DOJ charges execs, others with elaborate $1.4B billing scheme using rural hospitals

https://www.healthcaredive.com/news/doj-charges-execs-others-with-elaborate-14b-billing-scheme-using-rural-h/580785/

Office of Attorney Recruitment & Management | Department of Justice

Dive Brief:

  • The U.S. Department of Justice is charging 10 defendants for an “elaborate” pass-through billing scheme that used small rural hospitals across three states as shells to submit fraudulent claims for laboratory testing to commercial insurers, jacking up reimbursement.
  • The defendants, including hospital executives, lab owners and recruiters, billed private payers roughly $1.4 billion from November 2015 to February 2018 for pricey lab testing, reaping $400 million.
  • The four rural hospitals used in the scheme are: Cambellton-Graceville Hospital, a 25-bed rural facility in Florida; Regional General Hospital of Williston, a 40-bed hospital in Florida; Chestatee Regional Hospital, a 49-bed facility in Georgia; and Putnam County Memorial Hospital, a 25-bed hospital in Missouri. Only Putnam emerged from the scheme relatively unscathed: Chestatee was sold to a health system that plans to replace it with a newer facility, Cambellton-Graceville closed in 2017 and RGH of Williston was sold for $100 to an accounting firm earlier this month.

Dive Insight:

The indictment, filed in the Middle District of Florida and unsealed Monday, alleges the 10 defendants, using management companies they owned, would take over rural hospitals often struggling financially. They would then bill commercial payers for millions of dollars for pricey urine analysis drug tests and blood tests through the rural hospitals, though the tests were normally conducted at outside labs, and launder the money to hide their trail and distribute proceeds.

The rural hospitals had negotiated rates with commercial insurers for higher reimbursement for tests than if they’d been run at an outside labs, so the facilities were used as a shell for fraudulent billing for often medically unnecessary tests, the indictment alleges.

The defendants, aged 34 to 60, would get urine and other samples by paying kickbacks to recruiters and healthcare providers, like sober homes and substance abuse treatment centers.

Screening urine tests, to determine the presence or absence of a substance in a patient’s system, is generally inexpensive and simple — it can be done at a substance abuse facility, a doctor’s office or a lab. But confirmatory tests, to identify concentration of a drug, are more precise and sensitive and have to be done at a sophisticated lab.

As such they’re more expensive and are typically reimbursed at higher rates than screening urine tests. None of the rural hospitals had the capacity to conduct confirmatory tests, or blood tests, on a large scale, but frequently billed in-network insurers, including CVS Health-owned Aetna, Florida Blue and Blue Cross Blue Shield of Georgia, for the service from 2015 to 2018, the indictment says.

Rural hospitals are facing unprecedented financial stress amid the pandemic, but have been fighting to keep their doors open for years against shrinking reimbursement and lowering patient volume. That can give bad actors an opportunity to come in and assume control.

One of the defendants, Jorge Perez, 60, owns a Miami-based hospital operator called Empower, which has seen many of its facilities fail after insurers refused to pay for suspect billing. Half of rural hospital bankruptcies last year were affiliated with Empower, which controlled 18 hospitals across eight states at the height of the operation. Over the past two years, 12 of the hospitals have declared bankruptcy. Eight have closed, leaving their rural communities without healthcare and a source of jobs.

“Schemes that exploit rural hospitals are particularly egregious as they can undermine access to care in underserved communities,” Thomas South, a deputy assistant inspector general in the Office of Personnel Management Office of Inspector General, said in a statement.

 

 

 

 

 

In blow to hospitals, judge rules for HHS in price transparency case

https://www.healthcaredive.com/news/in-blow-to-hospitals-judge-rules-for-hhs-in-price-transparency-case/580395/

UPDATE: June 24, 2020: The American Hospital Association said it will appeal Tuesday’s ruling  that upholds the Trump administration’s mandate to force hospitals to disclose negotiated rates with insurers. The hospital lobby said it was disappointed in the ruling and will seek expedited review. AHA said the mandate “imposes significant burdens on hospitals at a time when resources are stretched thin and need to be devoted to patient care.”

