Category Archives: Rev Cycle Management

Lowering Out-of-Pocket Health Costs Isn’t Easy. States Have Tried

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U.S. Sen. Bill Cassidy shows a chart during a congressional hearing.

Congress has promised to tackle high consumer health-care costs this year. It’s one of the few issues where lawmakers on both sides of the aisle find common ground.

The Lower Health Care Costs Act, introduced in June, is an almost 200-page piece of legislation that seeks to prevent surprise medical bills, lower prescription drug prices and force hospitals to be more transparent about what they bill insurance companies.

But there are already signs of potential failure.

Despite early momentum, Congressional leaders postponed a vote on the measure until after August recess. The pharmaceutical industry as well as hospital and provider groups have started to lobby against the legislation, meeting with President Trump in July to make their case.

Although the Affordable Care Act led to more people having health insurance, many Americans still struggle with out-of-pocket costs, especially ones they weren’t expecting. Meanwhile, health care is taking up an ever-growing size of state budgets. Governors and lawmakers try to tackle this issue almost every legislative session, but few have succeeded in a meaningful way.

“It’s usually a third of state budgets. States have every reason to try and control health-care costs. And yet, everybody struggles to,” says Josh Shaferstein, vice dean of Johns Hopkins University’s Office of Public Health Practice and Training, and a former health secretary for the state of Maryland.

Battling the Health-Care Industry

The first and usually biggest hurdle is private interest groups who see reforms as a threat to their livelihood.

“There are a lot of stakeholders that have vested interest and lobbyists on the ground that will fight tooth and nail, whether it’s doctors and nurses groups or insurance companies. They are perhaps moreso willing to fight at the state level,” says Sabrina Corlette, research professor at Georgetown University’s Center on Health Insurance Reforms.

She points to a bill introduced in Colorado this year that would have capped payments to hospitals in order to lower premiums. After pushback from hospital groups, lawmakers amended the legislation — which was signed into law — so that hospitals will be paid the same but will have to pay back a portion of their revenue to help lower premiums. 

In Washington state, which passed a first-in-the-nation “public option” bill this year, lawmakers rewrote the original legislation after doctor and hospital groups fought a provision that would have set the same cap on provider payments as Medicare. The final legislation reflected a compromise for insurers to pay providers 160 percent of Medicare rates.

At least eight other states discussed or introduced public option bills this year, but they failed to gain traction.

In Delaware — a state that ranks third in health-care spending but 31st in health outcomes — Gov. Jay Carney signed an executive order in November that outlines eight goals the state will work toward to curb the growth in health spending. But Kara Odom Walker, the state’s health secretary, concedes that they weren’t able to convince stakeholders to enact new penalties or regulations.

“Being a small state makes it a lot harder to do things that might be unpopular. Any conversation that includes words like ‘penalty’ or ‘payment cap’ is like a bomb going off,” she says.

The health-care industry is one of the biggest in the country. That gives it a lot of leverage.

“The health systems are often the largest employers in town. The governor says they want to slow health-care spending growth, and the hospital group will say, ‘that means losing jobs,’” says Robert Mechanic, executive director of the Health Industry Forum.

But as Congress tries to lower out-of-pocket costs, they have an asset that states don’t: better data. Corlette says states often lack impartial numbers on potential policies, hurting their ability to assess and defend legislation.

“It’s very hard for your average state legislator to pierce the veil,” Corlette says. “There’s an imbalance of info for legislators to really tackle the problem. They don’t have a Congressional Budget Office.”

One Person’s Savings Are Another’s Costs

Many compare efforts to control health-care costs to a game of whack-a-mole. A state might successfully regulate spending in one area only to see costs skyrocket in another.

“You might be able to cut rates in Medicaid, but then rates will pop up in private insurance. The standard toolkit for states is fraught with political danger,” says Shaferstein.

“Health care is so complex, and there are so many different players. It’s really hard to get your arm around the whole bundle,” says Mechanic.

For instance, Medicare lowered the limit for how long older patients can stay in hospitals. But there’s some evidence that the Medicare savings became extra costs for nursing homes because hospitals started providing fewer services for elderly patients altogether.

State Legislation

When it comes to controlling drug prices, states haven’t made much progress. They have made more headway regulating surprise medical bills.

Half the states have passed surprise billing laws. Only nine of them, though, included “comprehensive protections” that apply to all insurance plans, according to the Commonwealth Fund.

