Author Archives: henrykotula

Another kind of surprise medical bills

Posted on by • Posted in Facility Fee, Health System, Hospital Industry, Office Visit, Out of Pocket Expenses, Outpatient Care, Physician, Physician Acquisition, Primary Care, Rev Cycle Management, Revenue Cycle, Surprise Bills • Leave a comment
https://www.axios.com/newsletters/axios-vitals-1763ccc5-40c4-4779-ae9d-c3d5f445a701.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Kaiser Health News’ latest edition of its “Bill of the Month” series features a patient who was charged a “facility fee,” which drove up what she owed to more than 10 times higher than what she’d previously paid for the same care.

Why it matters: Facility fees — which are essentially room rental fees, as KHN puts it — are becoming increasingly controversial, and patients often receive the bill without warning.

  • Hospitals aren’t required to inform patients ahead of time about facility fees.
  • Hospitals say they need the revenue to help cover the cost of providing 24/7 care.

What they’re saying: “Facility fees are designed by hospitals in particular to grab more revenue from the weakest party in health care: namely, the individual patient,” Alan Sager, a professor at the Boston University School of Public Health, told KHN.

  • The practice is becoming more popular as more private provider practices are bought by hospitals.
  • “It’s the same physician office it was,” said Trish Riley, executive director of the National Academy for State Health Policy. “Operating in exactly the same way, doing exactly the same services — but the hospital chooses to attach a facility fee to it.”

Millions of Americans remain vulnerable as cases rise

Posted on by • Posted in Access & Quality of Healthcare, Centers for Disease Control & Prevention (CDC), Coronavirus, Coronavirus Mutation, Disproportionate Share, Infection Control, Infection Control Plan, Infectious Virus, Pandemic, Public Health, Social Determinants of Health, Social Distancing, Vaccine, Vaccine Distribution, Vulnerable Populations • Leave a comment
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Coronavirus cases are on the rise again in several states, partially a result of variants of the virus becoming more widespread, experts say.

Why it matters: Even though a remarkable 72% of Americans 65 and older have received at least one dose of the vaccine, millions of Americans — particularly younger Americans with underlying conditions — remain vulnerable.

Driving the news: Coronavirus cases are rapidly rising in places including Michigan, New York, New Jersey and other Northeastern states.

  • In Michigan, the number of hospitalized younger adults has dramatically increased this month. Coronavirus hospitalizations increased by 633% for those aged 30 to 39 and by 800% for those aged 40 to 49, the Detroit Free Press reports.
  • The variant that originated in the U.K., which is partially driving the new surge, appears to be more transmissible and deadlier.

The big picture: “There are certainly many people who are not vaccinated who are still at severe risk themselves because of underlying medical issues,” said Leana Wen, a visiting professor at the Milken Institute School of Public Health at the George Washington University.

  • Because of vaccination demographics and who’s at highest risk of exposure, “the proportion of people who are hospitalized and who will die will likely skew toward a younger subset,” she said.

Between the lines: Those still vulnerable to the virus are disproportionately people of color.

  • That’s because prioritizing people for vaccines based on age disproportionately benefits white Americans, who tend to be older than people of color.
  • But younger people of color are tend to be at higher risk of severe infections because of underlying conditions.

What they’re saying: “To address areas of outbreak, we should allocate more of the increased vaccine supply coming into the market to places where penetration is low and infection rates high, like metro Detroit,” former FDA commissioner Scott Gottlieb tweeted.

The folly of fighting over board seats

Posted on by • Posted in Board, Critical Decisions, Critical Thinking, Decision Making, Governance, Leadership, Leadership Vision, Management, Market Consolidation, Market Power, Market Share, Market Trends, Mergers & Acquisitions, Mission, Strategic Alignment, Strategic Leadership, Strategy • Leave a comment

https://mailchi.mp/3e9af44fcab8/the-weekly-gist-march-26-2021?e=d1e747d2d8

The Importance Of Board Seats During Fundraising

In our work over the years advising health systems on M&A, we’ve been struck by how often “social issues” cause deals that are otherwise strategically sound to go off the rails.

Of course, it’s an old chestnut that “culture eats strategy for breakfast”, but what’s been notable, especially recently, is how early in the process hot-button governance and leadership issues enter the discussions.

Where is the headquarters going to be? Who’s going to be the CEO of the combined entity? And most vexingly, how many board seats is each organization going to get? That last issue is particularly troublesome, as it’s often where negotiations get bogged down. But as one health system board member recently pointed out to us, getting hung up on whether board seats are split 7-6 or 8-5 is just silly—in her words, “If you’re in a position where board decisions turn on that close of a margin, you’ve got much bigger strategic problems.” 

It’s an excellent point. While boards shouldn’t just rubber stamp decisions made by management, it’s incumbent on the CEO and senior leaders to enfranchise and collaborate with the board in setting strategy, and critical decisions should rarely, if ever, come down to razor-thin vote tallies.

If a merger makes sense on its merits, and the strategic vision for the combined organization is clear, quibbling over how many seats each legacy system “gets” seems foolish. No board should go into a merger anticipating a future in which small majorities determine the outcome of big decisions.

