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As various pieces of the gargantuan health
reform law are digested by the healthcare
body politic, the spotlight seems to shift from
one controversial aspect to another.
A few months ago the constitutionality was
in focus; then in June the shape of
accountable care organizations came into
view. Last week health insurance exchanges
took center stage.
On Aug. 9 Gov. Sam Brownback of Kansas,
a conservative Republican, announced that he
was returning the $31.5 million early
innovation grant that his state insurance
department had won to develop an insurance
exchange. The Department of Health and
Human Services gave out the competitive
grants earlier this year to seven states that had
interesting ideas on how the online
marketplaces might be set up.
Brownbacks move occurred over the
objections of the state insurance
commissioner, Sandy Praeger, who had
argued that Kansas should have its own
exchange regardless how people felt about the
particulars of the Affordable Care Act.
On Aug 12, meanwhile, HHS and the
Treasury Department issued some preliminary
regulations governing establishment of the
exchanges, including how to implement the
premium tax credit that is supposed to make it
more affordable for middle-class Americans to
purchase a health insurance policy. HHS
awarded $185 million to 13 states to help
them develop their exchanges.
And a CNN report said that Walgreens
intends to start selling health insurance
through its own private exchange in the fall.
The drugstore chain didnt conrm any such
plans but said it was looking at many options.
The health reform law requires most people
to have health insurance by 2014. It
encourages states to set up insurance
exchanges on the internet where individuals,
employers, and employees can buy policies
from participating companies and enroll in
Medicaid. The idea is to introduce comparison
shopping to health insurance, much like
buying an airline ticket online. The exchanges
will calculate the subsidies that people qualify
for, based on their incomes.
Residents in those states that decline to set
up their own exchanges will be provided an
exchange by the federal government.
Private internet health exchanges already exist,
such as eHealthInsurance.com, which offers a
variety of insurance products by state. And
state exchanges have been set up by Utah and
Massachusetts.
The state exchanges have been embraced
by some governors but condemned by others
as an unwanted federal intrusion into states
rights or private contractual matters.
Underlining the perils to implementation of
the act, on Friday a federal court of appeals in
Atlanta ruled that the individual mandate, the
centerpiece of the law requiring all Americans
to purchase health insurance, is unconst-
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October 5
September 14-16
Calendar
16 August 2011
August 23-25
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E-Mail
info@payersandproviders.com with
the details of your event, or call
(877) 248-2360, ext. 3. It will be
published in the Calendar section,
space permitting.
www.lakesidecommunityhealthcare.com
Midwest Edition
Kansas Governor Vetoes Exchange
Brownback Returns Early Innovator Grant to HHS
Continued on Next Page
www.healthexecstore.com
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Payers & Providers Page 2
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In Brief
Sanford Health
to Build New Hospital
in Northwest Minnesota

Sanford Health has made public its
plans for a new $60 million
hospital in northwestern Minnesota.
Ground will be broken for the
new Sanford Thief River Falls
Medical Center and Clinic in spring
2012, with construction completed
in late 2014. It will centralize clinic
and hospital services in one
location.
Since 2007 Sanford Health has
operated the 25-bed critical access
hospital in Thief River Falls that dates
from 1932.
Also included in the project is the
remodeling of a clinic that will house
outpatient services, behavioral health
inpatient care, dialysis, and a wellness
center.
Sanford Health is the largest rural
not-for-prot health system in the
United States. Based in eastern South
Dakota, it has 32 hospitals, 111
clinics, and more than 900 physicians
on staff.
Indiana University
Health Bans Smoking
During the Work Day

Employees at Indiana University
Health will no longer be allowed to
smoke on breaks during the work day,
according to a new policy the
Indianapolis health center unveiled last
week.
Beginning Aug. 22, workers will be
prohibited from bringing into the
hospital third hand smoke the
contaminants from smoking that linger
on a smokers body, hair, and clothes,
which are said to include many toxins
hazardous to patients.
Were not saying to people that
you cant smoke, said Sheriee Ladd,
senior vice president of human
Continued on Page 3
NEWS
Kansas Insurance Exchange (Continued from Page One)
itutional. Eventually, that issue will be decided
by the Supreme Court.
In Kansas, Gov. Brownback, who voted
against the health reform bill as a U.S. senator
in 2010, has conducted a ground war from
Topeka to block its progress.
A week after the debate about the federal
debt ceiling, he positioned the return of the
early innovator grant as a statement against
federal overspending.
