Monthly Archives: November 2021

Nonprofit health plans focus on reducing premiums, expanding benefits

Posted on by • Posted in Alliance of Community Health Plans (ACHP), Center for Medicare and Medicaid Services (CMS), Complex Care, Health Plan, Health Plan Nonprofit, High Premiums, Home Care, Home-Based Care, Price Transparency, Virtual Care Strategy, Virtual Healthcare • Leave a comment

https://www.healthcarefinancenews.com/news/nonprofit-health-plans-focus-reducing-premiums-expanding-benefits

Nonprofit payers have used a variety of strategies to address plan affordability throughout the next year, including reducing premiums by as much as 10% in some instances, finds a new report from the Alliance of Community Health Plans.

ACHP’s inaugural Report on Affordability found that when health plans manage premiums, provide enhanced benefits, smooth the way for access and reduce costs for governments and employers, the system – and outcomes – improve.

This is exemplified by some of the strategies employed by ACHP member plans, which largely reduced insurance premiums or held them flat, with some member companies reducing premiums by as much as 10%.

On top of that, every plan added new health benefits, or expanded existing ones, without increasing costs to consumers, the report found. Some of the additional benefits include free vaccines, transportation, hearing aids, reduced insulin costs, nutrition classes and meal services, smoking cessation programs and $0 co-pays for mental health visits.

Roughly three-quarters of ACPH plans moved acute and recovery services out of the hospital setting, which was deemed too expensive in most cases. By establishing hospital-at-home programs and remote patient monitoring, plans have generated significant savings for both consumers and the health system, plus improved consumer satisfaction, results showed.

Meanwhile, about two-thirds of the plans offered price transparency tools meant to allow consumers to make more-informed choices. They included information on inpatient and outpatient services, behavioral health, prescription drugs, lab and imaging services and other fees, and many provided options for several locations and virtual care, a move intended to reduce travel costs.

Priority Health’s cost estimator has tallied $13.8 million in shared savings and paid out roughly $4.1 million in rewards to members.

In a bid to improve access, all plans expanded telehealth offerings, smoothing access to mental healthcare as well as to specialties such as Medication Assisted Treatment, physical and occupational therapy, medication management, speech therapy and dialysis. Most eliminated co-pays and cost sharing.

WHAT’S THE IMPACT?

In the last year, ACHP members expanded the hospital-at-home care model, attempting to offer more efficient ways to provide acute and recovery care as well as care management in a home setting. The expansion of virtual care, complete with remote monitoring and social support, reduces the risk of infection, keeps patients comfortable at home and alleviates inpatient hospital bed shortages, according to the report.

For example, SelectHealth and its owner system, Utah-based Intermountain Healthcare, launched Connect Care Pro, a virtual hospital meant to enable access for patients in remote locations. The online, digital program connects more than 500 caregivers across the Intermountain system, enabling patients to receive both basic medical and specialty care without making a long journey, including by helicopter.

Presbyterian Health of New Mexico’s Complete Care, on the other hand, is a wrap-around program that combines primary, urgent and home care for patients with complex medical needs, including those with functional decline and at risk of needing long-term institutional care. Patients receive and manage their care from home, 24/7, including acute and palliative care, house-call and same-day visits, as well as medication management. In addition, care coordinators and social workers manage social needs, including transportation and food insecurity.

And the Home Care Recovery program from Wisconsin’s Security Health Plan and Marshfield Clinic Health System brings the elements of acute inpatient recovery to a patient’s home, eliminating fixed-cost allocations associated with traditional hospital-level care and reducing post-acute utilization and readmissions for 150 traditional inpatient conditions such as congestive heart failure, pneumonia and asthma.

THE LARGER TREND

A 2016 report from the Centers for Medicare and Medicaid Services found that nonprofit organizations and health plans tend to receive higher star ratings than their for-profit counterparts.

For Medicare Part Ds, about 70% of the nonprofit contracts received four or more stars compared to 39% of the for-profit MA-Part-Ds. Similarly, roughly 63% of nonprofit prescription drug plans received four or more stars, compared to 24% of the for-profit PDPs.

