Author Archives: henrykotula

Federal appeals court limits hospitals’ disproportionate-share funding

Posted on by • Posted in Children's Health, Children's Hospital, District Court of Appeals, Health Policy, Health System, Hospital, Hospital Industry, Medicaid, Medicaid Disproportionate Share Reimbursement (DSH), Uninsured • Leave a comment

https://www.modernhealthcare.com/payment/federal-appeals-court-limits-hospitals-disproportionate-share-funding?utm_source=modern-healthcare-daily-finance-wednesday&utm_medium=email&utm_campaign=20190814&utm_content=article1-headline

Hospitals that care for a large share of Medicaid, low-income and uninsured patients stand to receive less funding from the federal government after the D.C. Circuit reconsidered how Medicaid disproportionate-share hospital reimbursement is calculated.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit reversed a lower court and reinstated a 2017 rule establishing that payments by Medicare and private insurers are to be included in calculating a hospital’s DSH limit, ultimately lowering its maximum reimbursement.

In Tuesday’s ruling, U.S. Circuit Judge Karen LeCraft Henderson opined that the rule aligns with the intent of the Medicaid Act.

“By requiring the inclusion of payments by Medicare and private insurers, the 2017 rule ensures that DSH payments will go to hospitals that have been compensated least and are thus most in need,” Henderson wrote.

The case, brought by four children’s hospitals in Minnesota, Virginia and Washington and an association representing eight children’s hospitals in Texas, concerns the calculation of the uncompensated costs of treating Medicaid beneficiaries known as the “Medicaid shortfall.”

For instance, if a hospital spends $1 million on treating Medicaid patients who have no other healthcare coverage and Medicaid pays $600,000, then the Medicaid shortfall is $400,000. In some instances, Medicaid patients have additional third-party coverage such as Medicare or private insurance.

Hospitals cannot receive more money in Medicaid DSH payments than they spent to treat Medicaid beneficiaries or the uninsured. Part of the motivation behind that stipulation was to prevent hospitals from double dipping by collecting DSH payments to cover costs that had already been reimbursed. Previous cases also revealed that some states have made DSH payments to state psychiatric or university hospitals that exceed the net costs, or even total costs, of operating the facilities.

Providers successfully fought the 2017 rule that limited hospitals’ reimbursement. A federal judge sided with the hospitals that claimed the CMS overstepped its authority and essentially ignored payments by commercial insurers and Medicare. That was overturned Tuesday.

The Children’s Hospital Association of Texas said in a statement that it is exploring its options.

“We are disappointed with the result because it will reduce critical Medicaid funding to safety net providers like children’s hospitals,” the association said. “These hospitals are heavily reliant on Medicaid payments because between 50% and 80% of their inpatient days are covered by Medicaid. Children’s hospitals care for all children, and are, in fact, often the only place that children with complex conditions can get life-saving care.”

 

 

 

What Does Medicare Actually Cover?

Posted on by • Posted in 2020 Election Issues, Health Insurance Coverage Adequacy, Health System, Medicare, Medicare Advantage, Medicare for All, MedPAC, Public Option • 1 Comment

What Does Medicare Actually Cover?

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If it followed the path of traditional Medicare, it would end up paying for a lot of coverage that has little medical value.

In the first congressional hearing held on “Medicare for all” in April, Michael Burgess, a Republican congressman from Texas and a physician, called such a proposal “frightening” because it could limit the treatments available to patients.

The debate over Medicare for all has largely focused on access and taxpayer cost, but this raises a question that hasn’t gotten much attention: What treatments would it cover?

A good starting place for answers is to look at how traditional Medicare currently handles things. In one sense, there are some important elements that Medicare does not cover — and  arguably should. But a little digging into the rules governing treatments also reveals that Medicare allows a lot of low-value care — which it arguably should not.

Many countries don’t cover procedures or treatments that have little medical value or that are considered too expensive relative to the benefits. American Medicare has also wrestled with the challenge of how to keep out low-value care, but for political reasons has never squarely faced it.

You might remember the factually misguided “death panel” attack on the Affordable Care Act, which preyed on discomfort with a governmental role in deciding what health care would or would not be paid for. (This discomfort also extends to private plans, exemplified by the backlash against managed care in the 1990s.)

