Monthly Review & Commentary On Health Issues From A Rural Perspective - June 1st, 1997

Wisconsin's $1 Billion a Year Medicare Loss
Wisconsin is losing nearly $1 billion a year due to current Medicare payment policies. Wisconsin's receipt of $2.7 billion in Federal Fiscal Year 1995 for 757,404 beneficiaries resulted in an average payment per beneficiary of $3,529 in 1995, 26% below the national average of $4,745. If the Wisconsin's average payment had been at the national rate, the state would have received in 1995 an additional $1,126 for each Medicare beneficiaries living in Wisconsin, a total of $.92 billion. This would be an amount coming into Wisconsin equivalent to financing the care for all uninsured individuals with a few $100 million left over.

The U.S. House of Representative's Committee on the House Ways and Means publishes each year a very thick report entitled the Green Book about those areas over which they have jurisdiction. This is a gold mine of data. Pages 138-139 list an estimate by state of the total of Medicare payments in Federal Fiscal Year (FFY) '95 and number of beneficiaries
Examples of other states with low Medicare average payment rates are Iowa at $3,232 and Minnesota at $3,789. States representative of high average payments include California at $5,709 per beneficiary, Florida at $5,653 and New York at $5,300.
The Physician Payment Review Commission's 1997 Annual Report to Congress states that Medicare fee-for-service outlays "vary widely across areas because of differences in local prices, demographic composition, health status, and other factors like practice patterns and patient preferences."
While a portion of these payment variations may be due to differences in the average need for health care, major explanations that should cause a rightful challenge of the status quo include inequitable federal payment policies, unjustified regional practice patterns and differences in access to care. Both a cause and a result of these payment variations is the variation in the availability of basic Medicare HMO benefits (described on page 4). From another perspective, maybe not the cause but the continuation of extreme payment differentials reflects raw political power.
In rural health, many of us not only use networking to provide services but also to advocate for better public policy. Thanks to Greg Nycz from the Marshfield Clinic for information re this issue.
Proposal for a Breast Cancer Survivor Camp
The following is from a proposal developed by Ann Haney, Vice President of Development, Dean Health Plan. If you are willing to support this initiative, you should contact Ann c/o Dean Health Plan, 1277 Deming Way, Madison, WI 53717.
"Treatment for breast cancer is a mixture of surgery, and harsh but effective chemicals and/or radiation. Talking to women about their treatment and recovery, you might also hear about another therapy, one which is usually defined as "mind body,"
"It is for this reason, for the purpose of mind-body healing after breast cancer, that I propose to establish a Breast Cancer Survivor Camp. It would be open to all women with the diagnosis of breast cancer. The camp experience would be designed to accommodate her at any point in her treatment, (except immediately after surgery,) or at any time in the decades of life after treatment that she may still enjoy."
"For newly diagnosed women, the Camp would be a 'turning point' experience in her life after cancer. She would break through the current limits of what she was physically able to do, and leave camp with far greater confidence in her own personal and spiritual strength to survive. The long time survivor would have the opportunity to reaffirm her life, challenge herself to even greater levels of self discovery, and most importantly, according to the testimony of many breast cancer survivors themselves, the camp would afford her the opportunity to truly help other women survive and thrive. Note, although they may not be needed, the camp would have medical and psychotherapy staff on call."
"To accomplish these goals, the camp would need to be situated in such a way as to provide a complete get away from the 'disease' environment in which the breast cancer patient often finds herself. The setting should be among nature, have great inspirational beauty, and be conducive to contemplation, meditation and healing."
"The Madeline Island Music Camp has offered its facilities for a 'pilot' camp this fall. Madeline Island is among the beautiful Apostle Islands national Lake Shore in western Lake Superior. It is accessible only by boat or ferry and has proven to be the perfect setting for a 'camp' experience. Another area commonly used for business and professional retreats in Wisconsin is Spring Green. Spring Green is the home of Frank Lloyd Wright's Taliesin and American Players Theater's outdoor classical theater. Its rolling wooded hills and prairie grass valleys have been inspirational to artists and artisans for decades, A fall 'pilot' camp is also planned for the Spring Green area."
Order Helps Rural Providers Get Wired