If AHA seeks to have the rule stayed pending an appellate ruling, the decision on such a request “is likely to be almost as significant as this ruling is, since absent a stay, the rule will likely go into effect before the appellate court rules,” James Burns, a law partner at Akerman, told Healthcare Dive.

Dive Brief:

  • A federal judge ruled against the American Hospital Association on Tuesday in its lawsuit attempting to block an HHS rule pushing for price transparency. The judge ruled in favor of the department, which requires hospitals to reveal private, negotiated rates with insurers beginning Jan. 1.
  • U.S. District Court Judge Carl Nichols, an appointee of President Donald Trump, was swayed neither by AHA’s argument that forcing hospitals to publicly disclose rates violates their First Amendment rights by forcing them to reveal proprietary information nor by the claim that it would chill negotiations between providers and payers. The judge characterized the First Amendment argument as “half-hearted.”
  • Nichols seem convinced that the requirement will empower patients, noting in Tuesday’s summary judgment in favor of the administration that “all of the information required to be published by the Final Rule can allow patients to make pricing comparisons between hospitals.”

Dive Insight:

The ruling is a blow for hospitals, which have been adamantly opposed to disclosing their privately negotiated rates since HHS first unveiled its proposal in July 2019. AHA did not immediately reply to a request for comment on whether it planned to appeal.

The legal debate hinges on the definition of “standard charges”, which is mentioned in the Affordable Care Act, though it was left largely undefined in the text. Trump issued an executive order last year that included negotiated rates as part of that definition.

Cynthia Fisher, founder of patienrightsadvocate.com, which filed an amicus brief in support of HHS, told Healthcare Dive on Tuesday the ruling could make shopping for health services more like buying groceries or retail.

“For the first time we will be able to know prices before we get care,” she said. “This court ruling rejects every claim to keep the secret hidden prices from consumers until after we get care.”

 

 

 

 

Hospitals tell court price transparency laws violate 1st Amendment

https://www.healthcaredive.com/news/AHA-HHS-price-transparency-oral-arguments/577613/

Dive Brief:

  • In the first round of oral arguments in their lawsuit against HHS over a rule requiring hospitals to reveal the secret rates they negotiate with insurers for services, hospital groups argued the requirement exceeds the government’s authority and violates the First Amendment by compelling hospitals to publicly post confidential and proprietary information​.
  • The American Hospital Association, along with other industry groups and health systems that brought the lawsuit, argued in the U.S. District Court for the District of Columbia on Thursday that medical bills aren’t considered commercial speech and don’t fall under the same regulations that traditional advertisements, flyers and other forms of commercial speech offering or promoting services do.
  • “There’s not another market that looks like the market for hospital services,” said U.S. Department of Justice Attorney Michael Baer, who was representing HHS. A majority of patients final bills’ include the negotiated rate, information that should be available to patients, acting as consumers, prior to receiving care, he said.

Dive Insight:

Thursday’s hearing was the first step in what’s likely to be a drawn out legal fight. Negotiated rates between hospitals and insurers have long been private, and hospitals want to keep it that way. 

When HHS passed the final price transparency rule last year, the hospital groups filed a lawsuit in December, warning that requiring disclosure of negotiated rates will confuse patients, overwhelm hospitals and thwart competition. The rule would go into effect Jan. 1, 2021.

According to the lawsuit, the rule creates undue burden on hospitals and health systems, which can have more than 100 contracts with insurers. There can even be multiple contracts with an individual carrier to account for the various product lines, including Medicare Advantage, HMO or PPO.

The rule would require various pricing information, including gross charges, payer-specific rates, minimum and maximum negotiated charges and the amount the hospital is willing to accept in cash from a patient.

Some payers and employer groups have also protested the new rule, calling it wrong-headed.

