Category Archives: Health Policy

The Tit for Tat Game in Healthcare produces No Winners

Posted on by • Posted in Health Policy, Health System, Healthcare Reform, Hospital, Hospital Industry, Mission, Unintended Consequences • Leave a comment
The Tit for Tat Game in Healthcare produces No Winners

Tit for Tat battles in healthcare are nothing new. Last week, they were on full display.

  • Health insurers and drug manufacturers squared off in national ad campaigns accusing the other of complicity in keeping drug costs high.
  • The House Energy and Commerce and Ways and Means Committees held hearings challenging non-profit hospital tax exemptions as momentum builds for a new site neutral payment policy opposed by the American Hospital Association. In tandem, Indiana Republican Rep. Victoria Spartz reintroduced “Combatting Hospital Monopolies Act,”– a bill April 20 that would allow the FTC to enforce antitrust rules among the nation’s more than 2,900 nonprofit hospitals.

The intensity of these battles is likely to increase because healthcare affordability is a kitchen-table issue and the public’s paying attention.

Executive compensation in hospitals, drug companies and health insurers is a flashpoint: the disparity between pay packages for healthcare CEOs and their rank-and-file employees is widening. Books and documentaries about healthcare rogue operators like Theranos and Purdue draw wide audiences. And announcements like the Kaiser Permanente-Geisinger deal last week lend to the industry’s growing kinship with BIG BUSINESS.

The corporatization of U.S. healthcare has endangered its future.  The time has come to revisit its purpose, refresh its structure and re-organize its finances.

  • Revisit it’s purpose:
  • The modern health system has evolved through economic cycles, population growth, scientific explosion and shifting demand. Regulations, roles and money has followed. The integration of artificial intelligence is the next threshold in its evolution unlocking efficiencies heretofore unimagined and capabilities that enable self-care and customization. Might the system’s purpose shift from producing products and services for patients to enabling individuals to care for themselves and others more effectively? Might price and cost transparency in each sector be without pre-condition and barriers? And might the system’s true north be health and wellbeing rather than utilization and revenue growth?
  • Refresh its structure:
  • The system’s fundamental flaw is structural: the U.S. operates a health system of caregivers and facilities that serve its majority and a separate system of 3000 public health programs that serve the rest. Though long acknowledged, social determinants of health play second fiddle to specialized services to populations that are insured. The destination for the system must be health + social services, not health or human services, and the fiduciary role of its prominent non-profit institutions to steward the transition. In tandem, the system’s financing (through insurance) and delivery (through services and facilities) must necessarily be integrated so investments in prevention, population health management and care coordination are optimized.
  • Re-organize its finances:
  • The health system’s primary financing is derived primarily from direct government appropriations (vis a vis tax collections from individuals and employers) and profits earned by its operators and suppliers. Its capital investing is increasingly dependent on private equity that seeks profits in 5-6 years for its limited partner investors. In systems of the world with better outcomes and lower costs, government financing plays a bigger role balancing prevention and social services with the needs of the sick. The U.S. financing system rewards taking care of health problems after they’re manifest in hospitalization or medication management and insignificant investment elsewhere. Capitalizing innovation across the system is an imperative: otherwise, risk-taking by private investors in the system will default to short-term returns. And the public’s long-term wellbeing is compromised.

Most of the food fights in healthcare like last week’s revolve around each sector’s unique response to the three challenges above. That’s why they exist: to protect the interests of their members and advocate on their behalf. All believe their mission and vision is essential to the greater good and the moral high ground theirs. Some are imperiled more than others: not for profit, rural and safety net hospitals, long-term care operators, direct caregivers and public health programs at the top of this list.

Educating lawmakers is necessary but what’s needed is serious, objective forward-looking definition of the U.S. health system’s future. The tit for tat game will not solve anything. That’s where we are.

Paul

PS: Bipartisanship in Congress is rare.

Hospitals, particularly non-profit hospitals, may be the exception. Bipartisan headwinds are swelling and adversaries organizing. Members of Congress appear keen to assert more influence in how hospitals operate.

Price transparency, cost controls, site-neutral payments, charity care, pay equity and funding for non-patient care activity are on their radar. Hospitals, especially large not-for-profit multi-hospital systems, have joined drug manufacturers and pharmacy benefits managers as targets for reformers seeking lower cost and greater accountability.

As the debt ceiling is debated and FY24 federal budget is crafted, softening support for healthcare will take its toll across the industry and create unintended negative consequences for all.

The Debt Ceiling Debate is Problematic for Healthcare

Posted on by • Posted in For-Profit, Health Policy, Health System, Hospital, Hospital Industry, Non-Profit Healthcare Industry, Strategy, Tax Exempt Status • Leave a comment
The Debt Ceiling Debate is Problematic for Healthcare

Last week, 35,000 gathered in Chicago to hear about the future of health information technologies at the HIMSS Global Health Conference & Exhibition where generative AI, smart devices and cybersecurity were prominent themes.

