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Health Care Price Growth Plummets To Lowest Rate In Almost Two Years
Fueled by health policy uncertainty and structural health sector changes, health care price growth in August rose by only 1.2% compared to a year earlier. This is the lowest health price growth rate recorded in almost 2 years, and just slightly above the all-time low, according to Altarum’s latest Health Sector Economic Indicators Briefs. Contributing to overall slow price growth is a historically low Medical Consumer Price Index growth rate, a possible signal of relief for health care consumers with substantial out-of-pocket expenditures.
Despite an upward revision to recent estimates, health spending growth in August 2017 was only a modest 4.3% higher than a year earlier. Per Charles Roehrig, founding director of Altarum’s Center for Sustainable Health Spending, this moderation in spending growth is in response to a leveling-off in insurance coverage.
Health care job growth also remained modest, with 22,500 new jobs added in September 2017, slightly less than the 2017 average of 25,000. “Slower growth in health care utilization is reflected in slower growth in health jobs, particularly in the hospital sector,” said Roehrig. “This relatively good news should be tempered by a serious look at whether even this moderate growth is sustainable in the longer term.”
Health Care Spending
In August, the health share of gross domestic project (GDP) fell to 18.0%, but spending at an annual rate was 4.3% higher than August 2016, exceeding $3.5 trillion. Spending growth in August 2017 increased in all major categories, led by home health care at 6.5%. Hospital spending continues to grow slowly, at a 2.3% rate.
Health Care Employment
Hospitals added 4,500 jobs and ambulatory care settings added an above-average 24,700 jobs in August, but these gains were offset by the loss of 6,700 jobs in nursing and residential care. Slow hospital job growth in 2017 is a primary force behind the health sector growing at about three-quarters the pace of 2015 and 2016.
Health Care Prices
The 12-month moving average of the Health Care Price Index (HCPI) fell to 1.8% growth after being at 1.9% for 6 straight months, dousing any expectations of a return to a 2.0% growth rate range in the near term. Year-over-year hospital price growth fell to from 1.5% to 1.3%, and physician and clinical services price growth fell one-tenth to 0.5%. Annual drug price growth fell to a 2.7% rate, its lowest reading since growing by 2.4% in December 2015.
Fitch affirms ‘AA-‘ on Virtua Health’s revenue bonds
https://www.beckershospitalreview.com/finance/fitch-affirms-aa-on-virtua-health-s-revenue-bonds.html
Fitch Ratings affirmed its “AA-” rating on Marlton, N.J.-based Virtua Health’s revenue bonds, affecting a total of $605 million of debt.
The affirmation is a result of several factors, including the health system’s solid liquidity growth, strong market position, favorable operating margins, sizable clinical platform and moderate debt burden.
The outlook is stable.
Florida wipes inspections of troubled nursing homes from its website
On a good day, Olga Vasquez would dress up in the morning, apply makeup and stand in the hallway at her Hialeah Gardens nursing home, helping other residents get in and out of wheelchairs or offering unsolicited advice. On a bad day, her depression got the best of her and she would remain in bed in her nightgown.
May 31, 2012, was a very bad day.
Vasquez — who hadn’t seen a psychiatrist in weeks despite instructions to the contrary — hoisted herself out of the window of Room 310, and hurled herself to the concrete courtyard 39.4 feet below.
This is the type of thing you might want to know about before your mom, dad or spouse moves into a nursing home. And such documented events were readily available on the website of state health regulators.
They aren’t anymore — part of the latest erosion in what is supposed to be ready access to public records in Florida.
The document can still be obtained from the state Agency for Health Care Aministration, although you have to know what to ask for and whom to ask — and you may be required to pay and wait. Online, AHCA now refers consumers to a separate website managed by the federal Centers for Medicare and Medicaid Services, though that site does not include as much material as the state previously provided. AHCA does maintain spreadsheets online that rate homes on a host of criteria, and allow consumers to compare.
For many years, AHCA’s website included links to inspections of nursing homes, retirement homes and hospitals. They were available with a few keystrokes with very few redactions. The agency then began to heavily redact the reports — eliminating words such as “room” and “CPR” and “bruises” and “pain” — and rendering the inspections difficult to interpret for families trying to gauge whether a facility is suitable for a loved one. AHCA says the redactions were necessary to protect medical privacy, though patients were identified only by number. Vasquez was “Resident 239.”
In the past year, the state spent $22,000 for redaction software that automatically blacks out words the agency says must be shielded from the public. Those same words were available on a federal website unredacted. Elder and open-government advocates said the newly censored detail did more to protect the homes than patients.
