MedPAC’s report to Congress: 7 takeaways

https://www.beckershospitalreview.com/finance/medpac-s-report-to-congress-7-takeaways.html?utm_medium=email

Image result for MedPAC

The Medicare Payment Advisory Commission released its March 2020 report on Medicare payment policy to Congress, which includes a chapter analyzing the effects of hospital and physician consolidation in the healthcare sector.

Here are seven takeaways:

1. Medicare’s Insurance Trust Fund is likely to run out without changes. Trustees from Medicare estimate that the program’s Hospital Insurance Trust Fund, mostly funded through a payroll tax, will be depleted by 2026. To keep the fund solvent for the next 25 years, Medicare trustees advise that the payroll tax immediately be raised from 2.9 percent to 3.7 percent, or Part A spending to be reduced by 18 percent.

2. MedPAC recommends boosting payment rate for three sectors:

  • Hospitals. MedPAC recommended a 3.3 percent raise in Medicare payments for hospitals next year. The commission said it wants to give hospitals a 2 percent boost overall and tie the other 1.3 percent to quality metrics to motivate hospitals to reduce mortality and improve patient satisfaction. Currently, CMS has scheduled a 2.8 percent increase in 2021 Medicare payments.
  • Outpatient dialysis services. MedPAC recommended that the End Stage Renal Disease Prospective Payment System base payment rate is raised by the amount determined under current law. This is projected to be a boost of 2 percent
  • Long-term care hospitals. The commission recommended a 2 percent increase in the payment rates for long-term care hospitals in 2021.

3. MedPAC recommends unchanged payment rates for four sectors:

  • Physicians: Under current law, there is no update to the 2021 Medicare fee schedule base payment rate for physicians who treat Medicare patients. MedPAC is recommending that CMS keeps the physician rate the same as it is this year.
  • Surgery centers. MedPAC recommended eliminating an expected 2.8 percent payment rate bump for surgery centers next year. It said its decision was due to not having enough cost data from surgery centers.
  • Skilled nursing. MedPAC is recommending skilled nursing facilities receive no change to their base rate next year to better align payments with costs while exerting pressure on providers to keep their cost growth low.
  • Hospice. MedPAC recommends that the hospice payment rates in 2021 be held at their 2020 levels

4. MedPAC recommends payment rate reductions for two sectors: 

  • Home health. The commission recommended a 7 percent reduction in home health payment rates for 2021.
  • Inpatient rehabilitation hospitals. MedPAC is recommending that CMS reduce the payment rate to inpatient rehabilitation facilities by 5 percent for fiscal year 2021.

5. MedPAC builds on its recommendation to revamp quality programs. MedPAC is furthering its recommendation to replace Medicare’s four current hospital quality programs with a single hospital value incentive program. MedPAC said it believes that this recommendation would provide hospitals  higher aggregate payments than they would get under current law.

6. MedPAC’s findings on hospital and physician consolidation. MedPAC said that consolidation gives providers greater market power, which has a statistically significant association with higher profit margins for treating non-Medicare patients. Higher non-Medicare margins also are associated with higher standardized costs per discharge. But the direct association between market power and standardized costs per discharge is statistically insignificant, the commission found.

“The effect of consolidation on hospitals’ costs is not clear in theory or from our current analysis. From a theoretical standpoint, the merger of two hospitals could initially create some efficiencies and bargaining power with suppliers. But over time, higher prices from commercial payers could loosen hospitals’ budget constraints and lead to higher cost growth, thus offsetting any efficiency gains,” MedPAC’s report states.

7. MedPAC’s findings on the 340B Drug Discount Program. MedPAC was asked to analyze whether the availability of 340B drug discounts creates incentives for hospitals to choose more expensive products than they would without the program. MedPAC studied the effect of 340B market share on higher drug spending on cancer treatments between 2009 and 2017. The commission found that for two of the five cancer types studied, 340B participation boosted prices by about $300 per patient per month. However, the boost in spending attributed to 340B was much smaller than the general increase in oncology spending, which includes rising prices and the launch of new products with high drug prices. For example, cancer drug spending grew by more than $2,000 per patient month for patients with breast cancer, lung cancer, and leukemia/lymphoma.

