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UnitedHealthcare issues warning to hospitals about out-of-network coverage for ER physicians
UnitedHealth plans to update its provider directories to show its beneficiaries those hospitals that use non-participating hospital-based physicians.
WHAT HAPPENED
UnitedHealthcare sent out an advanced notice to more than 700 hospitals that its emergency room contractor, Envision Healthcare, could be out of network starting January 1, 2019.
WHY IT MATTERS
Dissolving the contract is expected to result in more “surprise bills” for patients who are unaware that their ER doctor, anesthesiologist or radiologist is out-of-network for their insurance coverage.
THE BIGGER TREND
Both hospitals and UnitedHealthcare would bear the brunt of patient complaints, at a time when consumer satisfaction is seen as a priority for value-based care and in rankings that include patient surveys.
UnitedHealth said it plans to update its provider directories to show its beneficiaries those hospitals that use non-participating hospital-based physicians. It is also activating a dedicated hotline for members to call if they receive a surprise bill from Envision and UnitedHealth said it would advocate on their behalf to have the bill waived or reduced.
ON THE RECORD
“A study published by the National Bureau of Economic Research shows ER physicians are paid on average 297 percent of what Medicare allows,” said Dan Rosenthal, president of UnitedHealthcare Networks in the letter to hospitals. “In comparison, Envision demands to be paid nearly 600 percent of Medicare, two times this amount for ER physician services.”
Envision said by statement, “We have offered United a solution that helps with the affordability of healthcare, and yet United is making egregious demands that will force all of our physicians out of network. They’ve elected to use data for one group in one market and have presented it as the single source of truth. This is misleading and designed to fit their narrative rather than the reality.”
THEIR TAKE
Envision said there were never any problems until UnitedHealth demanded massive cuts to allow it to stay in-network. It calls the insurer’s letters to its hospital partners “aggressive” and “filled with half-truths and inaccuracies.”
UnitedHealthcare, the country’s largest insurer, said it has offered Envision competitive rates for all of their hospital-based services, similar to what other ER and hospital-based physicians are paid in each market, and given them the opportunity to earn additional reimbursement based on the value they bring to customers.
In May, a court ordered arbitration between the insurer and network provider after dismissing a lawsuit brought by Envision claiming UnitedHealthcare changed its payment rate agreement. Envision charged patients at rates three times higher than it should have, UnitedHealth said. Envision said this was due to out-of-network charges because the insurer refused to bring Envision provider groups into their contract agreement.
OUR TAKE
This is about money, with patients paying the difference and hospitals caught in the middle. A hospital can choose to employ physicians, but many doctors are independent contractors, including emergency room physicians. Since, Envision has its highest concentration of contracts with UnitedHealthcare in Florida, Texas and Arizona and to a lesser extent, in New York, Wisconsin, Georgia, Tennessee and California, both patients and hospitals in those regions are likely to find themselves managing more surprise bills.
Readers Respond: Trinity Health’s President on Bond Ratings
In last week’s edition of the Weekly Gist, I shared an exchange I’d had with the CFO of one of our clients during a meeting of their health system’s board of directors. The topic was the importance of the system’s AA bond rating to the board, and the impact that maintaining that rating might have on the strategic flexibility of the system. I wrote, “As big strategic decisions loom (shifting the business model, taking on risk, responding to disruptive competitors), it’s worth at least asking whether we’ve passed the time for “keeping dry powder”, and whether systems are being held back by conservative financial management.”
One of the true pleasures of our work at Gist Healthcare is engaging in an ongoing dialogue with our clients, readers, and colleagues across the industry. Shortly after sending out the Weekly Gist last week, we heard from long-time friend Mike Slubowski at Trinity Health. He shared his somewhat different (and much more informed!) view of the importance of bond rating to hospital systems, and was kind enough to engage in a brief Q&A over email to expand on his thoughts. We hope you’ll find his perspective as enlightening as we have.
Gist Healthcare: How do you think about financial strength for a health system? What characteristics and metrics are most important?