The Federal Communications Commission on May 7 announced a new order to "Ensure Access to Affordable Telecommunications Services for All Americans" as required by the Telecommunications Act of 1996. This was a big win for rural communities and rural health. In addition to a key intervention by the National Rural Health Association, our thanks are particularly due to Dena Puskin, Acting Director of the federal Office of Rural Health Policy for providing early (as in not always supported) leadership and continuous bird dogging of this critical FCC decision. In case you have not seen it, the section regarding Rural Health Care Providers is as follows:
"The Commission, consistent with the Joint Board recommendation, provides for all public and not-for-profit health care providers located in rural areas to receive universal service support, not to exceed an annual cap of $400 million. A health care provider may obtain telecommunications service at a transmission capacity up to and including 1.544 mbps, the bandwidth equivalent of a T-1 line, at rates comparable to those paid for similar services in the nearest urban area with more than 50,000 residents, within the state in which the rural health care provider is located."
"Rural health care providers will receive support for both distance-based charges and a toll-free connection to an Internet service provider. Each health care provider that lacks toll-free access to an Internet service provider may also receive the lesser of 30 hours of Internet access at local calling rates per month or $180 per month in toll charge credits for toll charges imposed for connecting to the Internet."
We Don't Pick Trends, Only Our Responses
The following is taken from "Five Irresistible Forces" written by Saad J. Allawi in Healthcare Forum Journal, January/February, 1997:
"Establishing a vision and long-term direction cannot be put off for calmer times. The pace of change in healthcare is accelerating, not slowing. And the powerful forces that are transforming healthcare can generate enormous economic potential for those who are able to employ effective survival techniques in the short run and at the same time plan for the success in the long run."
"A clear understanding of the fundamental trends driving transformation will help organizations structure their thinking about how businesses will be affected and how to take control of the transition to the future. Because these are economy wide trends arising across many markets and industries, their potential implications can be extrapolated from other industries and situations even before their full effect is directly observable in healthcare."
"Individual healthcare organizations are adopting different approaches to coping with the transformation of the industry. The leaders--the potential winners--concentrate on understanding and managing change in their marketplaces in order to build value. Competitors who continue to react passively put their success, and even their survival, at risk."
The five trends noted below explain much of what is happening in healthcare today:
  1. "To market, to market. The 'marketization' of the industry will expose participants to new levels of competitive pressure as healthcare becomes a business. Competitors will have to drive their costs down and productivity up just to remain in the game. But cost efficiency, while a necessary condition for survival in the new healthcare market, will not be a sufficient condition for long-term success.
  2. "The rise of the consumer. There is a definitive shift toward the true healthcare consumer as the central decision maker. Consumers are better informed and more assertive than ever with respect to their healthcare options. They are also bearing more of the economic consequences of their decisions."
  3. "Tailor-made medicine. To succeed in an efficient market, competitors must create value for customers through product/service differentiation. In consumer markets across industries, the trend is towards mass customizing, or tailoring the offering to population segments and individual customers. This is particularly applicable to healthcare."
  4. "Restructuring inside and out. To meet competitive challenges and satisfy emerging consumer demands, industry participants are restructuring both their internal organizations and their external relationships to optimize the delivery value chain... Increasingly, integration is "virtual," based not on asset acquisition but on low-investment arrangements governed by operating protocols and risk based incentives. Virtual integration provides flexible scale and scope without burdensome fixed cost."
  5. "Information--the ultimate change maker. It is difficult to over-estimate the impact of the information revolution, digitization, on healthcare and other information-intensive industries. Information fuels and facilitates consumer responsibility and involvement, enabling informed choice and self-care. It is the lifeblood of efficient markets, providing performance data for improvement and accountability... Technology will become a strategic tool for designing care delivery systems of the future, rather than a tactical tool for solving today's problems."
Rural HMOs: How Much & Where?
Rural Managed Care: Patterns & Prospects, is an eighty page chartbook (exactly what it sounds like plus some words of explanation) just released by the Rural Health Research Center at the University of Minnesota with support by the Robert Wood Johnson Foundation. According to the available data, Wisconsin had in 1995 the highest percentage of rural population under 65 enrolled in commercial HMOs.

