Drugmakers sue HHS over 340B advisory opinion in feud over contract pharmacy access

Hospital associations sue HHS over 340B enforcement

Drug companies AstraZeneca, Eli Lilly and Sanofi filed separate lawsuits seeking to preserve their ability to restrict offering 340B-discounted drugs to contract pharmacies.

The lawsuits, filed Tuesday in different federal courts, seek to get rid of an advisory opinion filed by the Department of Health and Human Services’ (HHS’) general counsel that says drug companies must offer 340B drugs to contract pharmacies, which are third-party entities that dispense drugs on behalf of hospitals participating in the program.

The drug companies argue that the advisory opinion contracts the statute for the 340B program, which requires manufacturers to offer discounted products to safety net hospitals and other providers in exchange for participation in Medicare and Medicaid.

“The statute, on its face, does not require manufacturers to recognize any contract pharmacies, much less unlimited contract pharmacies,” the legal filing from AstraZeneca said.

AstraZeneca wants a federal court to declare the advisory opinion didn’t follow proper procedure and exceeded HHS’ statutory authority. The manufacturer also wants a court to declare that companies are not required to offer 340B discounts to contract pharmacies.

The lawsuits come less than a week after the American Hospital Association (AHA) and five other groups and three individual systems sent letters to the drug companies that have halted or restricted sales to contract pharmacies. They wanted the drugmakers to reinstate sending the discounted products to their pharmacies and reimburse facilities for any damages.

AHA and several groups sued HHS to get the agency to clamp down on the drug manufacturers’ moves.

AstraZeneca, Eli Lilly, Novartis, Novo Nordisk, Sanofi and United Therapeutics have taken a range of actions to clamp down on sales to contract pharmacies, which a majority of 340B-covered entities use.

The companies have argued that the discounts do not filter down to patients, but hospital and advocacy groups charge that the discounts are vital, especially as safety net providers operate on thin margins.

“Make no mistake: the boom in contract pharmacies has been fueled by the prospect of outsized profit margins on 340B discounted drugs,” AstraZeneca argued in its court filing.

A Wall Street Giant Tapped $1.5 Billion in Federal Aid for Its Hospitals

https://www.bloomberg.com/news/articles/2020-09-14/a-wall-street-giant-tapped-1-5-billion-in-federal-aid-for-its-hospitals

LifePoint’s Castleview Hospital in Price, Utah.

Private equity firm, flush with cash, sees ‘upside’ and more acquisitions.

Like hospital chains across the U.S., LifePoint Health tapped federal relief money to blunt the cost of the Covid-19 pandemic. It was a potent lifeline, a total of $1.5 billion.

But LifePoint is unusual in one respect, its owner: private equity firm Apollo Global Management, led by billionaire Leon Black.

LifePoint was certainly eligible for the money. But the extent of the federal assistance could contribute to concern in Washington over whether private equity-backed hospitals should have been. In July, the U.S. House passed a bill that would require health-care companies to disclose any private equity backing when seeking short-term loans from the federal Medicare program.

The reason for lawmakers’ concern: Private equity firms have ample access to cash. As recently as June, the Apollo fund that owns LifePoint had more than $2 billion to support its investments. Apollo, which manages $414 billion, recently told investors in an internal document that LifePoint was in such a strong market position that it was planning to make acquisitions of less fortunate hospitals.

The relief flowing to LifePoint illustrates a drawback of a government program designed to send out money quickly to every hospital, regardless of financial circumstances, according to Gerard Anderson, a health policy professor at Johns Hopkins University.

“This particular hospital system does not appear to need the money,” he said.

LifePoint and Apollo say they absolutely did. In their view, taxpayer money helped cover the soaring cost of treating Covid-19 patients and lost revenue because of the loss of fees from lucrative elective procedures. The assistance enabled the chain to retain all of its workers and provide essential service to its communities, they said.

“No health-care provider, including LifePoint, is immune to this, regardless of their ownership,” said LifePoint spokesperson Michelle Augusty.

Said an Apollo spokesperson: “Apollo is proud of LifePoint’s response to the Covid pandemic as they continue to provide vital care for both Covid and non-Covid patients.’’

