Category Archives: Uncategorized

Feds are ready to claw back billions from Medicare insurers

Posted on by • Posted in Uncategorized • Tagged , , , , , , • Leave a comment

https://www.axios.com/cms-clawback-medicare-advantage-audits-health-insurance-92edb13e-5abd-4527-8503-c0c74b501d58.html

A person picks up a medical chart from a long row in a cabinet.

The Centers for Medicare & Medicaid Services is ready to charge ahead with broad audits of Medicare Advantage plans, which could result in companies paying back billions of taxpayers dollars to the federal government.

The big picture: The threat of these federal audits has existed for several years, but the audits haven’t led to large clawbacks yet. CMS now has an estimate of those improper payments to insurers: almost $14.4 billion in 2017, or 7% of Medicare Advantage spending from that year.

Show less

How it works: The federal government pays Medicare Advantage companies monthly amounts based on how sick their enrollees are. Insurers code the conditions people have, and the more health problems someone has, the more insurers get paid.

  • But regulators are conducting “risk adjustment data validation” (RADV) audits that compare patient medical codes submitted by health insurers with the actual codes that doctors put in patient medical records.
  • The goal is to see if Medicare Advantage insurers are exaggerating people’s health conditions to get higher payments.
  • An investigation from the Center for Public Integrity detailed how the industry has manipulated these so-called “risk scores.”

Driving the news: New proposed regulations lay out the federal government’s legal authority for the audits.

  • CMS says it will audit the diagnoses of about 200 people in any given health plan and then extrapolate the results across the insurer’s entire Medicare Advantage population — leading to potentially large clawbacks for insurers that improperly code conditions.
  • An accompanying federal analysis separately found that coding errors in the traditional Medicare program have no bearing on how Medicare Advantage insurers are paid, and thus RADV audits should not adjust for those discrepancies. The analysis, in essence, pokes a hole in a recent federal ruling that favored insurers.

The bottom line: CMS appears ready to step on the gas and recoup money it believes the industry has bilked from taxpayers. Health insurers have long been frightened of RADV audits — every major publicly traded insurer lists the audits as a top “risk factor” in their annual filings to investors.

  • “CMS has a strong requirement to ensure accuracy of payments because of the magnitude of dollars flying around,” said Jessica Smith, a consultant at Gorman Health Group who studies risk adjustment.

Between the lines: Health insurers have successfully fought off or watered down these audits since they were first proposed. The industry almost certainly will work to weaken any final regulation.

  • America’s Health Insurance Plans — the industry’s leading lobbying group, which has made Medicare Advantage a priority as more insurers rely on the program for revenue — has already warned the audits must be “sound” and “legally appropriate.”

 

 

M&A, debt dampen US healthcare risk profile, report finds

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , • Leave a comment

https://www.healthcaredive.com/news/ma-debt-dampen-us-healthcare-risk-profile-report-finds/540922/

Image result for M&A, debt dampen US healthcare risk profile, report finds

Dive Brief:

  • Demand for healthcare products and services has helped to keep wind in the sales of U.S. healthcare companies, but continuing deal activity and increasing issuance of high-grade bonds to fund large strategic acquisitions and capital projects is causing credit ratings to trend south, Fitch Ratings reports. 
  • Regulatory changes, pricing pressures, pushes from activist investors and low interest rates will likely spark more horizontal mergers and acquisitions, as well as vertically integrated deals, according to the ratings agency.
  • “We view M&A and investor appetite for high quality paper, particularly during the late stages of the economic cycle, as major contributors to the risk in investment-grade bond issuance,” Fitch says. “However, prospects of enhanced cash flow generation and greater efficiencies of scale are not fully offsetting increased leverage and this is altering the long-term credit risk profile of the sector.”

Dive Insight:

Other pressures fueling healthcare M&A include technological innovation and consumer-centricity, according to a recent PwC report. The largest deal in the third quarter of 2018 was RCCH Healthcare Partner’s $5.6 billion purchase of LifePoint Health. The quarter also saw HCA Healthcare pick up Mission Health for $1.5 billion.

Overall, though, the quarter marked the fewest number of deals since the first quarter of 2017. Value of deals also declined compared to the same period the previous year.

