Category Archives: Federation of American Hospitals

Four Implicit Messages to Healthcare in the FTC Non-Compete Rule

Posted on by • Posted in American Hospital Association (AHA), American Medical Association (AMA), Competition, Federal Trade Commission (FTC), Federation of American Hospitals, Health System, Hospital, Hospital Industry, Non-Compete Agreements, Physician • Leave a comment
Four Implicit Messages to Healthcare in the FTC Non-Compete Rule

Last Tuesday (April 23), the Federal Trade Commission (FTC) issued a 570-page final rule in a partisan 3-2 vote prohibiting employers from binding most American workers to post-employment non-competition agreements (the “Final Rule”):

“Pursuant to sections 5 and 6(g) of the Federal Trade Commission Act (“FTC Act”), the Federal Trade Commission (“Commission”) is issuing the Non-Compete Clause Rule (“the final rule”). The final rule provides that it is an unfair method of competition—and therefore a violation of section 5—for persons to, among other things, enter into non-compete clauses (“non-competes”) with workers on or after the final rule’s effective date. With respect to existing non-competes—i.e., non-competes entered into before the effective date—the final rule adopts a different approach for senior executives than for other workers. For senior executives (in policy setting/executive positions who earned more than $151,164 last year), existing non-competes can remain in force, while existing non-competes with other workers are not enforceable after the effective date.” (p.1)

“Concerns about non-competes have increased substantially in recent years in light of empirical research showing that they tend to harm competitive conditions in labor, product, and service markets. … When a company interferes with free competition for one of its former employee’s services, the market’s ability to achieve the most economically efficient allocation of labor is impaired. Moreover, employee-noncompetition clauses can tie up industry expertise and experience and thereby forestall new entry… competes by employers tends to negatively affect competition in labor markets, suppressing earnings for workers across the labor force—including even workers not subject to noncompete. This research has also shown that non-competes tend to negatively affect competition in product and service markets, suppressing new business formation and innovation… Yet despite the mounting empirical and qualitative evidence confirming these harms and the efforts of many States to ban them, non-competes remain prevalent in the U.S. economy. Based on the available evidence, the Commission estimates that approximately one in five American workers—or approximately 30 million workers—is subject to a non-compete. The evidence also indicates that employers frequently use non-competes even when they are unenforceable under State law.” (p.6)

On its home page, the FTC says “with a comprehensive ban on new non-competes, Americans could see an increase in wages, new business formation, reduced health care costs and more.”(www.ftc.gov)

The rule takes effect 120 days following its publication in the Federal Register and is applicable to every employer including specified operations in not-for-profit organizations (which represents the majority of hospitals, nursing homes and others). The agency noted it received 26,000 comment letters since the proposed rule was published January 19, 2023 including significant reaction from healthcare organizations.  By the end of last week, two lawsuits were filed: one by the Chamber of Commerce in the United States District Court for the Eastern District of Texas and the second by a global tax services and software company in the Northern District of Texas – each challenging the Final Rule and arguing that the FTC lacked the authority. Others are likely to follow and its implementation will be delayed as arguments about its merits and the FTC’s standing to make the rule find their way thru the courts.

Special attention to hospitals and physicians in the rule

Notably, the use of non-competes in healthcare is a central theme in the rule, particularly in tax-exempt hospital and medical practice settings. Noting that one in 5 workers (30 million) and up to 45% of physicians work under non-compete agreements today, the Commissioners illustrated the need for the rule by inserting vignettes from 14 workers in their introduction: 4 of these were healthcare workers– 2 physicians and employees of a hospital and electronic health record provider (p.11-13). Throughout its exhaustive commentary, the Commissioners took issue with assertions by healthcare organizations about the potential negative consequences of the rule citing lack of empirical evidence to justify opposition claims. References to tax-exempt hospitals, their for-profit activities and their employment arrangements with physicians are frequent in the commentary justifying the application of the rule as follows:

“Many commenters representing healthcare organizations and industry trade associations stated that the Commission should exclude some or all of the healthcare industry from the rule because they believe it is uniquely situated in various ways. The Commission declines to adopt an exception specifically for the healthcare industry. The Commission is not persuaded that the healthcare industry is uniquely situated in a way that justifies an exemption from the final rule. The Commission finds use of non-competes to be an unfair method of competition that tends to negatively affect labor and product and services markets, including in this vital industry; the Commission also specifically finds that non-competes increase healthcare costs. Moreover, the Commission is unconvinced that prohibiting the use of non-competes in the healthcare industry will have the claimed negative effects.” (p.303)

