Grassley Renews Probe of Nonprofit Hospitals

https://www.healthleadersmedia.com/grassley-renews-probe-nonprofit-hospitals

The Iowa Republican has asked the IRS for data on how many of the nation’s approximately 3,000 tax-exempt hospitals are in compliance with charity care requirements.


KEY TAKEAWAYS

Grassley asked for information about whether tax-exempt hospitals are meeting the statutory requirements laid out in section 501 of the Internal Revenue Code.

The lawmaker is renewing his probe of tax-exempt hospitals after hearing reports that ‘at least some of these tax-exempt hospitals have cut charity care, despite increased revenue.’

Senate Finance Committee Chairman Chuck Grassley has renewed efforts to ensure that nonprofit hospitals are earning their tax-exempt status by providing enough services for low-income people.

In a letter to Internal Revenue Service Commissioner Charles Rettig, the Iowa Republican asked for data on how many hospitals are in compliance with the requirements for tax-exempt status and the status of IRS examinations of those not in compliance.

“Making sure that tax-exempt hospitals abide by their community benefit standards is a very important issue for me,” Grassley said in his letter.

“As chairman of the Senate Judiciary Committee, I oversaw an investigation into the billing practices of the Mosaic Life Care hospital. That investigation resulted in debt relief of almost $17 million for thousands of low-income patients.  This issue is still just as important to me now that I am chairman of the Senate Finance Committee,” Grassley wrote.


The Mosaic Life inquiry examined the billing and debt collection practices at the health system after news reports indicated it had sued low-income patients who should have qualified for charity care.

Grassley told Rettig that he was renewing his probe of tax-exempt hospitals after hearing “reports” that “at least some of these tax-exempt hospitals have cut charity care, despite increased revenue, calling into question their compliance with the standards set by Congress.”

He asked Rettig for information about whether tax-exempt hospitals are meeting the statutory requirements laid out in section 501 of the Internal Revenue Code, and he cited in his letter an article in Politico that suggested nonprofit hospitals were profiting from the Affordable Care Act while simultaneously cutting their charity care.

In February 2018, Grassley sent a letter to the IRS to inquire about how the agency reviews nonprofit hospital compliance.

Acting Commissioner David J. Kautter responded in April 2018 that the IRS reviews the status of about 1,000 U.S. tax-exempt hospitals each year by reviewing Forms 990, hospital websites, and other information in order to identify the hospitals with the highest likelihood of noncompliance.

Kautter said the IRS assigns either a compliance check or examination to those hospitals that appear to be most at risk of noncompliance.

Melinda Hatton, general counsel for the American Hospital Association, said her organization was confident that nonprofit hospitals are meeting their mission.

“In 2015, an AHA analysis of Schedule H filings reported that 13.3% of tax-exempt hospitals and health systems total expenses were devoted to community benefits programs, and that half of that spending was attributable to expenditures for providing financial assistance to needy patients and absorbing losses from Medicaid and other means-tested government program underpayments,” she said.

Hatton said an analysis by Ernst & Young for the AHA found that hospitals’ and health systems’ community benefit activities outweigh the value of their federal tax exemption by a factor of 11 to one. “According to the report, non-profit hospitals in 2013 were exempt from an estimated $6 billion in federal taxes and provided an estimated $67.4 billion in community benefits,” Hatton said.

“Making sure that tax-exempt hospitals abide by their community benefit standards is a very important issue for me.”

 

 

 

Nonprofit Hospital Consolidation to Continue in 2019

https://www.healthleadersmedia.com/finance/nonprofit-hospital-consolidation-continue-2019

Despite increased scrutiny from regulators, nonprofit health systems will remain active through mergers and acquisitions this year, according to a new Moody’s report.

The deluge of M&A activity among nonprofit health systems is expected to continue on in 2019, with the potential for some “unconventional relationships,” according to a Moody’s report released Friday morning.

Driven by tight financial conditions challenging the nonprofit hospital business model, as well as the entrance of nontraditional corporate players to healthcare and the potential changes to the ACA, more M&A activity is expected throughout the year.

Moody’s expects nonprofit health systems to engage in partnerships with other hospitals but also seek to align with companies specializing in data analytics or ridesharing services to continue the transition from inpatient care to outpatient care.

Nonprofit health systems are also aiming to increase their footing when negotiating with payers, which involves strategic decisions to diversity service options and increase their geographic reach.

The report cites ProMedica’s acquisition of HCR Manorcare and Tower Health’s purchase of five for-profit acute care hospitals as examples of nonprofit systems taking a short-term credit hit to gain stable long-term positioning for the organization.

