December 30, 2012

by Chris Darling, Editor, Medical Practice Update 

I was helping an Internal Medicine physician with year-end cash-flow planning and 2013 budgeting on Friday when he asked me to succinctly and logically explain what is going on with the Medicare cuts.

The following article by Brendon Nafziger succinctly describes in 7 paragraphs what is going on with the Medicare cuts.

As for the logic, it evades me...


"Fiscal cliff gridlock could bring 29% Medicare cut to docs

by Brendon Nafziger, DOTmed News Associate Editor

The American Medical Association features a countdown timer prominently on its website, ticking off the seconds until the new year. But the society, which represents a quarter of the nation's doctors, is not simply being festive. It's warning about the hefty Medicare cuts to physicians that are coming in 2013.

Two blades are delivering the cuts. One is the SGR formula, which enacts a 27 percent cut in Medicare reimbursements to physicians, and goes into effect in January. The other is the so-called sequestration, a result of the Budget Control Act of 2011 that carries a 2 percent cut to providers and hospitals from 2013 to 2021, amounting to nearly $11 billion next year.

The deeply unpopular SGR was developed in the 1990s as a way to keep spending on Medicare in line with GDP growth. Medical societies have long lobbied for its repeal. They've never gotten it, but they usually get a reprieve before the cuts take effect. In a letter to Congress urging the SGR repeal, the AMA noted that the cuts have been delayed or frozen by congressional action 15 times since 2003, in what it called a "game of political chicken."

"Every time, , Congress assures patients and physicians throughout the year that it will not allow scheduled cuts to take effect, yet we find ourselves in the same situation year after year," AMA said in the letter, dated Dec. 19. 

The sequestration goes into effect if Congress is unable to deliver a balanced budget before the end of the year, sending the country tumbling over the "fiscal cliff," a mix of spending cuts and tax hikes totaling some $600 billion. So far, Congress and the White House have not been able to agree to a deal.

How will health care deal with the fiscal cliff? In part, possibly through layoffs or hiring freezes. A TrippUmbach report from the fall estimates the sequestration cuts could lead to the loss of almost half a million jobs in health care and related fields next year, and nearly 766,000 jobs by 2021.

Stalled fiscal cliff talks and lack of action on the sustainable growth rate reductions mean doctors could be facing a 29 percent reduction in Medicare reimbursements, starting early next week."


Dr. Graham leaves amid social services probe

Dr. Carolyn N. Graham

Tuesday, December 11, 2012: Robert Zullo reported in today's Richmond Times-Dispatch that "Tammy Hawley, Mayor Jone's Press Secretary, said in a news release Monday that the city had 'reached an agreement' with Carolyn N. Graham, the deputy chief administrative officer over human services,which inclueds the socials services agency, over her 'departure from city service'".  To read Zullo's article, please click here.

Dr. Carolyn Graham Expected to Resign per Richmond Times-Dispatch Article

Dr. Carolyn Graham
Dr. Carolyn Graham
December 7, 2012  Robert Zullo writes in his Richmond Times-Dispatch front page article that Dr. Carolyn Graham "is expected to resign amid concerns over management of Richmond’s social services agency and fears about the safety of the children the department is tasked with protecting."  To read the entire artilce, please click here.

Dr. Graham is well known to the Richmond healthcare community for her leadership role with the Mayor's Blue Ribbon Commission on Healthcare Policy.


December 7, 2012

The lead article in today's Business Section of the Richmond Times-Dispatch written by Tammie Smith describes how Anthem, the largest insurer in the Commonwealth, has signed six patient-centered primary care program contracts with six large medical practices in Virginia including Patient First and Bon Secours Medical Group.  The article reports that under this "fundamental change" by Anthem's parent company WellPoint, the doctors will be paid more and receive payment for "care coordination" services.

"Hospital War" Article Creates Buzz

Physician leaders and organizations across the United States, including the Richmond Academy of Medicine are discussing the issues raised in the Julie Creswell/Reed Abelson November 30, 2012 article in the New York Times regarding hospital employment of large numbers of physicians in the Boise, Idaho market.  In this two health system market "many of the independent doctors complain that both hospitals, but especially St. Luke’s, have too much power over every aspect of the medical pipeline, dictating which tests and procedures to perform, how much to charge and which patients to admit."

"Dr. David C. Pate, chief executive of St. Luke’s, denied the assertions by St. Alphonsus (the smaller health system) that the hospital’s acquisitions had limited patient choice or always resulted in higher prices. In some cases, Dr. Pate said, services that had been underpriced were raised to reflect market value. St. Luke’s, he argued, is simply embracing the new model of health care, which he predicted would lead over the long term to lower overall costs as fewer unnecessary tests and procedures were performed."

To read the entire article which also describes legal and regulatory reviews of health systems that have paid bonuses for ordering lab tests, dramatically increasing fees (a 2009 Virginia case) and systems that have created monopoly scenarios please click here.