“The MedPAC report released today uses rigorous analysis and finds little evidence 340B participation influences cancer drug spending. Modest differences may be attributable to the types of patients treated in 340B facilities. The safety-net hospitals that participate in the 340B drug-pricing program are essential providers of cancer care in this nation, especially to patients who are living with low incomes, those living with disabilities, and patients requiring more complex oncology care,” said Maureen Testoni, president and CEO of 340B Health, an association that represents more than 1,400 hospitals participating in the 340B program.

Access MedPAC’s full report here. 

 

 

 

 

Experts agree that Trump’s coronavirus response was poor, but the US was ill-prepared in the first place

https://theconversation.com/experts-agree-that-trumps-coronavirus-response-was-poor-but-the-us-was-ill-prepared-in-the-first-place-133674?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20March%2017%202020%20-%201565314971&utm_content=Latest%20from%20The%20Conversation%20for%20March%2017%202020%20-%201565314971+Version+A+CID_6ce2ffeb273f535ccdcb368c4649a7ee&utm_source=campaign_monitor_us&utm_term=Experts%20agree%20that%20Trumps%20coronavirus%20response%20was%20poor%20but%20the%20US%20was%20ill-prepared%20in%20the%20first%20place

As the coronavirus pandemic exerts a tighter grip on the nation, critics of the Trump administration have repeatedly highlighted the administration’s changes to the nation’s pandemic response team in 2018 as a major contributor to the current crisis. This combines with a hiring freeze at the Centers for Disease Control and Prevention, leaving hundreds of positions unfilled. The administration also has repeatedly sought to reduce CDC funding by billions of dollars. Experts agree that the slow and uncoordinated response has been inadequate and has likely failed to mitigate the coming widespread outbreak in the U.S.

As a health policy expert, I agree with this assessment. However, it is also important to acknowledge that we have underfunded our public health system for decades, perpetuated a poorly working health care system and failed to bring our social safety nets in line with other developed nations. As a result, I expect significant repercussions for the country, much of which will disproportionately fall on those who can least afford it.

Decades of underfunding

Spending on public health has historically proven to be one of humanity’s best investments. Indeed, some of the largest increases in life expectancy have come as the direct result of public health interventions, such as sanitation improvements and vaccinations.

Even today, return on investments for public health spending is substantial and tends to significantly outweigh many medical interventions. For example, one study found that every US$10 per person spent by local health departments reduces infectious disease morbidity by 7.4%.

However, despite their importance to national well-being, public health expenditures have been neglected at all levels. Since 2008, for example, local health departments have lost more than 55,000 staff. By 2016, only about 133,000 full-time equivalent staff remained. State funding for public health was lower in 2016-2017 than in 2008-2009. And the CDC’s prevention and public health budget has been flat and significantly underfunded for years. Overall, of the more than $3.5 trillion the U.S. spends annually on health care, a meager 2.5% goes to public health.

Not surprisingly, the nation has experienced a number of outbreaks of easily preventable diseases. Currently, we are in the middle of significant outbreaks of hepatitis A (more than 31,000 cases), syphilis (more than 35,000 cases), gonorrhea (more than 580,000 cases) and chlamydia (more than 1,750,000 cases). Our failure to contain known diseases bodes ill for our ability to rein in the emerging coronavirus pandemic.

Failures of health care systems

Yet while we have underinvested in public health, we have been spending massive and growing amounts of money on our medical care system. Indeed, we are spending more than any other country for a system that is significantly underperforming.

To make things worse, it is also highly inequitable. Yet, the system is highly profitable for all players involved. And to maximize income, both for- and nonprofits have consistently pushed for greater privatization and the elimination of competitors.

As a result, thousands of public and private hospitals deemed “inefficient” because of unfilled beds have closed. This eliminated a significant cushion in the system to buffer spikes in demand.