Mike Slubowski: Financial strength is ultimately measured by strong operating cash flow—is the system generating enough cash to cover expenses including debt service, fund depreciation, and to meet capital spending requirements? Operating margin, days’ cash, and leverage ratios are also important metrics of financial strength. We compare these metrics to published ranges from Rating Agencies on rating categories. Finally, what is the organization’s profitability or loss on Medicare? Is the cost structure of the organization (as measured by cost per adjusted discharge or similar metrics) competitive and attractive to payer and purchasers, or is it a high cost organization that’s been living off high commercial payment rates because of its market relevance? That will come back to bite them at some point in the not-too-distant future. Finally, financial strength is simply a means to an end. In the case of not-for-profit health systems, our mission is to improve the health of the people and communities we serve. Are we using that financial strength to make a measurable difference for our communities? That question has to always be pondered.
In my opinion a system’s bond rating is very important. Our organization strives to maintain an AA rating
GH: How important is the bond rating, and the broader evaluation of the system’s financial outlook by the banking community?
MS: In my opinion a system’s bond rating is very important. Our organization strives to maintain an AA rating. While it is true that the interest rate spreads between, say, an AA and an A rating are small, the reality is that a positive financial outlook and rating from the rating agencies is a “Good Housekeeping Seal of Approval” for a not-for-profit health system. In most instances, acquisitions in not-for-profit healthcare are accomplished by member substitutions, and rather than cash changing hands, the entity being acquired agrees to merge because of future capital investment commitments made by the acquiring entity and their belief that the acquirer will bring economies of scale. They aren’t going to join a system if it has a weak credit rating, because they’d be concerned that the acquiring system wouldn’t be able to fulfill the capital investment commitment.
GH: What are some considerations you’d recommend to health systems thinking about “trading off” a strong bond rating to gain strategic flexibility?
MS: A difficult question, to be sure. First of all, it depends on your starting point. There’s a lot more risk in going from an A- to BBB rating than, say, an AAA rating to an AA rating. Second, it really depends on what strategic opportunities the organization is pursuing—are they opportunities within the wheelhouse of the organization’s leadership competencies? There have been a lot of providers that have ventured into other businesses, such as insurance, long-term care, physician practices and other for-profit ventures, and they have lost a lot of money because they spread themselves too thin and didn’t know how to successfully manage these different businesses. Does the opportunity provide more market relevance? Is the new opportunity accretive? Is there a solid business plan that gives the organization confidence that the new opportunity will be accretive within a defined timeframe? There are a lot of “hockey stick” business plans (i.e., up front losses that predict large profits in later years) that never deliver the desired results. So rating agencies and investors are always wary of these wildly optimistic business plans.
I’m not suggesting that organizations become so conservative that they don’t take risks on strategic opportunities—but it’s important to go into these new ventures with eyes wide open. I think it is important for health care organizations that have been acute-care focused to develop a continuum of services that grow cost-effective home-based services, primary care and other ambulatory services, as well as consumer-focused digital health solutions. They also need to develop clinically-integrated provider networks that are positioned to assume risk for cost and outcomes as payers shift from fee-for-service to value-based payment. Otherwise they will be one-trick-pony dinosaurs while the rest of the world around them is transforming and diversifying.
I’m not suggesting that organizations become so conservative they don’t take risks…but it’s important to go into new ventures with eyes wide open
GH: As health systems take on more risk (strategic, actuarial, operational), how can they best make the case to their financial stakeholders (bondholders, shareholders, public funders) to justify increasing risk?
MS: I think that historical track records are important. Does the organization have an experienced and competent leadership team? Do they recruit leaders with needed skills for new businesses? How has the organization performed with previous new ventures? Have they been able to adjust if things go south? Do their business plans include a sensitivity analysis with upside and downside potential, along with immediate actions they would take if performance does not meet the plan? Does the opportunity improve market relevance and create a diversified portfolio and/or a continuum of services? At the end of the day, confidence in an organization and its leadership comes from their track record.