Yesterday, the Annual Meeting of the American Hospital Association convened. Its line-up includes some big names in federal health policy and politics along with some surprising notaries like Chris Wray, Head of the FBI and others. In tandem, a new TV ad campaign launched yesterday by the Coalition to Protect America’s Health Care, of which the AHA is a founding member to pressure Congress to avoid budget cuts to hospitals to “protect care for seniors”.

These events bracket what has been a whip-lash week for the U.S. healthcare industry…

  • Throughout the week, the fate of medication-abortion mifepristone was in suspense ending with a Supreme Court emergency-stay decision late Friday night that defers prohibitions against its use until court challenges are resolved.
  • At HIMSS last Monday, EHR juggernaut EPIC and Microsoft announced they are expanding their partnership and integrating Microsoft’s Azure Open AI Service into Epic’s EHR software. Epic’s EHR system will be able to run generative AI solutions through Microsoft’s Open AI Azure Service. Microsoft uses Open Ai’s language model GPT-4 capabilities in its Azure cloud solution.
  • Thursday HHS posted data online showing who owns 6,000 hospices and 11,000 home health agencies that are reimbursed by Medicare.
  • Bell-weather companies HCA (investor-owned hospitals), Johnson and Johnson (prescription drugs) and Elevance (health insurers) reported strong 1Q profits and raised their guidance to shareholders for year-end performance.
  • And Monday, House Speaker Kevin McCarthy told an audience at the New York Stock Exchange that Republicans will agree to increase the $31.4 trillion debt-limit if it is accompanied by spending cuts i.e. a requirement that all “able bodied Americans without children” work to receive benefits like Medicaid, re-setting federal spending to 2022 levels and others.

Each of these is newsworthy. The partisan brinksmanship about the debt ceiling is perhaps the most immediately consequential for healthcare because it will draw attention to 2 themes:

Healthcare is profitable for some. Big companies and others with access to capital are advantaged in the current environment. Healthcare is fast-becoming a land of giants: it’s almost there in health insurance (the Big 7 in the US), prescription drugs (36 major players globally), retail drugstores (the Big 5), PBMs (the Big 4) and even the accountancies who monitor their results (the Big 4).

By contrast, the hospital and long-term care sectors sectors remain fragmented though investor-owned systems now own a quarter of operations in both.

Physicians and other clinical service provider sectors (physical therapy, dentistry, et al) are transitioning toward two options—corporatization via private equity roll-ups or hospital employment.

The 1Q earnings reported by HCA, J&J and Elevance last week give credence to beliefs among budget hawks that healthcare is a business that can be lucrative for some and expensive for all. That view aka “Survival of the Fittest” will figure prominently into the debt ceiling debate.

The regulatory environment in which U.S. healthcare operates is hostile because the public thinks it needs more scrutiny. 82% of U.S. adults think the health system puts its profits above all else. The public’s antipathy toward the system feeds regulatory activism toward healthcare.

 At a federal level, the debt ceiling debate in Congress will be intense and healthcare cuts a likely by-product of negotiations between hawks and doves.

In addition, government accountants and lawmakers will increase penalties for fraud and compliance suspecting healthcare’s ripe for ill-gotten gain and/or excess. Federal advocacy in each sector will be strained by increasingly significant structural fault-lines between non-profit and for profits, and public health programs that operate on shoestrings below the radar.  Two committees of the House (Ways and Means and Energy and Commerce) and two Senate Committee’s) will hold public hearings on issues including not-for-profit hospitals consolidation, price transparency and others with unprecedented Bipartisan support for changes likely “uncomfortable” for industry insiders.

At a state level, matters are even more complicated: states are the gatekeeper for the healthcare system’s future. States will increasingly control the supply and performance criteria for providers and payers. Ballot referenda will address issues reflective of the state’s cultural and political values—abortion rights, public health funding, gun control, provider and prescription drug price controls, and many more.

My take

The upcoming debt ceiling debate comes at a pivotal time for healthcare because it does not enjoy the good will it has in decades past.  The pandemic, dysfunctional political system and the struggling economy have taken a toll on public confidence. Long-term planning for the system’s future is subordinated to the near term imperative to control costs in the context of the debt ceiling debate.

The federal debt will hit its ceiling in June. Speaker McCarthy’s ‘Limit, Save, Grow Act’ would return the government’s discretionary spending to fiscal year 2022 levels, cap annual spending growth at 1% for a decade and raise the debt ceiling until March 31, 2024, or until the national debt increases by $1.5 trillion, whichever comes first. 