At any given time, this decrease in capacity does not pose much of a problem for the nation. Yet in the middle of a global pandemic, communities will face significant challenges without this surge capacity. If the outbreak mirrors anything close to what we have seen in other countries, “there could be almost six seriously ill patients for every existing hospital bed.” A worst-case scenario from the same study puts the number at 17 to 1. To make things worse, there will likely be a particular shortage of unoccupied intensive care beds.

Of course, the lack of overall hospitals beds is not the most pressing issue. Hospitals also lack the levels of staffing and supplies needed to cope with a mass influx of patients. However, the lack of ventilators might prove the most daunting challenge.

Limits of the overall social safety net

While the U.S. spends trillions of dollars each year on medical care, our social safety net has increasingly come under strain. Even after the Affordable Care Actalmost 30 million Americans do not have health insurance coverage. Many others are struggling with high out-of-pocket payments.

To make things worse, spending on social programs, outside of those protecting the elderly, has been shrinking, and is significantly smaller than in other developed nations. Moreover, public assistance is highly uneven and differs significantly from state to state.

And of course, the U.S. heavily relies on private entities, mostly employers, to offer benefits taken for granted in other developed countries, including paid sick leave and child care. This arrangement leaves 1 in 4 American workers without paid sick leave, resulting in highly inequitable coverage. As a result, many low-income families struggle to make ends meet even when times are good.

Can the US adapt?

I believe that the limitations of the U.S. public health response and a potentially overwhelmed medical care system are likely going to be exacerbated by the blatant limitations of the U.S. welfare state. However, after weathering the current storm, I expect us to go back to business as usual relatively quickly. After all, that’s what happened after every previous pandemic, such as H1N1 in 2009 or even the 1918 flu epidemic.

The problems are in the incentive structure for elected officials. I expect that policymakers will remain hesitant to invest in public health, let alone revamp our safety net. While the costs are high, particularly for the latter, there are no buildings to be named, and no quick victories to be had. The few advocates for greater investments lack resources compared to the trillion-dollar interests from the medical sector.

Yet, if altruism is not enough, we should keep reminding policymakers that outbreaks of communicable diseases pose tremendous challenges for local health care systems and communities. They also create remarkable societal costs. The coronavirus serves as a stark reminder.

 

 

UnitedHealth likely to keep squeezing physician staffing firms

https://www.healthcaredive.com/news/unitedhealth-likely-to-keep-squeezing-physician-staffing-firms/573679/

Image result for UnitedHealth likely to keep squeezing physician staffing firms

The nation’s largest private insurer has been terminating its contracts with physician staffing firms in a bid to extract lower prices, part of a years-long pattern analysts say could spur other payers to follow.

UnitedHealthcare contends it is simply trying to curb the rising cost of healthcare by driving out high-cost providers that charge far more than the median rate in its network. The payer said it had hoped to keep these firms in network “at rates that reflect fair market prices,” a UnitedHealthcare spokesperson told Healthcare Dive.

The most recent action targeted Mednax, a firm that provides specialty services including anesthesia, neonatology and high-risk obstetrics in both urban and rural areas. United cut Mednax contracts in four states, pushing those providers out of network, potentially putting patients at risk of balance bills.

United also recently canceled its in-network contracts with U.S. Anesthesia Partners in Texas, starting in April, which caused Moody’s to change its outlook to negative for the provider group because the contracts represent 10% of its annual consolidated revenue.

These latest moves to end relationships with certain physician staffing firms seem to have escalated in recent years, Sarah Kahn, a credit analyst for S&P Global, told Healthcare Dive.

Since the insurer’s 2018 tussle with ER staffing firm Envision, “it’s sort of ramped up and become more aggressive and more abrupt and more pervasive,” Kahn said of the contract disputes.

 

United said the volume of negotiations it’s involved in has not changed in recent years, and added that it expects to renegotiate the same amount of contracts in 2020 that it did in 2019. However, United pointed a finger at a small number of physician staffing firms, backed by private equity, that are attempting to apply pressure on United to preserve the same high rates.