While states have struggled to actually lower drug prices, like Congress plans to do, they have passed laws to make them more transparent and to clamp down on pharmacy benefit managers — middlemen who negotiate drug benefits for plans.

Five states have enacted laws that require drug companies to notify them if they will significantly raise the price of a drug, and at least a dozen have restricted the power that a pharmacy benefit manager can have, like requiring them to register with the state.

Solutions That Have Worked

There are some success stories and lessons learned that Congress could use to lower health-care spending in general.

“States should be thinking of more global solutions because you kind of have to go big. Oftentimes people are looking to save $1 to $2 million a year, but that’s not going to make much of a difference,” says Shafterstein.

Only a couple of states have “gone big” in this sense.

Massachusetts passed what became the framework for the federal Affordable Care Act in 2006, known as “RomneyCare,” which requires residents to have health insurance. Health-care spending has since slowed in recent years. Mechanic credits that to the law’s requirements for private health entities to publicly justify price hikes and high spending.

In Maryland, it has taken decades to get health-care spending under control. The state has had an all-payer system for hospitals since the 1970s, meaning they get a fixed sum every month rather than bill insurers for every claim. While that system — which is only used by one other state, Vermont — curbed hospital spending per patient, hospital spending overall grew at a slightly higher rate than the national average.

So in 2014, Maryland forced hospitals to limit their spending to 0.5 percent less than the national growth rate. It has largely been deemed a success, with a report commissioned by the federal Centers for Medicare and Medicaid Services finding that “Maryland hospitals were able to operate within their global budgets without adverse effects on their financial status.”

On a less global scale, states have been able to drive down premiums by implementing reinsurance programs, meaning the government pays for the most expensive patients, taking that bill off insurance companies’ plate.

But reinsurance is like slapping a band-aid on a much larger wound.

“Recent state efforts on reinsurance have worked, but they aren’t really getting at the overall cost of coverage,” says Kevin Lucia, research professor at Georgetown University’s Health Policy Institute.

 

 

 

Anthem again irks docs with latest changes to reimbursement

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https://www.healthcaredive.com/news/anthem-again-irks-docs-with-latest-changes-to-reimbursement/559747/

Anthem is again ruffling the feathers of providers, this time over a new reimbursement policy denying payment for certain follow-up office visits the same day a procedure is performed. 

The policy could impact many specialists and primary care doctors. Dermatologists are particularly upset over the change, which they call punitive and unnecessary with the potential to disrupt patient care.

“It is a nuisance. It makes absolutely no sense,” George Hruza, a practicing dermatologist and president of the American Academy of Dermatology, told Healthcare Dive.

It’s the latest in a string of controversial policies from Anthem. The Blue Cross payer that insures 40 million people has taken steps to rein in costs by enforcing different payment policies based on site of care and other factors. 

In the past several years, the Indianapolis-based for-profit said that it would no longer pay for emergency room visits if patients show up with minor ailments like the common cold. It also stopped paying for certain imaging tests at outpatient facilities owned by hospitals due to the unexplained wide variation in costs compared with freestanding imaging centers.

And this year, Anthem cut rates paid to hospital-based labs in an attempt to align them with independent labs, a strategy that garnered extensive discussion on lab giant Quest Diagnostic’s second quarter earnings call.

Anthem contends the latest change to office visit payments will prevent duplicative billing for similar visits. The change took effect March 1, according to a previous provider alert. Anthem told Healthcare Dive it’s an update to its claims systems and does not describe it as a new reimbursement policy.

Despite conversations with Anthem, Hruza said his organization hasn’t been given an explanation on what triggered the change and whether it actually addresses a problem or an abuse of the system. He said he understands the need to cut healthcare costs, but wonders how much savings the change will generate as some of the visits are below $100.

The payer proposed an almost identical change last year but later decided to pull it back after intense pushback from the American Medical Association and other provider groups. The newer policy is worse because doctors would receive no payment, and it’s more narrowly tailored to the same diagnosis, Hruza said.

‘Appropriate settings’

Anthem argues the policy is needed to move care to more cost-efficient settings.

“Our efforts to help achieve that goal include a range of initiatives that, among other things, encourage consumers to receive care in the most appropriate setting and also help promote accurate coding and submission of bills by providers,” Anthem said in a statement to Healthcare Dive.