That means healthcare program cuts. That’s why this debt ceiling expansion is more than perfunctory: it’s an important barometer about the system’s future in the U.S. and how it MIGHT evolve:

In 8-10 years, it MIGHT be dominated by fewer players with heightened regulatory constraints.

It MIGHT be funded by higher taxes in exchange for better performance.

It MIGHT be restructured with acute services as a public utility. It might be a B2C industry in which employers play a lesser role and a national platform powered by generative AI and GPT4 enables self-care and interoperability.

It MIGHT be an industry wherein public health and social services programs are seamlessly integrated with non-profit health systems.

It MIGHT be built on the convergence of financing and delivery into regional systems of health.

It MIGHT bifurcate into two systems—one public for the majority and one private for some who can afford it.

It MIGHT replace the trade-off between community benefits and tax exemption.

It MIGHT re-define distinctions between non-profit hospitals and plans with their predicate investor-owned operators, and so on.

No one knows for sure, but everyone accepts the future will NOT be a repeat of the past. And the resolution of the debt ceiling in the next 60 days will set the stage for healthcare for the next decade.

Most Adults with Past-Due Medical Debt Owe Money to Hospitals

Posted on by • Posted in Bad Debt Expense, Charity Care, Federal Poverty Level (FPL), Health Insurance Coverage Adequacy, Health Policy, Health System, Hospital, Hospital Industry, Medical Debt, Medical Debt Financing, Rev Cycle Management, Revenue Cycle, Uncompensated Care, Underinsured, Uninsured • Leave a comment

https://www.urban.org/research/publication/most-adults-past-due-medical-debt-owe-money-hospitals

This brief examines past-due medical debt among nonelderly adults and their families using nationally representative survey data collected in June 2022. The analysis assesses the share of adults ages 18 to 64 with past-due medical bills owed to hospitals and other health care providers as well as the actions taken by hospitals to collect payment or make bills easier to settle.

It focuses on the experiences of adults with family incomes below and above 250 percent of the federal poverty level (FPL), approximating the income cutoff used by many hospitals to determine eligibility for free and discounted care.

WHY THIS MATTERS

In their efforts to protect patients from medical debt, policymakers have increasingly focused on the role of hospital billing and collection practices, with particular scrutiny directed toward nonprofit hospitals’ provision of charity care. Understanding the experiences of people with past-due bills owed to hospitals and other providers can shed light on the potential for new consumer protections to alleviate debt burdens.

WHAT WE FOUND

  • More than one in seven nonelderly adults (15.4 percent) live in families with past-due medical debt. Nearly two-thirds of these adults have incomes below 250 percent of FPL.
  • Nearly three in four adults with past-due medical debt (72.9 percent) reported owing at least some of that debt to hospitals, including 27.9 percent owing hospitals only and 45.1 percent owing both hospitals and other providers. Adults with past-due hospital bills generally have much higher total amounts of debt than those with past-due bills only owed to non-hospital providers.
  • Most adults (60.9 percent) with past-due hospital bills reported that a collection agency contacted them about the debt, but much smaller shares reported that the hospital filed a lawsuit against them (5.2 percent), garnished their wages (3.9 percent), or seized funds from a bank account (1.9 percent).
  • Though about one-third (35.7 percent) of adults with past-due hospital bills reported working out a payment plan, only about one-fifth (21.7 percent) received discounted care.
  • Adults with incomes below 250 percent of FPL were as likely as those with higher incomes to experience hospital debt collection actions and to have received discounted care.

The concentration of past-due medical debt among families with low incomes and the large share who owe a portion of that debt to hospitals suggests that expanded access to hospital charity care and stronger consumer protections could complement health insurance coverage expansions and other efforts to mitigate the impact of unaffordable medical bills.

HOW WE DID IT

This analysis draws on data from the June 2022 round of the Urban Institute’s Health Reform Monitoring Survey (HRMS), a nationally representative, internet-based survey of adults ages 18 to 64 that provides timely information on health insurance coverage, health care access and affordability, and other health topics. Approximately 9,500 adults participated in the June 2022 HRMS.

The survey questionnaire and information about the survey design is available at https://www.urban.org/policy-centers/health-policy-center/projects/health-reform-monitoring-survey/survey-resources.

Hospitals’ ‘dire’ financial situation, in 4 charts

Posted on by • Posted in American Hospital Association (AHA), Financial Distress, Financial Performance, Financial Pressure, Financial Stewardship, Financial Strength, Financial Viability, Financially Distressed, Health Policy, Health System, Hospital, Hospital Industry, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue • Leave a comment
https://www.advisory.com/daily-briefing/2023/04/26/hospital-challenges?utm_source=member_db&utm_medium=email&utm_campaign=2023apr26&utm_content=member_headline_final_x_infogram_x_x&elq_cid=4778863&x_id=

According to a new report from the  American Hospital Association (AHA), hospitals and health systems are facing significant financial pressures from rising expenses, including for labor, drugs, medical supplies and more. And without increased government support, the organization warns that patients’ access to care could be at risk.