There is much uncertainty surrounding the
ability of the federal government to meet its
already budgeted future spending obligations,
the governor said in a statement. Every state
should be preparing for fewer federal
resources, not more. To deal with that reality
Kansas needs to maintain maximum exibility.
That requires freeing Kansas from
the strings attached to the early
innovator grant."
Lt. Gov. Jeff Colyer, M.D.,
added: Federal Medicaid
mandates have cost Kansans over
$400 million in the past two years
alone. Full implementation of the
mandates in the presidents
healthcare law would cost billions
more.
Kansas is the second state to
make this move. Oklahoma had
decided to return its early
innovator grant in April.
We are disappointed,
said Bob Tomlinson, assistant
commissioner of the Kansas
Department of Insurance.
Our department was
instrumental in applying for
the grant. We believe that a state sponsored
exchange is much better than having the
federal government run one for the state.
In a lengthy interview with Payers &
Providers (14 June and 21 June editions),
Praeger, the Republican insurance
commissioner, laid out her view that the
health reform law is a reasonable market
solution to the problem of the uninsured.
The idea behind the Kansas grant,
Tomlinson said, was to make it innovative
enough that other states might want to join us
in a regional exchange. Maybe glom together
Oklahoma and Nebraska and bring them in. If
we could run an exchange domiciled in
Kansas, that might bring a few jobs to us.
As a courtesy, the governor notied the
insurance department of his intent and
listened to their views, Tomlinson said, but
didnt alter his decision.
None of the money had actually been
given to the insurance department or spent
yet, so the state isnt really returning any cash
to HHS.
The insurance department, in collaboration
with the Kansas Chamber of Commerce, had
just begun a series of public conversations
around the state to gather the publics input on
the exchange. The remaining events have been
canceled.
Our objective was to see where the
business community lies on the insurance
exchange, said Eric Stafford, the chambers
sernior director of government affairs. The
chamber has been looking at examples from
other states, notably California, Utah,
Massachusetts, and Florida. Whether any of
those would be benecial for Kansas,
we dont know yet, he said. There
is still some desire to set something
up.
A chamber steering committee
will meet Aug. 24 to see what
options might be available for
Kansas. Just because this money has
been sent back, I dont think this
issue is going away, Stafford said.
The state could go in any of three
directions, he said: The federal
government could operate the
exchange, the state could do it in
compliance with the ACA, or
the state could create something
on its own that doesnt meet the
ACA requirements.
Anna Lambertson, executive
director of the Kansas Heatlh
Consumer Coalition, said she
was disappointed that Brownback turned
down the grant. From our perspective, that
was an opportunity for Kansas to lead the
nation. We could truly have been an
innovator.
The exchange idea is denitely not dead,
she said. A group of consumer advocates is
working on it. We just wont have the
innovator grant to do it.
Dan Murray, Kansas director for the
National Federation of Independent Business,
which opposes the health reform law, said he
didnt have a reaction to the governors
decision one way or the other. But his
members have made clear they would prefer
it to be a state-run exchange, not a federal
exchange, he said.
Thats under the assumption that we will
be forced to create one, that the law
withstands the challenges.
Bob Tomlinson
Kansas Assistant
Insurance Commissioner
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Page 3
Payers & Providers
Longer ALOS!*
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*For our ads, not your hospital
NEWS
In Brief
resources for the hospital. What
were saying is you cant bring these
contaminants into the hospital. This is
a patient-care conversation, not an
employee conversation.
As part of the policy to discourage
smoking. IU Health is also making the
Quit for Life program available to
employees. A survey in 2010
determined that 6% of IU Health
employees smoked.
Illinois Re-instates Law
Publishing Physicians
History and Information
A new law that went into effect last
week in Illinois gives patients access
to extensive histories of physicians,
including whether they have been
convicted of a crime, been red, or
had a medical malpractice judgment
led against them.
A web site to be developed by the
states Department of Financial and
Professional Regulation will post the
physicians medical school, specialty
board certication, number of years in
practice, and whether the physician
participates in Medicaid. The web site
address is idfpr.com.
The Patients Right to Know Act
was signed by Gov. Pat Quinn on Aug.
10.
One of the ironies of being an
American is it can be easier to nd
information about a dishwasher that to
nd information about a doctor, said
Brent Adams, secretary of the
department.