Hruza is worried the latest iteration would cause patients delays in care.

He gave the example of a patient with acne prescribed a medication. He would want to see them for a follow-up in a few weeks. At that second appointment, if he saw the treatment wasn’t working well, he might prescribe a different medication. At the same time, he may drain an acne cyst, a minor procedure. That would trigger a denial, he said, because of the two visits revolving around the same diagnosis with the same-day procedure.

AMA is aware of the policy and has had meetings with Anthem about its concerns, a source for the organization that represents the nation’s doctors told Healthcare Dive.

For providers, the big fear is the change will result in unjustified claim denials and encourage other payers to adopt similar measures. Hruza said there is no recourse for contracted providers, particularly those that work in smaller practices, when these changes are made, given Anthem’s size as the nation’s second-largest insurer.

As deductibles rise and patients are shouldering a greater burden of the cost of care, insurers may be feeling the pressure from employers to wring out costs from the provider side, Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University, told Healthcare Dive.

“Employers are getting more and more wise to the fact that the reason we have a cost problem in this country is because of provider prices,” Corlette said. 

 

 

 

Hospital billing is big business

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Health care’s administrative back end — services like verifying patients’ insurance, putting patients on payment plans and collecting patient debt — is bigger than ever, Axios’ Bob Herman reports.

The big picture: The U.S.’ fractured insurance system leads hospitals and doctors to spend tens of billions of dollars annually on billing software and services — none of which are tied to actual health care.

Driving the news: For-profit hospital system Tenet Healthcare decided to spin off its billing services unit, Conifer, into its own publicly traded entity in 2021.

Between the lines: Many hospital systems that send out bills have ownership stakes in these companies.

  • Tenet controls 76% of Conifer, which registered $1.5 billion of revenue last year. Catholic Health Initiatives owns the remaining 24%. They both use Conifer.
  • Catholic health system Ascension and private equity firm TowerBrook hold a majority stake in R1 RCM, which used to be named Accretive Health and was prohibited from doing business in Minnesota due to its aggressive collections practices. Two Ascension executives sit on R1’s board.
  • Bon Secours Mercy Health recently sold off a majority stake in its billing firm, Ensemble Health Partners, for $1.2 billion, the Wall Street Journal reported.

Researchers have cited administrative costs as a sizable source of health care waste. Some startups are trying to address this issue, but traditional billing and service firms are only getting larger and have providers as investors.

 

 

 

Politicians Tackle Surprise Bills, but Not the Biggest Source of Them: Ambulances

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A legislative push in Congress and states to end unexpected medical bills has omitted the ambulance industry.

After his son was hit by a car in San Francisco and taken away by ambulance, Karl Sporer was surprised to get a bill for $800.

Mr. Sporer had health insurance, which paid for part of the ride. But the ambulance provider felt that amount wasn’t enough, and billed the Sporer family for the balance.

“I paid it quickly,” Mr. Sporer said. “They go to collections if you don’t.”

That was 15 years ago, but ambulance companies around the nation are still sending such surprise bills to customers, as Mr. Sporer knows well. These days, he oversees the emergency medical services in neighboring Alameda County. The contract his county negotiated allows a private ambulance company to send similar bills to insured patients.

In most parts of medical care, you can choose a doctor or hospital that takes your insurance. But there are some types of care where politicians have begun tackling the “surprise” bills that occur when, say, patients go to an emergency room covered by their insurance and are treated by a physician who is not.

Five states have passed laws this year to restrict surprise billing in hospitals and doctor’s offices. Congress is working on a similar package of measures, after President Trump held a news conference in May urging action on the issue.

But none of these new policies will protect patients from surprise bills like the one Mr. Sporer received. Ordinary ambulances that travel on roads have been left out of every bill.

“Ambulances seem to be the worst example of surprise billing, given how often it occurs,” said Christopher Garmon, a health economist at the University of Missouri-Kansas City. “If you call 911 for an ambulance, it’s basically a coin flip whether or not that ambulance will be in or out of network.”

Mr. Garmon’s research finds that 51 percent of ground ambulance rides will result in an out-of-network bill. For emergency room visits, that figure stands at only 19 percent.

Congress has shown little appetite to include ambulances in a federal law restricting surprise billing. One proposal would bar surprise bills from air ambulances, helicopters that transport patients who are at remote sites or who have life-threatening injuries. (These types of ambulances tend to be run by private companies.)