Not surprisingly rule, responses from the hospital trade groups were swift, direct and harshly critical:

  • American Hospital Association (www.aha.org):” The FTC’s final rule banning non-compete agreements for all employees across all sectors of the economy is bad law, bad policy, and a clear sign of an agency run amok. The agency’s stubborn insistence on issuing this sweeping rule — despite mountains of contrary legal precedent and evidence about its adverse impacts on the health care markets — is further proof that the agency has little regard for its place in our constitutional order. Three unelected officials should not be permitted to regulate the entire United States economy and stretch their authority far beyond what Congress granted it–including by claiming the power to regulate certain tax-exempt, non-profit organizations. The only saving grace is that this rule will likely be short-lived, with courts almost certain to stop it before it can do damage to hospitals’ ability to care for their patients and communities.”
  • Federation of American Hospitals (www.fah.org): “This final rule is a double whammy. In n a time of constant health care workforce shortages, the FTC’s vote today threatens access to high-quality care for millions of patients.”

By contrast, the American Medical Association (www.ama-assn.org) response was positive, linking its support for the rule to AMA’s ethical principles of physician independence and clinical autonomy.

Four implicit messages to healthcare are evident in the rule

It is unlikely the rule will become law in its current form. Opposing trade groups, employers dependent on non-competes for protections of trade secrets and business relationships and many others will actively pursue its demise in courts actions. But a review of the text makes clear the FTC is intensely focused on competition and consumer protections in healthcare akin to its ongoing challenges to hospital consolidation.

Four messages emerge from the text of the rule:

1-‘The healthcare industry is a business which needs more regulation to protect consumers and its workforce by lowering costs and stimulating competition. ‘

“Many commenters representing healthcare organizations and industry trade associations stated that the Commission should exclude some or all of the healthcare industry from the rule because they believe it is uniquely situated in various ways. The Commission declines to adopt an exception specifically for the healthcare industry. The Commission is not persuaded that the healthcare industry is uniquely situated in a way that justifies an exemption from the final rule. The Commission finds use of non-competes to be an unfair method of competition that tends to negatively affect labor and product and services markets, including in this vital industry; the Commission also specifically finds that non-competes increase healthcare costs. Moreover, the Commission is unconvinced that prohibiting the use of non-competes in the healthcare industry will have the claimed negative effects.” (p.373)

2-‘Physicians play a unique role in healthcare and deserve protection.’

“Some healthcare businesses and trade organizations opposing the rule argued that, without non-competes, physician shortages would increase physicians’ wages beyond what the commenters view as fair. The commenters provided no empirical evidence to support these assertions, and the Commission is unaware of any such evidence. Contrary to commenters’ claim that the rule would increase physicians’ earnings beyond a “fair” level, the weight of the evidence indicates that the final rule will lead to fairer wages by prohibiting a practice that suppresses workers’ earnings by preventing competition; that is, the final rule will simply help ensure that wages are determined via fair competition. The Commission also notes that it received a large number of comments from physicians and other healthcare workers stating that non-competes exacerbate physician shortages.” (p.157)

“Hundreds of physicians and other commenters in the healthcare industry stated that non-competes negatively affect physicians’ ability to provide quality care and limit patient access to care, including emergency care. Many of these commenters stated that non-competes restrict physicians from leaving practices and increase the risk of retaliation if physicians object to the practices’ operations, poor care or services, workload demands, or corporate interference with their clinical judgment. Other commenters from the healthcare industry said that, like other industries, non-competes bar competitors from the market and prevent providers from moving to or starting competing firms, thus limiting access to care and patient choice. Physicians and physician organizations said non-competes contribute to burnout and job dissatisfaction, and said burnout negatively impacts patient care.” (p.202)

“…the Commission notes that while the study finds that non-competes make physicians more likely to refer patients to other physicians within their practice—increasing revenue for the practice—it makes no findings on the impact on the quality of patient care. The Commission further notes that pecuniary benefits to a firm cannot justify an unfair method of competition.” (p.206)

3.’Tax exempt hospitals that operate like for-profit entities deserve special scrutiny from regulators and are thus subject to the rule’s provisions.’