Envisioning a range of new roles for the health system
https://gisthealthcare.com/weekly-gist/
Over the past few weeks, we’ve been sharing our framework for thinking through the path forward for traditional health systems, as they look to drive value for consumers. We began by describing today’s typical health system as “Event Health”, built around a fee-for-service model of delivering discrete, single-serve interactions with patients. We then proposed the concept of “Episode Health”, which would ask the health system to play a coordinating role, curating and managing a range of care interactions to address broader episodic needs. Finally, last week we shared our vision for “Member Health”, in which the system would re-orient around the goal of building long-term, loyalty-based relationships with consumers, helping them manage health over time. In this broader conception, the health system would curate a network of providers of episodes, and events within those episodes, and ensure that the consumer (and their information) moves seamlessly across a panoply of care interactions over time.
This week we bring those three, distinct visions for the role of the health system together in one framework, shown below. A couple of points are worth mentioning here. To begin, our view is that health systems face a fundamental choice over the near term: either begin to embrace the broader aspiration of evolving toward Episode Health and Member Health or become reconciled to the reality of a future as a subcontractor of events and being part of some other organization’s curated network. There’s nothing wrong with being a subcontractor, as long as your cost and quality positions allow you to win business and thrive. You might be the best acute care hospital choice in the market, or the most efficient surgery provider, or the best diagnostic center. But competition will be intense among those subcontractors and earning the business of those who coordinate episodes and control referrals will be increasingly demanding.
Most health systems have already begun to look beyond Event Health, investing in strategies that allow them to span the full continuum of care. Other systems have pushed even further, into the “risk business”—looking to become Member Health and take on the role of managing a consumer’s care across time. But contrary to common wisdom, this evolution does not require a binary choice. Systems are not moving “from one canoe to the other”; rather, most successful systems will play a combination of all three roles at the same time, in perpetuity. While it’s always worth evaluating whether others might be more efficient providers of some Event Health services (diagnostics, rehab, and so forth), most systems will want to maintain a robust base of providing Event Health, even as they embrace a more comprehensive role.
Finally, there is a space we describe as “Beyond Health”, which comprises all of the additional components of consumer value delivery which may be beyond the ability of most systems to handle on their own. Most notably, these include services that address many of the social determinants of health—housing, nutrition, transportation, and the like. Our recommendation is that health systems look to partner with other organizations at a local and national level to address issues that, however critical, lie beyond their ability to fully solve on their own.
Next week we’ll begin to share some additional implications of our Event-Episode-Member Health framework and discuss the operational challenges that face health systems looking to make this evolution.
Changing Healthcare’s Culture of Overtreatment a Challenge
More focus on accepting uncertainty is needed, expert says
Medical schools and healthcare workplaces should try harder to change the culture around medical overtreatment, according to Barnett Kramer, MD, MPH.
“Some of the solution may be at the training level of health professionals,” Kramer, director of the cancer prevention division at the National Cancer Institute, in Bethesda, Md., said at a briefing Thursday sponsored by Kaiser Health News. “The number one problem identified by medical historian Kenneth Ludmerer is insufficiency of training for uncertainty in medical school; his thesis was that [this] led to systematic overuse of testing and overtreatment. If neither the physician nor the patient are trained to think [about] and accept uncertainty, then almost always our medical culture is going to lean in one direction, so education in probabalistic thinking [is important].”
Another issue is “knowing when you don’t have to make a decision then and there,” he continued. For instance, “there are situations where we’re learning it’s uncertain what the best way to go is, but there’s pretty good evidence that waiting and seeing what the natural history of the disease is, is acceptable, and sometimes that’s very difficult.”
A third consideration “is to try to keep the discussion focused on what is known about the particular disease,” Kramer said. “There’s a famous saying that ‘If thought corrupts language, the opposite is certainly the case.’ So as soon as you have an entity with the word ‘cancer’ or ‘carcinoma’ in it, sometimes that shuts off the ability to really understand and get informed about what the disease really is.”
“There is some movement … to change the name of some of the things we call cancer,” he added. “If we have enough biological information to know they don’t act like a routine cancer, that at least moves the word off the table and you can focus on what’s known and what’s not known, and try to handle the uncertainties.”
Malpractice liability concerns, especially when combined with clinical uncertainty, also can contribute to overtreatment, said Ranit Mishori, MD, MHS, a family physician and professor of family medicine at Georgetown University here. “There are days when I go home and ask myself again and again and again, ‘Should I have ordered that test? I think I probably shouldn’t have, but is that patient going to sue me?’ God forbid they’ll be the one patient in 1,000 coming down with that rare form of prostate cancer.”