Hospitals continue to see expenses grow, negative margins

In the report, AHA writes that several factors, including historic inflation and critical workforce shortages leading to a reliance on contract labor, led to “2022 being the most financially challenging year for hospitals since the pandemic began.”

According to data from  Syntellis Performance Solutions, overall hospital expenses increased by 17.5% between 2019 and 2022 — more than double the increases in Medicare reimbursements during the same time. Between 2019 and 2022, Medicare reimbursement only grew by 7.5%.

https://e.infogram.com/45b88e2f-36be-4acf-b83e-3f8441322ab5?parent_url=https%3A%2F%2Fwww.advisory.com%2Fdaily-briefing%2F2023%2F04%2F26%2Fhospital-challenges%3Futm_source%3Dmember_db%26utm_medium%3Demail%26utm_campaign%3D2023apr26%26utm_content%3Dmember_headline_final_x_infogram_x_x%26elq_cid%3D4778863%26x_id%3D&src=embed#async_embed

With expenses significantly outpacing reimbursement, hospital margins have been consistently negative over the last year. In fact, AHA noted that “over half of hospitals ended 2022 operating at a financial loss — an unsustainable situation for any organization in any sector, let alone hospitals.”

So far, this trend has continued into 2023, with hospitals reporting negative median operating margins in both January and February.

A recent analysis also found that the first quarter of 2023 had the largest number of bond defaults among hospitals in over 10 years. 

https://e.infogram.com/0e03ba0d-cad4-49b4-80da-201819ae9fab?parent_url=https%3A%2F%2Fwww.advisory.com%2Fdaily-briefing%2F2023%2F04%2F26%2Fhospital-challenges%3Futm_source%3Dmember_db%26utm_medium%3Demail%26utm_campaign%3D2023apr26%26utm_content%3Dmember_headline_final_x_infogram_x_x%26elq_cid%3D4778863%26x_id%3D&src=embed#async_embed

Where are hospital expenses increasing?

Between 2019, and 2022 hospital labor expenses increased by 20.8%, a rise that was largely driven by a growing reliance on contract labor to fill in workforce gaps during the pandemic. Even after accounting for an increase in patient acuity, labor expenses per patient increased by 24.7%.

Compared to pre-pandemic levels, hospitals saw a 56.8% increase in the rates they were charged for contract employees in 2022. Overall, hospitals’ contract labor expenses increased by a “staggering” 257.9% in 2022 compared to 2019 levels.

A sharp rise in inflation in recent months has also led to a significant increase in hospitals’ non-labor expenses, particularly for drugs and medical expenses. According to a report by  Kaufman Hall, just non-labor expenses would lead to a $49 billion one-year expense increase for hospitals and health systems.

Since 2019, non-labor expenses have grown 16.6% per patient. Hospitals’ expenses for drugs and medical supplies/equipment have seen similar increases per patient at 19.7% and 18.5%, respectively. Costs of laboratory services (27.1%), emergency services (31.9%), and purchased services, including IT and food and nutrition services, (18%) have also increased significantly per patient. 

https://e.infogram.com/8ea80e49-1f60-47cd-9429-dbd4a0869c60?parent_url=https%3A%2F%2Fwww.advisory.com%2Fdaily-briefing%2F2023%2F04%2F26%2Fhospital-challenges%3Futm_source%3Dmember_db%26utm_medium%3Demail%26utm_campaign%3D2023apr26%26utm_content%3Dmember_headline_final_x_infogram_x_x%26elq_cid%3D4778863%26x_id%3D&src=embed#async_embed

Outside of labor and non-labor expenses, AHA writes that policies from health insurers have also contributed to significant burden among hospital staff and increased administrative costs. Currently, administrative costs account for up to 31% of total healthcare spending — of which, billing and insurance makes up 82%.

https://e.infogram.com/27e64c96-bd58-4e5b-8efb-8748e4a3cc28?parent_url=https%3A%2F%2Fwww.advisory.com%2Fdaily-briefing%2F2023%2F04%2F26%2Fhospital-challenges%3Futm_source%3Dmember_db%26utm_medium%3Demail%26utm_campaign%3D2023apr26%26utm_content%3Dmember_headline_final_x_infogram_x_x%26elq_cid%3D4778863%26x_id%3D&src=embed#async_embed

What Congress can do to support hospitals

With the COVID-19 public health emergency ending on May 11, several important hospital waivers and flexibilities will soon end, and “[t]he downstream effects of this will be wide-ranging as hospitals will be faced with a set of additional challenges,” AHA writes.

“Rising costs for drugs, supplies, and labor coupled with sicker patients, longer hospital stays, and government reimbursement rates that do not come close to covering the costs of caring for patients have created a dire situation for hospitals and health systems,” said AHA president and CEO Rick Pollack.