Perhaps as a result, Americans don’t often talk about what treatments and services provide enough value to warrant coverage.

You can divide current Medicare coverage into two layers.

The first is relatively transparent. Traditional Medicare does not cover certain classes of care, including eyeglasses, hearing aids, dental or long-term care. When the classes of things it covers changes, or is under debate, there’s a big, bruising fight with a lot of public comment. The most recent battle added prescription drug coverage through legislation that passed in 2003.

Over the years, there have also been legislative efforts to add coverage for eyeglasses, hearing aids, dental and long-term care — none of them successful. Some of these are available through private plans. So a Medicare for all program that excluded all private insurance coverage and that resembled today’s traditional Medicare would leave Americans with significant coverage gaps. Most likely, debate over what Medicare for all would cover would center on this issue.

But there is a second layer of coverage that receives less attention. Which specific treatments does Medicare pay for within its classes of coverage? For instance, Medicare covers hospital and doctor visits associated with cancer care — but which specific cancer treatments?

This second layer is far more opaque than the first. By law, treatments must be “reasonable and necessary” to be approved for Medicare coverage, but what that means is not very clear.

We think of Medicare as a uniform program, but some coverage decisions are local. What people are covered for in, say, Miami can be different from what people are covered for in Seattle.

Many treatments and services are covered automatically because they already have standard billing codes that Medicare recognizes and accepts. For treatments lacking such codes, Medicare makes coverage determinations in one of two ways: nationally or locally.

Although Medicare is a federal (national) program, most coverage determinations are local. Private contractors authorized to process Medicare claims decide what treatments to reimburse in each of 16 regions of the country.

In theory, this could allow for lots of variation across the country in what Medicare pays for. But most local coverage determinations are nearly identical. For example, four regional contractors have independently made local coverage determinations for allergen immunotherapy, but they all approve the same treatments for seasonal allergy sufferers.

There are more than 2,000 local coverage determinations like these. National coverage decisions, which apply to the entire country, are rarer, with only about 300 on the books.

When Medicare makes national coverage decisions, sometimes it does so while requiring people to enter clinical trials.

It has been doing this for over a decade. The program is called coverage with evidence development, and its use is rare. Fewer than two dozen therapies have entered the program since it was introduced in 2006. But it allows Medicare to gather additional clinical data before determining if the treatment should be covered outside of a trial. To be considered, the treatment must already be deemed safe, and it must already be effective in some population. The aim is to test if the treatment “meaningfully improves” the health of Medicare beneficiaries.

Only one therapy (CPAP, for sleep apnea) that entered this process has ever emerged to be covered as a routine part of Medicare. The others are in a perpetual state of limbo, neither fully covered nor definitively not covered. CAR-T cell therapy, a type of cancer immunotherapy, which appears to be very successful but is also very expensive, is one of the most recent to enter this process.

Despite the complexity of all these coverage determination methods — local, national, contingent on clinical trials — the bottom line is that very few treatments are fully excluded from Medicare, so long as they are of any clinical value. And this suggests that it’s not very likely that Medicare for all would deny coverage for needed care.

A 2018 study in Health Affairs found only 3 percent of Medicare claims were denied in 2015. And traditional Medicare doesn’t limit access to doctors or hospitals either, as it is accepted by nearly every one. (This is in contrast with Medicare Advantage.)

Medicare has a troubled history in considering cost-effectiveness in its coverage decisions. Past efforts to incorporate it have failed. For example, regulations proposed in 1989 were withdrawn after a decade of internal review.

As a result, Medicare covers some treatments that are extremely expensive for the program and that offer little benefit to patients. The Medicare Payment Advisory Commission recently studied this in detail. In a 2018 report to Congress, it noted that up to one-third of Medicare beneficiaries received some kind of low-value treatment in 2014, costing the program billions of dollars. If Medicare for all followed in traditional Medicare’s path, it could be wastefully expensive.

The United States has had a historical unwillingness to face cost-effectiveness questions in health care decisions, something many other countries tackle head-on. Some Americans favor Medicare for all because it would make the system more like some overseas. And yet, in choosing not to consider the value of the care it covers, Medicare remains uniquely American.