That situation happened to a physician friend of Mishori’s. “He followed all the guidelines about PSA [prostate-specific antigen] testing, and this one person was the person he didn’t test who ended up having prostate cancer and sued the heck out of him,” she said. “Do you think my friend continued with not offering PSA testing to all his other patients? For a while it was a very difficult decision for him.”
Although critics have complained for decades about the problem of physicians overtesting and overtreating because they’re afraid of malpractice suits, not much has changed, Mishori told MedPage Today. She added that the probability of being sued seems to be geographically dependent. “If you’re in rural Arkansas, you’re less likely to be sued, but if you’re in Washington, D.C., and everybody and their sisters are lawyers, it’s something that goes through your mind a little bit more.”
Another problem is that one test often triggers a cascade of testing, said Saurabh Jha, MD, a radiologist and associate professor of radiology at the University of Pennsylvania. He cited a case in which a woman came into the hospital with a suspected pulmonary embolism. A CT scan ruled out that possibility, “but then I did something else which led to cascade of investigations: I measured the main pulmonary artery, and it was 3.3 cm.” Since the threshold for suspecting pulmonary hypertension is 3.1 cm, Jha said in his report that the patient possibly had pulmonary hypertension, and also added the limitations of his conclusion. Because Jha was a resident at the time and most patients passed into others’ care, he then forgot about the case.
Later on, however, another hospital staff member told him that his diagnostic conclusions had resulted in a “cascade of investigations” for that patient. “What I began to realize later on was that the chances of actually picking somebody up with pulmonary hypertension using that number is overwhelmed by causing false positives and putting somebody through a train of investigations,” he said. “Since then, I have begun to be more judicious with measuring, realizing that anything printed in a report can be like a Greek tragedy — very difficult to reverse afterwards.”
Jacqueline Kruser, MD, a pulmonologist and critical care physician at Northwestern Memorial Hospital, in Chicago, called the phenomenon of this testing cascade “clinical momentum.” “We see this for acutely ill patients,” she said. “When they come to the hospital and are admitted to the intensive care unit (ICU), everyone who takes care of you is laser-focused on the acute problems that brought you there … Most importantly, they want to act quickly to fix them, and the environment is designed to fix things rapidly — we can get lab tests back in minutes and rush someone to the operating room in an hour.”
However, although that works well for most patients, “what we worry about is, what about the patients who have different goals [than just getting things fixed] — they want to avoid invasive procedures or burdensome treatment, or they want to be with family, eating what they want to eat?” she said. “All those cascading interventions might not accomplish those goals for that patient.”
The hospital isn’t necessarily designed to focus on those issues, Kruser said. In an ICU, for example, it’s hard to find “enough chairs for everyone to sit down with the patient in the room — with their family, their doctors — and talk about what’s most important to them.”
November Offers Major Test of Medicaid Expansion’s Support in Red States
Several states will hold the first referendum on Obamacare since Congressional Republicans tried and failed to repeal it.
SPEED READ:
- Four states are voting on Medicaid expansion in November — Idaho, Montana, Nebraska and Utah.
- Medicaid expansion is a central tenet of President Barack Obama’s Affordable Care Act. It makes people living up to 138 percent of the federal poverty line eligible for Medicaid, the government-run health insurance program for the poor.
- Only one state, Maine, has approved Medicaid expansion through the ballot box.
- It is the first time voters will directly weigh in on provisions of the ACA since Congressional Republicans tried to repeal it.
It started with Maine. After years of failed attempts to get Gov. Paul LePage to sign off on Medicaid expansion, residents took to the ballot box and made it the first state where voters passed the health care policy.
It hasn’t been smooth sailing. Maine’s Republican governor has taken every opportunity to block the expansion — even asking the federal government to reject the state’s Medicaid expansion application that the courts made him send.
But the passage alone galvanized health care advocates who wish to see Medicaid expansion in the 14 states that have declined federal money to offer health insurance to the people who fall in a “coverage gap,” where they make too much money to qualify for Medicaid but can’t afford private insurance.
