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Florida Medicaid managed care demonstration gets 5-year extension
Dive Brief:
- CMS approved a five-year extension of Florida’s section 1115 demonstration of a capitated Medicaid managed care program and low-income pool to support uncompensated care.
- The uncompensated care pool will receive about $1.5 billion annually, based on the most current data on hospitals’ charity care costs, according to an Aug. 3 letter from CMS Administrator Seema Verma to Justin Senior, secretary of the Florida Agency for Health Care Administration.
- The Managed Medical Assistance (MMA) demonstration, which now runs until June 2022, is the first to include simplified reporting requirements. CMS said it will monitor progress toward state-selected benchmarks and partner with the state to develop a meaningful program evaluation.
Dive Insight:
The modifications are in line with President Donald Trump’s administration’s pledge to reduce what it sees as burdensome or duplicative state reporting activities and with the CMS’ commitment to partner with states to improve their Medicaid programs.
In a March 14 letter, HHS Secretary Tom Price and Verma reminded states they can apply for waivers that would allow for significant changes to their Medicaid programs. States must show their waiver promotes the objectives of the Medicaid program, but HHS has broad authority for approval and Price has indicated he intends to broaden their use.
The CMS had been winding down funding for the Florida program under President Barack Obama’s administration. Officials at the time said the state should expand Medicaid under the Affordable Care Act to help with uncompensated care costs. They gave Florida $600 million for the final year of the program, far less than the about $2 billion requested.
The amount of funding now being provided offers a pretty clear indication the CMS under Trump thinks Florida is on the right track without expansion.
More than 30 states currently have waivers. Alabama received CMS approval in February for a section 1115 demonstration waiver to shift a majority of its Medicaid beneficiaries into regional care organizations, akin to accountable care organizations. While there are other states using this strategy, Alabama is unique in that it’s being administered by provider-run nonprofit organizations rather than a major insurer.
Patient advocacy groups have voiced alarm at potential steep cuts to Medicaid. Trump’s proposed $4.1 trillion budget would slash $610 billion from Medicaid plus 20% of funding for the Children’s Health Insurance Program. Robert Greenstein, president of the Center on Budget and Policy Priorities, said Trump’s budget would increase the number of uninsured and narrow Medicaid benefits and eligibility. This would lead to higher uncompensated care costs for hospitals.
Cigna latest major payer to post strong Q2
http://www.healthcaredive.com/news/cigna-latest-major-payer-to-post-strong-q2/448675/
Dive Brief:
- Cigna reported strong second-quarter earnings Friday, which included a 4% increase in total revenues compared to a year ago to $10.3 billion.
- In announcing its earnings, Cigna also raised its 2017 earnings forecastfrom between $9.35 and $9.85 to between $9.75 and $10.05 per share. Experts had predicted $9.77.
- With Cigna’s announcement, six major health insurers have beaten Wall Street expectations in the second quarter, despite the healthcare debate in Washington and uneasiness in the Affordable Care Act exchanges.
Dive Insight:
Cigna’s positive results are yet another second-quarter success for payers. In recent days, Aetna raised its outlook after a strong quarter, Humana beat its earnings predictions, Anthem posted strong results and UnitedHealth announced that its revenue grew 8% from last year.
For Cigna, the payer’s adjusted income from operations increased to $750 million compared to $515 million last year, which Cigna said “reflects significantly increased earnings contributions from each of our business segments.”
Premiums and fees increased 3% compared to a year ago, which was “driven by customer growth and specialty contributions in our commercial business.” Cigna reported that its financial results for its commercial insurance projects more than offset a drop in revenue from government products because of lower enrollments in those programs.
Cigna’s positive second-quarter numbers may lead to M&A activity, especially regarding Medicare Advantage (MA). Cigna Chief Executive David Cordani said in June the payer has between $7 billion and $14 billion that it may use on mergers and acquisitions this year. That money may go to expanding its MA offerings. Corandi declined to say in June whether Cigna is looking to buy Humana, which is the second-largest MA payer, or whether it may acquire or merge with other companies.
