Universal Health Services finance chief Steve Filton on cost containment and challenges hospital CFOs face

https://www.beckershospitalreview.com/finance/universal-health-services-finance-chief-steve-filton-on-cost-containment-and-challenges-hospital-cfos-face.html?origin=cfoe&utm_source=cfoe

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As CFO of one of the nation’s largest hospital management companies, Steve Filton understands the challenges hospitals face.

Mr. Filton has served as executive vice president and CFO of King of Prussia, Pa.-based Universal Health Services since 2003.

He  joined the company in 1985 as director of corporate accounting and in 1991, he was promoted to vice president and controller.

Mr. Filton spoke with Becker’s about some of the challenges facing CFOs and his top cost-containment strategies.

Question: What is the greatest challenge hospital and health system CFOs faced in 2018? Do you expect this to be their biggest challenge in 2019 as well?

Steve Filton: I think effectively we’re in an environment where our payers have all concluded that costs and medical spending have to be reduced, and a lot of that burden ultimately falls on providers, like hospitals and doctors. As a [result], I think hospitals are tasked with the difficult goal of continuing to provide the highest quality care in more efficient ways. I think that was the biggest challenge last year and will be the biggest challenge this year. I think, frankly, for the foreseeable future, that’s the challenge of being a provider in today’s healthcare environment.

Q: How do you feel the CFO role has evolved in recent years?

SF: I think CFOs have a particularly challenging role in that our organizations explore the ways to deliver high quality care that’s best for our patients and try to create an environment that is satisfying for our employees. We as CFOs then say, ‘How do we accomplish these things and remain efficient and remain profitable?’ [That way organizations] can continue to do all the things we have to do as far as investing and reinvesting in the business and continuing to be competitive with our labor force and do all the things that allow us to continue to run high quality facilities, which in many cases involve significant expenditures.

Q: What are your top cost-containment strategies?

SF: I think a lot of our cost-containment strategies are focused on what I describe as driving the variability out of our business. I think so many other industries and businesses are accustomed to delivering their products and services in very standardized ways that are determined to be most efficient. I think healthcare has sort of long resisted that, and as a [result], we have lots of variability in the way that we deliver services in our various geographies. Various clinicians will deliver services differently. And I think we could benefit by following the lead of some of our peer industries and becoming much more focused on … delivering all our care and service in that standard way in accordance with best practice protocols. Driving out excess utilization and driving out rework and re-dos and errors — those things I think are a significant focus of getting the hospital industry to be more efficient and cost-efficient.

Question: During your tenure at UHS, what has been one of your proudest moments as CFO?

SF: What I take great pride in is the growth of the company. When I joined the company in the mid-1980s, it had maybe 35 [or] 40 hospitals around the country and maybe $500 million of consolidated revenues. This coming year we’ll have well over 300 domestic facilities and another 100 or so in the United Kingdom and over $11 billion of revenue.  And what I’m proud of is not just the growth of the company, but … the way the company has grown and yet really adhered to its core principles. When I joined the company 30 some odd years ago, it was very committed to high quality patient care and to the satisfaction to our employees. And honestly, if anything, I think the company has recommitted itself to those core principles over the years, and to be a much bigger company [and] not have abandoned our core principles, at least for me, is a source of great pride.

Q: If you could pass along one nugget of advice to another hospital CFO, what would it be?

SF: I tell the folks who work with me and for me all the time that it’s so important to behave every day with the highest level of integrity. I think at the end of the day you can’t replace that. People, I think, will give you a lot of leeway if they trust you, if they believe that you’re behaving transparently and with great honesty. And so I encourage everyone who works for me to do that, and I certainly endeavor to try to do that as best I can. And it’s tough. There are all kinds of pressures on folks in a financial role in this sort of environment. But I think if you behave with integrity, everything else will follow from that.

 

 

 

State Efforts to Protect Consumers from Balance Billing

https://www.commonwealthfund.org/blog/2019/state-efforts-protect-consumers-balance-billing?omnicid=EALERT1547609&mid=henrykotula@yahoo.com

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Health insurance rates for working-age Americans have improved over the past decade. But not everyone with health insurance today has adequate financial protection. About one-fourth of insured Americans are underinsured because they have significant coverage gaps or high out-of-pocket costs. And all consumers are vulnerable to surprise medical bills, or balance bills for out-of-network care. These balance bills arise when insurance covers out-of-network care, but the provider bills the consumer for amounts beyond what the insurer pays and beyond cost-sharing, as well as in situations where out-of-network care is not normally covered but the selection of provider is outside the consumer’s control.