 

 

Healthcare workforce development: New strategies for new demands

Posted on by • Posted in Culture, Health System, Hospital, Hospital Industry, Recruiting, Talent Imperative, Talent Management, Workforce Development • Leave a comment

https://www.healthcareitnews.com/news/healthcare-workforce-development-new-strategies-new-demands

As hospitals and ambulatory sites grapple with the challenges of quality improvement, value-based care, cybersecurity and more, the size and shape of the workforce is changing as technology and imperatives evolve.

The healthcare workforce is evolving, often by necessity, thanks to the same gravitational forces that are affecting the rest of the industry and the economy at large: technological advances, competitive market forces, shifting imperatives that demand new skill sets, challenges with job satisfaction and burnout.

Whether they’re C-suite leaders, physicians, nurses, IT staff, data scientists, case managers, security pros or revenue cycle, billing and accounting experts, hospitals and health systems large and small are facing an array of challenges when it comes to finding the right people to fit the right roles.

There’s a lot that needs doing in healthcare these days, after all – managing the clinical and operational demands of value-based reimbursement, caring for a growing aging population with a shrinking number of doctors and nurses, fighting the good fight against relentless cybersecurity threats – and finding the right employees to do it all is more important than ever.

During July, Healthcare IT News and our sister publication, Healthcare Finance, will explore how hospitals and health systems are managing these challenges – optimizing their workforces and positioning skilled leaders to help drive long-term strategic success in those areas and others.

From the C-suite to the trenches, unique challenges persist

The recent 2019 HIMSS U.S. Leadership and Workforce Survey polled 232 health information and technology leaders from acute and ambulatory providers nationwide to gain some insights about the challenges they’re prioritizing and the organizational structures they’re putting in place to deal with them.

Surprisingly or not, “hospitals and non-acute providers appear to have very different strategies regarding information and technology leadership and workers,” according to the report.

For instance, inpatient sites are much more able to prioritize the hiring of skilled C-suite execs to guide strategic initiatives. But “the absence of information and technology leaders in non-acute organizations is unsettling as it becomes more challenging to advance capabilities in settings without strong executive champions.”

Likewise, hospitals and practices also differ substantially when it comes to more rank-and-file employees. The larger inpatient sites “tend to operate environments with fairly extensive opportunities, whereas non-acute providers tend to deal with static workforce demands,” according to HIMSS. “The culture that can result from these different settings is something healthcare leaders should take into consideration when developing a staffing strategy.”

And health system hiring strategies are indeed shifting as providers face an array of challenges that need skilled and forward-thinking workers to help solve them. The HIMSS report listed the top 10 of these as:

  • Cybersecurity, Privacy, and Security
  • Improving Quality Outcomes Through Health Information and Tech
  • Clinical Informatics and Clinician Engagement
  • Culture of Care and Care Coordination
  • Process Improvement, Workflow, Change Management
  • User Experience, Usability and User-Centered Design
  • Data Science/Analytics/Clinical and Business Intelligence
  • Leadership, Governance, Strategic Planning
  • Safe Info and Tech Practices for Patient Care
  • HIE, Interoperability, Data Integration and Standards

The big hurdle, however, is that many “hospitals are continuing to be negatively impacted by staffing challenges,” according to the study. “The negative impacts on providers resulting from paused/scaled back projects are significant enough to at least warrant an exploratory consideration,” said HIMSS researchers.

A look at the numbers tells one story: When it comes to workforce vacancy barely one-third 36% of providers polled by HIMSS say they’re fully staffed – while more than half (52%) said they have open positions (12% didn’t answer or weren’t sure).

Indeed, there’s plenty of hiring to be done for health systems trying to tackle some of the biggest ongoing strategic challenges.

Even though the size in provider workforces since 2018 increased for 38% of the providers in this year’s survey – it stayed the same for 37% and decreased for just 14% – the projection for 2020 is a further expected hiring boost at 34% of providers (compared with a status quo for 42% and a contraction at just 9%).