When the rule initially passed last year, HHS argued that patients already see this pricing data when they receive their explanation of benefits, pushing back against the idea that it’s proprietary business information. They said this information needs to come before a procedure, not after.​

HHS maintains that the rule is intended to give patients better access to payment information so they can make informed decisions as consumers. 

“Patients deserve to know how much it’s going to cost when they get hospital care,” Baer said. “They deserve to know before they open a medical bill or before they choose where they want to receive care.”

 

 

 

 

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

https://www.fiercehealthcare.com/hospitals/moody-s-patient-volume-recovering-may-but-providers-face-long-road-to-recovery?mkt_tok=eyJpIjoiWmpjeVlXVTRZV0l5T1RndyIsInQiOiJLWWxjamNKK2lkZmNjcXV4dm0rdjZNS2lOanZtYTFoenViQjMzWnF0RGNlY1pkcjVGcFwvZFY4VjFaUUlZaFRBT1NRMGE5eWhGK1ZmR01ZSWVZWGMxOHRzTkptZVZXZmc5UnNvM3pVM2VIWDh6VllldFc3OGNZTTMxTDJrXC8wbzN1In0%3D&mrkid=959610

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

Why People Are Still Avoiding the Doctor (It’s Not the Virus)

Why People Are Still Avoiding the Doctor (It's Not the Virus ...

At first, people delayed medical care for fear of catching Covid. But as the pandemic caused staggering unemployment, medical care has become unaffordable for many.

At first, Kristina Hartman put off getting medical care out of concern about the coronavirus. But then she lost her job as an administrator at a truck manufacturer in McKinney, Texas.

While she still has health insurance, she worries about whether she will have coverage beyond July, when her unemployment is expected to run out.

“It started out as a total fear of going to the doctor,” she said.

“I definitely am avoiding appointments.”

Ms. Hartman, who is 58, skipped a regular visit with her kidney doctor, and has delayed going to the endocrinologist to follow up on some abnormal lab results.

While hospitals and doctors across the country say many patients are still shunning their services out of fear of contagion — especially with new cases spiking — Americans who lost their jobs or have a significant drop in income during the pandemic are now citing costs as the overriding reason they do not seek the health care they need.

“We are seeing the financial pressure hit,” said Dr. Bijoy Telivala, a cancer specialist in Jacksonville, Fla. “This is a real worry,” he added, explaining that people are weighing putting food on the table against their need for care. “You don’t want a 5-year-old going hungry.”

Among those delaying care, he said, was a patient with metastatic cancer who was laid off while undergoing chemotherapy. He plans to stop treatments while he sorts out what to do when his health insurance coverage ends in a month.

The twin risks in this crisis — potential infection and the cost of medical care — have become daunting realities for the millions of workers who were furloughed, laid off or caught in the economic downturn. It echoes the scenarios that played out after the 2008 recession, when millions of Americans were unemployed and unable to afford even routine visits to the doctor for themselves or their children.

Almon Castor’s hours were cut at the steel distribution warehouse in Houston where he works about a month ago. Worried that a dentist might not take all the precautions necessary, he had been avoiding a root canal.

But the expense has become more pressing. He also works as a musician. “It’s not feasible to be able to pay for procedures with the lack of hours,” he said.

Nearly half of all Americans say they or someone they live with has delayed care since the onslaught of coronavirus, according to a survey last month from the Kaiser Family Foundation. While most of those individuals expected to receive care within the next three months, about a third said they planned to wait longer or not seek it at all.

While the survey didn’t ask people why they were putting off care, there is ample evidence that medical bills can be a powerful deterrent. “We know historically we have always seen large shares of people who have put off care for cost reasons,” said Liz Hamel, the director of public opinion and survey research at Kaiser.

And, just as the Great Recession led people to seek less hospital care, the current downturn is likely to have a significant impact, said Sara Collins, an executive at the Commonwealth Fund, who studies access to care. “This is a major economic recession,” she said. “It’s going to have an effect on people’s demand for health care.”