“Merely claiming tax-exempt status in tax filings is not dispositive. At the same time, if the Internal Revenue Service (“IRS”) concludes that an entity does not qualify for tax-exempt status, such a finding would be meaningful to the Commission’s analysis of whether the same entity is a corporation under the FTC Act.” (p.53)

“As stated in Part II.E, entities claiming tax exempt status are not categorically beyond the Commission’s jurisdiction, but the Commission recognizes that not all entities in the healthcare industry fall under its jurisdiction. “(p.374)

“While the Commission shares commenters’ concerns about consolidation in healthcare, it disagrees with commenters’ contention that the purported competitive disadvantage to for-profit entities stemming from the final rule would exacerbate this problem. As some commenters stated, the Commission notes that hospitals claiming tax-exempt status as nonprofits are under increasing public scrutiny. Public and private studies and reports reveal that some such hospitals are operating to maximize profits, paying multi-million-dollar salaries to executives, deploying aggressive collection tactics with low-income patients, and spending less on community benefits than they receive in tax exemptions.943 Economic studies by FTC staff demonstrate that these hospitals can and do exercise market power and raise prices similar to for-profit hospitals.944 Thus, as courts have recognized, the tax-exempt status as nonprofits of merging hospitals does not mitigate the potential for harm to competitive conditions.” (p.383)

“Conversely, many commenters vociferously opposed exempting entities that claim tax exempt status as nonprofits from coverage under the final rule. Several commenters contended that, in practice, many entities that claim tax-exempt status as nonprofits are in fact “organized to carry on business for [their] own profit or that of [their] members” such that they are “corporations” under the FTC Act. These commenters cited reports by investigative journalists to contend that some hospitals claiming tax-exempt status as nonprofits have excess revenue and operate like for-profit entities. A few commenters stated that consolidation in the healthcare industry is largely driven by entities that claim tax-exempt status as nonprofits as opposed to their for-profit competitors, which are sometimes forced to consolidate to compete with the larger hospital groups that claim tax-exempt status as nonprofits. Commenters also contended that many hospitals claiming tax-exempt status as nonprofits use self-serving interpretations of the IRS’s “community benefit” standard to fulfill requirements for tax exemption, suggesting that the best way to address unfairness and consolidation in the healthcare industry is to strictly enforce the IRS’s standards and to remove the tax-exempt status of organizations that do not comply. An academic commenter argued that the distinction between for-profit hospitals and nonprofit hospitals has become less clear over time, and that the Commission should presumptively treat hospitals claiming nonprofit tax-exempt status as operating for profit unless they can establish that they fall outside of the Commission’s jurisdiction.” (p.377-378)

“After carefully considering commenters’ arguments, the Commission declines to exempt for-profit healthcare employers or to exempt the healthcare industry altogether.” (p.380)

4. ‘The net impact of non-compete agreements is harmful to the workforce and the public. ‘

“The Commission finds that with respect to these workers, these practices are unfair methods of competition in several independent ways:  

  • The use of non-competes is restrictive and exclusionary conduct that tends to negatively affect competitive conditions in labor markets.
  • The use of non-competes is restrictive and exclusionary conduct that tends to negatively affect competitive conditions in product and service markets.
  • The use of non-competes is exploitative and coercive conduct that tends to negatively affect competitive conditions in labor markets.
  • The use of non-competes is exploitative and coercive conduct that tends to negatively affect competitive conditions in product and service markets.” (p.105)

“The Commission notes that the vast majority of comments from physicians and other stakeholders in the healthcare industry assert that non-competes result in worse patient care. The Commission further notes that the American Medical Association discourages the use of non-competes because they “can disrupt continuity of care, and may limit access to care.” In addition, there are alternatives for improving patient choice and quality of care, and for retaining physicians, that burden competition to a much less significant degree than non-competes…commenters asserted that a ban on non-competes would upend healthcare labor markets, thereby exacerbating healthcare workforce shortages, especially in rural and underserved areas. A medical society argued that non-competes can allow groups to meet contractual obligations to hospitals, as physicians leaving can prevent the group from ensuring safe care. As the Commission notes, there are not reliable empirical studies of these effects, and these commenters do not provide any. However, the Commission notes that the rule will increase labor mobility generally, which makes it easier for firms to hire qualified workers.” (p.208)

“The Commission also noted that in three States—California, North Dakota, and Oklahoma—employers generally cannot enforce non-competes, so they must protect their investments using one or more of these less restrictive alternatives…Commenters provide no empirical evidence, and the Commission is unaware of any such evidence, to support the theory that prohibiting non-competes would increase consolidation or raise prices. “384

The bottom line:

Odds are this rule will not become law anytime soon allowing healthcare organizations to consider alternatives to the non-competes they use. Work-arounds for protection of intellectual property, talent acquisition, employment agreements are likely as HR professionals, benefits and compensation consultancies huddle to consider what’s next.