Private equity firms have been increasingly interested in healthcare over the past few years, accelerating acquisitions of medical practices from 2013 to 2016. Private equity acquired 355 physician practices, representing 1,426 sites of care and more than 5,700 physicians over that time frame, according to recent research in JAMA. The firms had a particular focus on anesthesiology with 69 practices acquired, followed by emergency physicians at 43.

Mednax is a publicly traded company. But Envision is owned by investment firm KKR; TeamHealth is owned by private equity firm Blackstone; and U.S. Anesthesia Partners is backed by Welsh, Carson, Anderson & Stowe.

 

Proposed legislation around surprise billing may be influencing United’s actions, Kailash Chhaya, vice president and senior analyst at Moody’s, told Healthcare Dive. Congress has been weighing legislation that seeks to eliminate surprise billing, mainly through two vehicles, either using benchmark rates or arbitration.

If Congress ultimately decides on a bill that uses benchmark rates, or ties reimbursement for out-of-network providers to a benchmark rate (or average), it would benefit insurers like United to lower its average rate for certain services, Chhaya said. One way to do that is to end relationships with high-cost providers.

“It would help payers like UnitedHealth if that benchmark rate is low,” Chhaya said.

In late 2018, United threatened to drop Envision from its network, alleging the firm’s rates were responsible for driving up healthcare costs, according to a letter the payer sent hundreds of hospitals across the country. United and Envision eventually agreed to terms, but United seemed to outmuscle Envision as the deal secured “materially lower payment rates for Envision” that resulted in lower earnings, S&P Global analysts wrote in a recent report.

In 2019, United began terminating its contracts with TeamHealth, which has a special focus on emergency medicine. The terminations affect two-thirds of TeamHealth’s contracts through July 1. The squeeze from United caused Moody’s to also change Team Health’s outlook to negative as an eventual agreement would likely mean lower reimbursement and lower profitability for company, the ratings agency said.

“They’re trying to lower their payments to providers. Period,” David Peknay, director at S&P Global, told Healthcare Dive.​

 

Data shows prices — not usage — is driving healthcare spending. Physician staffing firms are frequently used for ER services and the ER and outpatient surgery experienced the largest growth in spending between 2014 and 2018, according to data from the Health Care Cost Institute.

United said it had been negotiating with TeamHealth since 2017 and does not believe TeamHealth should be paid significantly more than other in-network ER doctors for the same services. United alleges its median rate for chest pains is $340. But if a TeamHealth doctor provides the care it charges $1,508.​

“As Team Health continues to see more aggressive and inappropriate behavior by payors to either reduce, delay, or deny payments, we have increased our investment in legal resources to address specific situations where we believe payor behavior is inappropriate or unlawful,” according to a statement provided to Healthcare Dive.

TeamHealth said it will not balance bill patients in the interim.

 

The pressure from payers, particularly United, is unlikely to relent. The payer insures more than 43 million people in the U.S. through its commercial and public plans.

“I don’t think anyone is safe from such abrupt terminations,” Kahn said. However, United disputes the characterization of abruptly terminating contracts and says in many cases it has been negotiating with providers to no avail.

Likely targets in the future may include firms with a focus on emergency services, which tend to be high-cost areas, S&P’s analysts said. In their latest report, Kahn and Peknay pointed to The Schumacher Group, which is the third-largest player in emergency staffing services. However, it commands a market share of less than 10%, far less than its rivals Envision and TeamHealth.

Smaller firms may not be able to weather the pressure as effectively as very large staffing organizations.

For those smaller groups, it may be wise for them “to sit tight on their cash or prepare from some pressure,” Kahn said.

Although some believe it may influence other payers to follow suit, Dean Ungar, vice president and senior analyst with Moody’s, said United may be uniquely placed to exert this pressure because it has its own group of providers it can use and considerable scale.

“They are better positioned to play hardball,” Ungar said.

 

 

 

 

5 numbers that show the dominance of Epic

https://www.beckershospitalreview.com/ehrs/5-numbers-that-show-the-dominance-of-epic.html?utm_medium=email

Image result for epic ehr market share dominance

 

Here are five quick notes on Epic and the EHR market.