But that interest has not extended to more traditional ambulance services — in part because many are run by local and municipal governments.

Lamar Alexander, the chairman of the Senate Committee on Health, Education, Labor and Pensions, and a key author of a Senate surprise billing proposal, said in an email that surprise bills from air ambulances were the more pressing issue because federal law prevents any local regulation of their prices. “Unlike air ambulances, ground ambulances can be regulated by states,” said Mr. Alexander, a Republican from Tennessee. “And Congress should continue to learn more about how to best solve that problem.”

The ambulance industry has brought its case to Capitol Hill, arranging meetings between members of Congress and their local ambulance operators.

“When we talk to our members of Congress, what we really emphasize is that we’re a little different from the other providers in the surprise billing discussion,” said Shawn Baird, president-elect of the American Ambulance Association. “We have a distinct, public process. The emergency room isn’t subject to any oversight of that kind.”

Patient advocates contend that this public oversight isn’t doing enough to protect patients, who often face surprise bills and forceful collection tactics from ambulance providers.

Anthony Wright, executive director of Health Access California, worked on a 2016 California law to restrict surprise billing. Initially, he thought it made sense to include ambulances in that legislation.

“It’s our experience that ambulance providers bill quicker and are more aggressive in sending bills to collection,” Mr. Wright said. “If they’re being more aggressive, you might want legislation to deal with that one first.”

But obstacles quickly began to mount. Some were about policy, like whether California would need to offset the revenue local governments would lose.

Then there were the politics. “There is the political reality that it’s hard to go after an entire industry at once,” Mr. Wright said. “It’s hard to have a bill opposed by doctors and hospitals and ambulances. We did manage to get a strong protection against doctor billing, but that was an epic, brutal, three-year fight.”

The California law that passed in 2016 did not regulate ambulance prices.

Patient groups elsewhere also say they ran into political trouble. Of the five states that passed surprise billing regulations in 2019, only Colorado’s new law takes aim at ambulance billing — not by regulating it, but by forming a committee to study the issue.

“The surprise bills laws are hard enough to get,” said Chuck Bell, program director for advocacy at Consumer Reports, who worked to pass a Florida surprise billing law in 2016. “You’re struggling with health plans, hospitals and doctors and other provider groups. At a certain point you don’t want to invite another big gorilla in the room to further widen the brawl.”

On Capitol Hill, the ambulance services have been less aggressive than other health care providers in lobbying against their inclusion in reforms. But lawmakers have largely declined to even include them in the conversation.

Consumer advocates say the lack of state-level legislation has been a barrier.

“Since there are issues related to ambulances being run by municipalities, and, at the state level, there hasn’t been a lot of model law to inform federal law, I think that’s made some members hesitant to wade into that space,” said Claire McAndrew, the director of campaigns and partnerships at the health care consumer group Families USA.

Local governments generally finance their ambulance services through a mix of user fees and taxes. If ambulances charge less to patients, they typically need more government funding.

Municipal governments often publish the prices of their ambulance services online, and they can range substantially. In Moraga and Orinda, in the Bay Area, the base rate for an ambulance ride is $2,600, plus $42 for each mile traveled. In Marion County, Fla., the most basic kind of ambulance ride costs $550, plus $11.25 per mile.

In many communities, there is no choice of ambulances.

Older patients are not charged such fees. Medicare, which also covers some people with disabilities, pays set prices for ambulance rides — a base rate of around $225 for the most typical type of care, in addition to a mileage fee — and forbids the companies to send patients additional bills.

In Bucks County, Pa., where it is $1,500 for a basic ambulance ride, in addition to $16 per mile, the emergency medical service gets 78 percent of its revenue from ambulance billing, according to Chuck Pressler, the executive director of the Central Bucks Emergency Medical Services. The rest of the budget comes from taxes raised by local cities and fund-raising drives.

“There is an expectation that we just plant money trees, that people should come in and work for free,” Mr. Pressler said of proposals to tamp down ambulance billing. “When was the last time you saw the police send out a fund-raiser? They don’t have to do that. Why do we have to raise money to come get you when you’re sick?”