The slowdown in M&A includes deals among hospitals and health systems. The third period saw just 18 deals, 38% fewer than the 29 in Q3 2017, according to Kaufman Hall. The turndown suggests providers are looking at options other than mergers and acquisitions to achieve strategic aims.

Over the past 10 years, the number of investment grade bonds in healthcare has been growing at an 18% compound annual growth rate, nearly tripling in size to $609 billion by the end of September, according to Fitch. Currently, 58% of those outstanding bonds in the sector have ratings in the BBB category, compared with 1% at the end of 2009.

Roughly half of all outstanding IG bonds in healthcare are held by 10 companies, including CVS Health and Cigna. CVS took out $40 billion in loans to help fund its $67.5 billion purchase of Aetna, resulting in an A/rating watch negative. Cigna issued $20 billion worth of bonds to help cover its $67 billion acquisition of Express Scripts. Cigna’s current credit rating is BBB/RWN.

Fewer than 10% of BBB-rated companies have a BBB/negative rating. Among those are two medtech companies, Becton Dickinson and Bio-Rad Laboratories.

Fitch recently lowered Cardinal Health’s rating BBB+/negative to BBB/stable over concerns of higher than usual leverage following recent deal activity.

Moody’s Investor Services this year revised its outlook for the nonprofit and public hospitals sector from stable to negative. Moody’s warned facilities are “on an unsustainable path” due to high spending and low growth of revenues. 

 

CHS sees massive Q3 net loss amid weak volume, aftershocks of HMA settlement

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , , , , , , , , • Leave a comment

https://www.healthcaredive.com/news/chs-sees-massive-q3-net-loss-amid-weak-volume-aftershocks-of-hma-settlemen/540868/

Credit: Rebecca Pifer / Healthcare Dive, Yahoo Finance data

 

Dive Brief:

  • Community Health Systems reported third quarter net operating revenues of $3.5 billion, a 5.9% decrease compared with $3.7 billion from the same period last year but slightly higher than analyst expectations.
  • In its earnings release after market close Monday, the Franklin, Tennessee-based hospital operator also disclosed a massive shareholder loss in the quarter of $325 million, or $2.88 per diluted share. CHS had a net loss of $110 million, or $0.98 per diluted share, in Q3 2017.
  • Lower volume was partially to blame, as the quarter saw a 12.4% decrease in total admissions and a 12.2% decrease in total adjusted admissions compared with the same period in 2017. The report also pointed the finger at the financial aftershocks of its troubled purchase of Health Management Associates (HMA), along with loss from early extinguishment of debt, restructuring and taxes.

Dive Insight:

CHS, one of the largest publicly traded hospital companies in the U.S., reported its highest operating cash flow since the second quarter of 2015, according to Jefferies. The third quarter figure of $346 million is also significantly higher than the $114 million from the same quarter last year.

Similarly, volume and revenue didn’t tank as heavily on a same-store basis as they did overall. Same-facility admissions decreased just 2.3% (adjusted admissions by 0.8%) compared with a year ago. Net operating revenues actually increased by 3.2% during the quarter compared with last year, beating analyst expectations.

But declining admissions show how hospital operators continue to struggle under the fierce headwinds 2018 has blown their way so far. CHS is clearly not immune, as the 117-hospital system faces ongoing operational challenges, bringing in financial advisers earlier this year to restructure its copious long-term debt.

The 20-state hospital operator continues to deal with the fiscal fallout from its roughly $7.6 billion acquisition of Florida hospital chain HMA in 2014. The Department of Justice accused the 70-facility HMA of violating the Stark Law and the anti-kickback statute for financial gain between 2008 and 2012, activities CHS reportedly was aware of prior to the merger.

Just last month, CHS announced a $262 million settlement agreement ending the DOJ investigation into HMA’s misconduct. However, that liability was adjusted during the third quarter and, taking into account interest, now totals $266 million. The fee will reportedly be paid by the end of this year.

The settlement also slapped an additional $23 million tax bill on the 19,000-bed system under recent changes to the U.S. tax code.