Those that operate in 3 states (CA, ND, OK) already face state reg’s limiting non-competes and more states are adding measures. As noted in the rule, the health systems in these states have not been debilitated by non-compete limitations nor empirical evidence of public/worker harm produced, so no harm no foul.

The bigger takeaways from this rule for healthcare—especially hospitals—are 2:

The rule may fuel already growing antipathy between the workforce and senior management. Physicians are frustrated and burned out. Mid-level clinicians, techs and nurses are not happy. The hourly workforce is insecure. The hospital workplace—its clinics, programs and services—is not a happy place these days. The rule might fuel increased union organizing activity among some work groups at a critical time when demand is high, utilization is increasing, resources are stretched, reimbursement is shrinking and conditions for solvency and sustainability in question for rural, safety net and community hospitals in areas of declining population.  And employed physicians will push-back harder against pressure from their hospital and private equity partners to work harder and produce more. The rule gives physicians a moral premise on which to oppose employer demands, whether the rule is implemented in its current form or not.

And the second equally notable takeaway is the rule’s specific attention to tax-exempt hospitals that operate as “for-profit” organizations. The FTC Commissioners question their tax exemptions and their investor-owned competitors are happy they noticed. They’re joined by investigations in 5 Committee’s of Congress with Bipartisan support for a fresh look at their bona fide eligibility despite strong pushback by the American Hospital Association and others.

This rule was introduced as a proposed rule last year with a comment period of 90 days allowed. Fifteen months and 26,000 comments later, it’s the latest reminder that the future of healthcare is everyone’s business and hospitals and physicians see that future state differently.

In its summation, the FTC estimates that this final rule will lead to new business formation growing by 2.7% per year, create 8,500 additional new businesses annually, produce 17,000-29,000 patents for innovation, increase earnings for workers and lower health care costs by up to $194 billion over the next decade. Maybe.

What’s clear is that the FTC and regulators in DC and many states are watching the industry closely and many aren’t buying what we’re selling.

House Republicans press HHS to end COVID-19 emergency, but hospitals want extension

Posted on by • Posted in American Hospital Association (AHA), Center for Medicare and Medicaid Services (CMS), Coronavirus, Dept of Health and Human Services (HHS), Federation of American Hospitals, Health Policy, Health System, Hospital, Hospital Industry, Pandemic, Public Health Emergency (PHE) • Leave a comment
https://www.fiercehealthcare.com/providers/house-republicans-press-hhs-end-covid-19-emergency-hospitals-want-extension?utm_source=email&utm_medium=email&utm_campaign=HC-NL-FierceHealthcareWeekly&oly_enc_id=8564C4000334E5C

House Republicans are demanding the Biden administration starts winding down the COVID-19 public health emergency, while hospital lobbying groups are pressing it to do the opposite.

A group of more than 70 House Republicans wrote Thursday to Department of Health and Human Services (HHS) Secretary Xavier Becerra asking to start the process to wind down the COVID-19 public health emergency (PHE), which was recently extended until April. At the same time, several hospital advocacy groups are hoping the agency keeps the PHE beyond this spring and wants a 60-day notice as to when it will end.

“Although the PHE was certainly necessary at the outset of the pandemic, it was always meant to be temporary,” according to the GOP letter led by Rep. Cathy McMorris Rodgers, R-Washington, ranking member of the House Energy and Commerce Committee.

Republicans want HHS to release a concrete timeline for when the agency plans to exit the PHE.

“We recognize that the PHE cannot end overnight, and that certain actions must be taken to avoid significant disruption to patients and healthcare providers, including working with Congress to extend certain policies like maintaining access to telehealth services for our nation’s seniors,” the letter added.

The PHE granted major flexibilities for providers to get reimbursed by Medicare for telehealth, but those powers will go away after the PHE. It also gave flexibility on several reporting requirements and eased other regulatory burdens.

Another major issue is that states are going to be able to start eligibility redeterminations for Medicaid, which have been paused since the PHE went into effect in January 2020. State Medicaid directors are seeking a heads-up on when the emergency will go away, as states can start to disenroll ineligible beneficiaries after the PHE expires.

Republicans also want Becerra to cite any programs that should be made permanent, and they want “swift action” to lift all COVID-19 vaccine mandates.

The Supreme Court upheld the Biden administration’s healthcare worker vaccine mandate, overturning a lower court’s stay that affected half of the country. The Centers for Medicare & Medicaid Services has deadlines for states to comply with the vaccination mandate, and facilities that don’t fully comply could risk losing participation in Medicare and Medicaid.