How many “lives” does a health plan need?

Posted on by • Posted in Financial Viability, Health Insurance Industry, Health System, Hospital, Hospital Industry, Integrated Delivery System, Market Consolidation, Market Outlook, Market Power, Market Share, Market Trends, Medicare, Medicare Advantage, Strategy, Sustainable • Leave a comment

https://mailchi.mp/3e9af44fcab8/the-weekly-gist-march-26-2021?e=d1e747d2d8

A Dozen Facts About Medicare Advantage in 2019 | KFF

Doctors and health systems with a significant portion of risk-based contracts weathered the pandemic better than their peers still fully tethered to fee-for-service payment. Lower healthcare utilization translated into record profits, just as it did for insurers.

We’re now seeing an increasing number of health systems asking again whether they should enter the health plan business—levels of interest we haven’t seen since the “rush to risk” in the immediate aftermath of the passage of the Affordable Care Act a decade ago.

The discussions feel appreciably different this time around (which is a good thing, since many systems who launched plans in the prior wave had trouble growing and sustaining them). First, systems are approaching the market this time with a focus on Medicare Advantage, having seen that growing a base of covered lives with their networks is much easier than starting with the commercial market, where large insurers, particularly incumbent Blues plans, dominate the market, and many employers are still reticent to limit choice.

But foremost, there is new appreciation for the scale needed for a health plan to compete. In 2010, many executives set a goal of 100K covered lives as a target for sustainability; today, a plan with three times that number is considered small. Now many leaders posit that regional insurers need a plan to get to half a million lives, or more. (Somehow this doesn’t seem to hold for insurance startups: see the recent public offerings of Clover Health and Alignment Health, who have just 57K and 82K lives, respectively, nationwide.)

We’re watching for a coming wave of health system consolidation to gain the financial footing and geographic footprint needed to compete in the Medicare Advantage market, and would expect traditional payers to respond with regional consolidation of their own.
 

From insurer to diversified services business

Posted on by • Posted in Diversification, Health Insurance Industry, Integrated Delivery System, Pharmacy Benefits Management, Physician, Physician Acquisition, Rev Cycle Management, Revenue Cycle, Revenue Diversification, Shareholder Value, Spinoff, Strategy • Leave a comment

https://mailchi.mp/3e9af44fcab8/the-weekly-gist-march-26-2021?e=d1e747d2d8

Large health insurers no longer just provide coverage, but are instead repositioning themselves as vertically integrated healthcare organizations that span the care continuum.

The graphic above shows five-year total revenue growth by segment for the top five health insurance companies.

Some, like Anthem and Humana, are still in the early stages of revenue diversification, leveraging partnerships and investments to fill service gaps—in Humana’s case, these are mainly centered on the Medicare Advantage population.

On the other hand, the insurance revenue of Cigna and CVS Health is already dwarfed by pharmacy benefit management (PBM) revenue (as well as retail clinic revenue for CVS).

UnitedHealth Group (UHG) is clearly leading the pack, with a robust revenue diversification and vertical integration strategy. 

Its Optum subsidiary grew 62 percent over the last five years, nearly double the rate of its UnitedHealthcare insurance business. Already the largest employer of physicians in the country, Optum recently announced plans to acquire Massachusetts-based 715-physician group, Atrius Health. It also announced its intent to acquire Change Healthcare, one of the largest providers of revenue and payment cycle management solutions.

Given the outsized role of the Optum division in driving UHG’s growth and profitability, it may soon face a dilemma that other publicly traded, diversified companies have had to confront: shareholder demands to unlock value by spinning off the business into a separate company.

Central to fending off that kind of activism by shareholders: demonstrable steps to integrate the myriad businesses the company has acquired into a functional whole. Just as Amazon’s hugely profitable Web Services business has become a target of spin-off demands, so too, eventually, may UHG’s Optum.

Senate votes to delay sequester cuts to Medicare payment

Posted on by • Posted in Cost Management, Health Policy, Health System, Hospital, Hospital Industry, Medicare, Medicare Payment, Medicare Sequestration, PAYGO (Pay-as-you-go) Act • Leave a comment

https://mailchi.mp/3e9af44fcab8/the-weekly-gist-march-26-2021?e=d1e747d2d8

Democrats ran and won on health care. Now what? - CNN Politics

If you’re looking for an issue that can unite a heavily divided Congress, it seems nearly all Senators can get behind delaying payment cuts to providers during a pandemic. On Thursday the Senate voted 90-2 to pause the 2 percent sequester cuts to Medicare payment slated to go into effect on April 1.

The bill is expected to be passed by the House and signed into law by President Biden, delaying the cuts through the coronavirus public emergency. While hospitals, many of whom are still recovering from increased costs and volume loss during the pandemic, can breathe a sigh of relief, providers face an even larger 4 percent payment cut in the fall due to the PAYGO, or “pay as you go”, statute, which would trigger automatic payments cuts due to the deficit increases caused by the COVID relief bill. 