But that’s not the only regulatory brouhaha CHS has dealt with this quarter.

Since August, CHS has been under civil investigation over EHR adoption and compliance. Annual financial filings show that the company received more than $865 million in EHR incentive payments between 2011 and 2017 through the Health Information Technology for Economic and Clinical Health Act, payments that investigators believe may have been overly inflated.

To deal with the burden, CHS has continued its portfolio-pruning strategy into the third quarter (although a recent Morgan Stanley report notes the system has a very high concentration of weak facilities, and those at risk of closing, relative to its peers). 

During 2018 so far, CHS has sold nine hospitals and entered into definitive agreements to divest five more. The earnings report also divulged CHS is pursuing additional sale opportunities involving hospitals with a combined total of at least $2 billion in annual net operating revenues during 2017, taken in tandem with the hospitals already sold.

The ongoing transactions are currently in various stages of negotiation, the report notes, but CHS “continues to receive interest from potential acquirers.”

CHS is cast in a better light when balance sheet adjustment and non-cash expenses are discarded, as well. Adjusted EBITDA was $372 million compared with $331 million for the same period in 2017, representing a 12.4% increase and suggesting the company can still generate cash flow for its owners in a more friendly atmosphere than the one Q3 provided.

But, though Q2 results were a bright spot in an otherwise gloomy year for the massive hospital operator, its shares have lost about 30% of their value since the beginning of the year (compared to the S&P 500’s decline of roughly 0.5%).

Jefferies believes that CHS should improve its balance sheet and drive positive same-store volume growth, along with speeding up divestitures to raise cash to pay down debt, in order to improve its stock performance.

 

 

The health care issues voters care about in the 2018 midterms

Posted on by • Posted in Uncategorized • Tagged , , • Leave a comment

https://www.brookings.edu/podcast-episode/the-health-care-issues-voters-care-about-in-the-2018-midterms/?utm_campaign=Economic%20Studies&utm_source=hs_email&utm_medium=email&utm_content=67092006

Image result for The health care issues voters care about in the 2018 midterms

Editor’s Note: The Brookings Cafeteria podcast will release new episodes on the issues shaping the 2018 midterms every Tuesday and Friday leading up to Election Day. You can follow the series where we list all episodes of the Cafeteriapodcast, and visit our 2018 Midterms page for more research and analysis on the upcoming elections.

Matthew Fiedler, a fellow in the USC-Brookings Schaeffer Initiative for Health Policy, addresses the health policy issues on voters’ minds as the 2018 midterm elections approach. He reviews the Trump administration’s changes to the Affordable Care Act, why Democratic candidates are placing more emphasis on health policy in their races than are Republicans, the topic of Medicaid expansion, and what repeal of the individual mandate could mean for health care in 2019 and beyond.

https://html5-player.libsyn.com/embed/episode/id/7284353/height/360/width/640/theme/standard/autonext/no/thumbnail/yes/autoplay/no/preload/no/no_addthis/no/direction/backward/no-cache/true/

 

 

 

 

Walmart looks to add health clinics in its parking lots

Posted on by • Posted in Uncategorized • Tagged , , , , • Leave a comment

https://www.beckershospitalreview.com/finance/walmart-looks-to-add-health-clinics-in-its-parking-lots.html

Related image

 

Walmart stores in several states are transforming extra parking lot space into “town centers,” some of which could include health clinics, according to Business Insider.

“The Walmart Town Center concept is an exciting approach to how we serve our customers by moving beyond the store’s four walls and reimagining how we use our unique assets — our existing stores and the surrounding land — to transform how customers experience Walmart,” a Walmart spokesperson told Business Insider.

Walmart provides details about a few of the new hubs on a website established for the projects. The Atlanta Business Chronicle reports that Walmart is evaluating whether to add health clinics in some of the new “town centers.”

“We envision a more robust and dynamic shopping experience that combines entertainment venues, curated local food vendors, health and fitness services as well as recreational opportunities in a way that connects and engages with the community,” a Walmart spokesperson told Business Insider.

Walmart has established its position as a one-stop shop, but the retailer may be redefining what that means by surrounding its stores with a variety of complementary tenants, according to the report.