Though M&A activity is expected to be widespread and a primary objective for many nonprofit systems, the Moody’s report warned that additional scrutiny from state and federal regulators is on the way.

The requirements put in place on the CHI-Dignity Health merger by California Attorney General Xavier Becerra, along with price increase restrictions imposed by Massachusetts Attorney General Maura Healey on CareGroup and Lahey Health, are cited as examples of the terms health systems should expect to meet.

For-profits will tap into capital markets

The Moody’s report also indicates that for-profit hospitals will delve further into capital markets so long as they remain receptive and buoyed by low interest rates. This approach could lead to lower interest costs and improve liquidity, which would bolster their credit standing.

Jessica Gladstone, Moody’s associate managing director and lead analyst on for-profit hospitals, told HealthLeaders that rising interest rates would a material impact on many for-profit hospitals.

“High cash interest costs relative to earnings are already consuming the majority of cash for many FP hospital companies,” Gladstone said. “For companies with floating rate debt, rising interest rates (depending on the amount of the increase) could leave some FP hospitals with very little free cash flow left to pay down debt or otherwise invest to grow operations.”

Gladstone added that while many of the same headwinds facing for-profit hospitals remain a challenge in 2019, executives can be encouraged by the opportunities ahead to refinance high-cost debt and achieve cost savings.

Several deals are listed as potential opportunities that could benefit for-profit healthcare organizations in 2019 regarding changes to capital structure, interest cost savings, as well as M&A activity:

Additional highlights from the Moody’s report:

  • Expect smaller community and regional nonprofit hospitals to join cooperatives to gain leverage at the negotiating table on supply costs among other price points.
  • Growing investment by private equity firms in physician practices and ambulatory services, will put a pinch on nonprofit systems.
  • The entrance of Amazon, Walmart, and Apple can’t be discounted as another driver of M&A activity in 2019.
  • Vertical mergers like CVS-Aetna and the continued rise of telemedicine will drive patients away from traditional areas of care delivery, like hospitals.
  • Though major changes to the ACA remain unlikely due to the split government in Congress, smaller changes could still make a significant impact.
  • The report cites potential changes to site-neutral payments, Medicare quality-factor penalties, and DSH payment reductions as examples.

 

 

 

 

Launching the first “public option” insurance plan

https://www.npr.org/sections/health-shots/2019/05/16/723843559/will-washington-states-new-public-option-plan-reduce-heath-care-costs

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On Monday, Washington Gov. Jay Inslee signed into law the nation’s first “public option” health plan, to be sold on the state’s individual health insurance exchange, starting during next year’s open enrollment period. Inslee, who is also a candidate for the Democratic Presidential nomination, characterized the new plan as a “way for our state to push back” on the Trump administration’s efforts to roll back the Affordable Care Act (ACA).

The plan, called Cascade Care, is not quite the same as a true, government-run plan of the type proposed by some during the drafting of the ACA; rather, it creates a category of private insurance plans that will cap provider and facility rates at 160 percent of Medicare reimbursement, with the goal of lowering premiums for consumers who shop on Washington’s insurance marketplace.

The public option plan is meant to exert competitive pressure on other plans in the market in an attempt to drive premiums down, but experts expect the new plan to produce only a modest 5-10 percent savings for consumers. In 2018, average premiums on Washington’s exchange rose 38 percent, resulting in lower overall enrollment levels. Other states, including Colorado and Connecticut, are considering similar “public option” plans.

It’s notable that Washington’s approach is explicitly built around reducing payment to hospitals and doctors—any serious efforts to lower premiums will almost certainly have the same impact.

As the politics of healthcare continue to heat up, we’d expect more such proposals to gain traction across the country.

 

 

 

Democrats Have No Safe Options On Health Care

Democrats Have No Safe Options On Health Care

Even though most of the candidates have committed to some form of universal health care, the Democratic primary is turning into a debate about the future of the country’s health care system. Presidential hopefuls have proposed policies ranging from an ambitious four-year plan to transform Medicare into a universal single-payer system, in which the government pays for everyone’s health care and private insurance plans are effectively eliminated, to a more modest scheme that would leave the existing health care system intact but create a government-administered public insurance plan people could choose to purchase. But some of the candidates have been light on policy specifics, so it’s likely that health care will be a big topic at the debates and beyond.