We’d gamble that intense industry lobbying to delay the PAYGO cuts will prove successful—again, legislators will be reticent to dock provider payment as pandemic recovery continues. But eventually, in a more normal world, hospitals can expect policymakers to shift their focus from pandemic relief to cost control—and it will likely not prove possible to delay the inevitable reckoning over the high cost of our health system.

AstraZeneca stumbles again in it its vaccine rollout

Posted on by • Posted in Coronavirus, Coronavirus Mutation, Food and Drug Administration (FDA), Pandemic, Supply Chain, Supply Chain Cold Logistics Network, Vaccine, Vaccine Distribution, Vaccine Efficacy, Vaccine Hesitancy Rate, Vaccine Safety, World Health Organization (WHO) • Leave a comment

https://mailchi.mp/3e9af44fcab8/the-weekly-gist-march-26-2021?e=d1e747d2d8

U.S. Health Officials Raise Concerns Over AstraZeneca Vaccine Data - WSJ

It was a relatively quiet week on the COVID front—so quiet that President Biden held his first White House press conference last week and wasn’t asked a single question about the pandemic, which continues to be a race between vaccinations and virus variants.

Not that nothing happened this week: it was a rocky week for AstraZeneca, which was hoping to change the narrative over its vaccine, which has stumbled in its rollout in Europe, by reporting positive results from US trials.

After a press release announcing that the vaccine was found to be 79 percent effective against symptomatic COVID, an independent review board called the results into question, pointing out that the report was based on data that had not been fully updated. That earned a swift and unusual rebuke from the National Institutes of Health (NIH), forcing the company to correct its findings—to 76 percent.

A relatively minor difference, but the dust-up served to further undermine confidence in the company’s COVID jab, especially troubling in Europe where hesitancy and distribution have been a vexing problem, and concerns about blood clots associated with the AstraZeneca shot caused several countries to pause inoculations. Given the supply of already-approved vaccines from other manufacturers in the US, it’s not clear that the AstraZeneca shot will play a big role here, but it is critical in other parts of the world, especially as part of the global COVAX initiative targeted at developing countries, since the vaccine can be stored at normal refrigerator temperatures.

The company’s set-to with American regulators also highlighted another challenge that’s become common during the COVID pandemic: conducting scientific review by press release, as the global emergency has required the otherwise slow-moving research community to move at lightning pace.

Meanwhile, back at that relatively dull White House press conference, one piece of encouraging news: President Biden doubled his “first 100 days” goal for vaccinations to 200M shots, a goal that seems wholly achievable, given that 2.5M Americans are being vaccinated every day, on average.

New Jersey health system sues insurer over $2.5B policy payout

Posted on by • Posted in Business Interuption Coverage, Health System, Hospital, Hospital Industry, Net Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Risk Management, Risk Mitigation • Leave a comment
https://www.beckershospitalreview.com/legal-regulatory-issues/new-jersey-health-system-sues-insurer-over-2-5b-policy-payout.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G
RWJBarnabas Health

RWJBarnabas Health sued an insurance carrier for allegedly refusing to cover the West Orange, N.J.-based system’s pandemic-related losses, according to NJ.com. 

The health system is suing Zurich American Insurance Co. for breach of contract, alleging the company refused to honor its obligations under a $2.5 billion “Zurich Edge Healthcare Policy.” 

The health system, which treats 3 million patients annually, claims Zurich’s policy should cover losses caused by illnesses like COVID-19. The lawsuit, filed March 19, alleges Zurich failed to acknowledge COVID-19 caused property damage after employees and patients died from the virus in its facilities, according to Law360. 

“Zurich has known, or should have known, for decades that its policy could be called upon to pay up to its full limits — here $2.5 billion dollars — to RWJBarnabas for losses associated with viruses and pandemics,” the lawsuit states. 

Ridgewood, N.J.-based Valley Health System is also suing Zurich, alleging the insurance company wrongfully denied covering its losses tied to the pandemic under a $550 million policy, according to Law360. 

A Zurich spokesperson declined to comment on RWJBarnabas’ lawsuit, telling NJ.com that it is not the company’s practice to comment on pending litigation. 

In Virginia, Carilion Clinic filed a similar lawsuit against its insurance provider, American Guarantee and Liability Insurance Co., on March 18. The Roanoke, Va.-based system says it lost more than $150 million because of the pandemic, and the insurance company allegedly refused to provide coverage or properly investigate its losses. 

“To cushion the impact of the coronavirus and COVID-19, Carilion Clinic turned to its property insurer, AGLIC, to whom Carilion Clinic had paid nearly $1 million in premiums in exchange for $1.3 billion in property damage and time element (also known as business interruption) coverage effective June 1, 2019 to June 1, 2020,” the lawsuit states. “AGLIC, however, declined to fulfill its obligations to Carilion Clinic under the policy.” 

Carilion is seeking damages for breach of contract and a judgment declaring the scope of American Guarantee’s obligation to cover the losses under the policy.

Read the full NJ.com article here. 

Read the full Law360 article here.