For the first time in eight years, Medicare premiums are going to remain unchanged for 2009.  What is the reason for the sudden change?  Well, due to a hospice payments accounting error, there is a surplus of capital available and therefore premiums are not going up, however with health care costs consistently outpacing inflation, it seems as if this move is more of a political maneuver rather than simply accounting for long-term costs.

Victoria Colliver, of the SFGate, had this to say about the situation, “From 2005 to 2007, about $9.3 billion in hospice payments mistakenly had been taken out of the portion of Medicare that beneficiaries pay premiums for, which includes outpatient doctor visits, home health services, physician-administered drugs and medical equipment. Those payments should have come out of Medicare’s Part A hospital fund and have been repaid this year to the fund supported by premiums, known as Part B.”

“It was painful to catch up, but now we have one year in which we can get rid of the catch-up amount and use that to offset the premium increases that otherwise would have happened,” said Richard Foster, Medicare’s chief actuary, estimating that next year’s increases would have been about 8.5 percent.

This is not a long term solution by any means, in fact this is a a one-time event that does nothing to address the core issue of:

• Compensating physicians properly for care
• Making healthcare affordable

What will the next few years look like for both patients and physicians?  Foster said the formula will cause a 20% reduction in physician payments for Part B Medicare services in 2010.  And this predicament will prove to not be beneficial for either party.

So Medicare patients, enjoy next year’s premiums, however please understand that there are deeper issues that need to be resolved in order to have a fully functional health care ecosystem.

After enjoying a steady decline in health care cost trends over the past eight years, U.S. companies have seen average rate increases settle in around 6 percent to 7 percent, according to Hewitt Associates, a global human resources consulting and outsourcing company. In 2008, average health care costs increased 6.0 percent, up from 5.3 percent in 2007. Hewitt is projecting a 6.4 percent average increase for employers in 2009.

According to Hewitt, the average health cost per person for major companies will increase from $8,331 in 2008 to $8,863 in 2009. The amount employees are being asked to contribute toward this cost will be $1,946, representing approximately 22 percent of the overall health care premium and up from $1,806 in 2008. Average employee out-of-pocket costs, such as copayments, coinsurance and deductibles, are also expected to increase from $1,707 in 2008 to $1,880 in 2009. Overall, employees’ total health care costs—including employee contribution and out-of-pocket costs—are projected to be $3,826 in 2009, up 8.9 percent from $3,513 in 2008.

“Employers continue to diligently manage health care costs through a combination of approaches, including continued cost shifting, tougher negotiations with health plans, and expanded health and wellness programs with incentives to encourage behavior change, which is why we’re seeing rate increases level out a bit,” said Jim Winkler, North American practice leader of Hewitt’s Health Management Consulting business. “The challenge now will be sustaining or even lowering those rate increases in an environment where the legislative, economic and political landscape is rapidly changing, and where companies are under more pressure than ever to balance their needs with the needs of employees and their families. Over the next few years, they will need to take a more rigorous and aggressive approach to getting employees healthy—which means implementing a combination of programs that drive actual behavior change, eliminate barriers to health and encourage people to take more responsibility for their personal health. These are the steps that will ultimately make an impact in lowering overall benefit costs and putting more money in the wallets of employees.”

2008 Cost Increases by Major Metropolitan Area

While Hewitt’s data shows relatively flat overall cost increases in 2008, a few major U.S. markets experienced rate increases significantly higher than the average: Cincinnati, OH (11.1 percent), Columbus, OH (9.9 percent), Orlando, FL (9.2 percent) and Minneapolis, MN (9.1 percent). Conversely, Austin, TX (1.0 percent), Houston, TX (2.6 percent) and Chicago, IL (3.7 percent) experienced lower-than-average rate increases in 2008.

2008 Cost Increases by Plan Type

In 2008, Hewitt saw average cost increases of 10.1 percent for traditional indemnity plans, 8.0 percent for health maintenance organizations (HMOs), 3.9 percent for point-of-service (POS) plans and 4.8 percent for preferred provider organizations (PPOs).

For 2009, Hewitt forecasts that companies will receive cost increases of 6.5 percent for traditional indemnity plans, 8.0 percent for HMOs, 5.5 percent for POS plans, and 5.5 percent for PPOs. That means from 2008 to 2009, the average cost per person for major companies will increase from $9,296 to $9,900 for traditional indemnity plans; $8,442 to $9,117 for HMOs; $8,986 to $9,480 for POS plans; and $8,048 to $8,491 for PPOs.

“Over the past few years, HMO rates have averaged almost two times higher than the rate increases of PPO or POS plans, mainly due to the fact that local and regional fully insured HMO plan offerings have higher administrative costs and are subject to state-mandated benefit requirements that drive up premium costs,” said Bob Tate, chief health care actuary at Hewitt. “We expect to see this trend continue, particularly because premiums translate directly into profit and loss for fully insured HMOs, and higher rate increases for these plans ensure higher profit margins.”

