RAND: Private plans paid hospitals 224% more than Medicare rates

https://www.fiercehealthcare.com/payers/rand-study-finds-private-plans-paid-hospitals-224-more-compared-medicare-rates

Private insurance plans paid hospitals on average 224% more compared with Medicare rates for both inpatient and outpatient services in 2020, a new study found. 

Researchers at RAND Corporation looked at data from 4,000 hospitals in 49 states from 2018 to 2020. While the 224% increase in rates is high, it is a slight reduction from the 247% reported in 2018 in the last study RAND performed. 

“This reduction is a result of a substantial increase in the volume of claims in the analysis from states with prices below the previous average price,” the study said. 

The report showed that plans in certain states wound up paying hospitals more than others. It found that Florida, West Virginia and South Carolina had prices that were at or even higher than 310% of Medicare

But other states like Hawaii, Arkansas and Washington paid less than 175% of Medicare rates. 

“Employers can use this report to become better-informed purchasers of health benefits,” study lead author Christopher Waley said in a statement. “The work also highlights the levels and variation in hospital prices paid by employers and private insurers, and thus may help policymakers who may be looking for strategies to curb healthcare spending.”

The data come as the federal government has explored ways to lower healthcare costs, including going toe-to-toe with the hospital industry. The Centers for Medicare & Medicaid Services (CMS) has in recent years sought to cut payments to off-campus outpatient clinics in order to bring Medicare payments in line with payments paid to physicians’ offices but has met with stiff legal and lobbying opposition from the hospital industry that argues the extra payments are needed.

CMS has also published regulations that call on hospitals to increase transparency of prices, including a rule that mandates hospitals publish online the prices for roughly 300 shoppable services.

The hospital industry pushed back against RAND’s findings, arguing that the study is based on incomplete data. The industry group American Hospital Association said researchers only looked at 2.2% of overall hospital spending, a small portion of overall expenses.

“Researchers should expect variation in the cost of delivering services across the wide range of U.S. hospitals – from rural critical access hospitals to large academic medical centers,” said AHA CEO Rick Pollack in a statement to Fierce Healthcare. “Tellingly, when RAND added more claims as compared to previous versions of this report, the average price for hospital services declined.”

Nonprofit health plans focus on reducing premiums, expanding benefits

https://www.healthcarefinancenews.com/news/nonprofit-health-plans-focus-reducing-premiums-expanding-benefits

Nonprofit payers have used a variety of strategies to address plan affordability throughout the next year, including reducing premiums by as much as 10% in some instances, finds a new report from the Alliance of Community Health Plans.

ACHP’s inaugural Report on Affordability found that when health plans manage premiums, provide enhanced benefits, smooth the way for access and reduce costs for governments and employers, the system – and outcomes – improve.

This is exemplified by some of the strategies employed by ACHP member plans, which largely reduced insurance premiums or held them flat, with some member companies reducing premiums by as much as 10%.

On top of that, every plan added new health benefits, or expanded existing ones, without increasing costs to consumers, the report found. Some of the additional benefits include free vaccines, transportation, hearing aids, reduced insulin costs, nutrition classes and meal services, smoking cessation programs and $0 co-pays for mental health visits.

Roughly three-quarters of ACPH plans moved acute and recovery services out of the hospital setting, which was deemed too expensive in most cases. By establishing hospital-at-home programs and remote patient monitoring, plans have generated significant savings for both consumers and the health system, plus improved consumer satisfaction, results showed.

Meanwhile, about two-thirds of the plans offered price transparency tools meant to allow consumers to make more-informed choices. They included information on inpatient and outpatient services, behavioral health, prescription drugs, lab and imaging services and other fees, and many provided options for several locations and virtual care, a move intended to reduce travel costs.

Priority Health’s cost estimator has tallied $13.8 million in shared savings and paid out roughly $4.1 million in rewards to members.

In a bid to improve access, all plans expanded telehealth offerings, smoothing access to mental healthcare as well as to specialties such as Medication Assisted Treatment, physical and occupational therapy, medication management, speech therapy and dialysis. Most eliminated co-pays and cost sharing.

