CMS recently released guidance that includes a new requirement for hospitals to get a Medicare payment boost for caring for patients diagnosed with COVID-19.
The Coronavirus Aid, Relief and Economic Security Act provided a 20 percent add-on payment to the inpatient prospective payment system diagnosis-related group rate for treating patients diagnosed with COVID-19. Until now, a physician’s documentation that a patient has COVID-19 was sufficient to receive the add-on payment. However, recent guidance from CMS adds the requirement to have a positive COVID-19 laboratory test documented in the patient’s medical record for the claim to be eligible for the add-on payment. The new requirement applies to admissions occurring on or after Sept. 1.
To receive the payment boost under the new guidance, the COVID-19 test must be taken within 14 days of the hospital admission. Only the results of viral testing that are consistent with CDC guidelines can be used. Tests performed by an entity other than the hospital, such as a local government-run testing center, can be manually entered into the patient’s medical record, CMS said.
Meeting the new requirement for the add-on payment could be difficult for hospitals, Ronald Hirsch, MD, vice president of the regulations and education group at R1 Physician Advisory Services, told Becker’s Hospital Review.
“There is no way to indicate on a claim for a hospital patient that a test was positive or negative,” he said. “First, the hospital will manually need to go into every record for a patient with U07.1 as a diagnosis and look for a positive test in their own lab system. If one is not found, they will need to search the notes to see if the patient had a test in the 14 days prior to admission and if that test was positive. If there is a note the patient self-reported that they had a positive test, the hospital must decide if they must go through due diligence and attempt to get that actual test result for their records.”
In cases where there isn’t a positive test noted in the medical record, hospitals would need to notify the Medicare audit contractor that they are submitting a claim for a COVID-19 diagnosis that was made clinically, Dr. Hirsch said. The MAC would need to make the appropriate adjustment to ensure the 20 percent add-on payment is not made.
The “undue burden” that the new requirement will place on hospitals was one of the concerns the American Hospital Association highlighted in an Aug. 26 letter to CMS Administrator Seema Verma. The group is also concerned that requiring a positive COVID-19 test will lead to unnecessary additional testing.
“Basing the COVID-19 diagnosis code on clinical judgment alone — in line with coding rules — continues to be an important approach given that test accuracy may not be reliable, re-testing is unnecessarily onerous, and some communities face persistent testing shortages.”
The AHA is urging CMS to drop the new requirement and allow provider documentation of a COVID-19 diagnosis to be sufficient for the add-on payment if the test result is unavailable.
UPMC reported higher revenue in the first half of this year than in the same period of 2019, but the Pittsburgh-based health system’s operating income declined year over year, according to unaudited financial documents.
UPMC reported revenue of $11.1 billion in the first six months of this year, up nearly $1 billion from the same period of 2019. A year-over-year decline in net patient service revenue attributed to volume declines linked to the COVID-19 pandemic was offset by gains in insurance enrollment revenue. Enrollment in UPMC’s health plans grew to 3.9 million members as of June 30.
Expenses also increased year over year. UPMC reported operating expenses of $11.1 billion in the first half of this year, up from $10.1 billion a year earlier. Operating income for the first two quarters of 2020 totaled $59 million, down $20 million from the same period last year.
The health system ended the first half of this year with a net loss of $165 million, compared to net income of $372 million a year earlier. The net loss was attributed to a $423 million loss on investments from January through July.
Though UPMC continues to experience some disruption to operations as a result of the COVID-19 pandemic, the system’s interim CFO Edward Karlovich said it’s on solid financial footing.
“We’re positioned with an organization of great financial strength to deal with what comes at us,” Mr. Karlovich said during a news conference Aug. 26, according to TRIBLive.
CMS accelerated payments to hospitals and other healthcare providers at the beginning of the COVID-19 pandemic to help temporarily relieve financial strain. It’s time to begin repaying the Medicare loans but that isn’t possible for some rural hospitals, according to NPR.
CMS expanded the Accelerated and Advance Payment Program in late March to help offset financial damage caused by the COVID-19 pandemic. CMS announced April 26 that it was reevaluating pending and new applications for advance payments due to the availability of funds under the Coronavirus Aid, Relief and Economic Security Act. As of May, CMS had paid out $100 billion in advance payments, the bulk of which went to hospitals.
Hospitals and other healthcare providers are required to start repaying the Medicare loans this month. Most hospitals will have one year from the date the first loan payment was made to repay the loans, according to Kaiser Family Foundation.