LifePoint owns a far-flung collection of small-town hospitals, from Western Plains Medical Complex in Dodge City, Kansas, to Bourbon Community Hospital in Paris, Kentucky. For years, private equity has been pushing into every corner of American health care. Many medical professionals worry that these Wall Street-style investors will inevitably put profits before patients – something private equity denies.

LifePoint’s Willamette Valley Medical Center in McMinnville, Oregon.

In April, LifePoint Chief Executive Officer David Dill and other hospital officials met with President Donald Trump. Dill urged Trump to keep helping hospitals, noting that LifePoint’s medical centers tend to be in the middle of the country, “smaller communities, which I know are communities very important to you,’’ according to a transcript of the meeting.

Rural hospitals are a very important part of the infrastructure in this country and also treating the uninsured and the Medicaid population as well,’’ Dill said.

Trump pointed out that the hospitals didn’t appear to be in the “hot spots.” Dill acknowledged they were handling only “a couple hundred Covid patients.” (The company said it has now cared for almost 20,000.)

In April, the month the government started distributing assistance, LifePoint borrowed $680 million in the capital markets. It also had access to $900 million in cash and an $800 million credit line, according to Moody’s Investors Service

By Apollo’s own account, LifePoint was doing just fine when the pandemic struck. In fact, it was thriving – and looking to expand. As of March 31, shortly before LifePoint got taxpayer dollars, Apollo’s investors were on track to double their money, internal documents show. On paper, they were sitting on a gain of more than $800 million.

“Independent hospital systems have greater difficulty weathering prolonged periods of financial stress,’’ Apollo wrote to its investors in May. “A  consolidation strategy will provide meaningful upside for Apollo funds’ investment.’’

Apollo said the crisis represented an opportunity: “The coronavirus pandemic will serve as a catalyst for additional M&A opportunities given the attractive scale and overall position of the LifePoint platform.”

Apollo is one of three private equity firms whose hospitals, as a group, received a total of about $2.5 billion in bailout grants and loans, according to an analysis of the latest federal records. That’s a conservative figure because it doesn’t count the many smaller sums distributed to subsidiaries.
LifePoint’s UP Health System-Marquette in Michigan.
Steward Health Care, a hospital  chain financed by private equity firm Cerberus Capital Management, received $675 million in grants and loans. In May, Cerberus transferred ownership of Steward to a group of doctors in exchange for a note that can be converted into a 37.5% equity stake. Another hospital company, Prospect Medical Holdings, owned by private equity firm Leonard Green & Partners, took in $375 million.
Apollo’s LifePoint hospitals received the most: $941 million in subsidized loans and $535 million in outright grants. 
While Democratic lawmakers have said such firms could have instead tapped their own cash stockpiles, private equity industry representatives have said they have a duty to manage that money in the best interests of their investors, which include public pension plans.
A Wall Street Giant Tapped $1.5 Billion in Federal Aid for Its Hospitals -  Bloomberg

Apollo built its rural hospital empire through the acquisition of three regional hospital chains in 2015, 2016 and 2018.  Apollo Investment Fund VIII LP owns 76% of LifePoint, which is based in Brentwood, Tennessee.

Even though many individual rural hospitals are struggling, Apollo says it can operate them more efficiently by merging them together. LifePoint now owns 88 hospitals in 29 states. It had almost $9 billion of annual revenue last year.

Apollo says that on its watch, the chain has improved its infrastructure and technology, recruited care providers and built new centers.

And for rural hospitals, Apollo argues, bigger is better.

“We continue to believe that rural hospitals can benefit from being part of a larger well-run system that enables access to greater resources and infrastructure for improved patient care,” the Apollo spokesperson said.

 

 

Hospitals face closure as $100B in Medicare loans come due

https://www.beckershospitalreview.com/finance/hospitals-face-closure-as-100b-in-medicare-loans-come-due.html?utm_medium=email

HCA posts a billion-dollar profit, bolstered by CARES Act funds - MedCity  News

CMS accelerated payments to hospitals and other healthcare providers at the beginning of the COVID-19 pandemic to help temporarily relieve financial strain. It’s time to begin repaying the Medicare loans but that isn’t possible for some rural hospitals, according to NPR

CMS expanded the Accelerated and Advance Payment Program in late March to help offset financial damage caused by the COVID-19 pandemic. CMS announced April 26 that it was reevaluating pending and new applications for advance payments due to the availability of funds under the Coronavirus Aid, Relief and Economic Security Act. As of May, CMS had paid out $100 billion in advance payments, the bulk of which went to hospitals. 