 

 

 

Tenet plans to spin off revenue-cycle subsidiary Conifer

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https://www.modernhealthcare.com/finance/tenet-plans-spin-revenue-cycle-subsidiary-conifer?utm_source=modern-healthcare-daily-dose-wednesday&utm_medium=email&utm_campaign=20190724&utm_content=article1-readmore

After nearly two years of fielding underwhelming offers for its revenue-cycle subsidiary, Tenet Healthcare Corp. has settled on a decidedly different maneuver: It will spin it off as a separate, publicly-traded company.

Leaders with Dallas-based Tenet have spent the past 18 months finalizing a deal on Conifer Health Solutions. While CEO Ron Rittenmeyer conceded on an investor call Wednesday that an outright sale would have been the company’s first choice, there are several benefits to a tax-free spin off.

Shareholders win in that they’ll get shares in the new company in addition to their Tenet stock, but Rittenmeyer couldn’t say say yet how many they will receive.

“From a shareholder standpoint, I believe it’s a no-brainer,” he said.

The stock market responded positively to Wednesday’s news. Tenet’s shares were up about 14.5% at market close.

Rittenmeyer said the deal, which isn’t scheduled to close for another two years, is also the best path forward for Tenet in that it will have a “reasonable” impact on the company’s debt. Tenet’s long-term debt stood at $14.8 billion as of March 31. He characterized the deal as a “debt-for-debt exchange” that will be tax free. Tenet also would have had to pay taxes on a sale.

The aim of Tenet’s asset sales, including—hypothetically—Conifer, have been to lower the company’s debt. But analysts questioned how much spinning off Conifer will truly achieve that purpose, and some said they believe it could actually increase the company’s debt ratio.

Rittenmeyer said in an interview Tenet has long maintained it will bring down debt through a combination of performance and asset sales, which are ongoing.

“The spin-off will be a debt-to-debt exchange that will put debt on the new company and pay off debt at Tenet,” he said. “So our debt will come down by that process.”

Tenet won’t disclose how much of its debt will shift to Conifer until 6 months before the deal closes, Rittenmeyer told investors on Wednesday morning’s call. He wouldn’t say whether Conifer will have more, less or similar leverage to Tenet. One thing’s for sure, he said Tenet does not plan to overleverage the new company.

“There’s no way we plan to load up Conifer and cause that to have a capital structure problem on the way out,” Rittenmeyer said. “We want it to be successful, so it’s a balancing act.”

Others aren’t convinced that will be the case. Brian Tanquilut, a healthcare equity analyst with Jefferies, thinks the deal will actually increase Tenet’s debt ratio because Conifer’s departure from Tenet will pull more from its earnings than it will from its debt, he said.

“There will be more debt sitting on Tenet’s books than what you’re moving off earnings proportionally to the Conifer spin,” he said.

John Ransom, a managing director in healthcare equity research with Raymond James & Associates, agreed that the deal could nudge Tenet’s debt ratio higher depending on how it plays out, although Conifer will likely pay a dividend to Tenet.

It makes sense that Tenet doesn’t want to load up the new company with debt, Ransom said.

“I think they want to try to dress this up as more of a growth company,” he said.

The deal won’t close until the end of the second quarter of 2021. To get there, Tenet will have to meet regulatory approvals from the Internal Revenue Service and Securities and Exchange Commission, Rittenmeyer said.

Tenet also announced Wednesday the departure of Conifer’s CEO, Stephen Mooney. He will be replaced on an interim basis by Tenet’s Chief Operating Officer, Kyle Burtnett, while the company searches for a permanent replacement. Rittenmeyer said that wasn’t connected to the Conifer announcement, but that Mooney simply wanted to pursue other endeavors.

“It’s very positive; no negative,” Rittenmeyer said. “We’re not pushing him out the door.”

In February, Tenet was in exclusive talks over what would have been a very different Conifer deal. Rittenmeyer revealed Wednesday Tenet had considered a merger with another company that would have ultimately been spun out. He said Tenet decided against that because it wasn’t clear that plan would have yielded enough of a financial return.

Tenet received nine preliminary bids to purchase Conifer, including three that were high enough to consider, Rittenmeyer said. Tenet spoke with 74 potential buyers overall, including 16 strategic buyers and 58 financial buyers. However, the company encountered a number of setbacks when it came to those deals.

Some of the would-be buyers were offering company stock in addition to cash, but Tenet wanted an all-cash sale, Rittenmeyer said. Additionally, he said the bids were not high enough to reflect the performance improvements Tenet has added to Conifer.