Regardless, you can expect Cigna to grow its MA market in the coming months after the CMS lifted Cigna’s suspension to sell MA and Medicare Part D plans in June. The suspension came after CMS found issues with Cigna’s appeals and grievances processes, Part D, formulary and benefits administration. The CMS restricted Cigna for 18 months, which the company said cost them at least $500 million.
Also, earlier this year, a proposed $54 billion merger proposal with Anthem failed. Despite the failed merger, Humana reported $1.1 billion net income in the first quarter compared to $254 million last year. At the time, Humana officials pointed to the failed merger with Anthem as a major reason for the net income increase and Bruce D. Broussard, Humana’s president and chief executive officer, especially highlighted MA as a positive.
After the merger failed, Cigna filed a lawsuit against Anthem that seeks more than $13 billion in damages and a $1.85 billion contractual breakup fee. Anthem is protesting both payments.
HHS general counsel candidate vows to uphold ACA
http://www.healthcaredive.com/news/hhs-general-counsel-candidate-vows-to-uphold-aca/448682/
Dive Brief:
- During his nomination hearing in front of the Senate Finance Committee, Robert Charrow, who is a candidate for general counsel to the HHS, told senators he will resist changes to the Affordable Care Act (ACA) as long as it is law.
- Charrow, who is an attorney with the international law firm of Greenberg Traurig, said he is a “firm believer in applying the law as written and passed by Congress. And if an action is inconsistent with the law, I will not approve it.”
- The hearing, which also included the nominee for HHS assistant secretary for legislative affairs, Matthew Bassett, comes as the Government Accountability Office is looking into the use of official HHS communication channels to promote ACA repeal legislation.
Dive Insight:
While all of the Republican attempts to repeal the ACA have thus far failed, its supporters are still worried about threats, including from President Donald Trump, to sabotage the exchange markets. Trump said he wanted the ACA to “implode” and force senators to the negotiating table.
Charrow’s expressed willingness to defend the ACA could certainly come into play if he is approved. His boss would be HHS Secretary Tom Price, who is a vocal opponent of the ACA. If confirmed, Charrow may need to stand up to both his boss and the president.
The most immediate concern for the ACA is cost-sharing reduction (CSR) payments to payers, which Trump called a “bailout” for insurance companies. Payers say that without those subsidies they will need to raise rates or leave the ACA market. Because of the uncertainty, some payers have increased rates by more than 20% for 2018, dropped out of the market or cut down on their footprint.
The issue appears to be in limbo for now, with Congress out for its annual summer break and Trump beginning a 17-day vacation.
The Senate Finance Committee didn’t vote on the Charrow’s nomination, but we’ll soon know whether his statements were enough to quell Democratic fears.
5 hospitals with strong finances
http://www.beckershospitalreview.com/finance/5-hospitals-with-strong-finances-080117.html
Here are five hospitals and health systems with strong operational metrics and solid financial positions according to recent reports from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.
Note: This is not an exhaustive list. Hospital and health system names were compiled from recent credit rating reports and are listed in alphabetical order.
1. Coral Gables-based Baptist Health South Florida has an “AA-” rating and stable outlook with S&P. The system maintained key balance sheet metrics and generated better-than-projected financial results in fiscal year 2016, according to S&P.
2. Carolinas HealthCare System has an “Aa3” rating and stable outlook with Moody’s. The Charlotte, N.C.-based system has a track record of good financial performance, strong balance sheet metrics and a large scope of operations with multiple hospitals. Moody’s expects Carolinas HealthCare System to maintain stable leverage metrics while continuing to generate financial results at current levels.
3. Children’s Healthcare of Atlanta has an “Aa2” rating and stable outlook with Moody’s. CHOA is a leading provider of high acuity pediatric care in the Atlanta area and has favorable leverage metrics and a track record of strong margins and liquidity, according to Moody’s.
4. Cleveland Clinic Health System has an “Aa2” rating and stable outlook with Moody’s. The system has a track record of meeting operating challenges to sustain strong cash flow, exceptional fundraising capabilities, strong liquidity and a growing ability to leverage an international brand into revenue diversification, according to Moody’s. The debt rating agency expects Cleveland Clinic to manage execution risks of multiple strategies, as demonstrated in the past.