Still, there’s nuance when one considers the differences between inpatient versus ambulatory organizations. While both are more likely to increase their workforces than to decrease them in 2020 (37% and 12% percent of hospitals, respectively, and 26% and 1% of outpatient sites), far more non-acute organizations expect their staff sizes to stand pat than hospitals (51 percent, compared with 38%).

“The variances in staffing growth trajectories evidenced in the two provider groups … has the potential to produce exceedingly different workplace cultures; a fast-paced environment in hospitals and a fairly stable setting in non-acute organizations,” according to the HIMSS report. “If true, then it is very possible these settings attract health IT workers with remarkably different needs/wants. Provider organizations looking to stabilize their workforce should take these factors into consideration when developing staff recruitment, retention and development strategies.”

What to expect in our Focus on Workforce Development

Over the course of this month, Healthcare IT News and Healthcare Finance will be exploring the many challenges related to staffing and workforce, across many facets of healthcare in the U.S.

We’ll examine the industry’s labor force spend (the percentage of total budgets may surprise you), and look at how how AI, telehealth and consumerism can help change that equation. We’ll learn how to attract top C-suite talent and combat clinician burnout. We’ll explore the benefits of apprenticeship programs, and see the strategies some hospitals are using to deal with labor shortages. And much more.

So, as your healthcare organization looks to the fiscal year or remaining calendar year ahead, be sure to check back at HITN and HF during July to learn from thought leaders and industry peers – about the best way to put the best people in the best position to help meet your strategic goals.

 

Nonprofit hospitals in Virginia garnish wages more often than for-profit hospitals, yielding only small payoffs

Posted on by • Posted in Health Insurance Coverage Adequacy, Health System, Hospital, Hospital Industry, Out of Pocket Expenses, Rev Cycle Management, Underinsured, Uninsured • Leave a comment

https://www.healthcarefinancenews.com/news/nonprofit-hospitals-virginia-garnish-wages-more-often-profit-hospitals-yielding-only-small

More than 70% of Virginia hospitals that garnish wages are nonprofit, and the money collected is only a tiny percentage of revenue.

Nonprofit hospitals in Virginia are more likely to garnish patients’ wages if they don’t pay their medical bills than for-profit hospitals in the state, and ultimately, the practice does little to drive revenue for those hospitals, according to a JAMA study published this week.

Researchers examined Virginia court records from 2017 that dealt with completed “warrant in debt” lawsuits, or cases where a party sues an individual for unpaid debt. They examined how hospital characteristics link to wage garnishments, and found that 71% of hospitals in Virginia that garnished wages were nonprofit.

A recent ProPublica report highlighted Methodist Le Bonheur Healthcare, which it said filed more than 8,300 lawsuits from 2014 through 2018. Methodist isn’t alone. The JAMA researchers unearthed more than 20,000 debt lawsuits filed by various Virginia hospitals in 2017; more than 9,300 garnishment cases took place that year, and almost three in four were liked to nonprofits.

Some even sue their own employees. Again looking at Methodist, ProPublica found the hospital has sued more than 70 of its employees for unpaid medical bills since 2014, including a suit brought against a hospital housekeeper in 2017 for $23,000 — $7,000 more than her annual salary.

Methodist responded by pointing out its considerable charity care, with community contributions estimated at more than $226 million annually. The federal government expects nonprofit hospitals to provide charity care and financial assistance since those hospitals are exempt from local, state and federal taxes.

WHAT’S THE IMPACT

Just five hospitals — four of them nonprofit — were responsible for more than half of the garnishment cases in the state, JAMA researchers found. Overall, 48 out of 135 Virginia hospitals garnished patient wages, amounting to 36 percent.

Despite the high prevalence of the practice, the money collected from garnishments comprised a minuscule share of hospital revenue. Hospitals that garnished wages collected annual gross revenue that averaged out to $806 million, while garnishments accounted for $722,342. That’s about 0.1% of gross revenue.

The garnishments, which ranged from $24.80 to $25,000, averaged $2783.15 per patient, researchers found.

According to a report filed by NPR, nonprofit Mary Washington Hospital in Fredericksburg was the hospital that sued the most patients in Virginia in 2017 — so much so that Fredericksburg General District Court reserved a morning each month to hear its cases.