A number of the bids included stipulations Tenet could not agree to, such as not being accountable for collecting 100% of Tenet’s cash, “which is critically important to us,” Rittenmeyer said. In the end, none of the proposals would have assured Tenet would have effective recourse if cash collection fell short, Rittenmeyer said.

Some would-be buyers expected Tenet to guarantee that if it sold a hospital, the buyer would continue to use Conifer or, if it didn’t, Tenet would pay Conifer’s new owner for the sold asset’s revenue-cycle management, Rittenmeyer said.

This deal was complicated by the fact that Tenet continues to divest hospitals to pay down its debt, Tanquilut said. Since Tenet is Conifer’s largest customer, buyers would be taking on a shrinking company, he said.

“How do you value an asset that we know at least for its largest client will see shrinking revenue?” Tanquilut said.

On Wednesday’s call, Rittenmeyer said early in the process, shareholders said they believed buyers would pay high multiples for Conifer, possibly in the mid- to high-teens.

Ransom said Tenet likely received an unreasonably high valuation from an investment bank, which may have contributed to the extended time it spent seeking a buyer.

“Whoever told them they were going to get a high-teens valuation, that’s insane,” Ransom said. “They probably shouldn’t have bought that.”

 

 

 

Optum aims to help John Muir Health System thrive in Bay Area

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https://www.beckershospitalreview.com/strategy/optum-aims-to-help-john-muir-health-system-thrive-in-bay-area.html?oly_enc_id=2893H2397267F7G

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UnitedHealth Group’s Optum is partnering with John Muir Health to help the system remain independent and become more competitive in California, according to CNBC.

“Optum’s expertise and capabilities will help us expand upon the high-quality patient care we provide to the Bay Area community,” Cal Knight, president and CEO of Walnut Creek, Calif.-based John Muir Health, said in a news release. “We share common values with Optum, and this new relationship will help us further deliver on our mission to improve the health of the people we serve. We are committed to remaining independent while embracing partnerships that help us grow and serve more patients.”

Optum, based in Eden Prairie, Minn., will take over John Muir’s information technology, revenue cycle management, analytics, purchasing, claims processing and other nonclinical functions. Optum and John Muir representatives said Optum will also be involved in John Muir’s physician network ambulatory care coordination and utilization management services.

Optum will hire about 540 John Muir employees as part of the partnership.

Optum, which offers various technologies and analytic tools, told CNBC the partnership provides a model under which it can help small, struggling hospitals remain independent.

Nick Howell, Optum senior vice president, told the TV business news channel: “Optum is not in the business of owning and operating health systems. We see this kind of partnership as a model. A lot of health systems out there are facing similar cost pressures and  are trying to find ways to remain independent. We believe this is a new third option for them.”

Optum has been a big contributor to revenue growth for UnitedHealth. It also has emerged as a competitor for some hospitals as it expands its physician workforce.

 

 

 

Michigan surgeon accused of $60M billing fraud

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https://www.beckershospitalreview.com/legal-regulatory-issues/michigan-surgeon-accused-of-60m-billing-fraud.html?origin=rcme&utm_source=rcme

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An indictment unsealed July 10 charges Vasso Godiali, MD, with orchestrating a $60 million healthcare fraud scheme and laundering proceeds from the scheme, according to the Department of Justice.

Dr. Godiali, a vascular surgeon, allegedly submitted false claims to Medicaid, Medicare and Blue Cross of Michigan for services that weren’t provided and exploited Modifier 59 to improperly unbundle claims. Dr. Godiali allegedly claimed he was performing several separate procedures when he was only entitled to a single reimbursement for a single procedure, according to the Justice Department.

The indictment further alleges Dr. Godiali used six corporations to launder roughly $49 million in proceeds from the healthcare fraud scheme, according to the Justice Department.

Dr. Godiali faces a maximum sentence of 10 years in prison for the healthcare fraud charge and a maximum sentence of 20 years in prison for money laundering, according to the Justice Department.

 

 

Hospital Pass-through Billing Scheme Detailed in Florida Plea Agreement

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https://www.healthleadersmedia.com/hospital-pass-through-billing-scheme-detailed-florida-plea-agreement

Kyle Marcotte of Jacksonville Beach admitted to using rural hospitals in a scheme that kicked back more than $50 million in insurance reimbursements for urine tests.