5. Broomfield, Colo.-based SCL Health has an “AA-” rating and stable outlook with Fitch. The system’s operating performance improved in fiscal year 2015, and SCL has sustained those results, according to Fitch. The system has manageable capital needs in the near term, a stable liquidity position and geographic diversity, with 12 hospitals in five markets across three states.
9 recent hospital, health system outlook and credit rating actions
The following hospital and health system credit rating and outlook changes and affirmations took place in the last week, beginning with the most recent.
1. Fitch assigns ‘A+’ rating to Regional Health’s bonds
Fitch Ratings assigned an “A+” rating to Rapid City, S.D.-based Regional Health’s proposed $214.4 million series 2017 revenue bonds to be issued by the South Dakota Health & Educational Facilities Authority.
2. Moody’s downgrades Midland County Hospital District’s debt rating to ‘Aa3’
Moody’s Investors Service downgraded Midland (Texas) County Hospital District’s general obligation debt rating to “Aa3” from “Aa2,” affecting $101.1 million of general obligation debt.
3. Moody’s assigns ‘Baa3’ rating to SoutheastHealth’s bonds
Moody’s Investors Service assigned its “Baa3” rating to Cape Girardeau, Mo.-based SoutheastHealth’s proposed $86.9 million series 2017A and $6.29 million series 2017B revenue bonds, to be issued through the Industrial Development Authority of the County of Cape Girardeau and the Industrial Development Authority of Stoddard County. The bonds will mature in 2042.
4. Moody’s affirms ‘A1’ rating on Sarasota County Public Hospital District’s bonds
Moody’s Investors Service affirmed its “A1” rating on Sarasota (Fla.) County Public Hospital District’s outstanding bonds, affecting $192 million of debt.
5. S&P revises NorthShore University HealthSystem’s outlook to stable
S&P Global Ratings affirmed the “AA” rating on Evanston, Ill.-based NorthShore University HealthSystem’s series 2010 revenue refunding bonds, issued by the Illinois Finance Authority.
6. S&P upgrades HealthEast Care System’s bond rating to ‘A+’
S&P Global Ratings upgraded the rating to “A+” from “BBB+” on St. Paul, Minn.-based HealthEast Care System’s series 2017A bonds, issued by the Redevelopment Authority of the City of Saint Paul.
7. Moody’s assigns ‘A2′ rating to Fairview Health Services’ bonds
Moody’s Investors Service assigned its “A2” rating to Minneapolis-based Fairview Health Services proposed $197 million series 2017A revenue bonds to be issued through the Housing and Redevelopment Authority of the City of St. Paul, Minn. The bonds will be fixed rate and will mature in 2047.
8. Moody’s assigns ‘A3’ rating to North Valley Hospital’s bonds
Moody’s Investors Service assigned its “A3” to Tonasket, Wash.-based North Valley Hospital’s proposed $8.5 million unlimited tax general obligation refunding bonds. The expected sale date is Aug. 16.
9. Moody’s downgrades Lucile Packard Children’s Hospital’s credit rating
Moody’s Investors Service downgraded Palo Alto, Calif.-based Lucile Packard Children’s Hospital’s credit rating to “A1” from “Aa3.”
Kaiser’s operating income jumps 57% to $772M
http://www.beckershospitalreview.com/finance/kaiser-s-operating-income-jumps-57-to-772m.html
Oakland, Calif.-based Kaiser Permanente reported higher revenue and operating income for its nonprofit hospital and health plan units in the second quarter of 2017.
Kaiser saw revenue climb to $18.1 billion in the second quarter of this year. That’s up 14.6 percent from revenue of $15.8 billion in the same period of 2016.
That boost was attributable, in part, to the system’s health plan unit. In the first half of 2017 Kaiser added 1.1 million health plan members. This growth was partially attributable to Kaiser’s acquisition of Seattle-based Group Health Cooperative in February. As of June 30, Kaiser had about 11.7 million members.
Kaiser reported operating income of $772 million in the second quarter of this year, up 57.2 percent from $491 million in the same period of 2016.
After factoring in non-operating income, Kaiser ended the second quarter of 2017 with net income of $1 billion, up from net income of $707 million in the second quarter of the year prior.
Cartoon – Why do I always get the Hard Part?
HENRY KOTULA 