The day after NPR published its report, Mary Washington announced its intention to suspend the practice of suing patients for unpaid bills, saying it was committed to a “complete re-evaluation of our entire payment process.”

The JAMA study found that, of those whose wages were garnished, Walmart, Wells Fargo, Amazon and Lowes were the most common employers.

THE LARGER TREND

Though researchers focused on Virginia, suing patients over medical debt is not a trend that’s unique to the state. Arizona hospitals have gone to court over personal injury claims, and Johns Hopkins Hospital in Baltimore, Maryland, was recently presented with a petition from citizens and unions to drop medical debt lawsuits.

 

11 hospitals with strong finances

Posted on by • Posted in Credit Ratings, Health System, Hospital, Hospital Industry, Net Income, Operating Income, Operating Margin, Operating Performance • Leave a comment

https://www.beckershospitalreview.com/finance/11-hospitals-with-strong-finances-081219.html?origin=rcme&utm_source=rcme

Here are 11 hospitals and health systems with strong operational metrics and solid financial positions, according to recent reports from Moody’s Investors Service, Fitch Ratings and S&P Global Ratings.

1. Altamonte Springs, Fla.-based AdventHealth has an “Aa2” rating and stable outlook with Moody’s. The health system has strong margins, low operating leverage and solid cash levels, according to Moody’s.

2. Children’s Healthcare of Atlanta has an “Aa2” rating and stable outlook with Moody’s. The health system has strong margins, and its good management discipline and detailed planning capabilities will drive consistent operating performance, according to Moody’s.

3. Falls Church, Va.-based Inova Health System has an “Aa2” rating and stable outlook with Moody’s. The health system has a leading market position in the broader northern Virginia region and strong operating cash flow margins, according to Moody’s.

4. IHC Health Services, the borrowing group of Salt Lake City-based Intermountain Healthcare, has an “Aa1” rating and stable outlook with Moody’s. Intermountain’s exceptional credit quality is supported by low debt levels, strong cash levels, solid operating performance and its leading market position, according to Moody’s.

5. Oakland, Calif.-based Kaiser Permanente has an “AA-” rating and stable outlook with Fitch and S&P. Kaiser has a robust integrated business model, strong operational cash flow and ample unrestricted reserves, according to S&P.

6. Bryn Mawr, Pa.-based Main Line Health has an “Aa3” rating and stable outlook with Moody’s. The health system has a leading market position in the Philadelphia suburbs, strong balance sheet measures and a modest debt load, according to Moody’s.

7. Chicago-based Northwestern Memorial HealthCare has an “Aa2” rating and stable outlook with Moody’s. The health system has a prominent market position in the broader Chicago region because of its strong brand, and its consolidated operating model and comprehensive IT systems will allow it to execute growth strategies while maintaining good margins, according to Moody’s.

8. Renton, Wash.-based Providence St. Joseph Health has an “Aa3” rating and stable outlook with Moody’s and an “AA-” rating and stable outlook with Fitch. The health system has a large service area, a revenue base of more than $24 billion and an integrated care delivery platform, which includes health plans, employed physicians and inpatient and outpatient services, according to Moody’s.

9. Broomfield, Colo.-based SCL Health has an “AA-” rating and stable outlook with S&P. The health system has ample liquidity and a healthy balance sheet, according to S&P.

10. San Diego-based Scripps Health has an “Aa3” rating and stable outlook with Moody’s. The health system has strong market share within San Diego County, a history of strong and stable management, and favorable balance sheet measures, according to Moody’s.

11. Tahoe Forest Hospital District, which operates Tahoe Forest Hospital in Truckee, Calif., and Incline Village (Nev.) Community Hospital, has an “Aa3” rating and stable outlook with Moody’s. The hospital district has a healthy cash position, low debt burden and a large and increasing tax base, according to Moody’s.