The Republicans charge that the mandates have not “stopped the spread of COVID-19 but have alienated many Americans and have caused staff shortages at hospitals and other healthcare facilities.”

Key drivers of the staff shortages, however, have been a massive surge of the virus overwhelming facilities caused by the omicron variant along with increased expenses facilities have faced for temporary nursing staff. Those lingering expenses are the reason hospital groups are pressing for HHS to do the opposite and extend the PHE beyond April.

The Federation of American Hospitals (FAH) also wrote to Becerra Thursday (PDF) seeking to continue to extend the PHE “well beyond its current expiration date in April 2022.” Even though the omicron surge appears to be easing, the virus is still creating major operational challenges for providers, FAH said.

It also wants the administration to give hospitals a 60-day heads-up when it plans to end the PHE.

“Unwinding the complex web of PHE waiver-authorized operations, programs and procedures—which will have been in place and relied on for more than two years—is a major undertaking that, if rushed, risks destabilizing fragile healthcare networks that patients rely on for care,” the letter said.

The American Hospital Association also wrote to congressional leaders Tuesday seeking for more relief from Congress to help systems overcome staffing shortages that have exacerbated due to the omicron surge.

“The financial pressures hospitals and health systems faced at the beginning of the public health emergency continue, with, for example, ongoing delays in non-emergent procedures, in addition to increased expenses for supplies, medicine, testing and protective equipment,” the letter said.

FAH President Chip Kahn told Fierce Healthcare on Friday that the issues Republicans address in the letter are different from the priorities of the FAH, namely that the association doesn’t focus on mask or vaccine mandates.

“What we are saying is that the PHE has many aspects to it, and so … we think [it] should be extended, but if you don’t then we need to have a lengthy or carefully thought through transition,” Kahn said.

He added that Becerra’s predecessor, acting Secretary Eric Hargan, told providers that they would get a 60-day notice before the end of the PHE. That deadline for such a 60-day notice is Feb. 15.

Kahn said he understands the administration may be under political pressure to end the emergency, but prior notice is absolutely needed.

“I don’t know how they will respond but if they do choose to pull out, we just want to make sure that it doesn’t leave anything behind,” he said.

Medical groups implore Congress to extend moratorium on sequester cuts as COVID-19 ramps up

Posted on by • Posted in America's Health Insurance Plans (AHIP), American Medical Association (AMA), Economic Crisis, Economic Recovery, Economic Stimulus, Federation of American Hospitals, Health System, Hospital, Hospital Industry, Medicare, Medicare Sequestration, Pandemic, The CARES Act • Leave a comment
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Congress building

A collection of provider and payer groups are imploring Congress to continue a moratorium on Medicare payment cuts instituted under the sequester.

The letter (PDF), sent Friday by more than 20 groups to congressional leaders, is concerned that the moratorium installed under the CARES Act expires on Jan. 1. The groups want the moratorium to extend through the COVID-19 public health emergency, which has been renewed by the federal government several times.

The groups said that the moratorium needs to be extended as healthcare facilities are under massive financial stress with new surges of COVID-19.

The surge has impacted the “financial health of medical professionals and facilities, including increased cost of labor to ensure adequate staffing, procurement of personal protective equipment, significant reductions in patient volume resulting from orders to cancel non-emergent procedures and the high cost of caring for COVID patients,” the letter said.

Some of the groups signing on to the letter include the American Medical Association, America’s Health Insurance Plans, Federation of American Hospitals and American College of Physicians.

The groups said that the moratorium on the sequester cuts installed as part of the CARES Act was an acknowledgment from Congress over the important role that Medicare reimbursement plays in “the financial well being of our healthcare system.”

The sequestration cut Medicare payments by 2% across the board to all Medicare providers back in 2013.

The letter comes as Congress is pondering another relief package for COVID-19 during the lame-duck period. Senate Majority Leader Mitch McConnell said after the presidential election that he was open to restarting talks on a new relief package and added that hospitals will need some additional relief.

But McConnell said earlier this week that the same issues that have held up a deal with House Speaker Nancy Pelosi are still there.

“I don’t think the current situation demands a multi-trillion dollar package,” McConnell told reporters. “I think it should be highly targeted.”

But Pelosi has endorsed a larger package. The House passed the HEROES Act, a $3 trillion relief bill, several months ago.

