News in Brief: Week of July 30-Aug 3

August 01, 2012 06:10 pm News Staff

This roundup includes the following news briefs:

CBO Releases New Cost Projections on Medicare Payment Patch

The cost of providing a one-year Medicare payment patch to block a 27 percent reduction in the Medicare physician payment rate on Jan. 1 would require offsets of $18.5 billion during the next 10 years, according to a Congressional Budget Office (CBO) scoring document( released in July.

The sustainable growth rate (SGR) formula CMS uses has called for steep cuts in the Medicare payment rate during the past several years, forcing Congress to step in, often at the last minute, to override the impending reductions. According to the CBO document, the cost of averting a 27 percent Medicare payment cut for the next two years would require offsets of $48 billion for the next nine years. Both estimates assume that Congress would hold Medicare physician payment rates at their current levels.

The cost of a Medicare payment patch represents the amount of money Congress would need to cut elsewhere in the budget to pay for a Medicare payment patch or the amount Congress would need to raise through taxes or federal spending cuts to finance a temporarily payment fix. Congress also could decide to grow its deficit spending.

Company Initiates Recall of Swabs Because of Contamination Fears

According to an FDA release(, DUKAL Corp. has announced a voluntary nationwide recall of selected lots of its OTC benzalkonium chloride swabs and antiseptic wipes.

The wipes, which are manufactured by Jianerkang Medical Dressing Co., are being recalled due to concerns about potential microbial contamination with Burkholderia cepacia. Customers are advised to discontinue use of products identified in this recall immediately because use could lead to infections, some of which pose certain health risks in immune-suppressed patients. The contaminated swabs are not likely to cause serious health risks in healthy individuals.

According to the FDA, no incidents have been reported, but DUKAL is recommending that all customers dispose of the product.

Adverse events that may be related to use of these products may be reported to MedWatch(, the FDA's Safety information and Adverse Event Reporting Program.

Report Documents Concentration of Health Care Spending

Five percent of the U.S. population accounts for nearly half of health care spending in the United States, and only 1 percent of the population makes up more than 20 percent of the nation's health care costs. This makes these two groups a "natural starting point when thinking about how to curb health care spending," says a new report( issued by the National Institute for Health Care Management.

The report, which is based on personal health care spending in 2009, found that the top 5 percent of spenders accounted for $623 billion in expenditures, or nearly $41,000 per patient. The top 1 percent of spenders accounted for $275 billion in health care costs in 2009.

"Data from 2009 reveal that the highest spenders are significantly older and in worse health," says the report. "Although people over age 64 comprise just 13 percent of the U.S. civilian population, they make up some 40 percent of those with the top 1 and 5 percent highest spending."

"The concentration of health care spending has several implications for health policy, particularly as we think about how to control overall spending for health services," says the study. "Targeting the highest spenders represents the greatest opportunity to have a significant impact on overall spending, but implementation of strategies directed at high spenders is challenging."

OIG Report Investigates Increase in High-level E/M Coding

HHS' Office of the Inspector General recently released a report examining the coding trends related to evaluation and management (E/M) services provided to Medicare beneficiaries by physicians and other health care professionals.

The report( details findings of a study showing that between 2001 and 2010, Medicare payments for Part B goods and services increased by 43 percent, thereby causing costs to skyrocket from $77 billion to $110 billion.

According to the report, during the same time period, physicians increased their billing of higher-level E/M codes in all types of E/M services. The report recommends that CMS continue to educate physicians on proper billing for E/M services, encourage Medicare contractors to review physicians' billing for E/M services, investigate physicians who bill higher-level E/M codes and take appropriate action when indicated.

HSC Raises Red Flag Regarding Small Business Move to Self-insurance

According to a new Issue Brief( released by the nonpartisan Center for Studying Health System Change (HSC), rising health insurance premiums and changing market dynamics are spurring small businesses -- particularly those with fewer than 100 employees -- to reject traditional health insurance coverage for employees in favor of self-insurance.

That's a problem, according to a July HSC press release(, because if more small businesses decide to self-insure, some health care reform goals, including strengthening consumer protections, could be undermined.

The brief, which is based on a qualitative study, also highlights concerns about adverse selection because policymakers fear that state-based insurance exchanges will include higher numbers of sicker-than-average people.

Self-insurance offers firms some advantages, such as lower costs, exemption from most state regulation and greater flexibility in benefit design. However, self-insured employers face fluctuation in the cost of health benefits, and that uncertainty increases proportionately as the size of a firm decreases because small businesses are more vulnerable to catastrophic medical costs incurred by just one or two employees.