Ozarks Community Hospital, 25-bed critical access hospital in Gravette, Ark., is one of the hospitals that applied for and accepted the Medicare loans. The hospital also received grants made available under the CARES Act, which do not have to be repaid.
CEO Paul Taylor said Ozarks Community Hospital’s revenue is still constrained, and he doesn’t know how it will pay back its $8 million Medicare loan. Payments for new Medicare claims will be offset to repay the loans, but losing those payments could force the hospital to close, Mr. Taylor told NPR.
“If I get no relief and they take the money … we won’t still be open,” he said.
Ozarks Community Hospital is one of more than 850 critical access hospitals in rural areas that received Medicare loans, according to NPR. Given the shaky financial footing of many rural hospitals before the pandemic, the strain of having Medicare payments withheld could be enough to force others to shut down.
Before the pandemic, more than 600 rural hospitals across the U.S. were vulnerable to closure, according to an estimate from iVantage Health Analytics, a firm that compiles a hospital strength index based on data about financial stability, patients and quality indicators.
If the financial pressures tied to the pandemic force any of those hospitals to shut down, they’ll join the list of 131 rural hospitals that have closed over the past decade, according to the Cecil G. Sheps Center for Health Services Research.
The Department of Health and Human Services told hospitals in April that reporting to the vendor, TeleTracking Technologies, was a “prerequisite to payment.”
The Trump administration tied billions of dollars in badly needed coronavirus medical funding this spring to hospitals’ cooperation with a private vendor collecting data for a new Covid-19 database that bypassed the Centers for Disease Control and Prevention.
The highly unusual demand, aimed at hospitals in coronavirus hot spots using funds passed by Congress with no preconditions, alarmed some hospital administrators and even some federal health officials.
The office of the health secretary, Alex M. Azar II, laid out the requirement in an April 21 email obtained by The New York Times that instructed hospitals to make a one-time report of their Covid-19 admissions and intensive care unit beds to TeleTracking Technologies, a company in Pittsburgh whose $10.2 million, five-month government contract has drawn scrutiny on Capitol Hill.
“Please be aware that submitting this data will inform the decision-making on targeted Relief Fund payments and is a prerequisite to payment,” the message read.
The financial condition, which has not been previously reported, applied to money from a $100 billion “coronavirus provider relief fund” established by Congress as part of the $2.2 trillion Coronavirus Aid, Relief and Economic Security Act, or CARES Act, signed by President Trump on March 27. Two days later, the administration instructed hospitals to make daily reports to the C.D.C., only to change course.
“Another data reporting ask,” a regional official in the health department informed colleagues in an email exchange obtained by The Times, adding: “It comes with $$ incentive. We really need a consolidated message on the reporting/data requests, this is past ridiculous.”
A colleague replied, “Another wrinkle. What a mess.”
The disclosure of the demand in April is the most striking example to surface of the department’s efforts to expand the role of private companies in health data collection, a practice that critics say infringes on what has long been a central mission of the C.D.C. Last month, the federal health department moved beyond financial incentives and abruptly ordered hospitals to send daily coronavirus reports to TeleTracking, not the C.D.C., raising concerns about transparency and reliability of the data.
Officials at the Department of Health and Human Services say that the moves were necessary to improve and streamline data collection in a crisis, and that the one-time reports collected in April by TeleTracking were not available from any other source.
“The national health system has not been challenged in this way in any time in recent history,” Caitlin Oakley, a department spokeswoman, said in a statement, adding that TeleTracking offered a “standardized national hospital capacity tracking system which provided more real-time, better informed data to make decisions from.”
But critics remain alarmed.
“In the middle of a pandemic, the Trump administration is using funds meant to support hospitals as a tool to coerce them to use an unproven, untrusted and deeply flawed system that sidelines public health experts,” Senator Patty Murray of Washington, the ranking Democrat on the Senate Health Committee, said in a statement.
In a statement, TeleTracking said it has three decades of experience providing health care systems “with actionable data and unprecedented visibility to make better, faster decisions.”
Still, public health experts and hospital executives are puzzled as to why the health agency chose such a difficult time to employ an untested private vendor rather than improve the C.D.C.’s National Healthcare Safety Network, a decades-old disease tracking system that was deeply familiar to hospitals and state health departments.