Employer Response to Rate Increases

To keep rate increases in the 6 percent to 7 percent range, employers continue to take proactive steps to mitigate costs and implement initiatives focused on improving employee health and productivity. These steps include:

Increasing attention on plan dependents. While cost-shifting in its traditional sense has tapered, an increasing number of companies are beginning to look at cost shifting a portion of their dependent subsidy dollars to employees, either through increased payroll contributions for dependent health care coverage or by applying surcharges to encourage dependent spouses to take coverage under their own employer’s plans.

In addition, employers are becoming increasingly interested in conducting dependent audits, which are designed to assess and remove plan costs for dependents who don’t qualify for coverage based on the employer’s eligibility requirements. More than 40 percent of Hewitt’s clients have conducted a dependent audit in the past five years, and another 10 percent planned to conduct one in 2008.

Eliminating “cost-inefficient” plans. As fully insured HMO rates increase in excess of overall medical cost increases, an increasing number of companies are consolidating plan participants under self-insured arrangements with fewer health plans. This enables them to streamline administration, offer more consistent designs across their markets and reduce costs—all of which help them avoid additional cost shifting to employees, either in the form of reduced benefits or higher payroll increases.

Aggressively managing health plans. As in past years, employers continue to negotiate aggressively with their health plans to try to reduce initial premium increases, and they are coming to the negotiations table with clear expectations and requests.

In addition to negotiating costs, an increasing number of employers are holding health plans accountable for delivering on specific measures in their health and productivity programs, including participation levels, clinical outcomes, reductions in claim costs and member satisfaction levels. Hewitt research shows that almost 60 percent of companies planned to ask their vendors for quarterly reports on their contribution to their health and productivity strategy within the next five years.

Continuing emphasis on employee health and productivity. Companies are continuing to invest significant resources in programs aimed at improving health and productivity of employees and their families. Flu shots, smoking cessation, physical fitness and weight management programs, as well as health risk questionnaires and online tools, are currently the most popular programs offered by employers. On-site health services, biometric screening and health/clinical advocacy programs—while still emerging trends—are also gaining increased attention, as companies look for more effective ways to motivate consistent and long-term employee behavior change.

To encourage participation in these programs, Hewitt’s research shows just under two-thirds (63 percent) of companies provide or plan to provide employees with financial incentives, most likely in the form of credits or lower premiums. While most companies work on the “honor system,” expecting employees to participate in a program once they enroll, a smaller minority are beginning to require completion of a program as a prerequisite for obtaining the incentive.

On the opposite end, almost 17 percent of companies in 2008 charged or planned to charge higher contributions for employees engaging in certain health behaviors, such as smoking. Another 40 percent said they were considering this option for a future date. In addition, 5 percent of companies in 2008 planned to require employees to take health assessments and/or participate in health improvement programs in order to receive health benefits, and more than half of companies said they are considering doing so at a future date.

“Over the past two years, we’ve seen health and productivity programs become fairly well established in large organizations, and now we’re seeing increased efforts on the part of the employer—through both carrot and stick approaches—to ensure employees are actually getting value from the programs that are offered,” said Winkler. “The next step will be for companies to determine whether these programs are providing a return on investment. Most currently measure the effectiveness of their programs by looking at changes in overall costs from year to year, or by the levels of employee participation in these programs. While these measures provide some short-term insight, companies that measure performance in actual outcomes will be in the best position to determine whether their programs have made an impact on truly improving employee health and productivity.”

Digging deeper into chronic health conditions. According to Hewitt research, more than half (51 percent) of employees or their dependents have a chronic health condition that requires ongoing care. Most companies (93 percent) have already identified the chronic health conditions that are most pressing for their employee populations and plan to target these conditions over the next three to five years, with particular emphasis on tackling diabetes. Half (50 percent) currently offer employees enhanced medical and/or prescription drug benefits for at least one or more chronic condition, and almost a quarter (23 percent) provide incentives for at-risk individuals who participate in condition management programs and comply with recommended therapies.

Companies also continue to show an interest in value-based design (VBD) programs, which reduce or remove financial barriers for health care services proven to be effective to treat certain conditions, while potentially increasing cost-sharing for those services that have not been proven to be as effective. Hewitt’s research shows that while just a small percentage of companies use value-based design programs today (12 percent), more than half (52 percent) said they were considering them in the next three to five years. Of those that currently offer value-based plan designs, 16 percent planned to expand the program beyond prescription drugs to include preventive care services or medical care services for certain chronic illnesses in 2009, and another two-thirds planned to do so in the next three to five years.

