Highmark Health posts record 6-month performance with $505M operating surplus


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Pittsburgh-based Highmark Health, the parent company of insurer Highmark and Allegheny Health Network, reported an operating gain of $505 million in the first six months of fiscal year 2017, compared to $35 million the same period last year.

“Highmark Health delivered its strongest financial performance for the six-month period ending June 30 since the formation of Highmark in 1996,” Karen Hanlon, executive vice president and CFO of Highmark, said.

Highmark attributed its financial turnaround to improvements in its government health plan business, as well as its commercial and senior health plan segments. The company’s nealry 5 million-member health plan achieved an operating gain of $480 million in the six months ended June 30, up $399 million compared to the same period a year prior, mostly fueled by its government business.

On the provider side, Highmark’s Allegheny Health Network in Pittsburgh saw its strongest financial performance since its establishment. AHN recorded $28 million in excess revenue over expenses in the first six months of this year, an improvement of $47 million from the same period in 2016.

While intentional enrollment reductions decreased Highmark’s operating revenues year-over year by $100 million to $9.1 billion in the six-month period, at the same time the organization’s expenses dropped $50 million. Highmark attributed the decrease to reduced costs related to its Epic EHR and other technology implementations.

Moody’s: Nonprofit healthcare medians reversed trajectory in FY 2016


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Annual expense growth for nonprofit and public healthcare organizations outpaced annual revenue growth in fiscal year 2016, according to Moody’s Investors Service.

After years of cost containment, annual expense growth hit 7.2 percent in fiscal year 2016, which outpaced annual revenue growth of 6 percent. The expenses were fueled by several factors, including rising pension contributions and higher labor and pharmaceutical costs, according to Moody’s.

“Higher expenses coupled with positive, albeit slower, revenue growth, contributed to lower profitability, tempered liquidity growth, and moderation of nearly all financial metrics,” said Beth Wexler, a Moody’s vice president.

Ms. Wexler said total admissions at nonprofit and public hospitals grew in fiscal year 2016, but the growth rate slowed due to stabilization of the uninsured population.

The medians are based on an analysis of audited fiscal year 2016 financial statements for 323 freestanding hospitals, single-state health systems and multi-state healthcare systems, representing 81 percent of all Moody’s rated healthcare entities.

For-profit hospital operators likely to experience weak patient admissions through 2018


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Major for-profit hospital operators were plagued by weak patient volumes in the quarter that ended June 30, and this trend is likely to continue through next year, according to Reuters.

Dallas-based Tenet Healthcare’s net loss ballooned from $44 million in the second quarter of 2016 to $56 million in the second quarter of this year. The company’s hospitals experienced softer patient volume in the second quarter of 2017, including fewer patients seeking elective procedures, according to Reuters.

Tenet’s rivals, such as Nashville, Tenn.-based HCA Healthcare and Franklin, Tenn.-based Community Health Systems also experienced weak patient volumes in the second quarter. HCA ended the second quarter of 2017 with net income of $657 million, which was down slightly from $658 million in the same period of 2016. CHS recorded a net loss of $137 million in the second quarter of this year, compared to a net loss of $1.43 billion in the same period of 2016.

Tenet, HCA, CHS and other for-profit hospital operators experienced a surge in admissions in 2014 and 2015 due to higher insured rates under the ACA. However, many insurers have pulled back from the ACA exchanges since last year, which has caused the for-profit hospital operators to see lower patient volumes, analysts told Reuters.

The companies are expected to see weak patient admissions next year, as the future of the ACA remains uncertain and patients with high-deductible health plans face soaring out-of-pocket costs.

Presence Health to join Ascension


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St. Louis-based Ascension, the nation’s largest nonprofit Catholic health system, signed a nonbinding letter of intent to acquire Chicago-based Presence Health, Illinois’ largest Catholic health system.

Under the deal, Presence’s medical centers, outpatient facilities and other care sites would be operated by Amita Health, a joint venture created by Ascension’s Arlington Heights-based Alexian Brothers Health System and Hinsdale, Ill.-based Adventist Midwest Health, part of Altamonte Springs, Fla.-based Adventist Health System. Ascension would own the facilities.

Presence Life Connections’ skilled nursing and assisted and independent living facilities would join Ascension Living, Ascension’s senior care subsidiary, the companies said in a news release.

“The mission, values and history of Presence Health clearly align well with those of Ascension, as both systems are dedicated to caring for all, with special attention to persons living in poverty and those most vulnerable,” Ascension President and CEO Anthony Tersigni, EdD, said in the release. “We believe this will strengthen Catholic healthcare not only in the region but throughout the country as we are all dedicated to delivering personalized, compassionate care.”

Mark Frey, president and CEO of Amita and senior vice president of St. Louis-based Ascension Healthcare, a division of Ascension, also expressed excitement about the proposed transaction.

“Since we brought together Alexian Brothers Health System and Adventist Midwest Health to form Amita Health two years ago, we’ve always looked for opportunities to add like-minded partners with similar values to our system,” he said. “Bringing Presence Health into Ascension and AMITA Health is a perfect fit and an exciting continuation of our commitment to increase access to quality healthcare in the many communities we serve.”

Presence President and CEO Michael Englehart echoed these sentiments, saying his system “look[s] forward to working together to engage in this joint effort to expand, and continue to deliver, quality care for our patients and residents, as well as provide additional clinical opportunities and patient care resources to all our physicians and associates.”

