Value-Driven [IT] Healthcare

Posted on April 29, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Leavitt Pitches Financial Transparency

Staff Reporters

According to Diana Manor, Senior Editor for Healthcare Finance News, the Department of Health and Human Services [HHS] Secretary Michael Leavitt was reported to say that he has no intention of slacking off in efforts to drive transparency into the US healthcare system, despite the winding down of the Bush Administration.  

World Health Care Congress

At the Fifth Annual World Health Care Congress, held last week in Washington, DC, Leavitt reported that in his 272 days left as HHS secretary, he has “a continued sense of urgency” and plans on picking up the pace to drive much-needed change. “I am among those who believe our unbridled healthcare costs will bring our economic system to its knees.”

Among initiatives in the works, Leavitt said HHS is consolidating all healthcare quality standards used across its agencies and will publish them in an effort to boost their market-wide use.

Competitive Bidding

HHS is also experimenting with competitive bidding for bundled services, beginning with a Medicaid demo that HHS officials hope to expand in the future.

The Bush value-driven healthcare plan relies on healthcare IT adoption to record quality measures and aggregate and provide cost and quality information to consumers, but adoption by small physician practices remains at, or below, 10 percent. HHS plans in June to push Congress to tie physician Medicare payment incentives to the use of healthcare IT.

Assessment

Apparently, many HIT standards have been developed over the past few years, but are not being developed fast enough. Leavitt pushed for these HIT initiative back in December 2008, without success.

Conclusion

And so, do you think the next HIT push will be successful or not; and please comment why?

Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Financial Planning: http://www.jbpub.com/catalog/0763745790

Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Administrative Terms: www.HealthDictionarySeries.com

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Filed under: Information Technology | 1 Comment »

Hospital Employee Benefits

Posted on April 29, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

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Tax-Deferred Benefits

[By LaVerne L. Dotson; JD, CPA]

As all readers of the Medical Executive-Post know, there are three categories of benefits that hospitals, healthcare systems, clinics and related medical employers typically provide to their employees, nurses, hospitalists, etc:

  1. Those that are totally income tax-free; some are still taxable for FICA (Social Security and Medicare).
  2. Those that are not taxed at their full economic value; or are taxed at a special preferential rate.
  3. Those in which a tax liability is not incurred until after benefits received.

Tax Deferred Benefits

There are several types of arrangements that allow employees to receive economic benefits currently without having to pay taxes until a later taxable year. Furthermore, some of these arrangements may even provide for a lower taxation rate at that time. These types of benefits are not totally excludable from income forever, however. Rather, they primarily provide deferral of taxable income.

Retirement Plans

The classic example is a retirement plan.  Employers may establish pension, profit sharing, stock-bonus, or annuity plans, as well as 401(k) and 403(b) plans. The tax consequences and most of the formal requirements of these plans are similar. These plans are often referred to as “qualified retirement plans.”

The hospital employer makes contributions on behalf of participating employees. The contributions are placed in a trust fund, custodial account, or annuity contract. The funds are held and accumulated for the benefit of plan participants.

The distribution of the funds to a participant normally occurs no sooner than the participant’s termination of service with the employer, and, no later than attainment of normal retirement age, as defined in the plan. The method of distribution may be a lump-sum payment of all of the employee’s benefits, an installment payment over a number of years (usually 10 to 15), or as an annuity that provides payments over the employee’s and/or spouse’s lifetime.  

The extremely favorable tax consequences of qualified retirement plans are the reason for their popularity. When the hospital makes a contribution on the employee’s behalf to the qualified plan, the employer receives a deduction for the amount contributed; however, the employee will not have to report the contribution as income until the funds are finally distributed.

Contributions to the trust or other qualified fund are accumulated tax-free. Distributions are taxable, but the recipient is generally in a lower marginal tax bracket during retirement than when contributions to the retirement plan were made. This treatment is a truly startling departure from the normal practice under the Code.

Employee FSAs

Assessment

The tax-free accumulation of income (contributions and interest) offers the hospital, clinic or other medical employee great advantage, even if his or her tax rates are the same at the time of deferral as at the time of distribution.

Conclusion

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Filed under: Retirement and Benefits | 6 Comments »