WHAT’S THE IMPACT?

In the last year, ACHP members expanded the hospital-at-home care model, attempting to offer more efficient ways to provide acute and recovery care as well as care management in a home setting. The expansion of virtual care, complete with remote monitoring and social support, reduces the risk of infection, keeps patients comfortable at home and alleviates inpatient hospital bed shortages, according to the report.

For example, SelectHealth and its owner system, Utah-based Intermountain Healthcare, launched Connect Care Pro, a virtual hospital meant to enable access for patients in remote locations. The online, digital program connects more than 500 caregivers across the Intermountain system, enabling patients to receive both basic medical and specialty care without making a long journey, including by helicopter.

Presbyterian Health of New Mexico’s Complete Care, on the other hand, is a wrap-around program that combines primary, urgent and home care for patients with complex medical needs, including those with functional decline and at risk of needing long-term institutional care. Patients receive and manage their care from home, 24/7, including acute and palliative care, house-call and same-day visits, as well as medication management. In addition, care coordinators and social workers manage social needs, including transportation and food insecurity.

And the Home Care Recovery program from Wisconsin’s Security Health Plan and Marshfield Clinic Health System brings the elements of acute inpatient recovery to a patient’s home, eliminating fixed-cost allocations associated with traditional hospital-level care and reducing post-acute utilization and readmissions for 150 traditional inpatient conditions such as congestive heart failure, pneumonia and asthma.

THE LARGER TREND

A 2016 report from the Centers for Medicare and Medicaid Services found that nonprofit organizations and health plans tend to receive higher star ratings than their for-profit counterparts.

For Medicare Part Ds, about 70% of the nonprofit contracts received four or more stars compared to 39% of the for-profit MA-Part-Ds. Similarly, roughly 63% of nonprofit prescription drug plans received four or more stars, compared to 24% of the for-profit PDPs.

Medicare finalizes its hospital payment policy for next year

https://mailchi.mp/ef14a7cfd8ed/the-weekly-gist-august-6-2021?e=d1e747d2d8

CMS finalizes $2.3B pay bump for hospitals in federal fiscal 2022 |  FierceHealthcare

The Centers for Medicare & Medicaid Services (CMS) issued its final payment rule for inpatient hospitals for FY22 this week, giving providers a 2.5 percent pay increase, and implementing a number of other regulatory changes. Of particular note, the rule puts in place a requirement for hospitals and long-term care providers to report on COVID vaccination rates among their workers, amid growing calls for healthcare organizations to mandate vaccines.

The final rule will also extend additional payments to hospitals for delivering COVID care until the end of the public health emergency is declared.

On top of a number of changes to quality reporting programs aimed at reducing the adverse impact of the pandemic on hospital metrics, CMS also used the final inpatient rule to begin acting on the Biden administration’s stated desire of improving health equity by adding a maternal morbidity measure to hospital quality reporting requirements.

The measure will require hospitals to report whether they participate in initiatives to improve perinatal health, an area in which unequal treatment has led to disproportionately adverse outcomes for women of color. In what will surely be welcome news for hospitals, CMS will no longer require disclosure of the contract terms providers strike with Medicare Advantage insurers, which was a key provision of Trump-era transparency regulations.

Nevertheless, based on earlier proposed changes to physician and outpatient surgery payment rules, and the President’s recent executive order on competition policy, we’d anticipate the Biden administration will continue to boost efforts to increase transparency of provider pricing.

First things first, however: there’s a pandemic to get through, and this final inpatient payment rule should largely come as good news to hospitals who are increasingly feeling the strain of a fourth surge of COVID cases.

New CMS payment rule is good news, bad news for hospitals

https://mailchi.mp/b5daf4456328/the-weekly-gist-july-23-2021?e=d1e747d2d8

Centers for Medicare & Medicaid Services - Wikipedia

Two major policy developments emerged from this week’s release by the Centers for Medicare & Medicaid Services (CMS) of the FY22 proposed rule governing payment for hospital outpatient services and ambulatory surgical centers.