Hospitals and other healthcare providers are required to start repaying the Medicare loans this month. Most hospitals will have one year from the date the first loan payment was made to repay the loans, according to Kaiser Family Foundation.

Ozarks Community Hospital, 25-bed critical access hospital in Gravette, Ark., is one of the hospitals that applied for and accepted the Medicare loans. The hospital also received grants made available under the CARES Act, which do not have to be repaid.

CEO Paul Taylor said Ozarks Community Hospital’s revenue is still constrained, and he doesn’t know how it will pay back its $8 million Medicare loan. Payments for new Medicare claims will be offset to repay the loans, but losing those payments could force the hospital to close, Mr. Taylor told NPR.

“If I get no relief and they take the money … we won’t still be open,” he said.

Ozarks Community Hospital is one of more than 850 critical access hospitals in rural areas that received Medicare loans, according to NPR. Given the shaky financial footing of many rural hospitals before the pandemic, the strain of having Medicare payments withheld could be enough to force others to shut down. 

Before the pandemic, more than 600 rural hospitals across the U.S. were vulnerable to closure, according to an estimate from iVantage Health Analytics, a firm that compiles a hospital strength index based on data about financial stability, patients and quality indicators.

If the financial pressures tied to the pandemic force any of those hospitals to shut down, they’ll join the list of 131 rural hospitals that have closed over the past decade, according to the Cecil G. Sheps Center for Health Services Research.

 

 

 

 

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.

 

 

 

 

 

State-by-state breakdown of 130 rural hospital closures

https://www.beckershospitalreview.com/finance/state-by-state-breakdown-of-130-rural-hospital-closures.html

Rural Hospital Closures Hit Poor, Minority Communities Hardest ...

Nearly one in five Americans live in rural areas and depend on their local hospital for care. Over the past 10 years, 130 of those hospitals have closed.

Thirty-three states have seen at least one rural hospital shut down since 2010, and the closures are heavily clustered in states that have not expanded Medicaid under the ACA, according to the Cecil G. Sheps Center for Health Services Research.

Twenty-one rural hospitals in Texas have closed since 2010, the most of any state. Tennessee has the second-most closures, with 13 rural hospitals shutting down in the past decade. In third place is Oklahoma with eight closures. 

Listed below are the 130 rural hospitals that have closed since Jan. 1, 2010, as tracked by the Sheps Center. For the purposes of its analysis, the Sheps Center defined a hospital closure as the cessation in the provision of inpatient services.

“We follow the convention of the Office of Inspector General that a closed hospital is ‘a facility that stopped providing general, short-term, acute inpatient care,'” reads a statement on the Sheps Center’s website. “We did not consider a hospital closed if it: merged with, or was sold to, another hospital but the physical plant continued to provide inpatient acute care, converted to critical access status, or both closed and reopened during the same calendar year and at the same physical location.”

As of June 8, all the facilities listed below had stopped providing inpatient care. However, some of them still offered other services, including outpatient care, emergency care, urgent care or primary care.

Alabama
SouthWest Alabama Medical Center (Thomasville)
Randolph Medical Center (Roanoke)
Chilton Medical Center (Clanton)
Florence Memorial Hospital
Elba General Hospital
Georgiana Medical Center

Alaska
Sitka Community Hospital

Arizona
Cochise Regional Hospital (Douglas)
Hualapai Mountain Medical Center (Kingman)
Florence Community Healthcare

Arkansas
De Queen Medical Center

California
Kingsburg Medical Center
Corcoran District Hospital
Adventist Health Feather River (Paradise)
Coalinga Regional Medical Center

Florida
Campbellton-Graceville Hospital
Regional General Hospital (Williston)
Shands Live Oak Regional Medical Center
Shands Starke Regional Medical Center

Georgia
Hart County Hospital (Harwell)
Charlton Memorial Hospital (Folkston)
Calhoun Memorial Hospital (Arlington)
Stewart-Webster Hospital (Richland)
Lower Oconee Community Hospital (Glenwood)
North Georgia Medical Center (Ellijay)

Illinois
St. Mary’s Hospital (Streator)