The physician prole program was
rst launched in 2008 but was taken
down in 2010 after a ruling by the
Illinois Supreme Court. It was highly
popular during its brief tenure,
averaging 150,000 hits per week.
Physicians will have 60 days to
enter and edit information about
themselves before the site goes live.
The regulatory agency has been in
possession of much of this information
but has not had the authority to make
it public. Healthcare employers are
required to notify the agency when
they terminate physicians privileges,
and insurance companies must report
malpractice payments.
Organizations in four Midwestern states will
receive grants to construct seven new
community health centers as part of a funding
award totaling $29 million announced last
week by the U.S. Department of Health and
Human Services.
The funding, authorized by the Affordable
Care Act, will create community health
centers in 67 localities around the country,
serving 286,000 patients.
Community health centers are intended to
improve the health of underserved regions and
vulnerable populations. The grants will
support new access points for primary and
preventive healthcare.
We are making an investment in the
health of people and the health of our
communities, said HHS Secretary Kathleen
Sebelius. We are removing barriers that stand
in the way of affordable and accessible
primary health services.
Applicants for the awards included public
and nonprot private entities, and tribal, faith-
based and community-based organizations.
Health center applicants in 23 states plus
Puerto Rico were given grants.
In the Midwest, organizations in these
states and localities were selected:
Illinois: Carlinville, Chicago
Kansas: Wichita, Pittsburg
Missouri: Sedalia
Ohio: Columbus (2 locations)
No grants were awarded in Iowa, Indiana,
Michigan, Minnesota, or Wisconsin.
Blue Cross and Blue Shield of Michigan will
have to mount a full defense against the gov-
ernments lawsuit alleging it engaged in uncom-
etitive practices in hospital contracting,
U.S. District Judge Denise Page Hood ruled
in Detroit on Aug. 12 against the Michigan
Blues motion to dismiss the case, led by the
U.S. Justice Department and the Michigan
Attorney Generals ofce in 2010. She
scheduled the trial to begin in April 2013. The
judge had earlier signaled her intent to allow
the case to proceed to trial in an oral statement.
The case involves so-called most-favored-
nation contracting, in which Blue Cross
requires competitors to pay more than it does
for hospital services.
It is plausible that the MFNs entered into by
Blue Cross with various hospitals in Michigan
establish anticompetitive effects as to other
health insurers and the cost of health
services, the judge wrote in a 23-page
opinion.
Blue Cross said it would appeal the ruling.
Helen Stojic, Blue Cross spokesman in
Detroit, said the contracts guarantee low
prices for consumers. Our hospital discount
are a vital part of our statutory mission to
provide Michigan residents with statewide
access to healthcare at a reasonable cost,
said Jeffrey Rumley, the companys general
counsel, in a statement.
Blue Cross is the dominant payer in
Michigan. It contracts with 70 of the 131
hospitals in the state, the government case
says. Some competing health plans were
required to pay 30% to 40% more than Blue
Cross at certain hospitals, the suit argues.
Michigan Blues Case Will Go to Trial
U.S. Judge Rules Against Insurer in Antitrust Suit
HEALTHCARES BEST ADVERTISING VALUE
]
PAYERS & PROVIDERS reaches 5,000 hospital, health plan and non-
prot executives statewide. There is no better venue for marketing
your organization or conference, or recruiting new staff.
CALL (877) 248-2360, ext. 2
HHS Awards Grants to 7 in Midwest
New Community Health Centers Seen in 4 States
!!!"#$$!%&!'(&)*+!,!'*-./0)*+!'1%2/+3/456!778
Payers & Providers Page 4
When the Affordable Care Act goes into effect
in 2014, millions of previously uninsured
Americans will receive health coverage through
private and public mech-anisms. Before that
happens, we need to know more precisely who
has access to care now. That was the goal of the
Department of Health and Human Services
when it commissioned a mystery shopper
survey of primary care access.
Unfortunately, the HHS study was quickly
shot down by a vocal group of physicians and
lawmakers who complained about
government spying and implied that the
clandestine method of data
collection was unethical and
constituted entrapment. One of
the most vocal opponents in this
regard was the outgoing
president of the American
Medical Association, Cecil B.
Wilson, M.D., who said there is
no need to study primary care
access because the physician
shortage is well documented.
However, he then cited the fact
that 22 specialty societies are
projecting shortages.
But that was not the point
of the proposed HHS study.