“This is not just a financial problem; it is an access problem.

When healthcare providers cannot afford the tools and teams they need to care for patients, they will be forced to make hard choices and the people who will be impacted the most are patients. We can’t let that happen. Congress and others must act to preserve the care our nation needs and depend on.”

To address these financial challenges and ensure that hospitals are able to continue caring for patients, AHA has suggested several actions Congress could take to support hospitals going forward, including:

  • Enacting policies to support efforts to boost the healthcare workforce and ensure of future pipeline of professionals to combat longstanding labor shortages
  • Rejecting attempts to cut Medicare or Medicaid payments to hospitals, which could further reduce patients’ access to care
  • Encouraging CMS to use its “special exceptions and adjustments” to make retrospective adjustments to account for differences between what was implemented for fiscal year 2022 and what is currently projected
  • Creating a special statutory designation and providing additional support to hospitals that serve historically marginalized communities

“As the hospital field maintains its commitment to care in the face of significant challenges, policymakers must step up and help protect the health and well-being of our nation by ensuring America has strong hospitals and health systems,” AHA writes.

AMERICAN HOSPITALS: Healing a Broken System

Posted on by • Posted in Change, Change Agent, Disruption, Fix It Healthcare, Health Insurance Industry, Health Policy, Health System, Healthcare Reform, Hospital, Hospital Industry, Innovation, Leadership, Payment Reform, Payor Contracting, Thought Leaders • Leave a comment
About Us

American Hospitals is the fourth in a series of documentaries produced by the Unfinished Business Foundation, founded by Richard Master, CEO of MCS Industries Inc., who took a deep dive into the economics of the U.S. health-care system after his company was hit year after year with double-digit health insurance rate increases. 

Master teamed up with filmmaker Vincent Mondillo to produce Fix It: Healthcare at the Tipping Point; Big Pharma: Market Failure; Big Money Agenda: Democracy on the Brink, and now, American Hospitals.

A provocative look at the cost and inequities of American Hospitals, often more motivated by money and power than in providing for the health needs of individuals and the communities they were founded to serve. From the filmmakers behind the hit documentaries Fix It: Healthcare at the Tipping Point, Big Money Agenda, and Big Pharma.

Learn more and find out where to see the latest film at fixithealthcare.com/events

What’s driving the bidding war for primary care practices?

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Health Policy, Market Consolidation, Market Power, Medicare Advantage, Mergers & Acquisitions, Outcomes, Physician Practice Acquisition, Physician Practice Valuation, Primary Care, Quality of Care, Value-Based Contracting, Value-Based Healthcare • Leave a comment

https://mailchi.mp/5e9ec8ef967c/the-weekly-gist-april-14-2023?e=d1e747d2d8

Published in the April edition of Health Affairs Forefront, this piece unpacks why payers and other corporations have replaced health systems as the top bidders for primary care practices, driving up practice purchase prices from hundreds of dollars to tens of thousands of dollars per patient. While corporate players like UnitedHealth Group, Amazon, and Walgreens have spent an estimated $50B on primary care, it pales in comparison to the potential “$1T opportunity” in value-based care projected by McKinsey and Company.

The authors argue that this tantalizing opportunity exists because the Centers for Medicare and Medicaid Services (CMS) invited corporations to “re-insure” Medicare through capitated arrangements in Medicare Advantage (MA) and its Direct Contracting program.

While CMS intended to promote risk and value-based incentives to improve care quality and costs, the incentive structures baked into these programs have afforded payers record profits, despite neither improving patient outcomes nor reducing government healthcare spending.

The Gist: While the critiques of MA reimbursement structures in this piece are familiar, they are woven together into a convincing rebuke of the “unintended consequences” of CMS’s value-based care policy. 

Through poorly designing incentives, CMS paved a runway for corporate America to capture the lion’s share of the financial returns of value-based care, paying prices for primary care that health systems can’t match.

Meanwhile, despite skyrocketing valuations for primary care practices, primary care services remain underfunded and inadequately reimbursed, pushing primary care groups closer to payers with excess profits to invest.

Hospitals’ off-site fees draw lawmakers’ scrutiny

Posted on by • Posted in Facility Fee, Health Policy, Health System, Hospital, Hospital Industry, Off-Site Fees, Price Transparency, Rev Cycle Management, Revenue Cycle, Surprise Bills • Leave a comment
https://www.axios.com/2023/04/07/hospitals-off-site-fees-draw-lawmakers-scrutiny?utm_source=4sight+Health+Readers&utm_campaign=4fbcb71eb2-EMAIL_CAMPAIGN_2018_08_29_09_53_COPY_01&utm_medium=email&utm_term=0_96b6d85309-4fbcb71eb2-147498402

More than two years after Congress acted to shield patients from surprise medical bills, lawmakers are turning to another source of unexpected medical costs: the fees that hospitals tack on for services provided in clinics they own.