The inability to afford care is “going to be a bigger and bigger issue moving forward,” said Chas Roades, the co-founder of Gist Healthcare, which advises hospitals and doctors. Hospital executives say their patient volumes will remain at about 20 percent lower than before the pandemic.

“It’s going to be a jerky start back,” said Dr. Gary LeRoy, a physician in Dayton, Ohio, who is the president of the American Academy of Family Physicians. While some of his patients have returned, others are staying away.

But the consequences of these delays can be troubling. In a recent analysis of the sharp decline in emergency room visits during the pandemic, officials from the Centers for Disease Control and Prevention said there were worrisome signs that people who had heart attacks waited until their conditions worsened before going to the hospital.

Without income, many people feel they have no choice. Thomas Chapman stopped getting paid in March and ultimately lost his job as a director of sales. Even though he has high blood pressure and diabetes, Mr. Chapman, 64, didn’t refill any prescriptions for two months. “I stopped taking everything when I just couldn’t pay anymore,” he said.

After his legs began to swell, and he felt “very, very lethargic,” he contacted his doctor at Catalyst Health Network, a Texas group of primary care doctors, to ask about less expensive alternatives. A pharmacist helped, but Mr. Chapman no longer has insurance, and is not sure what he will do until he is eligible for Medicare later this year.

“We’re all having those conversations on a daily basis,” said Dr. Christopher Crow, the president of Catalyst, who said it was particularly tough in states, like Texas, that did not expand Medicaid. While some of those who are unemployed qualify for coverage under the Affordable Care Act, they may fall in the coverage gap where they do not receive subsidies to help them afford coverage.

Even those who are not concerned about losing their insurance are fearful of large medical bills, given how aggressively hospitals and doctors pursue people through debt collections, said Elisabeth Benjamin, a vice president at Community Service Society of New York, which works with people to get care.

“Americans are really very aware that their health care coverage is not as comprehensive as it should be, and it’s gotten worse over the past decade,” Ms. Benjamin said. After the last recession, they learned to forgo care rather than incur bills they can’t pay.

Geralyn Cerveny, who runs a day care in Kansas City, Mo., said she had Covid-19 in early April and is recovering. But her income has dropped as some families withdrew their children. Although her daughter is urging her to get some follow-up testing because she has some lingering symptoms from the virus, she is holding off because she does not want to end up with more medical bills if her health plan will not cover all of the care she needs. She said she would dread “a fight with the insurance company if you don’t meet their guidelines.”

Others are weighing what illness or condition merits the expense of a doctor or tests and other services. Eli Fels, a swim instructor and personal trainer who is pregnant, has been careful to stay up-to-date with her prenatal appointments in Cambridge, Mass. She and her doctor have relied on telemedicine appointments to reduce the risk of infection.

But Ms. Fels, who also lost her jobs but remains insured, has chosen not to receive care for her injured wrist in spite of concern over lasting damage. “I’ve put off medical care that doesn’t involve the baby,” she said, noting that her out-of-pocket cost for an M.R.I. to find out what was wrong “is not insubstantial.”

At Maimonides Medical Center in Brooklyn, doctors have already seen the impact of delaying care. During the height of the pandemic, people who had heart attacks and serious fractures avoided the emergency room. “It was as if they disappeared, but they didn’t disappear,” said Dr. Jack Choueka, the chair of orthopedics. “People were dying in home; they just weren’t coming into the hospital.”

In recent weeks, people have begun to return, but with conditions worsened because of the time they had avoided care. A baby with a club foot will now need a more complicated treatment because it was not addressed immediately after birth.

Another child who did not have imaging promptly was found to have a tumor. “That tumor may have been growing for months unchecked,” Dr. Choueka said.