Consumers are most likely to receive surprise medical bills from health providers outside their insurance plan’s network after receiving emergency care or medical procedures at in-network facilities. In the latter cases, for example, consumers may select a surgeon and facility in network, but discover that other providers, such as an anesthesiologist or surgical assistant, are out of network. These unexpected medical bills are a major concern for Americans, with two-thirds saying they are “very worried” or “somewhat worried” that they or a family member will receive a surprise bill. In fact, these bills are the most-cited concern related to health care costs and other household expenses.

While employers and insurers may voluntarily protect employees or enrollees from some types of balance billing, no federal law regulates charges submitted by out-of-network providers. States can help protect enrollees from unexpected balance bills. However, state protections are limited by federal law (ERISA), which exempts self-insured employer-sponsored plans, covering 61 percent of privately insured employees, from state regulation.

Despite Recent State Activity, Consumers in Most States Are Not Protected from Balance Billing

We conducted a study, published in June 2017, that found that 21 states had laws offering consumers at least some protections in a balance billing situation. But only six of those states — California, Connecticut, Florida, Illinois, Maryland, and New York — had laws meeting our standard for “comprehensive” protections.

Critical elements of state laws that offer “comprehensive” protections against balance billing:

  • Extend protections to both emergency department and in-network hospital settings
  • Apply laws to all types of insurance, including both HMOs and PPOs
  • Protect consumers both by holding them harmless from extra provider charges — meaning they are not responsible for the charges — and prohibiting providers from balance billing, and
  • Adopt an adequate payment standard — a rule to determine how much the insurer pays the provider — or a dispute-resolution process to resolve payment disputes between providers and insurers.

In 2017 and 2018, states continued taking steps to protect consumers. Four states — Arizona, Maine, Minnesota, and Oregon — created balance-billing consumer protections for the first time, and two states — New Hampshire and New Jersey — substantially expanded existing protections. We now classify New Hampshire, New Jersey, and Oregon as states offering comprehensive protections against balance billing. As of December 2018, 25 states have laws offering some balance-billing protection to their residents, and nine of them offer comprehensive protections.

New Jersey has met our criteria for comprehensive protection by creating a strong dispute-resolution process to establish a payment amount for the out-of-network service. Other states have recently acted to protect consumers from balance billing in a more limited way that does not meet our criteria. For example, Missouri’s protections against balance billing apply only if the provider and insurer voluntarily agree to participate in the process.

Interest in a Federal Solution to Balance Billing

At the same time, interest has grown in federal measures, in part, because only federal legislation can protect those in self-funded insurance plans that are exempt from state regulation. During the 115th Congress, proposals were released by Senator Bill Cassidy (R–La.)Senator Maggie Hassan (D–N.H.)Representative Lloyd Doggett (D–Texas), and Representative Michelle Lujan Grisham (D–N.M.). The Cassidy proposal has bipartisan support, with three Democrats and two other Republicans as cosponsors.

Federal approaches vary along some of the same lines as state laws. For example, the Hassan bill relies most heavily on a dispute-resolution approach. By contrast, the Cassidy proposal relies on a payment standard that is the greater of a) the median in-network rate paid by the insurer or b) 125 percent of the average allowed amount across payers. Several federal proposals make protections contingent on failure of providers to notify the consumer that they could be billed by an out-of-network provider. States that have enacted protections have mostly viewed such contingent protections as an insufficient means of protecting consumers. Federal proposals also vary in the degree to which they allow a state role in implementing protections.

Some federal proposals, like some state laws, have potential gaps. For example, some address balance bills only from hospital-based physicians such as anesthesiologists and radiologists. Also, state laws and federal proposals mostly do not address ground or air emergency transport providers.

Looking Forward

The bipartisan interest in the surprise billing issue offers the potential for federal action in the new Congress. States are frustrated by their inability to address all insurance plans. And states without laws have often faced opposition from stakeholder groups, even when there is a consensus around protecting consumers. A federal solution could offer a more comprehensive approach, while giving states appropriate flexibility to seek an approach fitting their particular market environments.