A single cell can repopulate damaged skeletal muscle in mice, say scientists at the Stanford University School of Medicine, who devised a way to track the cell’s fate in living animals. The research is the first to confirm that so-called satellite cells encircling muscle fibers harbor an elusive muscle stem cell.

Identifying and isolating such a cell in humans would have profound therapeutic implications for disorders such as muscular dystrophy, injury and muscle wasting due to aging, disuse or disease.

“We were able to show at the single-cell level that these cells are true, multipotent stem cells,” said Helen Blau, PhD, the Donald E. and Delia B. Baxter Professor of Pharmacology. “They fit the classic definition: they can both self-renew and give rise to specialized progeny.” Blau is the senior author of the research, which will be published Sept. 17 in the online issue of Nature.

“We are thrilled with the results,” said Alessandra Sacco, PhD, senior research scientist in Blau’s laboratory and first author of the research. “It’s been known that these satellite cells are crucial for the regeneration of muscle tissue, but this is the first demonstration of self-renewal of a single cell.”

One-tenth of the body’s mass is skeletal muscle. Satellite cells hang out between a muscle fiber and its thin, membrane-like sheath, waiting to spring into action when the fiber is damaged by exercise or trauma. When necessary, they begin to divide to make more specialized muscle cells. This property alone, however, doesn’t qualify them as stem cells. That designation requires them to be able to also make copies of themselves for future use.

Although many researchers suspected that the satellite cell population included muscle stem cells, it was difficult to prove because not all satellite cells are identical. It was possible that one subpopulation was responsible for making lots of specialized muscle cells, while another replenished the supply of satellite cells.

This divide-and-conquer approach might be efficient, but doesn’t have the same exciting clinical applications as identifying a true stem cell. However, analyzing the specific properties of a single cell is technically difficult, and usually requires hundreds of hours of painstaking microscopic analysis of tissue slices from many laboratory animals.

Sacco used a trick to overcome these hurdles. She isolated satellite cells from a mouse genetically engineered to express a glowing protein, luciferase, first identified in fireflies. She then used a novel imaging technique developed at Stanford to follow their fate after transplantation into living animals that did not express the protein. Because this non-invasive method allows repeated imaging of the same animal, fewer mice are needed for the research.

“To be able to detect the presence of the cells by bioluminescence was really a breakthrough,” said Blau, the director of the Baxter Laboratory of Genetic Pharmacology. “It taught us so much more. We could see how the cells were responding, and really monitor their dynamics.”

Sacco transplanted a single satellite cell expressing the glowing protein into the hind leg muscles of each of 144 mice; in six of the mice, these cells went on to proliferate and self-renew in the recipient’s existing muscle. The relatively low success rate is most likely due in part to the fact that not all of the satellite cells are stem cells and also to the difficulty of keeping a lone cell alive and happy during isolation and transplantation.

The leg muscles of these six mice were repopulated with between 20,000 to 80,000 glowing progeny of the original satellite cell. Many cells made new muscle fibers or contributed to the recipient’s muscle fibers. Most exciting, several of the glowing cells expressed cell markers specific only to satellite cells, indicating the original cell was also making more copies of itself and confirming that it was a stem cell.

In another set of experiments, Sacco and her colleagues transplanted between 10 and 500 satellite cells expressing the glowing protein into each mouse leg muscle. These cells also engrafted and proliferated extensively, increasing approximately a hundredfold in number after transplantation and a hundredfold more in response to muscle damage. They contributed extensively to the recipient’s muscle, both by forming new fibers and by fusing with injured fibers. Furthermore, once the need for reinforcements had been met, the satellite stem cells stopped proliferating; that is, unlike tumor cells, the transplanted cells were responsive to local cues.

Finally, the researchers were able to induce a second and third wave of proliferation of the glowing satellite cells with repeated incidences of damage, showing that the stem cell function persisted over time.

“Now we can monitor the same mouse over time, and see how various treatments affect muscle regeneration,” said Sacco. She and her collaborators are now turning their attention to isolating similar muscle stem cells from humans.

In addition to visually following the fate of the glowing cells, researchers can also use the intensity of the signal to assess the speed and strength of the stem cells’ rescue response under a variety of conditions — an important feature that will allow researchers to directly compare the function of putative stem cells in a variety of injury and disease models.

“This technique provides the first quantitative way to compare stem cells in solid tissues,” said Blau. “By providing a means of assessing the efficacy of a range of stem cell therapies in a variety of tissues, I think it will greatly impact not only the study of muscle stem cells in regenerative medicine, but also the stem cell field in general.”

Sacco and Blau’s Stanford collaborators included Regis Doyonnas, PhD, senior scientist; Peggy Kraft, research assistant; and Stefan Vitorovic, a research assistant and Stanford undergraduate student. The research was funded by the National Institutes of Health and by the Baxter Foundation.

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