New spending from Build Back Better would outweigh cuts in DSH payments, finds Urban Institute

Posted on by • Posted in ACA, Health Insurance Coverage Adequacy, Health Policy, Health System, Hospital, Hospital Industry, Medicaid, Medicaid Expansion, Medicare Disproportionate Share Reimbursement • Leave a comment

https://www.healthcarefinancenews.com/news/new-spending-build-back-better-would-outweigh-cuts-dsh-payments-finds-urban-institute

Earlier this year, President Joe Biden proposed a framework called Build Back Better that would, among other things, expand Medicaid. If the BBB plan is implemented, a new Urban Institute analysis predicts that federal health subsidies would outweigh a projected increase in hospital spending by about 3-to-1.

The current draft of the Build Back Better Act (BBBA) includes provisions that would extend enhanced ACA subsidies to people below 100% of the federal poverty limit in the 12 states that have not expanded Medicaid. These provisions are intended to extend health insurance coverage to millions of people and to lower the cost of healthcare for many families.

Hospitals in non-expansion states would see more than $6.8 billion in new spending as a result of the BBBA’s closing of the Medicaid gap, which is about 15 times larger than the expected disproportionate share hospital allotment cuts of $444 million, the findings showed.

Overall, new federal health subsidies disbursed to non-expansion states for people in the coverage gap would be $19.6 billion. Florida, Texas, Georgia and North Carolina hospitals are among those that would have the most substantial increases in spending because of added coverage, the analysis found.

The Urban Institute also determined that the benefits of the changes would not necessarily go to the same hospitals that would sustain reductions in DSH allotments. If true, that means some hospitals may be worse off with the proposed changes.

Still, though only a portion of the total increased federal spending under the BBBA provisions would flow to hospitals, the researcher concludes that in the years during which additional subsidies would be provided, hospitals would be substantially better off overall than they are under current law, even after proposed Medicaid DSH cuts are taken into account.

WHAT’S THE IMPACT?

The effects of the new federal health subsidies would vary across states, largely because of differences in state populations, the Urban Institute showed. 

Florida hospitals, for instance, are projected to gain $1.7 billion in new spending because of added coverage, and to lose $33 million in DSH allotments, resulting in a net gain of $1.6 billion. Texas hospitals could gain $1.6 billion in new spending and lose $157 million in DSH allotments, gaining almost $1.5 billion. Georgia and North Carolina hospitals would also have substantial increases in spending because of added coverage that would exceed their reduced Medicaid DSH allotments by more than $750 million and almost $900 million, respectively. 

Meanwhile, because Wisconsin already covers adults up to the FPL under Medicaid, it would have a small net loss in payments to hospitals for the Medicaid gap population, but a net gain overall.

Hospitals serving a disproportionately high share of undocumented people would see less benefit from reform than other hospitals, and could see substantial DSH cuts. At the same time, the overall decline in the number of uninsured people could save spending on uncompensated care for the uninsured, data showed. If states and localities save on uncompensated care, the savings could be distributed to hospitals most in need after DSH cuts.

THE LARGER TREND

The BBBA’s increased subsidies are set to end after 2025, whereas the bill’s Medicaid DSH cuts would be permanent. More broadly, nationwide Medicaid DSH cuts specified under the Affordable Care Act have been repeatedly delayed, but they are now due to be implemented in fiscal year 2024. At $8 billion in that year, those cuts are much larger than the DSH cuts specified in the BBBA. 

Unless Congress intervenes, UI said, these ACA-related DSH reductions would be in addition to the DSH cuts in the BBBA for the 12 non-expansion states. 

The BBBA was slated to go to a vote the week of November 15, but that timetable may shift. According to CNN, the Congressional Budget office has yet to give a final cost estimate score for the bill; a group of moderate Democrats is waiting to see the CBO score before deciding whether to vote for the bill.