Hospitals that don’t submit daily COVID-19 data could lose participation in Medicare, Medicaid

Posted on by • Posted in American Hospital Association (AHA), Center for Medicare and Medicaid Services (CMS), Centers for Disease Control & Prevention (CDC), Compliance, Coronavirus, Dept of Health and Human Services (HHS), Federation of American Hospitals, Health Policy, Health System, Hospital, Hospital Industry, Medicaid, Medicare • Leave a comment
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US Department of Health and Human Services moves to Microsoft Office 365

Hospitals currently not reporting daily COVID-19 data have a few months to get in compliance or risk being thrown out of Medicare and Medicaid.

The Department of Health and Human Services (HHS) announced Tuesday it will send notices to all hospitals over their requirements for reporting COVID-19 data to the Trump administration.

Any hospital not in compliance with the daily reporting requirements will have 14 weeks to get in line or risk their participation in Medicare and Medicaid, officials said.

The agency gave an enforcement timeline that gives “hospitals ample opportunity to come into compliance,” said Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma on a call with reporters Tuesday.

The Trump administration wants hospitals to submit daily data that includes COVID-19 deaths and hospitalizations as well as patients currently in the intensive care unit with the virus. Hospitals must submit data on the ages of patients admitted with suspected COVID-19 infections. Facilities need to also report their inventory of the COVID-19 therapy Remdesivir, any staffing shortages and the number of ventilators. Every week hospitals also report data on their personal protective equipment on hand and supply of critical medications.

Facilities now must also report on new data for influenza cases. “The new requirements will allow us to gather critical information on influenza at hospitals across the U.S.,” said Centers for Disease Controls and Prevention Director Robert Redfield, M.D.

Verma said that the large majority of hospitals in CMS’ system are already reporting this data to the agency. CMS will also give hospitals that are not in compliance a wide berth to get them into compliance.

Hospitals will be sent multiple notices over the 14-week timeline to get their data reporting in line.

“This work of getting hospitals into compliance around reporting has been an ongoing effort,” Verma said.

CMS proposed the mandatory daily reporting requirements back in August, much to the chagrin of hospital advocates. 

The American Hospital Association (AHA) said that CMS tying Medicare and Medicaid participation to compliance “remains an overly heavy-handed approach that could jeopardize access to hospital care for all Americans,” according to a statement released Tuesday. 

“Today’s interpretive guidance on COVID data reporting does answer some of the questions hospitals and health systems have been asking about compliance since the interim final rule was released six weeks ago,” the group said. “In particular, the Administration will provide hospitals with information on whether their data are making it into HHS Protect and they will give hospitals the necessary time to adjust their data collection to come into compliance if need be.”

The Federation of American Hospitals called the new rules “sledgehammer enforcement.”

“It is both inappropriate and frankly overkill for CMS to tie compliance with reporting to Medicare conditions of participation,” said FAH President and CEO Chip Kahn in a statement.

Moody’s: Patient volume recovered a bit in May, but providers face long road to recovery

Posted on by • Posted in ACA, Bad Debt Expense, Cash, Cash Reserves, Coronavirus, Credit Quality, Credit Ratings, Crisis, Crisis Management, Deferred Healthcare, Economic Crisis, Economic Recovery, Elective Procedures, Elective Surgery, Emergency Care, Federation of American Hospitals, Health Policy, Health System, Hospital, Hospital Industry, Infection Control, Infection Control Plan, Infectious Virus, Liquidity, Market Outlook, Market Trends, Market Uncertainty, Medicaid, Medicare Advance Payments, Mortality, Office Visit, Pandemic, Payor Mix, Personal Protective Equipment (PPE), Physician, Public Health, Public Safety, Quarantine, Rev Cycle Management, Revenue Cycle, Social Distancing, Supply Chain, The CARES Act • Leave a comment

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Moody's: Patient volume recovered a bit in May, but providers face ...

Patient volumes at hospitals, doctors’ and dentists’ offices recovered slightly in May but lagged well behind pre-pandemic levels, according to a new analysis from Moody’s Investors Service.

In all, the ratings agency estimated total surgeries at rated for-profit hospitals declined by 55% to 70% in April compared with the same period in 2019. States required hospitals to cancel or delay elective procedures, which are vital to hospitals’ bottom lines.

“Patients that had been under the care of physicians before the pandemic will return first in order to address known health needs,” officials from the ratings agency said in a statement. “Physicians and surgeons will be motivated to extend office or surgical hours in order to accommodate these patients.”

Those declines narrowed to 20% to 40% in May when compared to 2019.

Emergency room and urgent care volumes were still down 35% to 50% in May.

“This could reflect the prevalence of working-from-home arrangements and people generally staying home, which is leading to a decrease in automobile and other accidents outside the home,” the analysis said. “Weak ER volumes also suggest that many people remain apprehensive to enter a hospital, particularly for lower acuity care.”

