.)

Today, reporters Chris Kenning and Patrick Howington tell us about yesterday’s closed session of the Trustees of the University of Louisville giving its medical center permission to issue a request for proposals to seek a new partner. (I thought closed sessions weren’t allowed for this sort of thing? So much for transparency.) Recall that failure to follow state procurement rules was one of many criticisms of the Attorney General’s Office supporting the rejection of the first merger effort. The University appears to be doing some backfill work. I have not yet seen this RFP, but University officials are quoted as saying they are seeking a “health care entity with a statewide network and capital resources to help maintain the hospital teaching and indigent care missions.” It seems to me this will be very short list. I will not be surprised that the RFP is written so narrowly that there is only one entity on earth that will fit the bill. (That is what some unethical employers do when they want to hire a particular person but yet be seen as following the procedures of affirmative action employment.) No doubt I will be proven wrong and will apologize for expressing an erroneous opinion. In fact, it just occurred to me that I am dead wrong. The University of Kentucky with its statewide presence and deep well of state support could easily be an eligible entity. The more I think of it, the better the idea seems! Brilliant!!  (Of course there are also the Baptist and Norton systems.)

KentuckyOne Health told its physicians today that it has been aware (was anyone else?) of the process and believes that a “close working relationship with the University of Louisville School of Medicine and University Medical Center is important to our vision as an organization.” In fact they seem downright eager to respond to an RFP.

Shame on the University of Louisville for dragging its community through this monkey business all over again. Arrogance is a descriptor that comes to mind. Of course, if you know you will ultimately get your way, how you appear is of less consequence. There are many in our community who want to help the University and to protect our public hospital. The University is making it difficult for us to do so.

Peter Hasselbacher, MD
Feb 17, 2012


A printable PDF version of this post is available here.

University of Louisville’s Review of Its Hospital Operations.

And Who Will Take Care of the Poor?

One doesn’t ask of one who suffers: What is your country and what is your religion? One merely says, you suffer, That is enough for me. You belong to me and I shall help you.        Attributed to Louis Pasteur.

The Commonwealth of Kentucky once required hospitals and doctor’s offices to post the prices of their top 20 services. This was fair– hospitals were asking their patients how they expected to pay. The policy concept of disclosure was and is reasonable, but the results were embarrassing, unused, and perhaps not even helpful. Under pressure, the Commonwealth repealed the law after two years.

I suggest we would all feel better (and probably even be better) if we would post the above thesis instead. Why don’t we? Most or all of the doctors with whom I went to medical school would have echoed Pasteur at the time. I suspect most hospital administrators and their corporate boards also wish they could post Pasteur’s profession on their front doors. After all, the earliest hospitals were established almost entirely to serve the poor. The non-profit status of today’s hospitals stems from those charitable roots. The sad fact is that in our system, no single physician or hospital could stay in business if they actually tried to serve all who showed up on their doorstep. It takes a community effort. In Louisville, talk of indigent care usually focusses on University Hospital. Why is that, and should it?

Fitness of University Hospital to serve the poor.

Earlier this month, and under the sword of an examination by the State Auditor’s Office, the University of Louisville announced that it would review its hospital operations to address questions of the strengths and vulnerabilities that were raised during the debate over their proposed merger/acquisition by Catholic Health Initiatives. They will retain an outside consultant of their choosing and have named a 9 person review committee. We are told that the review will consider how University Hospital compares to other academic hospitals financially and in the amount of “indigent care” provided. The University obviously still has a partnership on its mind, but declined to answer a direct question of whether it had resumed discussions with the new KentuckyOne Health entity. [Of course it has!]

I credit the University folks for opening the planned meetings to the public, but it looks to me that they want to control what is discussed just as tightly as they did when they rolled out their campaign for last Fall’s failed merger. Faced with a truly independent outside audit, and still embroiled in the courts over their withholding of court-ordered documents, some damage control might be judged imperative. It is axiomatic in matters such as these, that if you can select the issues and define the vocabulary of the debate, you have won before you even start. The University wants this discussion to be about how many medically indigent patients they serve, and to convince us that all that is needed is more money from the state or elsewhere. One strategy that I see evolving, seeks to give the Governor and Attorney General’s offices the political cover needed to reverse their previous rejection of the CHI acquisition.  The University leadership has (1.) already demanded more money than they know the Commonwealth can provide, (2.) will claim that only more money will solve the problem, and then (3.) present once again a deal they still hope to make with Jewish Hospital and CHI, (now KentuckyHealth One).  This would be an incomplete victory. Continue reading “University of Louisville’s Review of Its Hospital Operations.”