In the abstract, focusing on health care makes a lot of political sense for Democrats. It was a top issue among Democratic voters in the 2018 midterms, and the Trump administration recently renewed its efforts to strike down the Affordable Care Act in the courts, which means the law could be hanging in the balance throughout the primaries and into the general election. A recent ABC News/Washington Post poll also found that Americans, by a 17-point margin, say that President Trump’s handling of health care makes them more likely to oppose him than to support him in 2020. By a similar margin, an Associated Press/NORC poll found that Americans trust Democrats more than Republicans on health care.

All of this means that Democrats are heading into the 2020 election cycle with a serious edge on an issue that has the potential to mobilize their base. But if the candidates pitch big, sweeping changes to the health care system without addressing voters’ concerns about cost and access, that advantage won’t necessarily hold up. And trying to sell Americans on a completely new system carries risks, even in the primaries.

Why do people care about health care so much?

First, it’s important to understand how health care has morphed over the past decade from just another issue to one of the issues voters care most about. In the 2018 exit polls, 41 percent of voters said health care was the most important issue facing the country, up from 25 percent in 2014 and 18 percent in 2012. (It wasn’t asked about in 2016.) And although Democrats are more likely to prioritize health care than Republicans, a Pew Research Center poll from January found that a majority of Republicans say health care costs should be a top priority for Congress and the president.

The reason? Health care is becoming more of a financial burden, according to Mollyann Brodie, executive director for public opinion and survey research at the Kaiser Family Foundation. Specifically, Americans’ out-of-pocket health care costs have risen significantly over the past decade, even for workers who get insurance through their jobs. In an economy that by many measures is doing well, health care — rather than something like taxes — is becoming one of voters’ most important pocketbook issues, she said. “If you’re worried about whether you or your loved ones can afford your next health care bill, that’s really a matter of life or death, so you can understand why this issue is moving to center stage politically.”

And Americans are increasingly likely to say that the government has an important role to play in ensuring access to health care. In November, Gallup found that 57 percent of Americans said they think it’s the federal government’s responsibility to ensure that everyone has health care coverage, up from a low of 42 percent in 2013. Support for the Affordable Care Act rose over the same period, too. But, notably, support for government intervention in the health care system was even higher before President Obama was elected and the ACA passed — in 2006, 69 percent of Americans thought the government should guarantee health care coverage.

While support for government involvement in health care is rebounding, it’s not clear how much change voters are really asking for. “The average American is first and foremost concerned about the financial problems facing their family,” said Robert Blendon, a professor of health policy and political analysis at Harvard. “They’re less worried about system-level concerns like health care spending and inequality. They want their existing coverage to be better and more affordable.”

What do voters want politicians to do?

Americans aren’t opposed to the idea of government-run health care, but there’s not a lot of consensus on what that would mean. For example, a recent Kaiser Family Foundation poll found that a majority (56 percent) of Americans favor a national “Medicare for All” plan. But according to a March Morning Consult poll, Americans are more likely to favor a plan that offers some kind of public option — a government-sponsored health insurance plan available in addition to existing private plans — over a system where everyone is enrolled in the same plan.

But this apparent contradiction makes sense, according to Brodie, because Americans are risk-averse when it comes to health care, and the switch to single-payer would affect far more people than the ACA did. Tens of millions of previously uninsured people received coverage under the ACA, but that number would be dwarfed by the 156 million people who get their insurance through their employers and could see their coverage change if the country switched to a single-payer plan. “Even if the current system isn’t working, transitions are scary,” Brodie said. “And people aren’t necessarily aware of what a national plan really means. When you start telling people that there might not be any more private insurance companies, that’s actually not a popular position.” For example, a January Kaiser Family Foundation poll found that support for a national Medicare for All plan dropped significantly when respondents were told it would mean eliminating private insurance companies.

And when asked what health care policies they want Congress to prioritize, Americans don’t list Medicare for All first. Instead, according to a recent Kaiser Family Foundation poll, they want Congress to pass targeted measures that would lower prescription drug costs, continue the ACA’s protections for preexisting conditions and protect people from surprise medical bills. Only 31 percent of Americans say that implementing Medicare for All should be a top priority for Congress, compared to 68 percent who want lowering drug prices to be a top priority. Moreover, prioritizing Medicare for All is politically polarizing: Only 14 percent of Republicans support putting that kind of plan at the top of the to-do list, compared to 47 percent of Democrats.