Oak Street faces DOJ inquiry into third-party marketing, transportation relationships

Posted on by • Posted in Civil Investigative Demand, Dept of Justice (DOJ), False Claims Act, Fraud and Abuse, Health Insurance Industry, Medical Loss Ratio (MLR), Medicare Advantage, Medicare Fraud • Leave a comment
https://www.healthcaredive.com/news/oak-street-doj-inquiry-third-party-marketing-transportation-q3/609722/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202021-11-09%20Healthcare%20Dive%20%5Bissue:37891%5D&utm_term=Healthcare%20Dive

Dive Brief:

  • Oak Street Health, a value-based primary care network for adults on Medicare, is facing a Department of Justice inquiry into its relationships with third-party marketing agents and its provision of free transportation for members.
  • The DOJ is investigating whether Oak Street violated the False Claims Act, per a regulatory filing published Monday. On a call with investors Tuesday, management declined to provide additional information into the government’s request, saying it was too early to know for sure what exactly the agency is investigating but that they’re working to comply.
  • Otherwise, the provider had a generally solid third quarter with better-than-expected revenue and well-controlled medical costs, analysts said. Oak Street increased its full-year 2021 guidance following the results, which beat Wall Street expectations with topline revenue of $389 million, up 78% year over year and a quarterly record for the company.

Dive Insight:

The federal government is increasingly cracking down on alleged fraud, especially in the Medicare Advantage program. In privately run MA plans, CMS pays companies on a per-member basis, then adjusts payments based on the acuity or severity of their member’s health status, as supported by provider data like diagnostic codes. Generally, the sicker the member, the higher the plan’s reimbursement.

That’s led to allegations of plans hiking risk scores to overinflate members’ health needs, resulting in higher payments from CMS. Watchdogs have been finding higher incidence of fraud and abuse as the MA program becomes more popular, growing to cover more than 40% of all Medicare beneficiaries.

Oak Street isn’t a traditional plan itself, but enters into full-risk contracts with Medicare Advantage plans, and via CMS’ direct contracting program, in which it assumes full responsibility for patients’ medical expenses in exchange for a fixed per-member, per-month payment. The Chicago-based company is the latest target of a federal inquiry into whether it violated the False Claims Act.

According to the primary care company, the DOJ sent a civil investigative demand on Nov. 1 asking for information about Oak Street’s relationships with third-party marketers and transportation partners.

Oak Street does provide patients transportation to appointments when they need it and has various ways for finding new patients, including community partnerships, but it’s unclear what the DOJ is specifically investigating, CEO Mike Pykosz told investors.

“We have had no meaningful conversations with the government,” Pykosz said. “I’m not really sure what the link is.”

The CEO noted it’s not unusual for such inquiries to take months to resolve, particularly in the hyper-regulated healthcare industry, but said he wouldn’t speculate further.

A civil investigative demand is a form of administrative subpoena, and doesn’t denote any regulatory or legal action itself. However, it is used by the government to kick off investigating potential False Claims violations, and determine whether there’s sufficient evidence to warrant filing an action, according to the National Law Review.

Penalties for violating the act could range from $11,655 to $23,331 per violation, plus triple damages. Total penalties have resulted recently in some significant payouts from MA participants. Notably, in late August, integrated health system Sutter Health agreed to pay $90 million to settle whistleblower allegations of risk adjustment fraud, in the largest False Claims Act settlement against a hospital system in the MA program.

Analysts noted the inquiry, while in early stages, is a point of concern for Oak Street’s future stock performance.

“This creates a new potential risk factor that we are unlikely to get clarity on for some time,” SVB Leerink analyst Whit Mayo wrote in a note.

Oak Street, which also provides services to patients with a range of insurance options, had an otherwise solid quarter, eclipsing $1 billion of year-to-date revenue for the first time in the company’s history.

The highly infectious delta variant did contribute to higher expenses, as it has with other providers.

Oak Street reported $15 million in costs from COVID-19 admissions in the first half of the year, and another $10 million in the third quarter. COVID-19-related expenses surged in the latter half of August and continued into September, but tailed off early into the fourth quarter, CFO Tim Cook said.

The majority of Oak Street’s patients are in northern U.S. markets, however, which experienced coronavirus surges last year during the winter as more people stayed indoors.

“We will see what happens in November and December,” Cook said. “While COVID costs are going to be lower in Q4, unfortunately we’re not in a world where they’re going to be zero.”

In the quarter, the primary care provider’s medical claims expense doubled year over year to almost $310 million. Oak Street’s medical loss ratio of 82.2% was lower than analysts expected, though management said they expected it to be higher in the fourth quarter.

Pykosz and Cook called out medical costs from new patients brought in during 2021 as a system-wide stressor.