First, CMS proposes to dramatically increase the financial penalties assessed to hospitals that fail to adequately reveal prices for their services, a requirement first put in place by the Trump administration. According to a report by the consumer group Patient Rights Advocate, only 5.6 percent of a random sample of 500 hospitals were in full compliance with the transparency requirement six months after the regulation came into effect, with many instead choosing to pay the $300 per hospital per day penalty associated with noncompliance. The new CMS regulation proposes to scale the assessed penalties in accordance with hospital size, with larger hospitals liable for up to $2M in annual penalties, a substantial increase from the earlier $109,500 maximum annual fine. In a press release, the agency said it “takes seriously concerns it has heard from consumers that hospitals are not making clear, accessible pricing information available online, as they have been required to do since January 1, 2021.” In a statement, the AHA stated that it was “deeply concerned” about the proposal, “particularly in light of substantial uncertainty in the interpretation of the rules.” The penalty hike is a clear signal that the Biden administration plans to put teeth behind its new push for more competition in healthcare, which was a major focus of the President’s recent executive order. We’d expect to see most hospitals and health systems quickly move to comply with the transparency rule, given the size of potential penalties.
 
More heartening to hospitals was CMS’ proposal to roll back changes the Trump administration made, aimed at shifting certain surgical procedures into lower cost, ambulatory settings. The agency proposed halting the elimination of the Inpatient Only (IPO) list, which specifies surgeries CMS will only pay for if they are performed in an inpatient hospital. Citing patient safety concerns, CMS noted that the phased elimination of the IPO list, which began this year, was undertaken without evaluating whether individual procedures could be safely moved to an outpatient setting. Nearly 300 musculoskeletal procedures have already been eliminated from the list, and will now be added back to the list for 2022, keeping the rest of the list intact while CMS undertakes a formal process to review each procedure. Longer term, we’d anticipate that CMS will look to continue the elimination of inpatient-only restrictions on surgeries, as well as pursuing other policies (such as site-neutral payment) that level the playing field between hospitals and lower-cost outpatient providers. 

For now, hospitals will enjoy a little more breathing room to plan for the financial consequences of that inevitable shift.

Biden administration begins to implement a ban on surprise bills

https://mailchi.mp/bfba3731d0e6/the-weekly-gist-july-2-2021?e=d1e747d2d8

Biden Faces Health Industry Fight Over New 'Surprise' Billing Ban

On Thursday, the Biden administration issued the first of what is expected to be a series of new regulations aimed at implementing the No Surprises Act, passed by Congress last year and signed into law by President Trump, which bans so-called “surprise billing” by out-of-network providers involved in a patient’s in-network hospital visit.

The interim final rule, which takes effect in 2022prohibits surprise billing of patients covered by employer-sponsored and individual marketplace plans, requiring providers to give advance warning if out-of-network physicians will be part of a patient’s care, limiting the amount of patient cost-sharing for bills issued by those providers, and prohibiting balance billing of patients for fees in excess of in-network reimbursement amounts.

The rule also establishes a process for determining allowable rates for out-of-network care, involving comparison to prevailing statewide rates or the involvement of a neutral arbitrator, but falls short of specifying a baseline price for arbitrators to use in determining allowable charges. That methodology, along with other details, will be part of future rulemaking, which will be issued later this year.

Of note, the rule does not include a ban on surprise billing for ground ambulance services, which were excluded by Congress in the law’s final passage—even though more than half of all ambulance trips result in an out-of-network bill. Expect intense lobbying by industry interests to continue as the details of future rulemaking are worked out, as has been the case since before the law was passed.

While burdensome for patients, surprise billing has become a lucrative business model for some large, investor-owned specialist groups, who will surely look to minimize the law’s impact on their profits.

California hospital beats suit over ER fee nondisclosure

California moves end surprise ER bills after Vox's reporting - Vox

A California hospital was properly dismissed from a lawsuit alleging it violated state consumer protection laws by failing to disclose emergency room visit fees before treatment, a state appellate court ruled June 29. 