In September, 13 frail elders died miserable deaths at the Rehabilitation Center at Hollywood Hills in the sweltering aftermath of Hurricane Irma, which knocked out the home’s cooling system. The Miami Herald and other media wrote extensively about Hollywood Hills’ troubling regulatory history. And the Herald also reported on AHCA’s decision to heavily redact reports.
Soon after, with no announcement or notice, AHCA wiped its website clean of all nursing home inspections, shielding the industry to the detriment of consumers.
“I’m just stunned,” said Barbara A. Petersen, who is the president of the First Amendment Foundation in Tallahassee, an open-government group. “Government serves the people. They are doing a disservice, and one with potentially grave consequences.”
Barbara Petersen, president of the First Amendment Foundation, a Tallahassee-based group that promotes open government, said the removal of online nursing home records makes it difficult for consumers to make informed choices.
Miami Herald file photo
In recent weeks, Petersen needed to find a nursing home for her 96-year-old father in Colorado. The assisted living facility where he lived had become inappropriate, and Petersen had only 48 hours to move him.
“If I was in that situation here, and I had to do that without the information that used to be online, I’d have to submit a public records request for it. And, as we know, it takes a long time for them to produce public records. Meanwhile, I’d be stuck with the hardest decision I’ve ever made in my life without any information.”
“We put a tremendous amount of trust in these homes, and we need to make the best decisions for our families. Honestly, this makes no sense,” Petersen added.
A spokeswoman for the healthcare agency said both AHCA’s website and the federal site at Medicare.gov allow consumers to compare homes along a range of indicators, including quality of life, nutrition, dignity and abuse.
“AHCA goes above and beyond Florida law in the amount of information we make available online,” said spokeswoman Mallory McManus. “AHCA’s website www.FloridaHealthFinder.gov allows consumers to compare nursing homes by their inspection rating. Consumers can search by county, Zip code and even by services offered at every nursing home in Florida. This gives families more information to make informed healthcare decisions for their loved ones.”
“In fact,” McManus added, “in 2016 FloridaHealthFinder.gov won a Digital Government Achievement Award from the Center for Digital Government in the “Government-to-citizen State and Federal government” category, showing that Florida is a leader in getting information about healthcare facilities to consumers. FloridaHealthFinder.gov is an excellent tool for consumers, and a national leader in transparency.”
The award was given before the state removed nursing home inspections from AHCA’s site.
The Herald was unable to speak with administrators at the Hialeah Gardens home. Representatives from the corporate Signature HealthCARE did not return requests for comment. McManus said health regulators removed the “immediate jeopardy” label from the nursing home days after Vasquez’s death after administrators demonstrated they had improved the home’s safety. “Our Agency expected quick action to remove the potential risk to others. During a revisit on July 5 [2012], it was determined that the facility had implemented measures that removed the threat of serious risk to patients,” McManus said.
“Our Agency held this facility accountable, and all deficiencies were corrected,” McManus said.
The home’s plan of correction included a long list of actions administrators took to improve safety, including a comprehensive review of all residents’ medical records, new policies to ensure doctors’ orders are carried out, better monitoring of the symptoms of psychiatric patients, and an audit of records for all patients on mental health drugs to “ensure that they were seen by the psychiatrist as ordered.”
Though reports on Vasquez’s death are no longer available on AHCA’s website — or that of the federal Medicare program — a copy of the inspection obtained by the Herald is heavily redacted. The words “neglect” and “abuse,” for example, are removed from one of the report’s findings — and the definition of abuse from the Florida statutes is redacted.
A separate 50-page AHCA report on the same incident recites a portion of Florida law: “[Redacted] means any willful act or [redacted] act by a caregiver that causes or is likely to cause significant [redacted] to a [redacted] adult’s physical, [redacted] or emotional health. [Redacted] includes acts and omissions.” The portion is drawn directly from the state’s elder abuse law, a public record, and is the definition of abuse.
AHCA’s move is far from the only restriction in what records the public can see. The Herald wrote about an emergency management plan from the Hollywood Hills rehab center that was filed with — and approved by — Broward County, which included portions that were copied and pasted from a prior year, and failed to say how residents would be kept cool during a power outage. Broward and Palm Beach counties then refused to release any plans, though both had originally said they were public record. Miami-Dade released 54 plans, all heavily redacted.
Vasquez, who migrated to Florida from Cuba, first began to suffer from depression about a decade before her death, when her husband died, relatives told the Miami-Dade Medical Examiner’s Office. “Due to her depression, she was placed in” the nursing home, the report said. In addition to depression, Vasquez also was diagnosed with anxiety, chronic insomnia, heart disease and hypertension.