 

 

 

 

 

CMS cuts ACA exchange fees, floats proposal to end silver-loading

https://www.healthcaredive.com/news/cms-cuts-aca-exchange-fees-floats-proposal-to-end-silver-loading/546399/

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Dive Brief:

  • CMS proposed in its 2020 Payment Notice on Thursday a reduction to exchange user fees and is asking for feedback on a proposals to potentially eliminate auto-reenrollment and “silver-loading,” a strategy used by payers where they pack the ACA’s subsidy-rich silver tier plans in order to make up for losses incurred by the elimination of cost-sharing reduction (CSR) payments.
  • The agency is proposing to drop the exchange fee to 3% from 3.5% of premiums for plans sold on the federal exchange and to 2.5% from 3% for plans sold on state exchanges. If finalized as-is, the rule would also increase the annual cost-sharing limit for self-only coverage to $8,200 from $7,900 and to $16,400 from $15,800 for family coverage.
  • While rule’s intentions are to lower premiums, critics have argued it would trigger the opposite. Former CMS Administrator Andy Slavitt warned through a series of tweets that the rule is an “act of sabotage” that would cut coverage for 2 million Americans, “significantly increase premiums, and raise out of pocket costs.”

Dive Insight:

CMS has presented the rule as another step toward deregulating healthcare and lowering costs for consumers. Consumers, the agency argues, will ultimately save money on premiums, savings that will theoretically trickle down from insurers, who will pay less in exchange user fees once the proposal is finalized.

CMS Administrator Seema Verma said in a statement that the rule is aligned with the Trump administration’s healthcare goals, which include lowered premiums, reduced regulations, market stability, consumerism and protection for taxpayers.

While no regulations limiting or banning auto-enrollment and silver-loading are contained in the rule, CMS has requested public comment on the two issues for consideration in future rules before 2021.

The Administration supports a legislative solution that would appropriate CSR payments and end silver loading,” the proposed rule states. “There is a concern that automatic re-enrollment eliminates an opportunity for consumers to update their coverage and premium tax credit eligibility as their personal circumstances change, potentially leading to eligibility errors, tax credit miscalculations, unrecoverable federal spending on the credits, and general consumer confusion.”

Critics called it the latest act of “sabotage” on the ACA.

Ending auto-enrollment, a key feature of the ACA, would result in lost coverage for a number of Americans.

The end of silver-loading, a tactic many health plans resorted to in 2018 after the elimination of the law’s cost sharing reductions, could wreak havoc for insurers in the exchanges.

Opponents of the rule believe cracking down on silver-loading would do little more than boost premiums for consumers, as insurers would have no other mechanism to mitigate subsidy losses. 

President Trump, Senator Patty Murray, D-Wash., said in a statement. is “hurting families left and right.” Murray is the top Democrat on the Senate Health, Education, Labor, and Pensions Committee.

“Even 27 days into the shutdown he caused, President Trump has somehow found time to further sabotage health care for patients, families, and women —this time by proposing what would amount to a health care tax on patients and families across the country,” Murray said.

America’s Health Insurance Plans praised the reduced user fee, adding the proposed rule focuses on “stability in the individual market.” But it is unclear where the insurance lobby stands on the proposals to potentially end auto-reenrollment and the practice of silver-loading.

Public comments on the rule are due February 19. 

 

 

Health Care Costs 101: A Continuing Economic Threat

https://www.chcf.org/wp-content/uploads/2018/05/HealthCareCosts18.pdf

https://www.chcf.org/publication/health-care-costs-101-economic-threat/

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US health spending reached $3.3 trillion in 2016, or $10,348 per capita, and accounted for 17.9% of gross domestic product (GDP). Health spending slowed somewhat in 2016, following the coverage expansions of 2015 and 2014. National health spending increased 4.3% in 2016, down from 5.8% in 2015 and 5.1% in 2014. Despite this slowdown, 2016 health spending grew 1.5 percentage points faster than the economy (GDP grew at a rate of 2.8%).

Looking ahead, health spending is projected to grow at an average rate of 5.5% per year (1.0 points faster than the economy) between 2017 and 2026. At this rate, health care would consume a growing portion of the economy, totaling $5.7 trillion and accounting for one-fifth of GDP by 2026.

Health Care Costs 101: A Continuing Economic Threat (PDF), which relies on the most recent data available, details how much is spent on health care in the US, which services are purchased, and who pays.