 

 

 

 

Surprise medical bills in the coronavirus era

https://www.axios.com/surprise-medical-bills-coronavirus-c61a5529-3272-4edd-b660-35dc61f751b4.html

Surprise medical bills in the coronavirus era - Axios

Rep. Katie Porter recently received an explanation of benefits from her insurer saying that, in addition to the $20 co-pay she paid when she got her coronavirus test, she may be on the hook for an additional $56.60.

The catch: The law requires insurers to cover coronavirus testing without cost-sharing. Porter knows that because she voted for it.

Why it matters: Containing the coronavirus depends on knowing who has it, and it’s going to be much harder to get people to get tested if they think they’ll have to pay for it. But it’s becoming increasingly clear that patients may be vulnerable to surprise coronavirus bills.

Between the lines: Porter, who received a coronavirus test on March 23, has insurance through UnitedHealthcare and shared her explanation of benefits with Axios. Congress has required both the test itself and the associated care to be covered without cost-sharing.

  • In a statement, UnitedHealth Group said it has waived member cost-sharing for coronavirus testing and treatment.
  • “Some members received bills early on when there were not yet specific COVID-19 billing codes and during a period in which code adoption was first taking place,” the company said, adding that it’s waiving those charges and evaluating claims from earlier this year to make sure they were handled correctly.
  • “We are not authorized to talk about [Porter’s] specific situation without permission, however, what likely occurred is that her provider used the wrong billing code for the visit. To confirm if that’s the case and have it corrected, we encourage Rep. Porter to contact us so we can clarify with her directly.”

Yes, but: There’s a huge question of who should have to pay for coronavirus testing as it becomes more prolific, and many insurers — United included — have said that they’ll only cover tests that are “medically necessary,” at least without cost-sharing. It’s unclear who will pay for tests that aren’t deemed medically necessary.

  • The federal government hasn’t said who should pay for testing when, whether it be insurers, employers or the government itself. Insurers are questioning whether they should be on the hook for the hundreds of thousands of tests of asymptomatic people that public health experts say will need to be conducted every day.
  • Even though Congress has tried to resolve payment disputes between insurers and out-of-network labs, there’s a loophole that would allow patients to receive balance bills from out-of-network labs in some circumstances.
  • If a patient sees an out-of-network doctor for a coronavirus test, they’re vulnerable to receiving a surprise medical bill from this provider — just as they are under normal, non-coronavirus conditions, said Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy.

What they’re saying: “We will not be able to truly reopen and rebuild if Americans rightly fear costly medical bills for visiting their health care providers for coronavirus tests,” Porter writes in a letter to top Health and Human Services officials being sent today, asking the administration to implement the law more forcefully.

  • She also asked for “formal, explicit guidance for insurers, providers, employers like nursing homes and assisted living facilities, and testing companies, as well as all 50 states…to ensure patients and workers are not asked to pay any costs.”

 

 

 

 

A 70-year-old man was hospitalized with COVID-19 for 62 days. Then he received a $1.1 million hospital bill, including over $80,000 for using a ventilator.

https://www.yahoo.com/news/70-old-man-hospitalized-covid-170112895.html

Man, 70, hospitalized with COVID-19 for 62 days gets $1.1 million ...

  • A man in Washington state who spent more than two months in the hospital and more than a month in the Intensive Care Unit with COVID-19 received a 181-page itemized bill that totals more than $1.1 million, The Seattle Times reported.
  • Michael Flor, 70, will likely foot little of the bill due to his being insured through Medicare, according to the report.
  • “I feel guilty about surviving,” Flor told The Seattle Times. “There’s a sense of ‘why me?’ Why did I deserve all this? Looking at the incredible cost of it all definitely adds to that survivor’s guilt.”

A 70-year-old man in Seattle, Washington, was hit with a $1.1 million 181-page long hospital bill following his more than two-month stay in a local hospital while he was treated for — and nearly died from — COVID-19. 

“I opened it and said ‘holy (expletive)!’ ” the patient, Michael Flor, who received the $1,122,501.04 bill told The Seattle Times.