The N.H.S.N., as it is known, had built up trust over decades of working with hospitals and state health departments. Administrators were reluctant to make the switch.
“People — especially in public health and clinical health — are very protective of their data, so that trust factor is certainly an issue,” said Patina Zarcone, the director of informatics for the Association of Public Health Laboratories. “The fear of having their data leaked or misused or used for a purpose that they weren’t aware of or agreed to — I think that’s the biggest rub.”
Ms. Oakley said the C.D.C.’s system was “not designed for use in a disaster response” and could not adapt quickly in a crisis. Allies of the C.D.C. say withholding taxpayer dollars from the CARES Act in lieu of cooperation was an inappropriate effort to push hospitals into a system they were reluctant to use.
“It’s an absolutely enormous lever,” said William Schaffner, an infectious disease expert at Vanderbilt University. “It’s a compulsion to oblige institutions to report to this TeleTracking system because they knew if it weren’t tied to money, it wouldn’t happen.”
The Pittsburgh company has no obvious ties to the Trump administration. Rather, the push appears to be part of a broader privatization. The Health and Human Services Department has also asked the Minnesota-based manufacturer 3M “to create, and continuously update, a nationwide clinical data set on Covid-19 treatment,” according to documents obtained by The Times.
The effort is separate from the TeleTracking data collection. Tim Post, a company spokesman, said that because 3M already operates hospital information systems, it is “uniquely positioned,” with the permission of its clients, to submit information to the health department to help officials study disease patterns and recommend treatment options.
Some experts say this kind of cooperation with the private sector is long overdue. But the push also appears to be driven at least in part by an intensifying rift between the C.D.C., based in Atlanta, and officials at the White House and Department of Health and Human Services, the parent agency of the disease control centers.
Dr. Deborah L. Birx, the White House coronavirus response coordinator, and Mark Meadows, the president’s chief of staff, have taken a dim view of the C.D.C. and believe its reporting systems were inadequate. In a recent interview, Michael Caputo, the spokesman for Mr. Azar, accused the C.D.C. of having “a tantrum.”
Accurate hospital data — including information about coronavirus caseloads, deaths, bed capacity and personal protective equipment — is essential to tracking the pandemic and guiding government decisions about how to distribute scarce resources, like ventilators and the drug remdesivir, the only approved treatment for hospitalized Covid-19 patients.
The health agency has set up a new database, H.H.S. Protect, to collect and analyze Covid-19 data from a range of sources. TeleTracking feeds hospital data to that system.
But the public rollout of H.H.S. Protect has been rocky. The nonpartisan Covid Tracking Project identified big disparities between hospital data reported by states and the federal government and deemed the federal data “unreliable.”
The tension dates to March, when the novel coronavirus was making its first surge in the United States
On March 29, Vice President Mike Pence, charged by Mr. Trump with overseeing the federal response, informed hospital administrators that the C.D.C. was setting up a “Covid-19 Module,” and asked them to file daily reports which, he said, were “necessary in monitoring the spread of severe Covid-19 illness and death as well as the impact to hospitals.”
But around that time, TeleTracking submitted a proposal for data collection to the Trump administration, through an initiative, ASPR Next, created to promote innovation. On April 10, TeleTracking was awarded its contract.
The health department’s spokeswoman said the intent was to complement the C.D.C., not compete with it. Like the C.D.C.’s network, TeleTracking’s system requires manual reporting on a daily basis. But in June, Ms. Murray demanded the administration provide more information about what she called a “multimillion-dollar contract” for a “duplicative health data system.”
Some hospital officials also objected to the change.
“We have been directing our hospitals to N.H.S.N.,” Jackie Gatz, a vice president of the Missouri Hospital Association, wrote to a regional health and human services official in an email obtained by The Times, “and now this email with a much greater carrot — CARES Act distributions — is routing them to TeleTracking.”
When the order was delivered, flaws had already emerged in the new system.
“H.H.S. has acknowledged long wait times for those calling for technical support, and indicated that TeleTracking recently added 100 staff to respond to call center requests,” the American Hospital Association wrote to its members in a “special bulletin” on April 23. “They also are directing hospitals to leave a message if they are unable to reach someone live.”
At the time, hospitals had the option of making their daily coronavirus reports to TeleTracking or the C.D.C. Few were using the new database.