Some health care issues get only one-sided support

Share of Republicans and Democrats who say each issue should be a top priority for Congress, and the difference between the parties

Dem. Rep. Diff.
Making sure the ACA’s preexisting condition protections continue 82% 47% D+35
Implementing a national Medicare for All plan 47 14 D+33
Expanding government financial help for those who buy their own insurance coverage on the ACA marketplace to include more people 36 18 D+18
Lowering prescription drug costs for as many Americans as possible 77 66 D+11
Protecting people from surprise high out-of-network medical bills 55 45 D+10
Repealing and replacing the ACA 16 52 R+36

Source: Kaiser Family Foundation

However, smaller policy steps like lowering prescription drug costs and protecting people from surprise medical bills get more bipartisan support. Overall, Americans seem to be more concerned with fixing the current health care system than creating a sweeping new replacement — even if that replacement could address the issues they most want fixed in the current system.

What does this mean for the Democrats?

The complexity of Americans’ views on health care doesn’t change the fact that Democrats have a big advantage over Republicans on this issue, but it does mean that the individual candidates are in a tough spot because there’s no obvious unifying message they can adopt for the primary. And embracing a single-payer plan now could hand the GOP a weapon for the general election, allowing Republicans to frame the health care discussion around the Democrats’ controversial plan while glossing over Trump’s efforts to dismantle the ACA.

“The safest bet for a Democrat in the general election is to emphasize Trump’s track record on health care and say you’re going to make the ACA work,” Blendon said. The problem is that while that kind of argument might appeal to moderates, it’s likely to fall flat among a significant sector of the Democratic base that supports prioritizing a national Medicare for All plan over improving and protecting the ACA.

Democrats arguably still have an opening to make a case for a more ambitious health care overhaul, since voters still have relatively little information about what something like Medicare for All means. “It’s fine to support single-payer if you think that’s where the country needs to go, but you can’t just lean on principles like fairness or equality when you’re selling it,” said David Cutler, an economist at Harvard who advised Obama’s campaign on health care strategy. “You also have to tell voters, very specifically, what you are going to do to lower their costs and improve their coverage next year — not in 10 years.”

Even though Americans mostly prefer Democrats’ health care positions to the GOP’s, Democrats still risk alienating voters if they emphasize bumper-sticker slogans over concrete strategies for reducing the financial burden of health care. This is particularly important because their base of support for a single-payer system may be shallower than it appears, even within the party — especially when it comes to getting rid of private insurance. Big changes to the status quo are always politically challenging, but they may be especially risky when many Americans are concerned about losing the protections they already have.

 

 

 

Dems tee up new document fight with DOJ over Obamacare

https://www.politico.com/story/2019/05/14/democrats-doj-obamacare-1318932

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House Democrats are mounting yet another confrontation with the Justice Department that could lead to subpoenas, but this time it’s not about special counsel Robert Mueller’s report — it’s about health care.

Five committee chairman foreshadowed a possible subpoena as soon as May 24 if Attorney General William Barr declines to provide documents related to his decision to stop defending the constitutionality of the Affordable Care Act — the health care law signed by President Barack Obama in 2010.

In letters to Barr and White House Counsel Pat Cipollone, the chairmen say they’ve been asking since April 8 for documents connected to the decision, as well as testimony from four key officials involved in the effort. The request, they said, sought a response by April 22 but that the reply fell short. Now, they’ve giving the Justice Department two more weeks to meet the committees’ demands. They’re also asking the White House to make budget director Russ Vought available for an interview.

“If we do not receive a response by this date, we will have no choice but to consider alternative means of obtaining compliance,” the lawmakers wrote.

The letters are signed by Oversight Chairman Elijah Cummings (D-Md.) , Energy and Commerce Chairman Frank Pallone, Jr. (D-N.J.), Ways and Means Chairman Richard Neal (D-Mass.), Education and Labor Chairman Bobby Scott (D-Va.) and Judiciary Chairman Jerry Nadler (D-N.Y.).

Nadler’s committee has already voted to hold Barr in contempt for refusing to provide an unredacted version of Mueller’s report to Congress as well as Mueller’s underlying evidence. But the full House has yet to consider the committee’s effort. Speaker Nancy Pelosi indicated last week that other committees may want to combine similar contempt proceedings into one overarching floor vote that could come in the next few weeks.

Democrats are also locked in confrontations with the Trump administration over accessing Trump’s tax returns — a request made by Neal’s Ways and Means Committee. The House Intelligence Committee has demanded access to Mueller’s report as well on national security grounds and issued a subpoena for his files last week.