Indiana
Fayette Regional Health System

Kansas
Central Kansas Medical Center (Great Bend)
Mercy Hospital Independence
Mercy Hospital Fort Scott
Horton Community Hospital
Oswego Community Hospital
Sumner Community Hospital (Wellington)

Kentucky
Nicholas County Hospital (Carlisle)
Parkway Regional Hospital (Fulton)
New Horizons Medical Center (Owenton)
Westlake Regional Hospital (Columbia)

Louisiana
Doctor’s Hospital at Deer Creek (Leesville)

Maine
St. Andrews Hospital (Boothbay Harbor)
Southern Maine Health Care-Sanford Medical Center
Parkview Adventist Medical Center (Brunswick)

Maryland
Edward W. McCready Memorial Hospital (Crisfield)

Massachusetts
North Adams Regional Hospital

Michigan
Cheboygan Memorial Hospital

Minnesota
Lakeside Medical Center
Albany Area Hospital
Albert Lea-Mayo Clinic Health System
Mayo Clinic Health System-Springfield

Mississippi
Patient’s Choice Medical of Humphreys County (Belzoni)
Pioneer Community Hospital of Newton
Merit Health Natchez-Community Campus
Kilmichael Hospital
Quitman County Hospital (Marks)

Missouri
Sac-Osage Hospital (Osceola)
Parkland Health Center-Weber Road (Farmington)
Southeast Health Center of Reynolds County (Ellington)
Southeast Health Center of Ripley County (Doniphan)
Twin Rivers Regional Medical Center (Kennett)
I-70 Community Hospital (Sweet Springs)
Pinnacle Regional Hospital (Boonville)

Nebraska
Tilden Community Hospital

Nevada
Nye Regional Medical Center (Tonopah)

New York
Lake Shore Health Care Center
Moses-Ludington Hospital (Ticonderoga)

North Carolina
Blowing Rock Hospital
Vidant Pungo Hospital (Belhaven)
Novant Health Franklin Medical Center (Louisburg)
Yadkin Valley Community Hospital (Yadkinville)
Our Community Hospital (Scotland Neck)
Sandhills Regional Medical Center (Hamlet)
Davie Medical Center-Mocksville

Ohio
Physicians Choice Hospital-Fremont
Doctors Hospital of Nelsonville

Oklahoma
Muskogee Community Hospital
Epic Medical Center (Eufaula)
Memorial Hospital & Physician Group (Frederick)
Latimer County General Hospital (Wilburton)
Pauls Valley General Hospital
Sayre Community Hospital
Haskell County Community Hospital (Stigler)
Mercy Hospital El Reno

Pennsylvania
Saint Catherine Medical Center Fountain Springs (Ashland)
Mid-Valley Hospital (Peckville)
Ellwood City Medical Center
UPMC Susquehanna Sunbury

South Carolina
Bamberg County Memorial Hospital
Marlboro Park Hospital (Bennettsville)
Southern Palmetto Hospital (Barnwell)
Fairfield Memorial Hospital (Winnsboro)

South Dakota
Holy Infant Hospital (Hoven)

Tennessee
Riverview Regional Medical Center South (Carthage)
Starr Regional Medical Center-Etowah
Haywood Park Community Hospital (Brownsville)
Gibson General Hospital (Trenton)
Humboldt General Hospital
United Regional Medical Center (Manchester)
Parkridge West Hospital (Jasper)
Tennova Healthcare-McNairy Regional (Selmer)
Copper Basin Medical Center (Copperhill)
McKenzie Regional Hospital
Jamestown Regional Medical Center
Takoma Regional Hospital (Greeneville)
Decatur County General Hospital (Parsons)

Texas
Wise Regional Health System-Bridgeport
Shelby Regional Medical Center
Renaissance Hospital Terrell
East Texas Medical Center-Mount Vernon
East Texas Medical Center-Clarksville
East Texas Medical Center-Gilmer
Good Shepherd Medical Center (Linden)
Lake Whitney Medical Center (Whitney)
Hunt Regional Community Hospital of Commerce
Gulf Coast Medical Center (Wharton)
Nix Community General Hospital (Dilley)
Weimar Medical Center
Care Regional Medical Center (Aransas Pass)
East Texas Medical Center-Trinity
Little River Healthcare Cameron Hospital
Little River Healthcare Rockdale Hospital
Stamford Memorial Hospital
Texas General-Van Zandt Regional Medical Center (Grand Saline)
Hamlin Memorial Hospital
Chillicothe Hospital
Central Hospital of Bowie