In June, the administration again used a stick to demand that hospitals report to TeleTracking, this time in order to obtain remdesivir. By July, with Dr. Birx pushing to bolster hospital compliance, the administration instructed hospitals to stop filing daily reports to the C.D.C. and to send them to TeleTracking instead.
One official at a major academic hospital, who spoke on the condition of anonymity for fear of angering officials in Washington, said the switch left her “unable to sleep at night.”
“Ethically, it felt like they had taken a very trusted institution in the C.D.C. and all of that trust built up with many public health people,” she said, then “moved it onto a politically and financially motivated portion of this response.”
Health and human services officials say the government now has a much more complete picture of hospital bed capacity, with more than 90 percent of hospitals reporting. But Dr. Janis M. Orlowski, the chief health officer for the Association of American Medical Colleges, who worked with Dr. Birx and the administration to bolster hospital reporting, said that she was “stunned” by the switch and that the increase in reporting came because of efforts by her group and others, not the TeleTracking system.
Dr. Orlowski said the data and maps now published on the administration’s H.H.S. Protect data hub are “just not as sophisticated as the C.D.C.”
The switch also generated pushback inside the C.D.C., where officials have refused to analyze and publish TeleTracking data, saying they could not be assured of its quality and had continuing questions about its accuracy, according to a senior federal health official.
Administration officials say the C.D.C. is working with a little-known office in the executive branch — the United States Digital Service — to build a “modernized automation process” in which data will continue to flow directly to the Department of Health and Human Services. But the project is in its infancy, one senior federal health official said.
Critics say that if the department believed the C.D.C.’s health network had problems, those should have been fixed.
“We have a public health system that depends upon communication from hospitals to state health departments to the C.D.C.,” said Dr. Schaffner, the Vanderbilt University infectious disease expert. “It’s very well established. Can it be improved? Of course. But to cut out the public health infrastructure and report to a private firm essential public health data is misguided in the extreme.”
Drugmakers are getting bolder in their bid to restrict access to drugs discounted under the 340B program as legal experts say a lack of enforcement has created a regulatory void.
Hospitals are imploring the Department of Health and Human Services (HHS) to clamp down on several moves by drug companies, including Novartis and AstraZeneca, to limit distribution of certain 340B drugs. But experts say an administration-wide change in what agencies can enforce is likely behind drugmakers’ aggressive moves.
“It is an outrage that these actions are being taken at a time when hospitals are in the midst of their response to the COVID-19 public health emergency, which has further demonstrated the fractured, inadequate state of the prescription drug supply chain,” the American Hospital Association said in a release last week.
Hospitals and 340B advocates are furious that AstraZeneca announced last Friday that starting Oct. 1 it will not offer any discounted drugs to contract pharmacies, which are third-party entities that dispense drugs acquired under the program.
It is the most aggressive move in a fight sparked last month between drug companies against contract pharmacies, which are a popular tool among 340B hospitals.
In exchange for participating in Medicaid, a drug manufacturer is required to offer discounts to safety-net hospitals that participate in 340B. But the program has been beset with controversy in recent years as drug companies claim the program has gotten too large and patients aren’t benefiting from the discounts.
Eli Lilly decided last month to restrict sales to contract pharmacies of certain formulations of erectile dysfunction drug Cialis. Merck and Novartis also said contract pharmacies would need to submit claims data to avoid duplicate discounts.
We’ve reached out to pharmaceutical companies for comment and will update when we hear back.
Industry advocacy organization Pharmaceutical Research and Manufacturers of America (PhRMA) has previously called for reforms to the 340B program, including to the ability for covered entities to contract with multiple outside pharmacies to dispense drugs that receive 340B discounts. Even though the number of Americans who are insured has risen, 340B is growing exponentially, they said. “Not all 340B hospitals are good stewards of the program,” PhRMA said.
Hospital groups and 340B allies charge that the moves blatantly violate a 2010 guidance released by the Health Resources and Services Administration (HRSA), which oversees the 340B program.
The guidance permits a hospital participating in 340B to voluntarily use a contract pharmacy and outlines the requirements to do so. The guidance also says a manufacturer must still sell a drug at a price not to exceed the statutory 340B price.
But an October 2019 executive order said federal agencies cannot enforce guidance documents unless they are part of a contract amid other exceptions.
HRSA has said that it doesn’t have the authority under the 340B statute to take enforcement action on “requirements that have been established under guidance,” said Emily Cook, a partner with law firm McDermott Will & Emery.