Bon Secours Will Pay More to City

The Richmond Times-Dispatch reports today (11/28/2012) that after "lengthy negotiations over the weekend and Monday secured concessions on school funding in exchange for key votes, Richmond's City Council approved Mayor Dwight C. Jones' economic development package that will build a nearly $9 million training camp facility for the Washington Redskins and allow two major hospital expansions."

Bon Secours Richmond Health System will pay $33,000 a year for the next 60 years under the new terms of leasing Westhampton School for an expansion of nearby St. Mary's Hospital. Initially, Bon Secours was scheduled to pay $5,000 a year for the school lease.

Bon Secours also agreed to pay $100,000 a year for 10 years for school projects.
Bon Secours negotiated to be the major sponsor of the Redskins training camp to be built on 17 acres off Leigh Street behind the Science Museum of Virginia, which will be leased from the state. Bon Secours intends to operate a sports medicine and men's health facility at the training camp site.

An expansion of Richmond Community Hospital in the East End is also planned.

Obama Wins - Now what for "Obamacare"?

President Barack Obama's re-election victory eliminates the possibility of a wholesale repeal for his healthcare reform law. The 2010 Patient Protection and Affordable Care Act which has come to be known as "Obamacare" represents the biggest overhaul of the $2.8 trillion US healthcare system since the 1960s, aims to extend health coverage to more than 30 million uninsured Americans beginning in January 2014.

Obamacare will still faces challenges in Congress. Republicans who retained control of the House of Representatives are expected to press for healthcare reform concessions, including delaying and scaling back a planned expansion of the Medicaid program for the poor, during intense negotiations to cut the federal deficit that will begin later this month.  And there are still unanswered questions as to where the thousands of physicians needed to care for these patients will come from.

Major provisions of the Affordable Care Act call for cooperation from individual US states, including the Medicaid expansion and the introduction of subsidized health insurance exchanges for individuals to buy their own coverage. Governors and legislatures in as many as a half-dozen Republican-majority states oppose those plans and can refuse to act on them.

Clearly Obama's election victory is a step in this debate, but does not close the conversation.

Source: The Economic Times website


RAC Audits of E&M Codes to Begin for 15 States including Virginia

In September 2012 the Center for Medicare and Medicaid Services announced that it will extend Recovery Auditor (RAC) review for Evaluation and Management (E&M) services to 15 states. These 15 states where the expansion is occurring are Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia. This expansion of review to E&M coding has become a concern for many doctors to extent that the CEO of the American Medical Association (AMA), James L. Madara, M.D., wrote a letter to CMS requesting that E&M RAC audits should not be implemented.

The argument behind not extending RAC audits to E&M coding is that E&M coding is very subjective from the doctor’s point of view. It is in the doctor’s discretion to code appropriately for an E&M visit and should not be penalized if they spend more time with patients who need a longer, more detailed visit. Apparently, CMS has not budged and the RAC audits on E&M coding has progressed in the above mentioned 15 states. With the implementation of the audits in these states, the rest of the country will follow. source:

Edloe's Pharmacy Closing

Edloe's Pharmacy Closing

Young Broadcasting of Richmond Posted on 9/21/2012

A Church Hill pharmacy, open for more than 60 years, will be closing its doors next week.
Edloe's Pharmacy, open at 25th and Carrington Streets since 1945, will close next Tuesday, a move which upsets many long-time customers.
Doctor Leonard Edloe tells 8News he will turn the store over to CVS, after doing everything he could for his customers.
"We would find a way if we could, to get your medications covered," said Edloe.
"I'm a little unhappy because anything I needed was here, old remedies you can always find here," said long-time customer Joanie Gillison. "People are very friendly, treat you like family more than a customer."
Edloe, also a lecturer and pastor, said he knows the void that will be left behind once his business is gone.
"I'm still going to be around to make sure they get the right drugs, to help the people when they need to be helped," Edloe said. He also said he plans to open a private practice to offer advice on medication.
 To hear Doctor Edloe discuss the decision to close in an interview with WRIC8 NEWS please click here.

Sabato Addresses Richmond Academy of Medicine

On Tuesday night (September 18) Larry Sabato, the Robert Kent Gooch Professor of Politics at the University of Virginia, and director of its Center for Politics spoke to 260 members of the Richmond Academy of Medicine (RAM) at the Westin Hotel.

In his comments Sabato forsees a narrow victory for President Obama due in part to ineffective campaigning by Republican candidate Mitt Romney.  He indicated that the election is not a done deal if Romney's performance can improve and suggested the Republican candidate should present himself as "Mr. Fix It" for the economy.  Sabato also predicted a narrow victory for Tim Kaine unless Romney has a strong performance in Virginia.

For more information posted on the RAM website click here.

Times-Dispatch Covers Pediatric Care Initiatives


A Place for Children Only - VCUHS $168m Pediatric Facility

The front page of the Richmond Times-Dispatch covered the ground breaking for VCU Health Systems $168m outpatient pediatric facility.  To read the article click here.