Virginia
Lee Regional Medical Center (Pennington Gap)
Pioneer Community Hospital of Patrick County (Stuart)
Mountain View Regional Hospital (Norton)

West Virginia
Williamson Memorial Hospital
Fairmont Regional Medical Center

Wisconsin
Franciscan Skemp Medical Center (Arcadia)

 

 

 

 

After criticism, HHS directs $25B in CARES funding to Medicaid providers, safety net hospitals

https://www.healthcaredive.com/news/after-criticism-hhs-directs-25b-in-cares-funding-to-medicaid-providers-s/579496/

Dive Brief:

  • HHS announced Tuesday it will deliver $25 billion to providers and hospitals that serve the nation’s most vulnerable patients, or those with Medicaid and Children’s Health Insurance Program coverage. Of that, $15 billion will go to providers that primarily serve Medicaid and CHIP patients while the other $10 billion is reserved for safety net hospitals that usually operate on razor-thin margins. A total of 758 safety net hospitals will receive direct deposits, and the administration noted that many of these facilities are operating in the red with an average profit margin of -7%.
  • Not all Medicaid providers received Coronavirus Aid, Relief, and Economic Security funding from the initial general distribution. This targeted allocation is designed to make up for that by distributing money to the remaining 38% of Medicaid and CHIP providers who were left out of the first tranche.
  • These Medicaid providers will receive at least 2% of reported gross patient revenue, but could receive more depending on how many patients they serve. HHS will make a final determination once providers start submitting data to the relief portal.

Dive Insight:

The industry has been clamoring for HHS to target funding to Medicaid providers amid the COVID-19 pandemic and the downturn in business, noting these organizations are already on fragile ground.

Last week the American Hospital Association pleaded for the administration to release $50 billion more for all hospitals, with $10 billion reserved for providers with a heavy caseload of Medicaid patients.

HHS answered the hospital lobby’s call — in part. HHS will distribute funds to safety net providers — more than AHA asked for — but disclosed no plans Tuesday to broaden that funding to all hospitals. America’s Essential Hospitals, which represents safety net providers, had also called for the quick release of targeted funding.

“Our goal for all these distributions has been to get the money to the providers who need it most as soon as possible,” Eric Hargan, HHS deputy secretary, said Tuesday during a call with reporters.

However, some have been critical of how the administration decided to allocate the first few waves of funding.

Congress has earmarked a total of $175 billion in funding for providers through two pieces of legislation, including the CARES Act.

To get the money out the door quickly, the first tranche was sent to providers based on the Medicare fee-for-service business, and later on the net patient service revenue.

These formulas put certain providers at an advantage, which tend to be for-profit hospitals with higher-margins, or those who were already well off heading into the pandemic, according to a recent Kaiser Family Foundation analysis.

This targeted funding was not swift, one reason for the delay was the challenge in getting a list of Medicaid providers from the states to validate and authenticate those who came to the portal to apply for funds, according to a senior HHS official.​

Still, providers that have already received funds have noted that it comes with its own set of headaches. Some have decided to return the funds as navigating the legal and compliance issues may not be worth the hassle.

Though, that’s likely not the case for these safety net hospitals and providers.

 

 

 

 

These Hospitals Pinned Their Hopes on Private Management Companies. Now They’re Deeper in Debt.

https://www.propublica.org/article/these-hospitals-pinned-their-hopes-on-private-management-companies-now-theyre-deeper-in-debt?utm_source=ActiveCampaign&utm_medium=email&utm_content=Does+the+US+Spend+Too+Much+on+Police%3F&utm_campaign=TFT+Newsletter+06042020

At least 13 hospitals in Oklahoma have closed or experienced added financial distress under the management of private companies. Some companies charged hefty management fees, promising to infuse millions of dollars that never materialized.

Revenues soared at some rural hospitals after management companies introduced laboratory services programs, but those gains quickly vanished when insurers accused them of gaming reimbursement rates and halted payments. Some companies charged hefty management fees, promising to infuse millions of dollars but never investing. In other cases, companies simply didn’t have the hospital management experience they trumpeted.