1. More than 250 million patients have electronic records in Epic.

2. Epic has 28 percent of the acute care hospital market, according to a KLAS report.

3. There were 163 hospitals with 500-plus beds that used Epic in 2018, the most recent year reported. The second most-used EHR in that group was Cerner, with 77 hospitals that have 500 or more beds.

4. Epic implementation among small practices is increasing as those practices with one to 10 physicians join or affiliate with larger organizations. Among those groups, 93 percent said Epic Community Connect is part of their organization’s long-term plans and 93 percent said they would purchase the software again, according to KLAS.

5. Over the past five years, at least 11 hospitals and health systems switched from Cerner to Epic, including most recently AdventHealth in Florida and Atrium Health in North Carolina.

 

619-bed California hospital to join Cedars-Sinai Health System

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/619-bed-california-hospital-to-join-cedars-sinai-health-system.html?utm_medium=email

Image result for 619-bed California hospital to join Cedars-Sinai Health System

Huntington Hospital in Pasadena, Calif., has signed a letter of intent to join Los Angeles-based Cedars-Sinai Health System.

The organizations signed the agreement March 9 after a strategic review by a special committee of Huntington Hospital’s board of directors. The letter of intent calls for investments in 619-bed Huntington Hospital’s information technology, ambulatory services and physician development.

“Huntington Hospital’s longstanding commitment to the community, its reputation for quality and its outstanding physicians, nurses and other staff make it a very good fit for Cedars-Sinai Health System,” Vera Guerin, chair of Cedars-Sinai Health System’s board of directors, said in a news release. “Collaborations and sharing of resources throughout the health system will further strengthen Huntington’s ability to serve the community for decades to come.”

Leaders said Cedars-Sinai Health System and Huntington Hospital are working toward finalizing a definitive agreement. The transaction is subject to closing conditions and regulatory approvals.

 

 

Consolidation increasing stakes for payer-provider contract disputes, study finds

https://www.beckershospitalreview.com/payer-issues/consolidation-increasing-stakes-for-payer-provider-contract-disputes-study-finds.html?utm_medium=email

Image result for market consolidation

As more providers and insurers consolidate, the chances that both sides will run into disagreements over their in-network contracts have heightened, according to a report from the Center on Health Insurance Reforms from the Georgetown University Health Policy Institute in Washington, D.C. 

For the report, researchers reviewed insurance laws across six states, based on geographic diversity and recent high-profile payer-provider conflicts that took place there: California, Georgia, Massachusetts, North Carolina, Pennsylvania and Texas. Some high-profile conflicts in the states include UnitedHealthcare and Houston Methodist; Pittsburgh-based Highmark Health and UPMCCigna and San Francisco-based Dignity HealthCigna and Asheville, N.C.-based Mission Hospital; and Cigna and Irving, Texas-based Christus Health.

In interviews with regulators and insurers, researchers found both agreed that the more providers and payers consolidate, the higher the stakes for contract disputes. This will expose more consumers to care disruptions and higher out-of-pocket costs, they said. Several regulators warned that a greater number of high-profile contract disputes will take place in the future. 

State officials and insurers offered several recommendations for improving the patient experience through contract disputes, including providing members with advanced notice of possible contract termination and requiring insurers to hold their enrollees harmless if they can’t access necessary care elsewhere.

 

Massive benefits consulting merger in the works

https://www.axios.com/newsletters/axios-vitals-f4216088-ea87-4fb4-ae0b-ab76f9368c8d.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Image result for Massive benefits consulting merger in the works aon willis towers watson

Aon is proposing to buy Willis Towers Watson in an all-stock transaction that would combine the second- and third-largest insurance brokerages, Bob writes.

Why it matters: Employers hire Aon and Willis Towers Watson to help them choose health plans and pharmacy benefit managers for their workers, but the major consultants don’t always steer companies toward the best deals.

  • Combining into the largest consulting house on Earth will give Aon that much more power over employers.

What’s next: The two companies don’t expect to close the deal until the first half of 2021, indicating they know antitrust regulators will be closely scrutinizing this.