Because diagnoses from 2020 claims are used to determine 2021 risk scores, fewer claims last year could mean lower risk scores and lower payments for plans this year. Oak Street’s patients, especially older adults in low-income communities, used fewer services last year during COVID-19, which resulted in lower revenues this year even as costs expanded.

Management said they expected to get back on track in 2022 as patients new to Oak Street this year will contribute to higher reimbursement next year, closing the current medical-cost gap between tenured and new patients.

“This is certainly an outlier year from every other year we’ve had results,” Pykosz said.

Oak Street, which was founded in 2012 and went public in August 2020 at a $9 billion valuation, reported a net loss of almost $110 million in the quarter, compared to a loss of $59 million at the same time last year.

Oak Street continued expanding its membership and network in the quarter, reporting 69% at-risk patient growth and opening 15 new centers in seven new markets.

Oak Street’s competition in the value-based primary care space has ramped up this year, as peers One Medical acquired a rival value-based medical chain and VillageMD got a hefty new investment from drugstore partner Walgreens.

But Pykosz pointed to Oak Street’s exclusive relationship with senior group AARP and its acquisition of specialty telehealth provider RubiconMD as differentiators, while noting there’s room for a number of players in the space.

“At this point we don’t feel there’s a lot of pressure or competitive dynamics pressuring our performance,” Pykosz said.

In the third quarter, Oak Street served 100,500 risk-based patients, representing 76% of its total patient base. The company expects at-risk patient volume to grow to between 111,500 and 113,500 patients this year.

Tenet inks another $1B deal with SurgCenter Development for ambulatory surgery centers, long-term partnership

Posted on by • Posted in Ambulatory Surgery Centers (ASC), For-Profit, Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Mergers & Acquisitions, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Operating Room, Outpatient Care, Strategic Alignment, Strategic Plan, Strategy National • Leave a comment
https://www.healthcaredive.com/news/tenet-1b-deal-surgcenter-development-for-ambulatory-surgery-centers/609718/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202021-11-09%20Healthcare%20Dive%20%5Bissue:37891%5D&utm_term=Healthcare%20Dive
Tenet strikes $1.2B surgery center deal - NewsBreak

Dive Brief:

  • Tenet and its subsidiary USPI have entered into a $1.2 billion deal to acquire ambulatory surgery center operator SurgCenter Development, expanding on a previous $1.1 billion cash deal inked with SCD last year.
  • Under the new deal announced Monday, Tenet will acquire SCD’s ownership interests in 92 ambulatory surgery centers and other support services in 21 states.
  • In addition to the acquisition, USPI and SCD plan to enter into a five-year partnership and development agreement in which SCD will help facilitate “continuity and support for SCD’s facilities and physician partners.” USPI will also have exclusivity on developing new projects with SCD during the five-year agreement.

Dive Insight:

Despite being a legacy hospital operator, Tenet’s outpatient surgery business is key to its long-term strategy.

After the latest deal closes, USPI will operate 440 surgery centers in 35 states, Tenet said Tuesday. The acquisition will boost USPI’s footprint in existing markets, such as Florida where it already operates 47 centers and will gain an additional 15. USPI will also enter new markets, such as Michigan, with a sizable footprint at the outset, executives said Tuesday.

The deal includes 65 mature centers and 27 that have opened in the past year or will soon open and start performing their first cases. Tenet may also spend an additional $250 million to acquire equity interests from physician owners.

Tenet leaders touted SCD’s service line mix, pointing out that a significant portion of the cases performed by these centers are for musculoskeletal care, which includes total joint and spine procedures.

The deal is expected to generate $175 million in EBITDA during the first year, executives said. 

SVB Leerink analysts characterized the deal as savvy and said it will reshape the company’s earnings towards a “faster growing, higher margin, and improved capital return profile.”

Heading into 2021, Tenet had expected a greater share of its earnings power to come from its outpatient surgery business. This deal accelerates that aim over the long-term.

In 2014, Tenet’s ambulatory surgery business accounted for just 5% of the company’s overall earnings. Prior to this latest deal, Tenet expected the unit to account for 42% of its overall earnings in 2021.

This latest announcement follows Tenet’s deal in October with Compass Surgical Partners to acquire its ownership and management interests in nine ambulatory surgery centers located in Florida, North Carolina and Texas for an undisclosed sum.