Click on link above for examples of rural hospitals that pinned their hopes on private management companies that left them deeper in debt. They are based on interviews, public records and financial information from the Centers for Medicare and Medicaid Services and the American Hospital Directory.

Medicaid expansion key indicator for rural hospitals’ financial viability

https://www.healthcaredive.com/news/medicaid-expansion-rural-hospitals-health-affairs/579005/

Hospital Closures, Underfunded Health Centers In Ohio Valley ...

Dive Brief:

  • Struggling rural hospitals are faring better financially in states that expanded Medicaid under the Affordable Care Act, according to a new Health Affairs study examining 1,004 rural hospitals’ CMS cost reports submitted from 2011 to 2017.
  • Among rural, nonprofit critical access hospitals in states that expanded Medicaid, the median overall margin increased from 1.8% to 3.7%, while it dropped from 3.5% to 2.8% in states that did not expand the program.
  • Tax-exempt status played another key role in determining rural hospitals’ financial viability. During the study period, the median overall profit margin at nonprofit critical access hospitals rose from 2.5% to 3.2%, while it dropped among for-profit operators from 3.2% to 0.4%.

Dive Insight:

The unprecedented financial distress mega health systems are under amid the ongoing pandemic is all too familiar to rural hospitals.

These systems are often smaller, employing fewer specialists and less medical technology, thus limiting the variety of services they can provide and profit on. They remain the closest point of care for millions of Americans, yet face rising closures.

The good news is that most rural hospitals are nonprofit, the designation that fared best in Health Affairs’ six-year study. More than 80% of the 1,004 private, rural hospitals analyzed in the study were nonprofit, while 17% were for-profit.

But researchers found Medicaid expansion played a key role in rural hospitals’ financial viability during the study period, with closures occurring more often in the South than in other regions.

Thirty-seven states have expanded Medicaid under the ACA, but 14 have not, and a majority of them are concentrated in the southern U.S., according to data from the Kaiser Family Foundation.

One of those states is Oklahoma, which on Monday withdrew its planned July 1 Medicaid expansion, citing a lack of funding.

Another factor researchers found positively associated with overall margins and financial viability was charge markups, or the charged amount for a service relative to the Medicare allowable cost. Hospitals with low-charge markups had median overall margins of 1.8%, while those with high-charge markups had margins at 3.5%.

The same is true for occupancy rates. In 2017, rural hospitals with low occupancy rates had median overall profit margins of 0.1% Those with high occupancy rates had margins of 4.7%.

That presents a unique challenge for rural hospitals. Reimbursements from public and private payers do not compensate for fixed costs associated with providing standby capacity, which is essential in rural communities, where few hospitals serve large geographic areas.

Since 1997, CMS has been granting rural hospitals — particularly those with 25 or fewer acute care inpatient beds and located more than 35 miles from another hospital — critical access status, reimbursing them at cost for treating Medicare patients.

In the Health Affairs study, critical access hospitals accounted for 21% of the rural hospital bed capacity, with the remaining 79% of bed capacity provided by noncritical access hospitals.

 

 

 

 

Bankrupt hospitals sue feds

https://www.axios.com/newsletters/axios-vitals-e6483366-26b3-4f34-99c1-f2b356e47b4a.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Stifel CEO: Hospitals Will Go Bankrupt in Overlooked Threat

Small hospitals going through bankruptcy are suing the Small Business Administration, arguing it is unlawful for the federal government to deny them loans under the Paycheck Protection Program, Axios’ Bob Herman reports.

Why it matters: Allowing bankrupt hospitals access to PPP loans could keep their doors open, and could force the federal government to reverse its stance and allow other bankrupt firms to get PPP loans.

Driving the news: Faith Community Health System, a small rural hospital in Texas that filed for bankruptcy in February, sued the SBA Thursday.

  • The hospital wants to apply for a $2.4 million PPP loan to pay staff and remain open while it goes through bankruptcy and handles the coronavirus pandemic.
  • However, the SBA says bankrupt companies will not be approved for the bailout money because of their “high risk.”
  • Faith Community argues the government agency doesn’t have the authority to exclude bankrupt firms from PPP funding because the law doesn’t spell out those eligibility requirements.