The systems said a definitive agreement is expected in the future “pending detailed legal and financial due diligence, along with regulatory and canonical approval.” The deal, if completed, would add 10 Presence hospitals to Ascension and Amita, increasing Ascension’s hospitals to 151. Peoria, Ill.-based OSF HealthCare earlier this month announced plans to own the other two Presence hospitals — Presence Covenant Medical Center in Urbana, Ill., and Presence United Samaritans Medical Center in Danville, Ill.

Terms of the proposed deal were not disclosed.


Appeals court overturns ruling requiring HHS to clear Medicare appeals backlog by 2021


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The U.S. Appeals Court for the District of Columbia on Friday overturned an order requiring HHS to clear its backlog of Medicare reimbursement appeals by the end of 2020.

On Dec. 5, 2016, U.S. District Judge James Boasberg granted a motion for summary judgment filed by the American Hospital Association in AHA v. Burwell — a lawsuit that centers on the Recovery Audit Contractor Program.

He ordered HHS to incrementally reduce the backlog of 657,955 appeals pending before the agency’s Office of Medicare Hearings and Appeals over the next four years, reducing the backlog by 30 percent by the end of 2017; 60 percent by the end of 2018; 90 percent by the end of 2019; and to completely eliminate the backlog by Dec. 31, 2020.

HHS filed a motion Dec. 15, 2016, asking the judge to reconsider his decision. HHS argued it would be impossible to reduce the appeals backlog on the schedule provided by the court without improperly paying claims, regardless of merit. In January, Judge Boasberg denied HHS’ motion for reconsideration.

In late January, HHS filed an appeal in the case, seeking to avoid the district court’s order enforcing the plan to clear the appeals backlog by the end of 2020.

On Friday, the appellate court sided with HHS.

Since HHS said it was impossible to lawfully comply with the district court’s order, the appellate court ruled it was “an error of law” and “an abuse of discretion” for the district court judge to order HHS to abide by the schedule to clear the Medicare appeals backlog.

“In sum, it was an abuse of discretion to tailor the mandamus relief without tackling the Secretary’s claims that lawful compliance would be impossible,” states the appellate court’s opinion.

The appellate court held that on remand the lower court should determine if compliance with the timetable to reduce the Medicare appeals backlog is impossible.

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Sutter will shift 10,000 Anthem Medi-Cal enrollees to community health centers


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In Sacramento and Placer counties, roughly 10,000 adult Medi-Cal enrollees with Anthem Blue Cross are learning this summer that Sutter’s primary-care doctors will no longer see them.

Instead, those patients are being shifted to primary-care doctors at community health centers such as Sacramento’s WellSpace Health or Auburn’s Chapa-De Indian Health, said Dr. Ken Ashley, the medical director for primary care at Sutter Medical Group. He said the change in providers will allow the patients to access more services.

“Some of the things that the (community health centers) can provide with the funding that they are receiving are things that sometimes we struggle to find for our Medi-Cal patients, things like optometry and dental, behavioral medicine,” Ashley said. “I feel like these patients are finally going to receive things I could not provide as their primary-care doctor. I’m OK with our partners helping to take care of these patients.”

Sutter, Dignity Health, UC Davis and other providers have all contributed funding and expertise to expand the network of community health centers, more formally known as federally qualified health centers.

The so-called FQHC’s have long been the primary-care delivery network for uninsured, low-income people across the country, but Sacramento did not have a strong network of the centers until the Affordable Care Act set aside funding to help them grow to meet the needs of an expanding Medicaid population.

That flood of new patients has swamped many primary-care providers and has made it harder for all patients to get appointments through commercial providers, Ashley said. Meanwhile, in meetings with the leaders of local FQHC’s, he and other leaders were hearing how those organizations had expanded services, lengthened hours and had capacity for more patients.

About a year ago at one of the meetings, Ashley said, all the attendees began to feel that, if they could shift Anthem’s adult Medi-Cal enrollees, they would improve the health of the primary-care delivery system for a broad set of customers.

“We’ve been having a difficult time getting all our patients in at the time they would like, where they would like,” Ashley said. “This is one more step to try to help allow the rest of the community to help us take care of all these patients.”

Jonathan Porteus, the CEO of Wellspace Health, also leads the Central Valley Health Network, a group of health centers up and down the Central Valley that manage almost 3 million visits a year. He said that Anthem began earlier this year investigating whether the FQHC’s truly had the capacity to absorb the adult Medi-Cal patients served through Sutter.

“We were notified – we being the federally qualified health centers – that this change was coming and that there was a keen interest to make sure that it was smooth, that people would not be left without access,” Porteus said. “The wisdom of Sutter and others has been to help our region have a network of federally qualified health centers, a true blanket of care for the first time ever. This is one of the early tests.”

Porteus said he knows that people have questions about whether the quality of care at his centers is on par with what they would receive from primary-care doctors. He said he welcomes those questions because they give him an opportunity to tell the WellSpace story.

“The Joint Commission, which is the accrediting body that accredits hospitals and shuts them down if they don’t think they’re good enough, has accredited us to be a patient-centered medical home, has accredited all our behavioral health,” Porteus said. “This is a standard many of our commercial colleagues in this community don’t have. If you went into some of these primary-care practices and asked them if they had Joint Commission accreditation for ambulatory care, they will tell you ‘no.’”

There will unquestionably be upheaval in this process for both doctors and patients, Ashley said.

Sutter’s pediatricians will continue to provide primary-care to Medi-Cal-enrolled children covered by Anthem Blue , and the insurer’s Medi-Cal enrollees also still will be able to access Sutter specialists. Sutter primary-care doctors will continue to see anyone on Regular Medi-Cal recipients whose medical providers are paid directly by the government.