KEY TAKEAWAYS

Marcotte, the owner of a substance abuse treatment facility, sent his patients’ urine samples to a lab that retuned 40% of the insurance reimbursements to Marcotte. 

The lab owner then arranged with the managers of two rural hospitals in Florida to have the testing billed to private insurers at a better reimbursement under the hospitals’ in-network contracts.

The scheme expanded to include rural hospitals in Georgia, and more drug rehab centers, and laundered more than $57million in illicit reimbursements.

The owner of a Florida substance abuse treatment center pleaded guilty Tuesday to his role in a pass-through billing scheme that used rural hospitals to launder millions of dollars, the Department of Justice said.

Kyle Ryan Marcotte, 36, pleaded guilty to one count of conspiracy to commit money laundering and agreed to forfeit $10.2 million. His sentencing date has not been set, DOJ said.

According to DOJ, Marcotte, the owner of a substance abuse treatment facility in Jacksonville Beach, Florida. In 2015, Marcotte sent his patients’ urine samples to a lab that retuned 40% of the insurance reimbursements to Marcotte.

The lab owner then arranged with the managers of Campbellton–Graceville Hospital and Regional General Hospital Williston in Florida to have the testing billed to private insurers through the rural hospitals at a better reimbursement under the hospitals’ in-network contracts, DOJ said.

Attempts by HealthLeaders’ to contact officials at Campbellton–Graceville Hospital and Regional General Hospital Williston for comment were not successful.

Marcotte also admitted that he brokered deals with other substance abuse treatment centers to have their urine tests billed through the two hospitals in exchange for Marcotte receiving 10% of the insurance reimbursements. The other rehab centers received 30% of the reimbursements, DOJ said.

The lab owner, who was not identified by DOJ, then acquired Chestatee Hospital, in Dahlonega, Georgia, and other rural hospitals, and Marcotte continued to supply samples from his rehab facility and brokered deals with other substance rehab facilities that used those hospitals, DOJ said.

The reimbursements were sent from the hospitals to the lab, which sent them to two companies Marcotte controlled, North Florida Labs and KTL Labs.

Marcotte used the reimbursements from KTL Labs to pay $50 million in kickbacks to at least 88 companies and people operating other rehab facilities who involved in the scheme.  The total amount of money involved in the laundering scheme was $57.3 million, DOJ said.

 

 

 

Out-of-pocket costs rising even as patients transition to lower-cost care settings

Posted on by • Posted in 2020 Election Issues, Consumerism, Denial Rates, Emergency Care, Health Insurance Coverage Adequacy, Health Policy, Health System, Healthcare Financial Management Association (HFMA), High Deductible Health Plans, High Drug Prices, High Prices, Highly Specialized Drugs, Hospital, Hospital Industry, Out of Pocket Expenses, Primary Care, Rev Cycle Management, Urgent Care • Leave a comment

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Patients saw increases of up to 12% in their out-of-pocket responsibilities for inpatient, outpatient and ED care in 2018.

A new TransUnion Healthcare analysis has found that most patients likely felt a bigger pinch to their wallets as out-of-pocket costs across all settings of care increased in 2018. The new findings were made public yesterday at the 2019 Healthcare Financial Management Association Annual Conference in Orlando.

The analysis reveals that patients experienced annual increases of up to 12% in their out-of-pocket responsibilities for inpatient, outpatient and emergency department care last year.

In 2017, the average inpatient cost was $4,068; the average outpatient cost was $990; and the average emergency department cost was $577.

In 2018, the average inpatient cost was $4,659; the average outpatient cost was $1,109; and the average emergency department cost was $617.

FUELING THE TREND

There are certain factors that are influencing this trend, according to Jonathan Wiik, principal of healthcare strategy at TransUnion Healthcare.

“Patients are becoming more aware that emergency care is expensive and somewhat inefficient,” Wiik said. “No one wants to go to the emergency room unless we have to, because we don’t want to deal with the time there or the expense. They aren’t the best place to get primary or even urgent care.”

Another factor, he said, is that providers realize the emergency department is a care setting of last resort for many. Providers want to make sure that have room in the ED for cases that are real emergencies, so they’re essentially curating their patients, steering patients to the most cost effective settings possible — often primary care, which is the least expensive setting.