AHCA’s report on Vasquez’s death, dated June 14, 2012, said the 82-year-old former factory worker last saw her primary psychiatrist on March 1, 2012, for treatment of clinical depression. Staff at Signature never told him, the report said, that Vasquez’s condition had worsened.
Vasquez, the report said, “was very depressed at times.”
Vasquez’s primary doctor had ordered a psychiatric consultation around April 30, 2012. But a constellation of lapses led to the home’s failure to ensure Vasquez actually was treated. The psychiatrist Vasquez was to see left the nursing home, a report said, and the nurse who was trying to help Vasquez never was told who would fill in. Meanwhile, a psychiatrist who regularly saw patients on Vasquez’s floor reported “he never saw [her] and [she] was not on his caseload.”
Complicating matters: there was a 15-day gap in nursing notes in Vasquez’s chart, the report said, and the home’s administrator told an AHCA inspector he “had no idea” why no notes were made during those two weeks.
AHCA concluded: “There was no documentation to demonstrate the [psychiatric] consultation was completed, as ordered.”
Three days before Vasquez died, the report said, she “was observed to be sitting in the hallway or lying in bed; she was not wearing any makeup, and the resident told [a nurse] she did not feel like doing anything.” Vasquez needed help to fill out her menus.
A short report from the Miami-Dade Medical Examiner said that, on May 31, 2012, a maintenance worker noticed that the window in Vasquez’s room was open. The widow was found in the courtyard underneath her bedroom window, 14 feet from the building. The medical examiner’s office ruled Vasquez’s death a suicide.
Six months before Vasquez plunged from her window, the U.S. Department of Housing and Urban Development faulted the home for failing to maintain the windows safely. Windows, HUD said, were secured only with screws, and a corrective action plan required Signature to install window locks within all residents’ rooms.
The AHCA report is unclear as to whether the windows in Vasquez’s room were fixed, though an unspecified relative told AHCA she had noticed the day before Vasquez died that “the window clamp was not in place.”
A Hialeah Gardens police report confirms some of AHCA’s account, noting Vasquez wasn’t breathing by the time she arrived at Palmetto General Hospital. A doctor pronounced her dead at 4 p.m.
Vasquez’s niece, Maria Salgado, who handled Vasquez’s affairs, told police she had been taking 10 medications for her depression, some of which are listed in the AHCA report, though the names and dosages are largely redacted.
Staff at the nursing home told Salgado that something happened to her aunt while she was walking in the garden — exactly what Salgado was told is redacted — according to the AHCA report.
Salgado, 53, called her aunt’s death and the ordeal that followed painful to talk about.
She felt very close to her aunt, she said.
“It was such a horrible time,” she said. With a long breath, she added, “I don’t want to relive it.”
Why payers are flocking to the Medicare Advantage market
https://www.healthcaredive.com/news/why-payers-are-flocking-to-the-medicare-advantage-market/510589/
Medicare Advantage (MA) and the Affordable Care Act (ACA) exchanges are both federal programs, but they couldn’t be more different in payers’ eyes. Insurance companies are entering or expanding their footprints in the MA market, while simultaneously pulling back or out of the ACA exchanges. They’ve found success in MA. Not so much in the ACA exchanges.
Payers see MA as a stable market. That’s evident in the fact that MA premiums are expected to decrease by 6% next year. Insurance companies like stability. Insurers increase premiums by double digits when there isn’t stability, which is the case with the ACA exchanges.
A large part of the ACA exchanges’ problems is linked to actions and inaction in Washington, D.C. President Donald Trump’s administration stopped paying cost-sharing reduction payments to insurers, cut the exchanges’ open enrollment in half, reduced the exchanges’ advertising budget by 90%, offered proposed rules and executive orders that hurt the ACA and threatened not to enforce the individual mandate that requires almost all Americans to have health insurance.
Congress, meanwhile, has tried and failed to repeal the ACA this year. All of this created an unstable exchanges market, which resulted in payers leaving the exchanges or jacking up premiums by 20% or more for 2018.
Meanwhile, the MA market is a picture of stability and payer success.
- There is a steady stream of new people eligible for Medicare daily, and many choose MA.
- People usually don’t switch back from MA plans after leaving traditional Medicare.
- Payers can easily convert members from traditional Medicare to MA via marketing campaigns.
- The MA demographics are usually people who once had an employer-based plan, so they know insurance and how healthcare works. That also means they usually don’t have pent-up healthcare needs.
- The CMS pays MA plans upfront for covering people with high healthcare costs and payers have enjoyed stable MA payments from the CMS.