Why it matters: 

As health systems push more care outside hospital walls, they’re charging extra “facility fees” for common services like blood tests, X-rays and, in some cases, even telehealth visits.

  • Critics say the practice drives up health care costs while padding hospital profits and incentivizing more consolidation. But hospitals argue the fees cover the cost of nurses, lab technicians, medical records and equipment — and that limiting them could reduce patient care.

Driving the news: 

The fees have caught the attention of Congress, which could take up price transparency legislation.

But five states are currently considering laws to curb facility fees for certain services or strengthen existing laws, per the National Academy for State Health Policy, which has proposed model legislation.

  • Connecticut is updating a 2015 law that required notifications when facility fees were being charged by hospitals.
  • “Rising costs remain a barrier for far too many people and result in many people putting off care because they can’t afford it,” Deidre Gifford, executive director of the Connecticut Office of Health Strategy, said last month, when Democratic Gov. Ned Lamont proposed a package of reforms.
  • Colorado lawmakers are targeting the practice, despite mounting hospital resistance, Kaiser Health News reported.
  • And Texas legislators are weighing prohibitions on off-campus fees — a move the Texas Hospital Association brands “unprecedented and dangerous.”
  • Lawmakers in Indiana and Massachusetts are eyeing similar moves.

How it works: 

Many health services can be provided in both hospital and outpatient settings. But some patients who visit an offsite clinic are billed as if they were treated in the hospital.

  • Some might receive a facility fee if they haven’t yet met their health plan deductible. Others could see the added cost reflected later in higher premiums and copays.
  • A 2020 Rand report found facility and related professional charges factored in employers and private insurers paying 224% of what Medicare would have paid for the same services at the same facilities.

Some business groups like the Employers’ Forum of Indiana are advocating for bans or moratoriums on the fees, citing the increased cost of offering competitive benefits.

The other side: 

Hospitals maintain that facility fees are needed to cover essential infrastructure like electronic health record systems and other overhead costs. Some refer to them as “people fees,” saying they cover the expenses of nurses, lab technicians, pharmacists and other essential staff.

  • Texas hospitals are concerned about what they say is the broad definition of a facility fee in pending legislation in the state’s Senate, saying it could eliminate all hospital payments besides those that go to physicians.
  • “We need to quantify what problem we’re trying to solve,” said Cameron Duncan, vice president of advocacy at the Texas Hospital Association.
  • The group said the bill as originally filed would result in 69% of Texas hospitals closing their outpatient clinics.

The intrigue: 

Insurers that negotiated covered costs with hospitals and health systems have remained largely quiet on the fees.

  • And the vagaries of hospital pricing means transparency requirements alone may not give patients warning about added fees.
  • “It’s not clear from data either that the fees are consistent, or that you could decipher that the fee is consistent for each type of procedure,” said Vicki Veltri, senior policy fellow at National Academy for State Health Policy and former leader of the Connecticut Office of Health Strategy.

The bottom line: 

Patients increasingly get charged like they’re in a hospital even if they didn’t set foot in one as physicians’ offices are increasingly scooped up by massive health systems.

  • While those health systems tout access and efficiencies to drive down health care costs, facility fees are driving more lawmakers and regulators to do a reality check.

States confront medical debt that’s bankrupting millions

Posted on by • Posted in Bankruptcy, Credit, Health Insurance Coverage Adequacy, Health Policy, Medical Debt, Medical Debt Financing • Leave a comment
https://apnews.com/article/medical-debt-legislation-2a4f2fab7e2c58a68ac4541b8309c7aa?utm_source=4sight+Health+Readers&utm_campaign=4fbcb71eb2-EMAIL_CAMPAIGN_2018_08_29_09_53_COPY_01&utm_medium=email&utm_term=0_96b6d85309-4fbcb71eb2-147498402

Cindy Powers was driven into bankruptcy by 19 life-saving abdominal operations. Medical debt started stacking up for Lindsey Vance after she crashed her skateboard and had to get nine stitches in her chin. And for Misty Castaneda, open heart surgery for a disease she’d had since birth saddled her with $200,000 in bills.

These are three of an estimated 100 million Americans who have amassed nearly $200 billion in collective medical debt — almost the size of Greece’s economy — according to the Kaiser Family Foundation.

Now lawmakers in at least a dozen states and the U.S. Congress have pushed legislation to curtail the financial burden that’s pushed many into untenable situations: forgoing needed care for fear of added debt, taking a second mortgage to pay for cancer treatment or slashing grocery budgets to keep up with payments.