He added: “I feel guilty about surviving. There’s a sense of ‘why me?’ Why did I deserve all this? Looking at the incredible cost of it all definitely adds to that survivor’s guilt.”

According to the report, Flor will not have to pay for the majority of the charges because he has Medicare, which will foot the cost of most if not all of his COVID-19 treatment. The 70-year-old spent 62 days in the Swedish Medical Center in Issaquah, Washington, 42 days of which he spent isolated in the Intensive Care Unit (ICU). 

Of the more than one month he spent in a sealed-off room in the ICU, Flor spent 29 days on a ventilator. According to the Seattle Times, a nurse on one occasion even helped him call his loved ones to say his final goodbyes, as he believed he was close to death from the virus.

While in the ICU, Flor was billed $9,736 each day; more than $80,000 of the bill is made up of charges incurred from his use of a ventilator, which cost $2,835 per day, according to the report. A two-day span of his stay in the hospital when his organs, including his kidneys, lungs, and heart began to fail, cost $100,000, according to the report.  

In total, there are approximately 3,000 itemized charges on Flor’s bill — about 50 charges for each day of his hospital stay, according to The Seattle Times. Flor will have to pay for little of the charges — including his Medicare Advantage policy’s $6,000 out-of-pocket charges — due to $100 billion set aside by Congress to help hospitals and insurance companies offset the costs of COVID-19.

Flor is recovering in his home in West Seattle, according to the report.

 

 

 

 

R1 RCM buys Cerner’s revenue cycle outsourcing business for $30M

https://www.fiercehealthcare.com/tech/r1-rcm-buys-cerner-s-revenue-cycle-business-30m-deal?mkt_tok=eyJpIjoiTXpReVptRTBOemxoWW1OaCIsInQiOiJcL0FZVXVvVmhwQWpxdFBoV1VKRjhON29CaWhLY3g2bXFhT0doXC9tWVFpWTd0blh3TEY3MTN0M3lsZEs3K002d0hLS25BNld4dlk0b3NhWDBYaUhWYkNTUGc5SVRlRjBEMERoS01kWlZER1hVMmhFTkczdTAzMDhxWWpIaWxORk1mIn0%3D&mrkid=959610

Cerner's headquarters are in Kansas City, Missouri

R1 RCM plans to pay $30 million for health IT giant Cerner’s revenue cycle business.

Chicago-based R1, a leading revenue cycle management technology vendor, is acquiring Cerner RevWorks’ services business and commercial, nonfederal client relationships. The deal, which was announced Wednesday, does not include RevWorks’ federal clients.

R1 said it plans to hire Cerner RevWorks employees once the deal closes in the third quarter of 2020.

Both companies have committed to a seamless integration between the company’s technology-enabled services platform and Cerner’s software, R1 said in a press release.

As part of the transaction, Cerner said it will extend R1’s revenue cycle capabilities and expertise to Cerner clients and new prospects, helping drive sustainable financial improvements for providers while enhancing their patients’ overall experience.

The closing of the acquisition is expected to take place in the third quarter of 2020, subject to customary closing conditions.

According to R1’s filing with the U.S. Securities and Exchange Commission (SEC), the deal is valued at $30 million inclusive of working capital, financed with cash on the balance sheet.

The acquisition price will be paid in three installments, according to the SEC filing.

R1’s stock rose 12% Wednesday following the news.

The deal further establishes R1’s footprint across the acute and ambulatory markets, the company said in the SEC filing. The RevWorks business brings in approximately $80 million in annual revenue across more than 150 customers.

“We look forward to working collaboratively with Cerner to deliver superior results for healthcare providers and the communities they serve,” said Gary Long, executive vice president and chief commercial officer of R1. “With our interoperable technology and end-to-end platform, we are well-positioned to serve Cerner’s customers, as well as other healthcare organizations across the country.”

“Cerner’s overall goal is to deliver client success and accelerate our ability to deliver scalable innovations,” said Brenna Quinn, senior vice president of revenue cycle management at Cerner, in a statement.