The good news:  The analysis estimated it is unlikely there will be a return to the nationwide decline of volume experienced in late March and April because healthcare facilities are more prepared for COVID-19.

For instance, hospitals have enough personal protective equipment for staff and have expanded testing, the analysis said.

For-profit hospitals also have “unusually strong liquidity to help them weather the effects of the revenue loss associated with canceled or postponed procedures,” Moody’s added. “That is largely due to the CARES Act and other government financial relief programs that have caused hospital cash balances to swell.”

However, the bill for one of those sources of relief is coming due soon.

Hospitals and other providers will have to start repaying Medicare for advance payments starting this summer. The Centers for Medicare & Medicaid Services doled out more than $100 billion in advance payments to providers before suspending the program in late April.

Hospital group Federation of American Hospitals asked Congress to change the repayment terms for such advance payments, including giving providers at least a year to start repaying the loans.

Another risk for providers is the change in payer mix as people lose jobs and commercial coverage, shifting them onto Medicaid or the Affordable Care Act’s (ACA’s) insurance exchanges.

“This will lead to rising bad debt expense and a higher percentage of revenue generated from Medicaid or [ACA] insurance exchange products, which typically pay considerably lower rates than commercial insurance,” Moody’s said.

 

 

 

Hospital price transparency push draws industry ire, but effects likely limited

Posted on by • Posted in America's Health Insurance Plans, American Hospital Association (AHA), Federation of American Hospitals, Health Insurance Industry, Health Policy, Health System, Hospital, Medical Group Management Association (MGMA), Out of Pocket Expenses, Paperwork Burden, Physician, Physician Practice Management, President Executive Order, Price Transparency, Transparency • Leave a comment

https://www.healthcaredive.com/news/hospital-price-transparency-push-draws-industry-ire-but-effects-likely-lim/557536/

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Far-reaching rules mandating industry price transparency could mark a major shift, but experts are skeptical the efforts will meaningfully lower prices for patients without a more fundamental system overhaul.

President Donald Trump’s executive order signed Monday directs HHS and other federal departments to begin rulemaking to require hospitals and payers to release information based on their privately negotiated rates. Providers would also have to give patients estimates of their out-of-pocket costs before a procedure.

The moves come amid efforts from the federal government and Congress to push the healthcare industry to address patient anger over high prices, particularly regarding what medical bills they can expect to receive.

Many details must still be worked out as HHS and CMS craft their proposals, but providers and payers were quick to condemn any notion of making negotiated rates public. A legal challenge to the rules is also likely.

Many policy analysts and economists said that while price transparency is good in theory, current evidence shows patients don’t take advantage of pricing information now available, said Ateev Mehrotra, associate policy of healthcare policy and Harvard Medical School.

Patients are wary of going against a doctor’s advice to undergo a certain procedure or test, and to get it done at a certain facility. A difference in price may not be enough to sway them.

Also, the healthcare system has so many moving parts and unique elements that understanding a medical bill and how the price was calculated is daunting, to say the least.

“That complexity hinders the ability of people to effectively shop for care,” Mehrotra told Healthcare Dive “It’s not like going to Amazon and buying a toothbrush or whatever.”

What the order actual does

The executive order has two main directives:

  • Within 60 days, HHS must propose a regulation “to require hospitals to publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services, in an easy-to-understand, consumer-friendly, and machine-readable format using consensus-based data standards that will meaningfully inform patients’ decision making and allow patients to compare prices across hospitals.”
  • Within 90 days, HHS and the Departments of Labor and Treasury must solicit comment on a proposal “to require healthcare providers, health insurance issuers, and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket costs for items or services to patients before they receive care.”

The order also outlines smaller steps, including a report from HHS on how the federal government and private companies are impeding quality and price transparency in healthcare and another on measures the White House can take to deter surprise billing.

It also directs federal agencies to increase access to de-identified claims data (an idea strongly favored by policy analysts and researchers) and requires HHS to identify priority databases to be publicly released.

The order requests the Secretary of the Treasury expand coverage options for high-deductible health plans and health savings accounts. It specifically asks the department to explore using HSA funds for direct primary care, an idea Senate HELP Committee Chairman Lamar Alexander, R-Tenn., said he “especially like[d].”

Industry pushes back

The order itself wastes no time in pointing the finger at industry players for current patient frustrations with the system. “Opaque pricing structures may benefit powerful special interest groups, such as large hospital systems and insurance companies, but they generally leave patients and taxpayers worse off than would a more transparent system,” according to the document.