"New interest in the expansion of managed care in rural areas has been stimulated by several factors including:
"But to what extent has this interest--and the corresponding expansion of HMO service areas into rural counties--translated into actual enrollment.? This chartbook begins to answer that important question, summarizing the results of the first comprehensive effort to analyze national data on rural HMO enrollment in commercial plans, Medicaid HMOs and prepaid plans and Medicare risk-based plans."
Single copies are available from Jane Raasch at 612-624-6151 or fax 612-624-2196 or at:

How Medicare HMOs Sweeten the Pot
The Physician Payment Review Commission's 1997 Annual Report to Congress is now available (202-653-7220) or for more information:

It provides an in-depth analysis of Medicare and Medicaid spending and related policy issues. The following is from an information packed chapter on "Medicare Managed Care: Participation and Payment":

"Growing numbers of both health plans and beneficiaries have moved into Medicare managed care since the risk-contracting program was created in 1982. Almost two-thirds of all beneficiaries now have the option of selecting private health plans instead of receiving health services through the traditional fee-for-service program. About one in eight beneficiaries obtained Medicare coverage through managed care at the end of 1996."

"...Nearly all plans offer some additional benefits to enrollees beyond those in the standard Medicare benefit package. Benefits widely available in December 1996 included routine physicals, eye exams and immunizations (see chart below), More than half the plans offered outpatient drugs as an additional benefit... Nearly two-thirds of plans charged no premium for their package..."
The average plan offered about $82 in extra benefits for a lower than average premium of $22. As shown in the adjacent chart, the average elderly person spends 21% of his or her income on health care and for the poor that number climbs to 30%. Some portion of the elderly is respond positively to the marketing efforts of HMOs that can reduce their out of pocket costs.
The Age of Information, Misinformation
"Two life-and-death decisions: how to stop a cholera epidemic in London during September 1854; and whether to launch the space shuttle Challenger on January 28th, 1986. By creating statistical graphics that revealed the data, Dr. John Snow was able to discover the cause of the epidemic and bring it to an end. In contrast, by fooling around with displays that obscured the data, those who decided to launch the shuttle got it wrong, terribly wrong. For both cases, the consequences resulted directly from the quality of methods used in displaying and assessing quantitative evidence." (Visual Explanations by John Tufte, 1997.)
Computerized desk top publishing has allowed for a virtual explosion of information and opinion sharing, both on and off the Internet (this newsletter, a case in point). Many blessings have a potential down side and this phenomena is no exception. Publications, both formal and informal, that make use of graphs to create information out of data, have substantial power to both inform and misinform.
With the increased emphasis on the use and communication of data to improve both the quality and cost of health care, there is a series of three books that should be required reading for many of us: The Visual Display of Quantitative Information (Pictures Of Numbers), Envisioning Information (Pictures Of Nouns) and Visual Explanations (Pictures Of Verbs). All three are by Edward Tufte, a professor at Yale who teaches courses in statistical design and information design. The series can be purchased for $133 by calling Graphics Press at 800-822-2454. The production quality of these books makes them expensive but you won't be disappointed.

Benefits of a Cooperative Initiative

High -- Doing

Medium -- Talking About Doing

Real Low -- Talking About Talking About Doing

Partnerships for Health
What I expect from attending the annual meeting of the National Rural Health Association is always one great speaker that justifies the trip. This year it was the keynote session by Leland Kaiser. He spoke directly to the conference theme, "Caring for the Country, Partnerships for Health." A portion of the ideas he presented are noted below, taken from "Need For A Design Paradigm", an essay that is the first in a series of On-line Forums hosted by The Center for Health Design. You can read this article as well as participate in an on-line discussion with Dr. Kaiser and others at:

"We should use a biological metaphor to think about our work in creating healthier communities. Imagine your community as a human body. Imagine yourself as a cell in the body of the community. How are you connected? Describe your relationship to the circulatory system and the nervous system of your community. Imagine your organization as an organ in this body. How does it communicate with all the other organs? What role does it play in the health and well-being of the entire body?"
"Natural systems work. Human systems don't work. Perhaps if we designed our social systems like natural systems they would work. Kevin Kelly discusses "subsumption architecture" in his book, Out of Control. This refers to design from the bottom-up with no more structure than needed to get the job done. Think of your organization in terms of neurobiology. This means maximum downward delegation to the cellular level. Monitoring, control, decision making, and accountability at the lowest possible level is the model of the future with the cortex coming into play only as needed, primarily in emergency situations. The human body depends upon the well-being and contribution of each cell. So does your organization."
"Our challenge is to change the old paradigm - to think outside the lines. We should honor our past but not be held captive by it. It is time for us to reframe - to change our ideas about many things. We need to co-create our communities. We should settle for nothing less. It is time to get out of our box and into the inclusive circle of community. We need a new design paradigm."
Cheesehead Cool
The following is from "Cheesehead Cool, Out East, it ain't easy being from Wisconsin" by Ruth Connif in Isthmus, 4/25/97:
"My roommate, the Pittsburgh debutante, wanted to know if I grew up on a cheese farm. My dad loved that. He began sending me letters updating me on the tilling of the curds. ...out here, the Fargo question has taken on an entirely different cast. For people in the East, I realized, Fargo is not parody. It's a g--d----- documentary. When people ask me if I liked it, it's their way of saying: 'I know about you people. I am familiar with your ways.' "
"But now, instead of being just hopelessly uncool, the Midwest has taken on a kind of golden glow. People who have had enough of the harried, competitive culture of the East Coast see a haven of wholesomeness in the Midwest. woman I met at a party found out I was from Wisconsin, and clutched my hand: "Oh pure, sweet, good person!" she said. ...staring at me with a far-away look in her eye."
"Another journalist, John Nichols, (from Wisconsin) confirmed my impression. 'There's definitely this idea that Wisconsin is good. We're sort of seen as sweet idiots.' At lunch in New York, a prominent architect turned to Nichols and said, 'You're so interesting! Now where are you from?' 'I told him,' says Nichols, 'and he said, 'No, no, no. I'm sorry. Where do you live now?' "
Another Cheesehead to Washington
Michael Weiden, an attorney at Quarles & Brady in Madison, will be representing the National Rural Health Association in a Department of Health and Human Service's "Negotiated Rulemaking Committee on a Shared Risk Exception."
The existing anti-kickback statute establishes criminal liability for "whoever knowingly and willfully solicits or receives any remuneration in return for 'referring an individual to a person for the furnishing of any item or service'... such remuneration is unlawful whether it is direct or indirect, overt or covert, in cash or in kind." The Health Insurance Portability and Accountability Act of 1996 (Kennedy-Kassebaum) provided for a statutory exception specific to anti-kickback liability between providers and health maintenance organizations.
The Act specifically requires expedited implementation using a negotiated rule making process. The goal of such a process is to reach consensus, i.e. everyone can "live with" the proposed rule, before it is published for comment in order to improve the technical clarity of the rule and to minimize subsequent legal challenges.
Mike has been a counselor for RWHC for the last seventeen years and has volunteered to represent NRHA on this critical technical committee. As scenarios involving rural providers and managed care are expected to be a significant part of this rule, Mike's experience in these same areas should prove valuable to the Committee.
The 21 member committee represents a broad cross section of is a virtual alphabet soup of American health interests; a portion of the most recognizable part of the alphabet soup includes: AAHP, AARP, AHA, AMA, AMGA, BC/BS, HIAA, NACHC & NRHA.
Washington Becoming a Veritable Fondue
The President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry held its first meeting in early May. As this goes to the printer, the White House is scheduled to announce the additional appointment to the Commission of Chris Queram, CEO of the Alliance, a health care purchasing alliance based in Madison. Chris has been a very active participant in the Wisconsin Rural Zones of Collaboration Task Force that seeks to identify opportunities for cooperation among competing insurers in rural counties. The Commission already has a web site:


In response to the growing uneasiness about managed care from consumers and providers, President Clinton talked during the campaign last year about the need for this advisory Commission. By proceeding he does one of the following: (a) generates discussion and coherent advice on an important policy issue, (b) appoints diverse enough representation to assure minimal substantive agreement, (c) looks Presidential or (d) all of the above.
There has been a fair amount of cynicism expressed about the usefulness of the Commission. A Modern Healthcare analysis noted that "the chances of a meaningful decision being made by the commission are about the same as Rep. Fortney "Pete" Stark (D-Calif.) being appointed to the board of Columbia/HCA Healthcare Corp." (4/21/97)
What we do know, is that Chris's participation will very much help keep Wisconsin informed with the most current thinking regarding the opportunities and risks of the growing market power of managed care.
Ex-UW Professor Now CEO $1.5 B System
Joy Calkin, one of RWHC's strongest local supporters when we were just beginning has been appointed President and Chief Executive Officer of Extendicare, Canada's largest long-term care company, with revenue of $1.49 billion in 1996 and more than 34,000 employees. From an Extendicare press release, 4/22/97:
"Dr. Calkin specializes in health systems management and design. Her research, publications and management consulting activities have focused on health care organizations. Dr. Calkin joined the University of Calgary in 1985 as Dean of the Faculty of Nursing. She previously held a teaching posts at the University of Wisconsin-Madison..."
"Extendicare is the fourth largest operator of long-term care facilities in North America, with resident capacity at December 31, 1996, of 27,000 in 263 facilities in the United States, Canada and the United Kingdom. The Corporation also provides medical specialty services, including sub-acute care and rehabilitative therapy services, institutional pharmacy services, and other medical services in United States; and home care and rehabilitative therapy services in Canada."
WI Honors Primary Care Educators
The following is from DHFS Focus, 5/22:
"Governor Thompson presented the first annual Primary Health Care Educator Awards in the Governor's Conference room at the State Capitol. This award was established to recognize the important contributions made by primary health care educators who improve the health of Wisconsin citizens. Eligible educators include academic and clinical faculty and community based preceptors. Three individuals were honored this year:"
"Mary Barker, FNP is Director of the Graduate Nursing Program at the University of Wisconsin-Oshkosh. She was instrumental in developing student clinical experiences with migrant farm workers."
"Thomas Gabert, MD is an internal medicine physician with the Marshfield Clinic in Minocqua and a community based clinical faculty member for both medical schools."
"Thomas Jackson, MD is a Professor of Medicine at the University of Wisconsin's Medical School's Milwaukee Clinical Campus, having worked to develop student access for underserved populations in Milwaukee."
Note for Health Policy Web-Wonks
InterNETWORK is a www site at:

that has to be heard to be believed--live coverage of the floor of the United States Senate and House of Representatives along with gavel to gavel coverage of key Congressional Hearings. You need to have downloaded RealAudio from:

Of interest is the archive of recent broadcasts. (For about two months, you could actually listen to the National Rural Health Association's testimony on the Medicare budget before the U.S. Senate Finance Committee.)
You may also want to create a bookmark for the new site, FedStats that links to 70 federal Web data sites and includes its own search engine:

Summer Is Finally Here
CD disk to relax, right speaker buzz, three years this crackle, enough already, son Aaron "ruled out" an amplifier problem, checked where son Sean had spliced in a line to his room, no problem, get in car, new speakers, thanked guy, didn't need new wire, connected, speaker buzz, go in car, new wire costs more than original system, try re-threading through old wire holes, blocked, crowbar blows to dry wall, stopped by heat ducts, go in car, get drill (others five sets buried under Sean's takeover of basement shop), several holes seek new route, connect from closet to basement and basement to speakers, run wire, go in car to get one foot more wire each speaker, reinstall speakers, speaker buzz, get in car, new amplifier, great sound never heard before, now remember why lived with buzz.
Anyhow, don't keep checking mail or web site next month for a July Eye On Health as there probably won't be one. (Both June and July's cartoons are included here.) The "entire" editorial staff is going to Alaska for five days of meetings and visiting about rural and frontier health hosted by Governor Tony Knowles. Immediately afterwards there will be a week of mosquito and grizzly dodging while backpacking with above two sons in the incomparable Denali National Park.

"When the horse is dead, get off.", Rosita Perez, NRHA '97 Conference. If you missed rural health's best annual meeting; don't make the same mistake twice; get out of your rut and plan on being in Orlando, May 13-16th, 1997.

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