Some of the bills would create medical debt relief programs or protect personal property from collections, while others would lower interest rates, keep medical debt from tanking credit scores or require greater transparency in the costs of care.

In Colorado, House lawmakers approved a measure Wednesday that would lower the maximum interest rate for medical debt to 3%, require greater transparency in costs of treatment and prohibit debt collection during an appeals process.

If it became law, Colorado would join Arizona in having one of the lowest medical debt interest rates in the country. North Carolina lawmakers have also started mulling a 5% interest ceiling.

But there are opponents. Colorado Republican state Sen. Janice Rich said she worried that the proposal could “constrain hospitals’ debt collecting ability and hurt their cash flow.”

For patients, medical debt has become a leading cause of personal bankruptcy, with an estimated $88 billion of that debt in collections nationwide, according to the Consumer Financial Protection Bureau. Roughly 530,000 people reported falling into bankruptcy annually due partly to medical bills and time away from work, according to a 2019 study from the American Journal of Public Health.

Powers’ family ended up owing $250,000 for the 19 life-saving abdominal surgeries. They declared bankruptcy in 2009, then the bank foreclosed on their home.

“Only recently have we begun to pick up the pieces,” said James Powers, Cindy’s husband, during his February testimony in favor of Colorado’s bill.

In Pennsylvania and Arizona, lawmakers are considering medical debt relief programs that would use state funds to help eradicate debt for residents. A New Jersey proposal would use federal funds from the American Rescue Plan Act to achieve the same end.

Bills in Florida and Massachusetts would protect some personal property — such as a car that is needed for work — from medical debt collections and force providers to be more transparent about costs. Florida’s legislation received unanimous approval in House and Senate committees on its way to votes in both chambers.

In Colorado, New York, New Jersey, Illinois, Massachusetts and the U.S. Congress lawmakers are contemplating bills that would bar medical debt from being included on consumer reports, thereby protecting debtors’ credit scores.

Castaneda, who was born with a congenital heart defect, found herself $200,000 in debt when she was 23 and had to have surgery. The debt tanked her credit score and, she said, forced her to rely on her emotionally abusive husband’s credit.

For over a decade Castaneda wanted out of the relationship, but everything they owned was in her husband’s name, making it nearly impossible to break away. She finally divorced her husband in 2017.

“I’m trying to play catch-up for the last 20 years,” said Castaneda, 45, a hairstylist from Grand Junction on Colorado’s Western Slope.

Medical debt isn’t a strong indicator of people’s credit-worthiness, said Isabel Cruz, policy director at the Colorado Consumer Health Initiative.

While buying a car beyond your means or overspending on vacation can partly be chalked up to poor decision making, medical debt often comes from short, acute-care treatments that are unexpected — leaving patients with hefty bills that exceed their budgets.

For both Colorado bills — to limit interest rates and remove medical debt from consumer reports — a spokesperson for Democratic Gov. Jared Polis said the governor will “review these policies with a lens towards saving people money on health care.”

While neither bill garnered stiff political opposition, a spokesperson for the Colorado Hospital Association said the organization is working with sponsors to amend the interest rate bill “to align the legislation with the multitude of existing protections.”

The association did not provide further details.

To Vance, protecting her credit score early could have had a major impact. Vance’s medical debt began at age 19 from the skateboard crash, and then was compounded when she broke her arm soon after. Now 39, she has never been able to qualify for a credit card or car loan. Her in-laws cosigned for her Colorado apartment.

“My credit identity was medical debt,” she said, “and that set the tone for my life.”

In ‘American Hospitals’ Pride Comes Before the Fall

Posted on by • Posted in Administrative Burden, Cost Management, Cost Reduction, Cost Structure, Customer Service, Deferred Healthcare, Health Insurance Coverage Adequacy, Health Policy, Health System, Healthcare Reform, High Prices, Hospital, Hospital Industry, Innovation, Medical Debt, Medical Ethics, Outcomes, Quality of Care, Right Size, Underinsured, Uninsured, Unnecessary Care • Leave a comment
In ‘American Hospitals’ Pride Comes Before the Fall

The film “American Hospitals: Healing a Broken System” premiered in Washington, D.C., on March 29. This documentary exposes the inconvenient truths embedded within the U.S. healthcare system. Here is a dirty dozen of them:

  1. Over half of hospital care is unnecessary, either wasteful or for preventable acute conditions.
  2. Administrative costs account for 15-25% of total healthcare expenditures.
  3. U.S. per-capita healthcare spending is more than twice the average cost of the world’s 12 wealthiest countries.
  4. Medical debt is a causal factor in two-thirds of all personal bankruptcies.
  5. American adults fear medical bills more than contracting a serious disease. Nearly 40% of Americans — a record — delayed necessary medical care because of cost in 2022.
  6. Low-income urban and rural communities lack access to basic healthcare services.
  7. The financial benefits of tax exemption for hospitals are far greater than the cost of the charitable care they provide.
  8. Medical error is unacceptably high.
  9. Hospitals are largely unaccountable for poor clinical outcomes.
  10. The cost of commercially insured care is multiples higher than the cost of government-insured care for identical procedures.
  11. Customer service at hospitals is dreadful.
  12. Frontline clinicians are overburdened and leaving the profession in droves.