As expected, payer and provider groups slammed any attempt to force them to reveal the rates they negotiate behind closed doors, though they expressed appreciation for the general push toward more transparency.

The American Hospital Association shied away from strong language as details are still being worked out, but did say “publicly posting privately negotiated rates could, in fact, undermine the competitive forces of private market dynamics, and result in increased prices.”

The Federation of American Hospitals took a similar tone in a statement from CEO Chip Kahn. “If implementing regulations take the wrong course, however, it may undercut the way insurers pay for hospital services resulting in higher spending,” he said.

Both hospital groups highlighted more transparency for patient out-of-pocket costs and suggests the onus should be on payers to communicate information on cost-sharing and co-insurance.

Mollie Gelburd, associate director of government affairs at MGMA, which represents physician groups, said doctors don’t want to be in the position of explaining complex insurance terms and rules to a patient.

“While physicians should be encouraged to talk to patients about costs, to unnecessarily have them be doing all this education when they should be doing clinical care, that sort of gets concerning,” she said.

Practices are more concerned about payer provider directories and their accuracy, something not addressed in the executive order. Not having that type of information can be detrimental for a patient seeking care and further regulation in the area could help, Gelburd said.

Regardless, providers will likely view with frustration any regulations that increase their reporting and paperwork burdens, she said.

“I think the efficacy of pricing transparency and reducing healthcare costs, the jury is still out on that,” she said. “But if you have that onerous administrative requirement, that’s certainly going to drive up costs for those practices, especially those smaller practices.”

Payer lobby America’s Health Insurance Plans was quick to voice its opposition to the order.

CEO Matt Eyles said in a statement disclosing privately negotiated rates would “reduce incentives to offer lower rates, creating a floor — not a ceiling — for the prices that hospitals would be willing to accept.” He argued that current tools payers use to inform patients of cost expectations, such as cost calculators, are already offering meaningful help.

AHIP also said the order works against the industry’s efforts to shift to paying for quality instead of quantity. “Requiring price disclosure for thousands of hospital items, services and procedures perpetuates the old days of the American health care system paying for volume over value,” he said. “We know that is a formula for higher costs and worse care for everyone.”

Limited effects

One potential effect of making rates public is that prices would eventually trend toward equalization. That wouldn’t necessarily reduce costs, however, and could actually increase them for some patients. A payer able to negotiate a favorable rate for a specific patient population in a specific geographic area might lose that advantage, for example, Christopher Holt, director of healthcare policy at the conservative leaning American Action Forum, told Healthcare Dive.

John Nicolaou of PA Consulting told Healthcare Dive consumers will need help deciphering whatever information is made available however. Reams of data could offer the average patient little to no insight without payer or third-party tools to analyze and understand the information.

“It starts the process, just publishing that information and just making it available,” he said. “It’s got to be consumable and actionable, and that’s going to take a lot more time.”

The order does require the information being made public be “easy-to-understand” and able to “meaningfully inform patients’ decision making and allow patients to compare prices across hospitals.” That’s far easier said than done, however, Harvard’s Mehrotra said. “We haven’t seen anybody able to put this information in a usable way that patients are able to effectively act upon,” he said.

Holt said patients are also limited in their ability to shop around for healthcare, considering they often have little choice in what insurance company they use. People with employer-based plans typically don’t have the option to switch, and those in the individual market can only do so once a year.

Another aspect to consider is the limited reach of the federal government. CMS can require providers and payers in the Medicare Advantage program, for example, to meet price transparency requirements, but much of the licensing and regulations for payer and providers comes at the state level.

Waiting for details, lawsuits

One of the biggest questions for payers and providers in the wake of Monday’s announcement is how far exactly the rulemaking from HHS will go in mandating transparency. One one end, the requirements could stick close to giving patients information about their expected out-of-pocket costs without revealing the details of payer-provider negotiations. Full transparency, on the other hand, would mean publishing the now-secret negotiated rates for anyone to see.

“I think it’s the start of a much longer process,” Holt said. “It’s going to depend a lot on how much information is going to be required to be divulged and how that’s going to be collected.”

It’s almost certain that as soon as any concrete efforts at implementation are made, lawsuits will follow.

That’s what happened after Ohio passed a price transparency law in 2015 that required providers give patients information on out-of-pocket costs before a procedure — a proposal the executive order also puts forward.

The law still has not been enforced, as it has been caught up in the courts. The Ohio Hospital Association and Ohio State Medical Association sued over the law, arguing it was too vague and could lead to a delay in patient care.