Relative to other
industrialized countries, the
United States has a disproportionate shortage of
primary-care physicians compared to specialty
physicians. It is also highly likely that access to
primary care varies considerably by geography.
It seems that the HHS study was cancelled
largely due to a misunderstanding of the value
of audit studies (the scientic name for mystery
shopper studies). Audit methodology is a well-
established research tool used both to measure
quality and access in both private and public
markets. The technique is hardly new. It has
been used to uncover discrimination and
disparities in access to employment, mortgage
lending, and fair housing. HHS has used similar
methods to audit the quality and accuracy of
marketing and sales presentations led by private
Medicare plans; the Government Account-
ability Ofce used secret shoppers to examine
Medicare's own help line. Health insurance
plans, hospitals, and even physician ofces also
have used secret shoppers to uncover areas for
improvement.
Importantly, when audit methods are used
for research, human subjects are protected.
Scientic institutional review boards approve the
clandestine data collection because it reduces
bias. The identities of the practices that are called
are never disclosed. The whole purpose of the
HHS study was to monitor the system, not
individual providers. Such methods are as
rigorous and ethical as randomized and double-
blinded clinical trials. Just as well-designed
clinical trials advance clinical care, well-designed
audit studies are a powerful tool for
understanding the experiences of patients as they
seek needed health care.
HHS was planning to use a
high-quality survey rm, the
National Opinion Research
Center (NORC). The reasonably-
priced ($347,000) study would
have targeted more than 4,000
family medicine, pediatric,
general medicine, internal
medicine, and obstetrics-
gynecology practices in nine
states, selected based on the
numbers of uninsured adults so as
to generate national estimates
about the impact of the newly
insured on primary care
access. Practices would have
been contacted twice by
simulated patients seeking
new patient appointments for either routine or
acute care, once stating they had private
insurance and a second time with either Medicare
or Medicaid. An 11% sample of the same clinics
would have been called a third time, disclosing
the nature of the research study and asking the
practice if they are accepting new patients and
whether appointment availability varies by
insurance status. This would have claried
whether more routine provider surveys would
give the same results.
I hope that better understanding of the audit
methodology will change the public discourse
and encourage HHS to reconsider the proposed
study, which is needed to give us some reliable
national estimates about current primary care
capacity and which will determine the most
accurate and cost-effective method for tracking
access to primary care in the future.
OPINION
Who Really Has Access to Care?
Audit Studies Can Give a True Picture If We Use Them
By Karin V. Rhodes, M.D.
Karin V. Rhodes, M.D., is director of the
Division of Emergency Care Policy
Research at the University of Pennsylvania.
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MARKETPLACE/EMPLOYMENT
Payers & Providers Page 5


luyors & lrovdors und MCCL prosont koundtubo lntoructvo. lt dobuts Murch 20|| n tho luyors & lrovdors Nutonu odton.
Cur roudors uvuys vunt to knov vhut s on tho mnds ol houthcuro's c-suto oxocutvos. Conloroncos und trudo ovonts olton
ony uov lor crucu momonts to ntoruct vth thoso thought oudors. \th koundtubo lntoructvo, you' cut through tho
promnuros und mmodutoy knov vhut's on thor mnd.
Lvory koundtubo lntoructvo v louturo u C&A sosson conductod by luyors & lrovdors lubshor kon Shnkmun. Hs
docudos ol oxporonco n ournusm und tho houthcuro ndustry v promso concso und rovoung ntorvovs.
1opcs lor upcomng koundtubo lntoructvos ncudo:
!! lntogrutod Systoms vs. lrvuto lructco: 1o vhut dogroo v physcuns not uroudy n urgor modcu groups or ntogrutod
houth systoms romun n prvuto pructco durng ths docudo, und vhy. \hut uro tho udvuntugos, dsudvuntugos und
mpcutons n toduy's onvronmont:
!! Modcud luns und Dovory Systoms: Hov much s thor cout grovng us Modcud onromont s prooctod to sour us
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houth puns und systoms try to ncrouso shuro und concontruton n ths murkot:
!! Accountubo Curo Crgunzutons: Aro thoy ovorhypod: \hut typo ol houth curo systoms shoud bo pursung ACCs, und
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ncuson:
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no moro thun ono hour. Cu kon Shnkmun ut 877-248-2360, oxt. |, or o-mu hm ut odtorpuyorsundprovdors.com.
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*New England Journal of Medicine, 2004.
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Payers & Providers
MARKETPLACE/EMPLOYMENT
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