The new effort on health care could become part of the broader strategy, if they continue to accuse the Justice Department of stonewalling by the time the new deadline arrives on May 24. But convincing other lawmakers to wait until June — following a weeklong Memorial Day recess — for a comprehensive contempt vote could be difficult. Rank-and-file Democrats have been clamoring for punitive measures against Barr for weeks for his handling of Mueller’s report.

Unlike the other demands, though, Democratic leaders, though, believe that picking a fight on health care is better politics — and it shows their efforts to confront the Trump administration has policy dimensions, not just Trump-focused investigations.

Democrats have attributed the Trump administration’s efforts to overturn the health care law, known familiarly as Obamacare, to “politically motivated forces” in the White House. The Obama White House took a similar step in 2011 when the Justice Department, at Obama’s urging, stopped defending the Defense of Marriage Act, which barred federal recognition of same-sex marriages — a move social conservatives denounced at the time.

The Department of Justice declined to comment.

 

 

 

Healthcare Triage News: Infants and the Medicaid Expansion

Healthcare Triage News: Infants and the Medicaid Expansion

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What can we do about infant mortality and disparities in health care? This week we take a look at a recent study in JAMA that may have an answer.

 

 

Uninsurance of children, parents inched back up in 2017, report finds

https://www.healthcaredive.com/news/uninsurance-of-children-parents-inched-back-up-in-2017-report-finds/554590/

Dive Brief:

  • After improving for several years, insurance gains and participation in Medicaid and the Children’s Health Insurance Program tilted downward in 2017, a new Urban Institute report shows.
  • In the first three years following implementation of the Affordable Care Act, the uninsurance rate dropped from 7% to 4.3% among children and from 17.6% to 11% among parents, or about 40% for both groups. In 2017, however, the children’s uninsurance rate inched back up to 4.6%, or an additional 281,000 uninsured children, and parents’ coverage rate stalled.
  • Uninsurance rates rose both in states with and without the ACA’s Medicaid expansion, but the increase was more pronounced in states without expansion programs.

Dive Insight:

The findings jibe with recent data from the Centers for Disease Control’s National Health Interview Survey, which showed more than 1.1 million Americans lost health coverage in 2018, pushing the total number of uninsured from 29.3 million in 2017 to 30.4 million last year. Among surveyed adults between 18 and 64 years old, 13.3% were uninsured, 19.4% had public health coverage and 68.9% had private coverage.

The trend coincides with Trump administration efforts to weaken the ACA by eliminating several mechanisms meant to stabilize payers participating in ACA exchanges and pushing stripped-down, noncompliant health plans. The result has been rising premiums and a resurgence in the number of uninsured.

Adding to uncertainty about the ACA’s future is the U.S. Department of Justice’s support for a Texas federal district court that ruled the law unconstitutional without its individual mandate penalty, which a Republican-led Congress removed in 2017. A previous Urban Institute report estimated up to 20 million Americans would lose health insurance if the lawsuit prevails — a majority of whom are currently covered through Medicaid expansions and ACA exchanges.

While the ACA remains in legal jeopardy, Democrats and presidential candidates are looking at ways to increase the numbers of insured Americans, from shoring up the ACA to implementing some type of single-payer system or “Medicaid for All.”

According to the Urban Institute, participation in Medicaid/CHIP among children increased from 88.7% in 2013 to 93.7% in 2016, and from 67.6% to 79.9% for parents. Those gains reversed in 2017, however, with Medicaid/CHIP participation dropping to 93.1% among children and remaining unchanged for parents.

Among those who did not enroll in Medicaid/CHIP in 2017, 2 million children and 1.7 million parents were eligible for the programs — versus 1.9 million and a steady 1.7 million, respectively, in 2016.

More than half of the uninsured children and parents who were eligible for the Medicaid/CHIP lived in California, Florida, Georgia, Illinois, Indiana, New York, Pennsylvania and Texas, according to combined 2016-2017 data.

Parents were more than twice as likely to be uninsured as children in 2017. For example, children’s uninsurance rate was less than 5% in most states and under 10% in nearly every state, while parents’ uninsurance was less than 5% in just four states and over 10% in close to half the states, the report says.

The decline in improvement was worse among certain subgroups. “In 2017, the uninsurance rate was nearly 6% or higher among adolescents, Hispanic and American Indian/Alaska Native children, citizen children with noncitizen parents, and noncitizen children,” according to the report. “And consistent with prior years, one in six parents or more who were ages 19 5o 24, Hispanic or American Indian/Alaska Native, below 100 percent of FPL [federal poverty level], receiving SNAP [Supplemental Nutrition Assistance Program] benefits, or noncitizen were uninsured in 2017.”