Key findings include:

  • Per capita health spending increased 3.5% in 2016 and crossed the $10,000 per capita threshold for the first time.
  • Prescription drug spending declined dramatically from 8.9% in 2015 to 1.3% in 2016, driven in part by fewer new medications on the market, slower brand-name drug spending, and reduced spending on generic drugs.
  • Households and the federal government each accounted for 28% of health spending in 2016.
  • As ACA coverage expansion matured in 2016, the rate of increase in federal spending slowed to 3.9%, lower than private business (5.0%) or households (4.6%).
  • Federal subsidies for ACA marketplace (individual coverage) premiums and cost sharing totaled $33 billion, accounting for 3.5% of federal health spending and 3.0% of private health insurance spending.
  • Public health insurance, including Medicare and Medicaid, paid the largest share of spending (41%) in 2016. Private health insurance paid for a third of health spending and consumers’ out-of-pocket spending accounted for 11%.

The full report, a quick reference guide, and all of the charts found in the report are available under Related Materials. Also available are the datafiles and previous years’ reports.  These materials are part of CHCF’s California Health Care Almanac, an online clearinghouse for key data and analyses describing the state’s health care landscape.

 

 

 

US Health Care Spending: Who Pays?

https://www.chcf.org/publication/us-health-care-spending-who-pays/?_cldee=aGVucnlrb3R1bGFAeWFob28uY29t&recipientid=contact-58e265c0591ce51180f7c4346bac4b78-9a4a40fc07e8409d974f32d602d8816e&utm_source=ClickDimensions&utm_medium=email&utm_campaign=Newsletter%202019&esid=cb440b75-c619-e911-a970-000d3a199997

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Over the past 56 years, there have been major shifts in how we pay for hospital care, physician services, long-term care, prescription drugs, and other health care services and products in the US. In 1960, Medicare and Medicaid did not yet exist. Only half of hospital care was covered by insurance, with the rest paid out of pocket and by a patchwork of sources, both private and public.

In 1960, almost all (96%) spending on prescription drugs came out of the consumer’s pocket, but a dramatic rise in private insurance, coupled with the implementation of Medicare drug coverage in 2006, dropped the out-of-pocket spending share to 14% in 2016.

This interactive graphic uses data from the Centers for Medicare & Medicaid Services (CMS) to show national spending trends from 1960 to 2016 for health care by payer. (Figures presented refer to personal health care, which, as defined by CMS, includes goods and services such as hospital care and eyeglasses but excludes administration, public health activity, and investment.)

The data visualization below is a companion to Health Care Costs 101, part of CHCF’s California Health Care Almanac.

 

 

 

 

Tenet looks at offshoring more than 1,000 healthcare jobs

https://www.beckershospitalreview.com/workforce/tenet-looks-at-offshoring-more-than-1-000-healthcare-jobs.html?origin=cfoe&utm_source=cfoe

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Dallas-based Tenet Healthcare is looking to offshore roles throughout the organization to enhance efficiency, according to executive chairman and CEO Ronald Rittenmeyer’s Jan. 8 presentation at the J.P. Morgan Healthcare Conference in San Francisco.

Tenet, one of the nation’s major for-profit hospital operators, did not specify what areas of the organization would be affected. However, Mr. Rittenmeyer told The Dallas Morning News that Tenet will “look at aggressively” offshoring jobs “across the whole enterprise,” which includes Conifer Health Solutions, the company’s Frisco, Texas-based healthcare business services subsidiary.

Mr. Rittenmeyer told the publication that Tenet hadn’t determined how many workers would be displaced. He said he expects it will be more than 1,000 but “certainly not 10,000 or 5,000.”

“The number moves around, depending on what we’re looking at,” he added.

Mr. Rittenmeyer said direct patient care employees such as physicians and nurses won’t be affected, but the offshoring could affect employees who manage corporate functions, according to the Morning News.

He told the publication changes will not take place immediately; he expects them to happen over the next 12 to 18 months.

When contacted by Becker’s, Tenet declined to provide more information on the offshoring plans.

But according to the Morning News, Mr. Rittenmeyer expects to release more information at an upcoming employee town hall meeting.

Tenet’s enterprise includes three areas — hospital operations, Conifer and its Addison, Texas-based ambulatory services operation, United Surgical Partners International. A company spokesperson told the Morning News that Tenet’s total North Texas workforce is about 6,150 employees.