John Duval, CEO MCV Hospitals is quoted as saying "We didn't feel we could any longer responsibly not move forward."

Children's hospital for Richmond Area sought

Page A8 of the Richmond Times-Dispatch reported on the "Pediatrician lead effort to build a full-service (pediatric) facility".   To read the article, please click here.

"Federal government can expand the Medicaid program but it cannot withhold funds from states that choose not to participate in the expansion."

 WASHINGTON July 2, 2012 – 

 Chris Anderson, Editor, Healthcare Payor News writes:

Last week’s Supreme Court decision on the Affordable Care Act provided a setback to the Obama Administration by ruling that while the federal government can expand the Medicaid program, it cannot withhold funds from states that choose not to participate in the expansion.
"Nothing in our opinion precludes Congress from offering funds under the ACA to expand the availability of healthcare, and requiring that states accepting such funds comply with the conditions on their use,” wrote Justice John Roberts in the decision.  “What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.”

The effect of this ruling is twofold. First, it jeopardizes the chances of the working poor – those with incomes higher than 100 percent of the federal poverty level (FPL) but less than 133 of FPL – of getting health insurance coverage. Second, it firmly empowers the states to decide how they want to handle both their own Medicaid programs and the issue of widespread lack of insurance among this population. To see the entire article, click here.

Key Medicaid Decisions Face Virginia

Virginia: seal

June 29, 2012  The Richmond Times-Dispatch reports that "Virginia political leaders and lawmakers may not like the U.S. Supreme court ruling to uphold federal healthcare reform, but they face big decisions soon on how to carry out the law in a national election year".  Key decisions regarding whether or not to set up a State healthcare exchange and whether to expand Virginia Medicaid to 425,000 additional Virginians will impact all providers  throughout the Commonwealth.  To read the full article click here..

Supreme Court Upholds Individual Insurance Requirement

CAHN Opening New Center in Chesterfield

June 22, 2012...The Richmond Times-Dispatch reports that Capital Area Health Network ( a federally qualified health center or FQHC) plans to open a community health center in the Bermuda District of Chesterfield County by the end of 2012.  CAHN received $441,667 in federal grants to open the center which treats both uninsured and insured patients and provides primary care, dental services and referrals for behavioral health and case management.  When fully staffed the center is projected to have 12 FTE's and provide 10 - 15 thousand patient visits annually. Click here to view the RTD article.

RAM Sponsors Clinically Integrated Organizations Webinar

In a June 20, 2012 webinar facilitated by the Richmond Academy of Medicine, Jacque Sokolov, MD with Scottsdale, AZ based SSB Solutions presented information regarding Clinically Integrated Organizations. He described how changing reimbursement methodologies
are resulting in projected changes in reimbursement to all health care providers as illustrated in different scenarios such as the one below.
Clearly the impact of these changes on all sectors of the $2.6 trillion health care industry will impact all providers in material ways.  Since a primary driver for these changes is the unsustainable growth in health care expenditures, the areas generating the majority of the cost to the system (revenue to the provider) i.e. health systems, hospitals, imaging providers, etc. have the most dollars to lose if cost savings are achieved.  Of particular interest was Dr. Sokolov's comments regarding the vital role physicians will play in this transformation and the steps that health systems and insurers are taking to capture/align themselves with physicians.

The Advisory Board Company Physican Practice Roundtable Recommendations

The Advisory Board Company is a “global research, technology and consulting firm helping hospital and university executives to better serve patients and students”.  In addition they have Physician Practice Roundtable unit designed to serve the independent physician market.  On June 1, 2012 this unit held their New Performance Standard Summit in Washington, DC.  At that meeting they presented a new definition of “High-Performance” based on the premise that it is a “question of time, not direction” that the downward trajectory of provider payment of providers and medical groups based on fee-for –service models is an ongoing trend and that successful medical groups must “ready their organizations for success under value-based payment models”.

The Advisory Board Company High Performance definition image

CIGNA & Bon Secours ACO initiative

CIGNA & Bon Secours ACO initiative

In an April 9, 2012 press release Bon Secours Medical Group and CIGNA (NYSE:CI) announced the launch of and accountable care initiative to "expand patient access to health care, improve care coordination, and achieve the "triple aim" of improving health outcomes, lowering medical costs and increasing patient satisfaction. ... As part of the agreement, CIGNA will compensate Bon Secours physicians for medical services they provide as well as for the care coordination services" by clinical care coordinators. "Additionally, the practice may be rewarded through a ""pay for performance"" structure for improving quality and lowering medical costs" for 8,000 individuals covered by CIGNA health plan who receive care" from Bon Secours primary care physicians.  To see the press release click here.

Inagural Medical Practice Update post


Welcome to the Medical Practice Update blog.  This blog will provide updates on the issues facing medical practitioners.  The input for this blog will come from physicians, practice staff and business advisors actively working in medical practices.  If you would like recommend topics for discussion, please email us at