So, MA members are easier to get and keep, they usually have fewer health needs and payers like the MA payment structure better than the exchanges, which get compensated at the end of the year. All of that equals a stable market for payers.
One-third of Medicare beneficiaries are enrolled in an MA plan this year compared to 25% just six years ago. Enrollment grew by 8% between 2016 and 2017 and the CMS recently announced that MA membership will grow by 9% to 20.4 million members in 2018.
Gretchen Jacobson, associate director with the Kaiser Family Foundation’s (KFF) Program on Medicare Policy, told Healthcare Dive that more than half of those in Medicare will have MA plans in many counties next year.
That growth isn’t expected to slow — especially with Republicans controlling both houses of Congress and the White House, according to Steve Wiggins, founder and chairman of Remedy Partners.
“With Republican control of the federal government, it is conceivable that Medicare Advantage will become a centerpiece of CMS’ strategy to control spending growth,” Wiggins told Healthcare Dive.
What more MA members and payers mean for hospitals and providers
With more MA members expected next year, the continual shift to MA will have mixed benefits for providers. Jacobson said it’s not entirely clear how more MA members will affect hospitals and providers. “One of our studies recently showed that the provider networks for Medicare Advantage plans greatly varies and these networks will become even more important as enrollment in Medicare Advantage plans grows,” she said.
Fred Bentley, vice president at Avalere Health, told Healthcare Dive that MA’s growth will present a whole new set of challenges for hospitals and health systems.
Bentley listed two issues:
- Narrow networks
- Tighter utilization management compared to Medicare’s fee-for-service model
A recent KFF report found that 35% of MA enrollees were in narrow-network plans in 2015. Payers have increasingly turned to narrow networks to control costs and improve quality of care. To take part in the narrower networks, physicians usually have to agree to payer demands concerning cost and quality.
“Differences across plans, including provider networks, pose challenges for Medicare beneficiaries in choosing among plans and in seeking care, and raise questions for policymakers about the potential for wide variations in the healthcare experience of Medicare Advantage enrollees across the country,” KFF said.
Another issue for hospitals and providers is that more payers involved in capitated plans like MA will result in more pressure on providers and hospitals to focus on the cost of care, Michael Abrams, partner at Numerof & Associates, told Healthcare Dive.
“With Republican control of the federal government, it is conceivable that Medicare Advantage will become a centerpiece of CMS’ strategy to control spending growth.”
There’s also the issue of having too few MA payers in some regions. Aneesh Krishna, partner in McKinsey & Company’s Silicon Valley office, told Healthcare Dive the concentration of MA plans in certain markets is a worry for providers. “This concern would be magnified in markets where there is a similarly high concentration in commercial segments from the same payers, and where overall MA penetration is high,” he said.
There’s also a potential payment issue. MA generally reimburses at a slightly higher level than traditional Medicare, but utilization is managed more tightly. Krishna said providers willing and capable of sharing medical cost savings are “likely to see more benefit from the shift to Medicare Advantage plans.” However, MA networks are often narrow, which means providers will need to weigh the relative price/volume trade-offs of accepting MA.
More MA growth in the coming years
MA will have more payers and members than ever next year and the two largest payers, UnitedHealth and Humana, are expected to increase their footprint. Despite new payers showing interest in the market, Jacobson expects the market break down will look similar in 2018. She said small payers entering the market will offset the plans exiting MA next year.
The Congressional Budget Office (CBO) and HHS both project MA enrollment will continue to grow over the next decade. The CBO estimated that about 41% of Medicare beneficiaries will have an MA plan in 2027. UnitedHealth even predicted half of Medicare beneficiaries will eventually have an MA plan.
MA’s popularity with payers is easy to understand — 10,000 people turn 65 every day. The CBO expects 80 million Americans will be eligible for Medicare by 2035.
There’s also an opportunity in the MA market to sign up members quickly. Rachel Sokol, practice manager of research at Advisory Board, told Healthcare Dive that utilizing a strong marketing engine allows payers to grow MA membership. This is quite different from the employer-based market, which relies on payers working with companies.
Potential MA barriers
The MA market is largely positive for payers, but it does face challenges, including:
- A small number of payers dominate the market
- The CMS expects improved efficiency and savings
- There is increased federal oversight, especially concerning possible overpayments to MA insurers
CMS is all in supporting MA plans and its marketspace. The agency last week proposed a rule with an aim toward improving quality and affordability in contract year 2019. According to the agency, the number of plans available to individuals will increase from about 2,700 to more than 3,100.
