Healthcare Roundup: Hospitals Back Retail Clinics, Wellcare Settles, CMS Cracks Down on Hospitals, and More

(MoneyWatch)  Retail Clinics Take a New Slant ?€" The economics of retail clinics have turned out to be less than stellar. While there are still around 1,000 of them across the country, an increasing number of the clinics are backed by or affiliated with hospitals, which can generate extra revenue by using them as referral sources. Wal Mart, which closed the majority of its retail clinics last year and parted ways with RediClinic, now has 33 clinics, of which most are operated in partnership with local hospital systems. Meanwhile, the Cleveland Clinic has put its name on a cluster of CVS clinics in Ohio, and the Mayo Clinic has opened Express Care clinics at a shopping mall and a supermarket in Rochester, MN. [Source: New York Times]

WellCare settles case ?€" WellCare Health Plans agreed to pay $80 million to settle a case in which the Florida insurer was charged with defrauding Florida's Medicaid program by inflating on its books what it had spent on care. The government's suit against WellCare caused a management shakeup and forced the company to restate three and a half years of earnings because of nearly $40 million in what WellCare termed "accounting errors." WellCare still administers medical benefits for about 2.5 million people in government programs in several states. [Sources: Wall Street Journal, BNET Healthcare]

Bill to increase residency slots ?€" Everyone, it seems, has been crying about the dearth of primary care physicians lately. Well, now Congress is trying to do something about it. Senators Bill Nelson (D-FL), Charles Schumer (D-NY), and Majority Leader Harry Reid (D-NV) have introduced a bill that would increase the number of Medicare-supported residency positions by 15,000. Residency programs for primary care and general surgery and ambulatory care positions in physician offices and community health centers would receive additional funding. A similar measure is being considered in the House. [Source: Modern Healthcare]

CMS cracks down on hospital payments ?€" CMS actuaries estimate that hospitals were overpaid 2.5 percent, or $2.2 billion, in FY 2008, because many overcoded the severity of their case mix under the new DRG system. As a result, CMS is considering paring down its "market basket" payment increase to hospitals to just 0.2 percent for 2010. CMS calculates that if it applied the full correction to the amount it is now paying hospitals, their reimbursement would drop 8.5 percent from FY 2010 to 2012. But hospital execs need not despair--CMS is calling for comments, which may mean that it's ready to negotiate. [Source: SG2]

Thumbs down on virtual colonoscopy - After fending off a storm of lobbying, including letters from 50 Congressmen, CMS has rejected Medicare coverage of virtual colonoscopy. The agency concluded there was insufficient evidence to show that the CT version of the cancer screening test was as good as traditional colonoscopy. It also noted that when virtual colonoscopies do pick up cancerous growths, a regular colonoscopy must still be done to remove them. CMS' decision bodes well for the potential impact of comparative effectiveness research, but it also shows why device makers oppose such research. [Sources: AP, BNET Healthcare]