Joshua Yebba filed the lawsuit against AHMC Anaheim (Calif.) Regional Medical Center, alleging the hospital violated California’s Unfair Competition Law and Consumer Legal Remedies Act when it did not disclose a separate fee for an emergency room visit before treating him. Mr. Yebba claimed he would have gone to a different ER if he knew about the fee. He sued on behalf of himself and others who allegedly were charged the separate ER fee without knowing about it. 

The lawsuit centered on whether the hospital had a duty to disclose the ER fee to patients before treating them and whether the hospital violated the consumer protection laws by not disclosing them. 

The hospital argued that it fulfilled any duty to disclose the fee because it has a written or electronic copy of its chargemaster available. However, Mr. Yebba contended that Anaheim Regional had a duty to tell him personally while checking in or to at least post a sign about the fees in the ER. 

A lower court dismissed the case against the hospital on the grounds that Anaheim Regional had no duty to disclose the separate ER fee to Mr. Yebba before treating him and that the allegations didn’t violate the consumer protection acts.

The California Court of Appeals 4th District affirmed the dismissal, saying that California lawmakers have determined what pricing information hospitals must disclose to patients and when, and a court decision increasing the requirements “upsets the legislative balance between the consumers’ right to information and the hospitals’ burden of providing it.”

Read the full court opinion here

Medicare’s proposed payment rule benefits hospitals

https://mailchi.mp/097beec6499c/the-weekly-gist-april-30-2021?e=d1e747d2d8

The Centers for Medicare & Medicaid Services (CMS) released its 2022 Inpatient Prospective Payment System (IPPS) proposed rule this week. Overall, the rule brings good news for hospitals: Medicare reimbursement rates are slated to increase by 2.8 percent, resulting in a $2.5B payment boost to the industry.

In another win, hospitals will no longer be required to disclose their contract terms with Medicare Advantage (MA) insurers. Hospitals had previously been mandated by the 2021 rule to report median, payer-specific, negotiated charges for MA insurers on their Medicare cost reports. Medicare’s goal was to use this data to create a new, market-based, inpatient reimbursement methodology—an effort which has also been tabled, at least for now.

Led by the American Hospital Association, hospitals have been embroiled in lengthy legal challenges over a variety of CMS price transparency requirements, maintaining they are neither beneficial for consumers, nor helpful in lowering healthcare costs. 

It’s too early to tell whether this step back from price transparency, which was a key goal of the Trump administration, signals anything about the Biden administration’s prioritiesit’s possible CMS may just be slowing down the effort in the wake of the pandemic.

Other highlights of the proposed rule include funding 1,000 more residency slots over the next five years, and extending payments for COVID-19 treatments to the end of 2022, as CMS expects COVID patients will need care beyond the duration of public health emergency. The agency also proposed several changes to its readmissions and other value-based purchasing programs, to ensure hospitals aren’t penalized by COVID-related impacts on quality measures.

Comments on the proposed rule are due by June 28th.

One-third of small businesses say health insurance is a top concern during COVID-19: survey

Dive Brief:

  • Small businesses are struggling to cover the high costs of healthcare for their employees after a year of COVID-19, according to a new poll sponsored by the Small Business Majority and patient advocacy group Families USA.
  • More than one in three small businesses owners said it’s a challenge getting coverage for themselves and their workers. That pain is particularly acute among Black, Asian American and Latino businesses, which have fewer resources than their White counterparts, SBMfound.
  • As a result, small businesses want policymakers to expand coverage access and lower medical costs, beyond the temporary fixes included in the sweeping $1.9 trillion American Rescue Plan passed by Congress earlier this month.

Dive Insight:

Providing health insurance can be pricey for small employers, a challenge that’s been exacerbated by the pandemic and its subsequent economic downturn.

Accessing health insurance has been a major barrier over the course of COVID-19, the national survey of 500 businesses with 100 employees or fewer in November found. The poll, conducted by Lake Research Partners for SBM and Families USA, found many such businesses have had to slash benefits during the pandemic. Among small business owners that have reduced insurance benefits, 36% have trimmed their employer contribution for medical premiums and 56% switched to a plan with a lower premium.