In November, four states are voting on the issue — Idaho, Montana, Nebraska and Utah. The ballot measures will test support for a central tenet of President Barack Obama’s Affordable Care Act (ACA) in red states, which make up the bulk of the 14 holdouts. It will be the first referendum on provisions of the ACA since Congressional Republicans tried and failed to repeal it last year.
Supporters of Medicaid expansion see it as a vital part of the social safety net, especially because qualifying for Medicaid in nonexpansion states can be tough. Opponents, however, see expansion as fiscally irresponsible since states will start picking up 10 percent of the costs in 2020.
While the price tag of Medicaid expansion can come with some sticker shock, independent analyses have found that states often save money by insuring people — there are fewer instances of uncompensated care, and people are healthier when they have insurance. According to a 2016 report from the Robert Wood Johnson Foundation, 11 states experienced some savings from Medicaid expansion.
In Idaho and Nebraska, there has been no major movement on Medicaid expansion from either the executive or legislative branches for years. Because of Idaho’s historic opposition to Medicaid expansion, and the fact that the ballot measure doesn’t mention how it would be funded, advocates could experience a bit of déjà vu there.
While the federal government initially pays 100 percent of the costs of Medicaid expansion, it eventually hands states a bill for 10 percent. The funding issue is what LePage has been using as a reason to refuse to implement Medicaid expansion in Maine. For his part, Idaho Lt. Gov. Brad Little, the Republican expected to succeed Gov. Butch Otter in November, is against Medicaid expansion but has said he would accept it if it passes.
“Proponents insist that it’ll pay for itself, but entitlement programs are historically costlier than anticipated. I imagine there are going to be some really tough discussions if it passes,” says Fred Birnbaum, vice president of the Idaho Freedom Foundation, which opposes the measure.
Nebraska’s measure also doesn’t have a provision that explicitly says how the state share would be paid for, but supporters don’t believe that should make a difference.
“We modeled our language based on the Maine initiative, so it’s clear and unequivocal,” says Democratic state Sen. Adam Morfeld, who introduced Medicaid expansion bills in the past. “The governor can say he won’t implement it, but we’ll have a court tell him otherwise.”
Republican Gov. Pete Ricketts, who is expected to win reelection in November, has opposed Medicaid expansion since the beginning but said that if it made the ballot, it’s up to the voters to decide.
“That’s honestly the best I could hope for,” says Morfeld.
In Montana and Utah, the questions before voters are a little more complicated.
Montana expanded Medicaid in 2015, but under the deal struck in the state legislature, it is set to expire June 30. Residents will be voting on whether to extend it, and how the state would fund their portion of it. The ballot measure proposes hiking taxes on tobacco products to $2 per pack.
Utah also already passed a bill to expand Medicaid, but it is awaiting federal approval. It would require nondisabled people to work, volunteer or participate in a job training program; the expansion would automatically end if the federal match dipped below 90 percent; and eligibility stops at the poverty line, which is $12,140 for a single person. (The federal government has rejected other states’ requests to limit expansion to people at the poverty line.)
The ballot measure, meanwhile, asks voters to expand Medicaid traditionally — without work requirements or eligibility limits past the federal poverty line. It also asks voters to increase the sales tax to fund the state’s share. It’s unclear what would happen if the ballot measure passes and the federal government approves Utah’s competing Medicaid waiver.
In three of the four states — Nebraska, Montana and Utah — more than $11 million has been spent to sway voters one way or the other. In Nebraska and Utah, supporters have spent $1 million to 2 million while opponents have spent a reported zero dollars. In Montana, the balance is just the opposite: opponents have raised $8 million while supporters have raised just $2 million. In Idaho, the issue has attracted just has $37,067 — all from the supporters’ side.
Only Utah has conducted polling on the issue, which was done in June. The Salt Lake Tribune and the Hinckley Institute of Politics found that 54 percent of voters support the measure, 35 percent oppose it, and the rest are undecided.
“There’s been a lot of discussion in Utah about this, we’ve been having this debate for a couple of years now,” says Danny Harris, associate state director of advocacy at AARP Utah, which is in favor of the ballot measure. “The polling has always been consistently in favor. People are ready for this issue to move forward.”
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HENRY KOTULA 