The agency’s current position is that it can only take enforcement actions on clear violations of the 340B statute, she added.
HRSA told Fierce Healthcare in a statement it is considering the issues raised by the manufacturers and “evaluating our next steps.”
Hospitals are hoping HHS steps in and clears up the issue.
If not, then hospitals could either take drug companies to court or lobby Congress to give HRSA more authority over the program.
The advocacy group 340B Health said last week that if the administration refuses to step in then it will “pursue all legislative and legal avenues available to us to defend the safety net.”
Hospitals need to re-examine their 340B contract pharmacy deals to exclude AstraZeneca drugs, according to an article from Brenda Maloney Shafer and Richard Davis of law firm Quarles & Brady.
If they fail to do this, then the contract pharmacy could pay for dispensing and administrative fees for drugs that won’t get a 340B discount.
This is the latest spat over the controversial program. Hospitals took the administration to court after it tried to cut payments under the program by nearly 30%.
An appeals court recently ruled that HHS does have the authority to institute the cuts.
Hospital groups are unlikely to be pleased with the delay. The American Hospital Association earlier this month sent the Office of Management and Budget a letter urging them to expedite the review and release of the final Stark and AKS regulations.
“These rules take on even more significance in light of the COVID-19 pandemic,” AHA EVP Thomas Nickels wrote in the letter dated Aug. 19. “These rules will remove unnecessary regulatory burden from hospitals and health systems, allow for enhanced care coordination for patients, improve quality, and reduce waste in the Medicare and Medicaid programs.”
AHA did not respond to a request for comment by time of publication.
Healthcare organizations have said the Stark Law and Anti-Kickback Statute, passed decades ago in an attempt to deter physicians from referring patients to other locations or for services that would financially benefit them, are outdated and burdensome. Providers say the proposed changes are long overdue, citing longstanding concerns the laws hinder efforts to coordinate patient care across different sites and episodes.
The proposed rule, if finalized, would sharply ease federal anti-kickback regulations in a bid to help providers use value-based payment arrangements, reflecting the growing shift away from fee-for-service reimbursement and siloed care models.
The rule clarified exemptions from the physician self-referral law for certain value-based payment arrangements among physicians, providers and suppliers. Specifically, it applies to models with a specific patient population, where one of the entities takes on full financial risk for providing Medicare Part A and Part B for the first six months. The payments can either be capitated or global.
Doctors would be required to pay back a fourth of payments if they don’t meet financial goals.
The proposed rule also introduced a new exemption for certain arrangements under which a doctor receives limited payment for items and services that he or she provides, and another that would allow hospitals and medical device manufacturers to donate cybersecurity tools and other related software to doctors without fear of retribution.
Comments on the proposed rule from the hospital and physician community were generally supportive of the changes, though some organizations, including the American Hospital Association and Walmart, thought the feds didn’t go far enough. Hospital groups argued the exceptions should be expanded to include private payers, along with Medicare and Medicaid and the definition of value-based arrangements should be broadened, along with some other clarifications.
Per the Social Security Act, agencies have to maintain a regular timeline for publishing final regulations, normally within three years of the draft. However, they are allowed to extend the original deadline, if they justify the change.
Hospital Operating Margins have plunged 96% since the start of 2020 in comparison with the first seven months of 2019, according to a new Kaufman Hall report, as uncertainty and volatility continue in the wake of the COVID-19 pandemic.
Those results do not include federal funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Even with that aid, however, Operating Margins are down 28% year-to-date compared to January-July 2019.
Operating Margins fell 2% year-over-year in July without the CARES Act relief, according to the latest edition of Kaufman Hall’s National Hospital Flash Report. Hospitals also saw flat year-over-year gross revenue performance in July, continued high per-patient expenses, and a fifth consecutive month of volumes falling below 2019 performance and below budget.
From June to July, however, hospital Operating Margins were up 24%, likely due to a backlog in demand resulting from the shutdown of many non-urgent services in the early months of the pandemic.
“COVID-19 has created a highly volatile operating environment for our nation’s hospitals and health systems,” said Jim Blake, managing director, Kaufman Hall. “Hospitals have shown some incremental signs of potential financial recovery in recent months. Unfortunately, there is no guarantee these trends will continue, and hospitals still have a long way to go to recover from devastating losses in the early months of the pandemic.”