 

I’ve lived the difference between US and UK health care. Here’s what I learned

Posted on by • Posted in 2020 Election Issues, ACA, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Out of Pocket Expenses, Single Payer Health System, Single Payer Healthcare System, Underinsured, Uninsured, Universal Healthcare System • 1 Comment

https://www.cnn.com/2019/08/07/opinions/single-payer-healthcare-beers/index.html?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Weekly%20Roundup:%20Healthcare%20Dive%2008-10-2019&utm_term=Healthcare%20Dive%20Weekender

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Earlier this year, I shattered my elbow in a freak fall, requiring surgery, plates and screws. While I am a US citizen, several years ago I married an Englishman and became a UK resident, entitled to coverage on the British National Health Service. My NHS surgeon was able to schedule me in for the three-hour surgery less than two weeks after my fall, and my physical therapist saw me weekly after the bone was healed to work on my flexion and extension. Both surgery and rehab were free at the point of use, and the only paperwork I completed was my pre-operative release forms.

Compare that to another freak accident I had while living in Boston in my 20s. I spilled a large cup of hot tea on myself, suffered second degree scald burns, and had to be taken to the hospital in an ambulance. In the pain and chaos of the ER admission, I accidentally put my primary insurance down as my secondary and vice versa. It took me the better part of six months to sort out the ensuing paperwork and billing confusion, and even with two policies, I still paid several hundred dollars in out-of-pocket expenses.
With debate raging in the US among Democrats about whether to push for a government health care system such as Medicare for All, there is no doubt in my mind that the NHS single-payer health care system is superior to the American system of private insurance.
As someone who suffers from chronic illness, is incredibly clumsy and accident-prone, and has two young children, I spend an inordinate amount of time in doctors’ offices and hospitals. When my family is in our home in York, England, our health care is paid for principally through direct taxation, and we have zero out of pocket costs.
In contrast, when we are in the US, we are on my employer-based insurance plan. After years with one provider, rising costs pushed the premiums alone to above 10% of my gross salary for the family plan, and I recently opted to switch to a new provider, whose premiums are a more modest but still eye-watering 7% of my salary. I have had to switch our family doctor and specialists, with the attendant hassle of applying to have our medical records released and transferred to our new providers. In addition to my premiums, both plans include significant co-pays, although my new provider does not have a deductible.

In Britain, I am not entitled to the annual well patient and women’s health check-ups that Americans can now receive without a co-pay or deductible thanks to the Affordable Care Act. As an asthma sufferer, I do, however, have regular annual reviews of my condition. When one of my children becomes ill, I am usually able to receive same-day treatment in both countries, although in both cases this involves showing up early for the urgent care clinic.
The comparative ease and security of the NHS is why the system retains such high levels of support from the British public, despite frustrations with wait times and other aspects of service provision. A recent poll found that 77% of respondents felt that “the NHS is crucial to British society and we must do everything we can to maintain it,” and nearly 90% agreed that that the NHS should be free at the point of delivery, provide a comprehensive service available to everyone, and be primarily funded through taxation. Britons’ affection for their NHS was dramatically enacted in Danny Boyle’s 2012 Olympic opening ceremony extravaganza.
Yet, while I share my adopted countrymen’s support for the NHS, I can see almost no chance of America adopting a single-payer health care system of the kind described by Sens. Sanders and Warren any time soon. Sanders, Warren and other single-payer advocates not only face a strong and entrenched adversary in the American insurance industry, they also lack the broad public support for reform which characterized post-WWII Britain.
That broad public support for reform was crucial. Britain’s NHS system was very nearly defeated by opposing interests when it was introduced in the 1940s. It was initially opposed by the municipal and voluntary authorities, who controlled the 3,000 hospitals which Health Secretary Aneurin Bevan sought to bring under national administration, by the various Royal Colleges of surgeons and specialists, and by British Medical Association (BMA), the professional body representing the vast majority of the nation’s general practitioners, who stood to lose control of their private practices and become state employees.
At a meeting of doctors following the publication of Bevan’s proposals in January 1946, one physician claimed that “This Bill is strongly suggestive of the Hitlerite regime now being destroyed in Germany,” and another described the proposed nationalization of the hospitals as “the greatest seizure of property since Henry VIII confiscated the monasteries.” The BMA hostility persisted through rounds of negotiations lasting two years. Less than six months before the bill was set to come into effect on July 5, 1948, the BMA’s membership voted by a margin of 8 to 1 against the NHS, sparking serious fears within the government that GPs would refuse to come on board, effectively scuppering the NHS.
Bevan insisted that he would not cave but he did have to make several costly concessions to bring the doctors on board. First, he cleaved off the specialists (who were closely tied to the hospitals), by promising them that, if they signed on, they could continue to treat private patients in NHS-run hospitals in addition to their NHS patients, whom they would be paid to treat on a fee-for-service basis. Then, he offered the general practitioners a generous buyout to give up their stake in their private practices (effectively purchasing their patient lists), if they came on board. And finally, he promised them that the government would not be able to compel them to become fully salaried employees of the state without the passage of new legislation.
At the same time that Bevan offered the carrot of economic concessions, he also wielded the stick of public opinion against the doctors. Speaking in the House of Commons in February 1948, Bevan positioned single-payer healthcare as an issue of middle class survival, in language whose substance, if not its style, would not sound out of place in a 2020 Democratic primary debate: “Consider that social class which is called the “middle class.” Their entrance into the scheme, and their having a free doctor and a free hospital service, is emancipation for many of them. There is nothing that destroys the family budget of the professional worker more than heavy hospital bills and doctors’ bills.”
Bevan spoke for a public exceptionally united in support of an expanded state welfare policy as a result of the socially unifying experience of World War II. Fear of public backlash combined with economic incentives ultimately brought the medical establishment to heel.
Many were shocked when Bevan succeeded, but the BMA was arguably a less formidable threat to reform then than the American insurance industry is now. Insurance companies stand to be the biggest losers from a switch to single-payer health care, which seeks to achieve economies in large part through cutting out the profit-making middle man. As Elizabeth Warren noted in last Tuesday’s debate, US insurance companies reported $23 billion in profits last year. And the insurance lobby is determined to protect its position. That is why insurance companies are major donors in both state and federal election campaigns. The insurance industry has put massive resources into ensuring continued public and political opposition to the introduction of a single-payer system.
It’s possible that, if Americans were presented with an arguably cheaper and less bureaucratic health care system, they might decide that they liked it and were committed to doing everything they could to maintain it. But given the constellation of political forces in 21st century America, that just isn’t going to happen any time soon.