The big picture: Courts are starting to take hospitals’ side.

  • A bankruptcy judge in Maine said the funding was a “grant of aid necessitated by a public health crisis,” and that two hospitals that sued the federal government are entitled to PPP loans.
  • A separate bankrupt hospital in Vermont also should be eligible for PPP funds, a judge ruled this week.

The bottom line: Rural hospitals have been in dire straits for years, and for those that are on the precipice of or are going through bankruptcy, they may be eligible for this bailout funding despite SBA exclusions.

 

 

 

 

Trump will urge Supreme Court to strike down Obamacare

https://www.politico.com/news/2020/05/06/trump-supreme-court-obamacare-240366?utm_source=The+Fiscal+Times&utm_campaign=f343554e9c-EMAIL_CAMPAIGN_2020_05_06_09_42&utm_medium=email&utm_term=0_714147a9cf-f343554e9c-390702969

Trump will urge Supreme Court to strike down Obamacare - YouTube

Attorney General Bill Barr had urged the White House to soften its attack on the law during the pandemic.

President Donald Trump on Wednesday said his administration will urge the Supreme Court to overturn Obamacare, maintaining its all-out legal assault on the health care law amid a pandemic that will drive millions of more Americans to depend on its coverage.

The administration appears to be doubling down on its legal strategy, even after Attorney General William Barr this week warned top Trump officials about the political ramifications of undermining the health care safety net during the coronavirus emergency.

Democrats two years ago took back the House of Representatives and statehouses across the country by promising to defend Obamacare, in particular its insurance protections that prevent sick people from being denied coverage or charged more because of a health condition. The issue may prove to be even more salient in November amid the Covid-19 outbreak that health experts believe will persist through the fall.

The Justice Department had a Wednesday deadline to change its position in a case brought by Republican-led states, but Trump told reporters Wednesday afternoon his administration would stand firm. DOJ declined to comment.

“Obamacare is a disaster, but we’ve made it barely acceptable,” Trump said.

The Supreme Court later this fall will hear a lawsuit from the GOP-led states that argue the Affordable Care Act was rendered invalid after Congress eliminated its tax penalty for not having health insurance. A coalition of Democratic state attorneys general and the Democratic-led House of Representatives are defending the law in court.

The Trump administration had previously shifted its legal position in this case, but appears to have decided against doing so again. DOJ originally argued the courts should throw out just Obamacare’s preexisting condition protections, before last year urging that the entire law be struck down.

The Supreme Court is expected to hear the case during its next term starting in October, but it hasn’t scheduled arguments yet. A decision is unlikely before the Nov. 3 election. The court has previously upheld Obamacare in two major challenges that threatened the law’s survival.

About 20 million people have been covered by Obamacare, and the law is expected to provide a major safety net during the economic freefall brought on by the coronavirus. Millions more are expected to join the Medicaid rolls, especially in states that joined Obamacare’s expansion to poor adults. Others who lost workplace health insurance can sign up on the law’s health insurance marketplaces, though the Trump administration isn’t doing much to advertise coverage options.

House Democrats in a filing to the Supreme Court on Wednesday said the pandemic showcased why justices should preserve the law.

“Although Congress may not have enacted the ACA with the specific purpose of combatting a pandemic, the nation’s current public-health emergency has made it impossible to deny that broad access to affordable health care is not just a life-or death matter for millions of Americans, but an indispensable precondition to the social intercourse on which our security, welfare, and liberty ultimately depend,” their brief read.

Obamacare has grown more popular since the GOP’s failed repeal bid during Trump’s first year in office, though the law is still broadly disliked by Republicans. Many Democrats are eager to again run on their defense of Obamacare this fall. That includes presumptive presidential nominee Joe Biden, who has advocated for building on the health care law rather than pursuing a comprehensive progressive overhaul like “Medicare for All.”

Top Trump officials have long been split on the legal strategy in the Obamacare lawsuit. Barr and Alex Azar, the Health and Human Services secretary, both opposed a broader attack on the law, but White House officials have been more supportive, seeing it as a chance to fulfill Trump’s pledge to repeal Obamacare. Barr, in a Monday meeting with Vice President Mike Pence and other White House officials, made an eleventh-hour plea for the administration to soften its legal stance ahead of the Supreme Court’s briefing deadline.