Additionally, one in five small business owners say they plan to change or lower coverage in the next few months, while only about a quarter have been able to maintain coverage for temporarily furloughed employees.

The situation is bleaker for minority-owned small businesses. Overall, 34% say accessing health insurance has been a top barrier during COVID-19, but that figure rises to 50%, 44% and 43% for Black, Asian American and Latino business respondents, SBM, which represents some 80,000 small businesses nationwide, said.

That’s in line with past SBM polling finding non-white entrepreneurs are more likely to face temporary or permanent closure in the next few months than their white counterparts, and are also more likely to struggle with rent, mortgage or debt repayments.

Though employers expect a more stabilized business environment starting in the second quarter, many are still reeling from difficult economic circumstances last year. COVID-19 capsized normal efforts to calculate medical cost trends for 2021, complicating financial planning for the year ahead — especially for fragile small businesses.

Washington did allocate a significant amount of financial aid for small businesses last year, and the ARP includes numerous provisions including increased subsidies for health insurance premiums for two years, and extended COBRA coverage for laid off employees through September.

But respondents to this latest polling urged for more long-term support.

The most popular policy proposal was bringing down the cost of prescription drugs, with 90% of businesses saying they supported the measure and 54% saying they were in strong support. Protecting coverage for people with pre-existing conditions was also popular, with 87% of small business owners in total support and 51% strongly supporting.

Three-fourths of small business owners strongly support a public health insurance option, while 73% support expanding Medicaid eligibility in all states and 66% support letting people buy into Medicare starting at age 55.

Both a public option and lower age of eligibity for Medicare are key tenets of President Joseph Biden’s healthcare plan — though getting both through Congress is unlikely. And long-time business groups like the Chamber of Commerce and the National Federation for Independent Business hold major sway on such issues and tend to be more recalcitrant on progressive policy changes.

Still, calls have been mounting for employers, which insure more than half of the U.S., to do more to move the needle on medical costs, as price increases outpace overall inflation.

A survey of large to mid-size employers from the National Alliance of Healthcare Purchaser Coalitions published Wednesday found at least three-fourths of employers support drug price regulation, surprise billing regulation, hospital price transparency and hospital rate regulation.

The High Price of Lowering Health Costs for 150 Million Americans

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https://one.npr.org/?sharedMediaId=968920752:968920754

The Problem

Employers — including companies, state governments and universities — purchase health care on behalf of roughly 150 million Americans. The cost of that care has continued to climb for both businesses and their workers.

For many years, employers saw wasteful care as the primary driver of their rising costs. They made benefits changes like adding wellness programs and raising deductibles to reduce unnecessary care, but costs continued to rise. Now, driven by a combination of new research and changing market forces — especially hospital consolidation — more employers see prices as their primary problem.

The Evidence

The prices employers pay hospitals have risen rapidly over the last decade. Those hospitals provide inpatient care and increasingly, as a result of consolidation, outpatient care too. Together, inpatient and outpatient care account for roughly two-thirds of employers’ total spending per employee.

By amassing and analyzing employers’ claims data in innovative ways, academics and researchers at organizations like the Health Care Cost Institute (HCCI) and RAND have helped illuminate for employers two key truths about the hospital-based health care they purchase:

1) PRICES VARY WIDELY FOR THE SAME SERVICES

Data show that providers charge private payers very different prices for the exact same services — even within the same geographic area.

For example, HCCI found the price of a C-section delivery in the San Francisco Bay Area varies between hospitals by as much as:$24,107

Research also shows that facilities with higher prices do not necessarily provide higher quality care. 

2) HOSPITALS CHARGE PRIVATE PAYERS MORE

Data show that hospitals charge employers and private insurers, on average, roughly twice what they charge Medicare for the exact same services. A recent RAND study analyzed more than 3,000 hospitals’ prices and found the most expensive facility in the country charged employers:4.1xMedicare

Hospitals claim this price difference is necessary because public payers like Medicare do not pay enough. However, there is a wide gap between the amount hospitals lose on Medicare (around -9% for inpatient care) and the amount more they charge employers compared to Medicare (200% or more).