Myth Diagnosis: Do hospitals charge more to make up for low government pay?

Posted on by • Posted in 2020 Election Issues, Capitation, Global Payment, Health Policy, Health System, High Premiums, High Prices, Hospital, Hospital Industry, Managed Care, Market Consolidation, Market Power, Value-Based Healthcare • Leave a comment

https://www.healthcaredive.com/news/myth-diagnosis-do-hospitals-charge-more-to-make-up-for-low-government-pay/560021/

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It’s a mantra from providers to justify the disparate prices charged patients depending on their level of insurance coverage: It’s all in the name of cost shifting to make up for stingy government reimbursement.

The idea is that hospitals bill commercial payers more to make up for low rates from government payers and the costs from treating the uninsured. Providers and payers both insist the practice occurs, but academics are skeptical — and the notion is notoriously difficult to measure.

No one is doubting that the prices are different depending on who is footing the bill. The issue is whether they are dependent on each other.

“What is crystal clear is that there’s a huge unit cost payment differential between government and commercial payers,” John Pickering of Milliman told Healthcare Dive. “What isn’t clear is whether there’s a causal effect between those two.”

Heath economists, doctors and industry executives have been arguing about whether hospitals perform cost shifting for at least 40 years.

Government efforts to tamp down on runaway payments to providers may have sparked the debate. These include Medicare’s shift from strictly fee-for-service reimbursement to the prospective payment system in the 1980s.

Also, the Affordable Care Act attempted to codify efforts to pay providers based on performance with initiatives like the Hospital Readmission Reduction Program and alternative payment models.

Part of the difficulty is untangling factors like differences in geography, quality and market share, said Michael Darden, an associate professor at Carey Business School.

The body of research on healthcare cost shifting is mixed. There is evidence that some hospitals perform cost shifting, but not strong and clear results showing hospitals make such adjustments consistently or what exactly is causing them.