In a statement provided by the company, Cerner executives said the deal with R1 will bring its commercial, nonfederal clients a total solution that pairs “Cerner’s advanced technology with R1’s world-class revenue services, ultimately optimizing financial performance for health systems.”

“Cerner remains committed to and heavily invested in its revenue cycle solutions to help our clients combine clinical, financial, and operational health information when and where it’s needed,” the company said.

Centerview Partners LLC acted as financial adviser, and Kirkland & Ellis LLP acted as legal adviser to R1. Greenhill & Co. acted as an adviser to Cerner.

Earlier this year, R1 acquired SCI Solutions, a provider of SaaS-based scheduling and patient access solutions, for approximately $190 million in cash.

The RCM vendor’s revenue grew 16.2% in the first quarter of 2020, up $44.6 million to reach $320.5 million.

However, during its first-quarter earnings call in May, R1 executives said the company is expecting to see revenue decline by $10 million to $20 million in the second quarter, driven by lower patient volumes for its smaller physician customers.

Cerner’s revenue cycle business took a hit last year when Adventist Health terminated its revenue cycle outsourcing contract with the company, resulting in a $60 million impairment charge for Cerner in the third quarter of 2019, the company reported during its third-quarter earnings call.

Adventist transitioned all its revenue cycle operations to Huron Consulting Group. At the time, about 1,700 Cerner employees transitioned over to Adventist and Huron.

During the company’s fourth-quarter and year-end 2019 earnings call in February, Cerner Chief Financial Officer Marc Naughton hinted at a potential sell-off of the RevWorks business.

“Those areas that we don’t think are the growth areas for the company we want to focus on, we’re going to consider divesting as one of the options,” Naughton said during a Q&A with analysts. “It will be an existing business that we will basically go out to market and look for opportunities to say here is this asset, it’s something we’re willing to let go and some of these assets have significant value.”

 

Ascension reports $2.7B net loss in Q3

https://www.beckershospitalreview.com/finance/ascension-reports-2-7b-net-loss-in-q3.html?utm_medium=email

Ascension, Google working on 'secret' patient data project, says ...

St. Louis.-based Ascension saw revenue decline in the three months ended March 31, and it ended the period with a net loss, according to unaudited financial documents

The 150-hospital system reported operating revenue of $6.1 billion in the third quarter of fiscal year 2020, down 2.5 percent from the same period a year earlier. Net patient service revenue dramatically declined in March due to a drop in patient volume attributed to the COVID-19 pandemic.

“COVID-19 has been encountered across all Ascension markets, to varying degrees, and has had an adverse effect on the system’s revenues and operating margin,” management wrote in comments on the financial results.

Looking at the nine months ended March 31, net patient service revenue was up 1.9 percent year over year due to several factors, including an increase in physician office visits and expansion of service lines and sites of care. 

The health system’s expenses climbed more than 3 percent year over year to $6.4 billion in the third quarter, and expenses were up nearly 4 percent in the nine months ended March 31. Higher expenses related to expanded service lines and the transition toward standardized revenue cycle services pushed the system’s expenses higher before the COVID-19 pandemic, Ascension said. 

Ascension ended the most recent quarter with an operating loss of $429.4 million, compared to operating income of $80.1 million a year earlier. During the nine months ended March 31, the health system’s operating loss totaled $344.9 million.

After factoring in nonoperating items, including losses from investments of nearly $2.5 billion, Ascension reported a net loss of $2.7 billion in the third quarter of fiscal year 2020. In the same period a year earlier, the system recorded investment income of $1.1 billion and net income of $1.2 billion.

To help offset financial damage caused by the COVID-19 pandemic, Ascension received funds from the $175 billion in relief aid Congress has allocated to hospitals and other healthcare providers to cover expenses and lost revenue tied to the pandemic. The health system received $211 million in federal grants, according to The New York Times.

Ascension also applied for and received about $2 billion of Medicare advance payments in April, which must be repaid.