Medical Device Daily Washington Editor

WASHINGTON — FDA is warning those who use devices controlled by a clock that the onset of daylight savings time (DST) has been moved up to this Sunday, March 11, and will not end until Nov. 4.

This change is courtesy of the Energy Policy Act of 2005 and is intended to save energy. But it has set into a motion a scramble to install software patches reminiscent of the Y2K bug frenzy, albeit with substantially less hand-wringing for those outside of healthcare.

The FDA announcement points out that not only are the new dates potentially nettlesome, but also the originally scheduled dates, April 1 and Oct. 28. The agency admitted that it cannot predict the “extent and seriousness of this problem,” but is “concerned about equipment that consumers or patients use in their homes.” The agency has already contacted doctors, nurses, and hospitals regarding the situation.

FDA recommends that patients and their caregivers in the home contact the makers of equipment to check the status of that equipment, and that if they cannot contact the maker, they should contact their doctor for advice on how to deal with the equipment.

Another recommendation is to check the equipment on all four dates involved to ensure the proper function of devices.

MedPAC seeking cost-control pressure

The Medicare Payment Advisory Commission (MedPAC) published its 2007 recommendations to Congress at the beginning of March, and the report reflects the need for fiscal discipline in the nation’s largest healthcare program.

In a statement directed to the House Ways and Means health subcommittee, Glenn Hackbarth, MedPAC chairman, said that in general, the Centers for Medicare and Medicaid Services “should continue to exert financial pressure on providers to control their costs, much as would happen in a competitive marketplace.” The commissioners based this argument on data indicating “that hospitals under financial pressure tend to control cost growth better.”

However, MedPAC warned that other “forces, such as the broad use of newer medical technologies and enrollment growth, will likely push future spending higher.”

Medicare Part A is a big source of spending, and hospitals have lobbied long and hard for their updates. However, MedPAC recommended that the update for payments to hospitals for both in-patient and out-patient services be updated by the market basket, essentially an adjustment for inflation only.

MedPAC offered an offset to get Congress and the CMS past the battles that surely lie ahead should they follow the market basket recommendation. The commission concluded that “more than half of the IME [indirect medical education] is unrelated to the additional cost of care that results from the intensity of a hospital’s teaching program.” And it said that teaching hospitals, “as a group, already have better financial performance than non-teaching hospitals under Medicare.”

The consensus at MedPAC is that Congress should boost funding for quality incentives by reducing payments that are based on the ratio of residents to patients.

The portion of Hackbarth’s testimony dedicated to skilled nursing facilities (SNFs) included the statement that “indicators of payment adequacy are generally positive . . . but quality shows a decline.” Access was said to be good overall, with the exception of a subset of services that Hackbarth did not identify.

The recommendation was that Congress “eliminate the update to payment rates for SNF services for fiscal year 2008.” The commission concluded that Medicare payments “will more than cover the costs” incurred by Medicare beneficiaries because margins for free-standing units are expected to run at about 11% in 2007.

Home health agencies found no friend in MedPAC, either, with the commissioners deciding that Congress should eliminate the update for home health services.

That recommendation is based partly on a high degree of accessibility, said to be the case for 99% of beneficiaries. Two unnamed states accounted for “tw- thirds of the growth,” Hackbarth noted, without naming the states. Free-standing units enjoyed margins of 16% in 2004 and 2005, according to MedPAC, which projected the same margins for 2007.

Long-term care hospitals (LTCHs) have been the subject of recent controversy (Medical Device Daily, Jan. 26) due to payments made to an Arizona LTCH, despite a moratorium on such payments, but the hospital-within-a-hospital (HWH) arrangement has also raised eyebrows on Capitol Hill.

The industry’s margins in 2005 were said to have rung in at nearly 12%, but MedPAC anticipates 2007 margins of .1% to 1.9% depending on how HWH units react to the 25% rule. Nonetheless, these healthcare operations “have shown themselves to be very responsive to changes in payments, and should be able to accommodate” the recommended payment regime. Much of MedPAC’s concerns revolve around uncertainty as to whether “this high-cost service is being used only on patients who need it.” As a consequence, the commissioners suggested that CMS eliminate the update for LTCHs for 2008.

In a statement, Sen. Max Baucus (D-Montana), chairman of the Senate Finance Committee, said “the fact that MedPAC had a hard time determining the best way to move forward shows us just what a challenge reform will be.” But he commended the commission for presenting “some good ideas, a number of which I’ve already urged Congress to adopt.”

David L. Allen, associate director for media relations at the American Hospital Association (Chicago), told Medical Device Daily that “[w]e think all hospitals need an inflationary increase.” Expenses have increased over the past two years, he said, “and we need increases to cover the costs, including staffing, pharmaceuticals and energy costs.”

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