Employer Efforts

A small but growing group of companies, public employers (like state governments and universities) and unions is using new data and tactics to tackle these high prices. (Learn more about who’s leading this work, how and why by listening to our full podcast episode in the player above.)

Note that the employers leading this charge tend to be large and self-funded, meaning they shoulder the risk for the insurance they provide employees, giving them extra flexibility and motivation to purchase health care differently. The approaches they are taking include:


Steering Employees

Some employers are implementing so-called tiered networks, where employees pay more if they want to continue seeing certain, more expensive providers. Others are trying to strongly steer employees to particular hospitals, sometimes know as centers of excellence, where employers have made special deals for particular services.

Purdue University, for example, covers travel and lodging and offers a $500 stipend to employees that get hip or knee replacements done at one Indiana hospital.

Negotiating New Deals

There is a movement among some employers to renegotiate hospital deals using Medicare rates as the baseline — since they are transparent and account for hospitals’ unique attributes like location and patient mix — as opposed to negotiating down from charges set by hospitals, which are seen by many as opaque and arbitrary. Other employers are pressuring their insurance carriers to renegotiate the contracts they have with hospitals.

In 2016, the Montana state employee health planled by Marilyn Bartlett, got all of the state’s hospitals to agree to a payment rate based on a multiple of Medicare. They saved more than $30 million in just three years. Bartlett is now advising other states trying to follow her playbook.

In 2020, several large Indiana employers urged insurance carrier Anthem to renegotiate their contract with Parkview Health, a hospital system RAND researchers identified as one of the most expensive in the country. After months of tense back-and-forth, the pair reached a five-year deal expected to save Anthem customers $700 million.

Legislating, Regulating, Litigating

Some employer coalitions are advocating for more intervention by policymakers to cap health care prices or at least make them more transparent. States like Colorado and Indiana have passed price transparency legislation, and new federal rules now require more hospital price transparency on a national level. Advocates expect strong industry opposition to stiffer measures, like price caps, which recently failed in the Montana legislature. 

Other advocates are calling for more scrutiny by state and federal officials of hospital mergers and other anticompetitive practices. Some employers and unions have even resorted to suing hospitals like Sutter Health in California.

Employer Challenges

Employers face a few key barriers to purchasing health care in different and more efficient ways:

Provider Power

Hospitals tend to have much more market power than individual employers, and that power has grown in recent years, enabling them to raise prices. Even very large employers have geographically dispersed workforces, making it hard to exert much leverage over any given hospital. Some employers have tried forming purchasing coalitions to pool their buying power, but they face tricky organizational dynamics and laws that prohibit collusion.

Sophistication

Employers can attempt to lower prices by renegotiating contracts with hospitals or tailoring provider networks, but the work is complicated and rife with tradeoffs. Few employers are sophisticated enough, for example, to assess a provider’s quality or to structure hospital payments in new ways. Employers looking for insurers to help them have limited options, as that industry has also become highly consolidated.

Employee Blowback

Employers say they primarily provide benefits to recruit and retain happy and healthy employees. Many are reluctant to risk upsetting employees by cutting out expensive providers or redesigning benefits in other ways.recent KFF survey found just 4% of employers had dropped a hospital in order to cut costs.

The Tradeoffs

Employers play a unique role in the United States health care system, and in the lives of the 150 million Americans who get insurance through work. For years, critics have questioned the wisdom of an employer-based health care system, and massive job losses created by the pandemic have reinforced those doubts for many.

Assuming employers do continue to purchase insurance on behalf of millions of Americans, though, focusing on lowering the prices they pay is one promising path to lowering total costs. However, as noted above, hospitals have expressed concern over the financial pressures they may face under these new deals. Complex benefit design strategies, like narrow or tiered networks, also run the risk of harming employees, who may make suboptimal choices or experience cost surprises. Finally, these strategies do not necessarily address other drivers of high costs including drug prices and wasteful care.