Healthcare still operates the same way it has for the last one hundred years — delivering hierarchical, fragmented, hospital-centric, disease-centric, physician-centric “sick” care. Accordingly, healthcare business models optimize revenue generation and profitability rather than health outcomes. These factors explain, in part, why U.S. life expectancy has declined four of the five years and maternal deaths are higher today than a generation ago.

It’s hard to imagine that the devil itself could create a more inhumane, ineffective, costly and change-resistant system. Hospitals consume more and more societal resources to maintain an inadequate status quo. They’re a major part of America’s healthcare problem, certainly not its solution. Even so, hospitals have largely avoided scrutiny and the public’s wrath. Until now.

“American Hospitals” is now playing in theaters throughout the nation. It chronicles the pervasive and chronic dysfunction plaguing America’s hospitals. It portrays the devastating emotional, financial and physical toll that hospitals impose on both consumers and caregivers.

Despite its critical lens, “American Hospitals” is not a diatribe against hospitals. Its contributors include some of healthcare’s most prominent and respected industry leaders, including Donald Berwick, Elizabeth Rosenthal, Shannon Brownlee and Stephen Klasko. The film explores payment and regulatory reforms that would deliver higher-value care. It profiles Maryland’s all-payer system as an example of how constructive reforms can constrain healthcare spending and direct resources into more effective, community-based care.

The United States already spends more than enough on healthcare. It doesn’t need to spend more. It needs to spend more wisely. The system must downsize its acute and specialty care footprint and invest more in primary care, behavioral health, chronic disease management and health promotion. It’s really that simple.

My only critique of “American Hospitals” is many of its contributors expect too much from hospitals. They want them to simultaneously improve their care delivery and advance the health of their communities. This is wishful thinking. Health and healthcare are fundamentally different businesses. Rather than pivoting to population health, hospitals must focus all their efforts on delivering the right care at the right time, place and price.

If hospitals can deliver appropriate care more affordably, this will free up enormous resources for society to invest in health promotion and aligned social-care services. In this brave new world, right-sized hospitals deliver only necessary care within healthier, happier and more productive communities.

All Americans deserve access to affordable health insurance that covers necessary healthcare services without bankrupting them and/or the country. Let me restate the obvious. This requires less healthcare spending and more investments in health-creating activities. Less healthcare and more health is the type of transformative reform that the country could rally behind.

At issue is whether America’s hospitals will constructively participate in downsizing and reconfiguring the nation’s healthcare system. If they do so, they can reinvent themselves from the inside out and control their destinies.

Historically, hospitals have preferred to use their political and financial leverage to protect their privileged position rather than advance the nation’s well-being. Like Satan in Milton’s “Paradise Lost,” they have preferred to reign in hell rather than serve in heaven.

Pride comes before the fall. Woe to those hospitals that fight the nation’s natural evolution toward value-based care and healthier communities. They will experience a customer-led revolution from outside in and lose market relevance. Only by admitting and addressing their structural flaws can hospitals truly serve the American people.

CMS softened proposed rate changes, but strengthened prior authorization rules for MA plans

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Denial, Health Insurance Industry, Health Policy, Lobbyist, Marketing, Medicare Advantage, Medicare Advantage Overpayments, Medicare Advantage Risk-Adjustment, Prior Authorization • Leave a comment

https://mailchi.mp/c9e26ad7702a/the-weekly-gist-april-7-2023?e=d1e747d2d8

Last Friday, the Centers for Medicare and Medicaid Services (CMS) announced that it will begin phasing in major Medicare Advantage (MA) risk-adjustment changes over a three-year period, slower than previously anticipated. Thanks to this delay in full implementation, MA plans will see an average 3.3 percent payment increase in 2024, up from the one percent projected in the earlier draft notice.

CMS also finalized regulations this week that aim to limit MA prior authorizations and denials by requiring that coverage decisions align with traditional Medicare.

The Gist: After CMS began proposing changes to MA payment formulas last year, aimed at reining in pervasive abuses and fraud, 

the insurance industry responded with a $13M marketing blitz to oppose the changes. 

The ads, one of which aired during the Super Bowl, tied Medicare Advantage “cuts” to the time-tested “Hands Off My Medicare” messaging directed at seniors. 

With MA enrollment projected to overtake traditional Medicare this year, the federal government finds itself walking a tightrope in clamping down on overpayments to MA plans, given that any reductions will impact a growing number of seniors.