Noting that the biggest annual increases were in inpatient and outpatient care, Wiik said that was largely a function of utilization and just a general wariness, in addition to the fact that most EDs have pretty flat contracts. Financial communication with patients is also an issue.

“Most people can’t afford the average out-of-pocket, so providers are really trying to educate patients as early as they can about those costs,” said Wiik. “Emergency care is a really hard place to educate people on finances, let alone collect on them.”

RISING COSTS

The analysis found that, during a hospital visit, patients are likely experiencing cost increases that continue the trend of higher out-of-pocket costs. About 59% of patients in 2018 had an average out-of-pocket expense between $501 and $1,000 during a healthcare visit. This was a dramatic increase from 39% in 2017. Conversely, the number of patients that had an average out- of-pocket expense of $500 or below decreased from 49% in 2017 to 36% in 2018.

And with out-of-pocket costs increasing, the trend toward consumerism is growing as more patients, payers and providers transition to lower cost settings of care.

One example: Inpatient care, traditionally the most expensive healthcare option, has seen a leveling off with the percentage of price estimates remaining at 8% between 2017 and 2018. The percentage of outpatient services estimates, generally about one-quarter of the cost of inpatient services, rose in that same timeframe from 65% to 73%.

“Patients are likely seeing more providers and payers recommending that they take advantage of cost-effective healthcare options, which brings down costs for all parties,” said Wiik. “This is especially important as costs continue to rise in all areas of healthcare, particularly in inpatient, outpatient and emergency department services.”

This is having an impact on providers, payers and patients, he said.

“Let’s pretend Joanna had an MRI in her head, and that ran $3,200. That might have been paid by Blue Cross Blue Shield, and $100 out of Joanna’s pocket. Now Joanna’s paying $300. Most patients don’t look up how much the MRI’s going to be. They just get the bill later and try to figure it out. I think the patient portion of the bill is going to be in the 35, 40% range very soon. What that means is we’re quickly approaching half of the bill coming from the patient and half from the payer. That’s not insurance anymore, that’s a bank account.”

A recent Kaiser Family Foundation study indicated that 34% of patients are finding it difficult to pay their deductible before insurance kicks in. In addition to patients being challenged to make payments, the trend is that providers are also feeling the pressure of increased denial rates and write-offs, which is increasing bad debt.

Considering these factors together — increased out-of-pocket expenses, a patient’s challenge to make payment, and increased denial rates — collecting payments from all payers is critical for providers. In order for providers to ensure they receive payment for the patient-care services rendered, it is vital that they implement strategies that maximize reimbursements.

 

 

Hospitals as medical debt litigators

Posted on by • Posted in Debt Collection, Health Policy, Health System, Hospital, Non-Profit Healthcare Industry, Rev Cycle Management, Tax Exempt Status, Wage Garnishment • Leave a comment

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Illustration of rope lassoing a hospital bill.

Tax-exempt hospitals are again raising eyebrows over how they harass patients, often the poorest, in court by trying to recoup medical debts, my colleague Bob Herman writes.

Driving the news: ProPublica and MLK50 published a deep dive yesterday on Methodist Le Bonheur Healthcare, a $2 billion not-for-profit and faith-based hospital system in Tennessee that has filed more than 8,300 lawsuits against patients over the past 5 years.

  • One of the patients featured in the story made less than $14,000 last year, and Methodist is suing her for more than $33,000. The hospital operates in the second-poorest large metropolitan area in the nation.
  • Methodist obtained wage garnishment orders in almost half of the cases it filed between 2014 and 2018, meaning that the debtor’s employer was required to send the court a portion of the worker’s after-tax income.

Between the lines: As we wrote this week, hospitals taking patients to court is both common and longstanding.

The bottom line: Not-for-profit hospitals market themselves as charities, but they act more like for-profit peers — renewing questions of whether those organizations’ tax exemptions are justified.

  • Coincidentally, the American Hospital Association released a paper Thursday touting hospitals’ community benefits, but the paper has some of the same flaws as prior analyses.

What we’re watching: These practices have drawn the ire of Sen. Chuck Grassley, who is now chairman of the powerful Finance Committee.

  • “Such hospitals seem to forget that tax exemption is a privilege, not a right. In addition to withholding financial assistance to low-income patients, they give top executives salaries on par with their for-profit counterparts,” Grassley wrote in a 2017 op-ed.