The debate has received some renewed attention as more states approve Medicaid expansion under the ACA and as employers consider offering high-deductible health plans that patients on the hook for more costs, Rick Gundling, senior vice president for healthcare financial practices with the Healthcare Financial Management Association, told Healthcare Dive.

“As folks get more price-sensitive through higher cost-sharing with patients and employers and these types of things — it’s certainly talked about. As it should be,” he said.

Policy implications

The topic may get even more attention as healthcare has come to dominate the early days of the 2020 presidential election, at least among the 20-plus contenders running in the primary.

While still a long way off, a “Medicare for All”-type system seems closer than any time in recent history.

While not all of the proposals explicitly or fully eliminate the private insurance industry, some (including those put forward by Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass.,) do, and others would at least severely curtail it. One key question for those plans is whether government rates would have to increase in order to keep hospitals and providers above water, and if so, by how much.

To counter, President Donald Trump and his administration have stepped up their scrutiny of industry billing practices. These efforts include pushing Congress to ban surprise billing and executive orders to revamp kidney care in the country and advance price transparency.

For their part,  providers say they’ll be forced to raise other rates if government programs pay less. Insurers will say the phenomenon means they must raise premiums to keep up.

In a statement to Healthcare Dive, America’s Health Insurance Plans pointed the finger at rising hospital prices, spurred in part from provider consolidation. The payer lobby argued health plans do their best to keep out-of-pocket costs affordable for customers through payment negotiations and by offering a number of coverage options.

“However, insurance premiums track directly with the underlying cost of medical care. The rising cost of doctor’s visits, hospital stays, and prescription medications all put upward pressure on premiums,” the group said.

Employers care about this issue as well, especially those that self-insure, said Steve Wojcik, vice president of public policy for the National Business Group on Health. Coverage can get expensive for businesses because they don’t get as good of a deal as government payers, he told Healthcare Dive.

Wojcik suggested more radical change away from fee-for-service payment arranges would be a better way of dealing with the issue. It’s an argument for many who push the healthcare sector’s slow march toward paying for quality and not quantity of treatment.

“I think, ultimately, it’s about driving transformation in healthcare delivery so that there’s more of a global payment for managing someone’s health or the health of a population rather than paying piecemeal for different services, which I think is inflationary,” he said.

Regardless, whether hospitals cost shift isn’t as important as whether they go out of business. “We may be missing the point if we focus on cost shifting,” Christopher Ody, a health economist at Northwestern University’s Kellogg School of Management, told Healthcare Dive.

Charging as much as they can?

A paper Darden helped author in the National Bureau of Economic Research found some hospitals that faced payment reductions from value-based Medicare programs did negotiate slightly higher average payments from private payers.

Health economist Austin Frakt noted the ability to negotiate better pricing could be related to quality improvement these hospitals likely undertook, knowing their quality measures would directly affect future payments.

It comes back to determining causality, Frakt, who holds positions with the Department of Veteran’s Affairs, Boston University and Harvard, told Healthcare Dive.

“It’s an important distinction, because the simplest economic model which is consistent with the evidence is that hospitals charge as much as they can to each type of payer,” he said. “So, they can’t really change what they receive from Medicare — those prices are fixed. But they charge private payers whatever the revenue- or profit-maximizing price is.”

Hospitals assert there is causality, but haven’t pointed to evidence that convinced Frakt of their argument. Frakt, for the record, understand why hospitals make the argument to policymakers, however.

“I’m not implying that this, throughout, is just to make a profit,” he said. “I think it’s possible to also have the best interests of patients in mind and to have this argument.”

Grundling said there has to be a breaking point somewhere so long as government rates fail to keep up with medical inflation. Also, hospitals have a federal legal responsibility to stabilize any patient regardless of ability to pay and have other philanthropic investments.

“It just puts a greater pressure on other payers in the system,” he said.

Frakt said the argument providers give for cost shifting doesn’t necessarily make sense for the average consumer. “It’s very strange that people find it intuitive that hospitals can readily cost shift because we don’t talk about any other industry like that,” he said. “Nobody says, well, my theater tickets was so much higher because you paid less.”

The idea that healthcare is vastly different from other industries is enduring, however, he said. “People don’t even want to think of healthcare as having prices,” he said. “How do you put a price on that?”