The agency is proposing to expand the definition of quality improvement activity to include fraud reduction activities, changing the medical loss ratio (MLR) requirements for Medicare Advantage plans. This change should excite payers because they can add the administrative service to the MLR ratio they are required to spend on healthcare, which is at least 85%. CMS states it believes the service will help combat fraud.
For now, the MA market is consolidated around only a handful of payers. UnitedHealth and Humana have more than 40% of the market. UnitedHealth has one-quarter on its own. KFF said UnitedHealth, Humana and Blue Cross Blue Shield affiliates make up 57% of MA enrollment and the top eight MA payers constitute three-quarters of the market.
Also, CMS is imposing improved efficiency in the traditional Medicare program. This could ultimately affect MA. Accountable care organizations (ACO) and bundled payments will “put downward pressure on the benchmarks used to set payment rates for Medicare Advantage plans,” Wiggins said.
This pressure will result in MA payers needing to either cut costs or trim benefits. “The former is difficult, except through narrow networks, and the latter will diminish the attractiveness of Medicare Advantage plans,” he said.
Then there’s the 800-pound gorilla in the market — potential overpayments. The Department of Justice (DOJ) has joined whistleblower lawsuits against UnitedHealth Group concerning MA overpayments. The lawsuits allege that UnitedHealth changed diagnosis codes to make patients seem sicker, which resulted in higher reimbursements to the insurer. A federal judge threw out one of the lawsuits in October.
The DOJ is investigating other MA payers for the same reason, and Congress is also interested. Sen. Charles Grassley (R-Iowa), chairman of the Senate Judiciary Committee, sent a letter to CMS Administrator Seema Verma in April questioning what CMS is doing to “implement safeguards to reduce score fraud, waste and abuse.” Grassley said there was about $70 billion in improper Medicare Advantage payments between 2008 and 2013 because of “risk score gaming.”
It’s understandable that investigators and Congress have grown interested in MA payers. The federal government paid $160 billion to MA payers in 2014. The CMS estimated about 9.5% of those payments were improper.
The combination of billions being paid to insurers, the potential for fraud and growing membership numbers make MA ripe for oversight. The stability of the market, particularly compared to other options for payers, however, will mean growth continues.
Sutter Health destroyed 192 boxes of evidence in antitrust case, judge says
Dive Brief:
- A California superior court judge ruled that Sutter Health intentionally destroyed 192 boxes of documents that were involved in a lawsuit involving employers and labor unions that alleged the health system abused its market power and charged inflated prices, reported California Healthline.
- The United Food and Commercial Workers and its Employers Benefit Trust initially filed the case in 2014 alleging that Sutter Health required health plans to include all Sutter hospitals in networks.
- San Francisco County Superior Court Judge Curtis E.A. Karnow said that Sutter knew the evidence “was relevant to antitrust issues” and the company was “grossly reckless.” A Sutter spokeswoman told California Healthline that the incident was a “mistake made as part of a routine destruction of old paper records.”
Dive Insight:
The recent ruling doesn’t put Sutter Health in a great light. The nonprofit system of 24 hospitals based in Sacramento reportedly destroyed documents related to the case — and its actions miffed the judge in the case.
Of course, this issue goes beyond destroying records, Sutter Health and California. The case involves a growing health system that allegedly increased prices to employers and employees while gaining a larger market foothold.
Mergers and acquisitions continue to become a common way for health systems to reduce costs, resolve inefficiencies and gain a larger market share. However, having one system own a large part of the healthcare market also inflates healthcare prices. Brent Fulton, assistant adjunct professor at Petris Center in the School of Public Health, University of California, Berkeley, recently wrote in a Health Affairs article “reviews of studies of hospital markets have found that concentrated markets are associated with higher hospital prices, with price increases often exceeding 20% when mergers occur in such markets.”
Sutter Health holds more than 45% of the healthcare market share in six Northern California counties. That gives the system leverage over employers. If employers don’t come to an agreement with Sutter Health, employees have limited options in those counties. Sutter Health charges about 25% higher than other California hospitals, according to the University of Southern California.
Those costs are higher if that care is considered out-of-network. Last year, Sutter Health allegedly asked employers to waive their rights to sue and to agree to arbitration following a court ruling that employers and health plans can seek class-action status in a lawsuit pertaining overcharges against Sutter Health. Those who didn’t agree were threatened to lose access to discounted in-network prices and pay higher out-of-network costs.
The court filing states the parties should not expect further orders in the case until after mid-December. Industry experts are awaiting the results as the trend of M&A continues and stakeholders question who the activity is benefiting: the companies or the patient?
Cartoon – The Blame Shifter
Cartoon – The Dip in Sales
HENRY KOTULA 