July volumes continued to fall year-over-year, but showed some signs of potential recovery month-over-month. Adjusted Discharges were down 7% compared to July 2019, but up 6% compared to June 2020. Adjusted Patient Days were down 4% year-over-year, but up 7% month-over-month. Adjusted Discharges are down 13% and Adjusted Patient Days are down 11% since the start of 2020, compared to the first seven months of 2019.
Hospital Emergency Department (ED) volumes have been hardest hit, falling 17% year-to-date compared to the same period in 2019, down 17% year-over-year, and 13% below budget in July. Surgery volumes saw some gains with the continued resumption of non-urgent procedures pushing Operating Room Minutes up 3% month-over-month and 4% above budget in July, but they remain down 15% year-to-date.
Not including CARES Act relief, Gross Operating Revenues were essentially flat year-over-year and 2% below budget for the month, but have fallen 8% year-to-date compared to the same period in 2019. Inpatient Revenue is down 5% year-to-date and fell 3% below budget in July, but increased 1% year-over-year. Outpatient Revenue is down 11% year-to-date, 1% year-over-year, and 2% below budget.
Hospitals nationwide also continued to see higher per-patient expenses despite having fewer patients. Total Expense per Adjusted Discharge has jumped 16% year-to-date compared to the same seven-month period in 2019, and rose 9% year-over-year and 5% above budget in July. Labor Expense per Adjusted Discharge is up 18% year-to-date and rose 9% year-over-year and 5% above budget in July. Non-Labor Expense per Adjusted Discharge has increased 15% during the first seven months of 2020 and jumped 11% year-over-year and was 5% above budget for the month.
The National Hospital Flash Report draws on data from more than 800 hospitals.
AdventHealth, a 46-hospital system based in Altamonte Springs, Fla., reported a decline in revenue in the second quarter of this year and ended the period with an operating loss, according to recently released unaudited financial documents.
The health system reported revenues of $2.8 billion in the three months ended June 30, down from $2.9 billion in the same period a year earlier. The decline was attributed to lower patient volumes from mid-March through early May. On a same-facility basis, hospital admissions were down 29 percent year over year in April, and surgical volumes were down 66 percent.
Expenses climbed 2.8 percent year over year, and AdventHealth ended the second quarter of this year with an operating loss of $799 million. In the same period a year earlier, the system posted operating income of $190.9 million.
After factoring in nonoperating items, including a $291.8 million gain on investments, the system reported net income of $290.8 million in the second quarter of 2020. In the same period last year, the system posted net income of $372.8 million.
Looking at the first six months of this year, AdventHealth reported a net loss of $287.7 million on revenues of $5.8 billion. That’s compared to the first half of 2019, when the system recorded net income of $865 million on revenues of $5.9 billion.
Sutter joins other major nonprofit health systems in posting net losses for the first half of the year despite receiving hundreds of millions in federal grants to help offset headwinds brought on by the pandemic.
Recently, both Renton, Washington-based Providence and Arizona-based Banner Health posted losses for the first half of the year — $538 million and $267 million, respectively. Dampened revenue and downturns in investments contributed to their losses.
The federal government has funneled billions of dollars to providers across the country in an attempt to help them weather the downturn in patient volumes. Sutter noted in its filing that it’s received $400 million in federal relief funds so far, though that wasn’t enough to push the health system back into the black. Sutter operates 29 hospitals and enjoys a large presence in Northern California.
Sutter reported fewer admissions and emergency room visits in the second quarter compared to the prior-year period, down about 10% and 19%, respectively.
The pandemic was quick to wreak havoc on Sutter’s finances during the first quarter, in which the system reported an operating loss of $236 million and a net loss of almost $1.1 billion.
The coronavirus is also serving as a drag on its ratings. In April, two of the three big ratings agencies downgraded Sutter Health’s rating.
In part, Moody’s attributed the downgrade to Sutter’s weaker profitability profile. In its rationale, Moody’s said, “Following a second year of weaker results, margins in 2020 are likely to remain under pressure due to COVID-19 related disruptions, ongoing performance challenges at some of Sutter’s facilities, and continued reimbursement pressure.”
Also weighing on Moody’s rating is the $575 million settlement expected to be paid this year to resolve antitrust issues. Last year, the health system averted a trial over antitrust concerns after agreeing to a settlement with California regulators. Sutter agreed it would end any contracts that require all of its facilities to be in-network or none of them and cap out-of-network charges, among other stipulations.
HENRY KOTULA 