Johns Hopkins favored out-of-state patients over locals to increase revenue, lawsuit claims

http://www.baltimoresun.com/health/bs-hs-hopkins-lawsuit-20171213-story.html

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A former supervisor in the patient appointments department at the Johns Hopkins Health System Corp. has accused the medical system in a lawsuit of prioritizing out-of-state patients over Maryland residents to boost revenue.

Anthony C. Campos said in the lawsuit filed Wednesday in U.S. District Court that his department was directed with the task of “filling the plane” with patients from outside Maryland. The directive to bring in more of these patients came from the highest ranks at the medical system, the lawsuit contends.

In Maryland, hospitals are required under an agreement with the federal government to operate under global budgets assigned to them by the state that limit how much revenue they can make in a given year. The budgets were put in place as part of a broader effort to cut soaring health costs and improve care.

But the budgets only apply to patients who live in Maryland. Any money brought in by treating out-of-state patients is additional revenue for the hospital.

The lawsuit contends that Hopkins is violating a clause in its budget agreement with the state that says hospitals can’t deny services to patients for inappropriate financial reasons. The medical system is also required to provide care that focuses on the community, something the lawsuit contends can’t be done if the emphasis is on patients from elsewhere. The medical system also hid what it was doing from the Centers for Medicare and Medicaid, which oversees payments through public health programsand the Health Services Cost Review Commission, which sets the hospital’s global budgets, according to the lawsuit.

An attorney representing Campos said he was not available for comment.

“I think Maryland residents will find it highly offensive that Hopkins is pushing out-of-state residents to the front of the treatment line while Maryland residents are forced to the back of the line all in the interest of profits,” said the attorney, Lindsey Ann Thomas, with the law firm of Conti Fenn & Lawrence LLC.

In a statement Wednesday night, Johns Hopkins said the “the complaint is without merit. Safe and high quality care for all patients, regardless of where they live, is our number one priority. Our census shows that the majority of our patients are from Maryland and that the number has steadily increased over the past several years.” ​

The medical institution began pushing for more out-of-state patients in 2015, Campos said in the lawsuit. He pushed back and told his bosses his team was getting complaints and concerns from doctors about the preference being given to out-of-state patients. Campos’ supervisors responded that they were following the orders of senior management, according to the lawsuit.

Priority was sometimes given without taking into consideration which patients were sicker, the lawsuit said.

The tactics to attract these patients became more aggressive over time, the lawsuit said. Johns Hopkins USA, a medical concierge service, was enlisted to help prioritize out-of-state appointments. The medical system began targeting the most profitable departments, including neurosurgery, oncology, otolaryngology, pediatrics and surgery. In some departments, a supervisor was ordered to intervene if an out-of-state patient could not get an appointment within 30 days, and those patients were also given priority on wait lists, the lawsuit said.

In May 2016, the Department of Patient Access was told that 250 to 350 additional out-of-state cases were needed that fiscal year to reach profit targets of $5 million to $7 million, according to the suit.

Campos is asking that the government be awarded damages and Johns Hopkins fined under the False Claims Act. He is also asking for a “percentage of any recovery allowed to him.”

California, North Carolina and New York hit hardest by 340B cuts

http://www.modernhealthcare.com/article/20171213/NEWS/171219953

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The CMS’ planned $1.6 billion in Medicare cuts to 340B hospitals across the nation will disproportionately impact providers in California, North Carolina and New York, according to a new study.

Slashing the 340B drug discount program, which is intended to lower operating costs for hospitals to give its low-income patients access to drugs, would result in large funding cuts across California, North Carolina and New York hospitals, ranging from $62 million to $126 million, researchers for consultancy Avalere found. Overall, six states will see drug payment cuts of more than $50 million next year.

About 62% of Medicaid disproportionate-share hospitals will experience less than a 5% reduction in Medicare Part B revenue due to the drug cuts, while 6% of impacted hospitals will experience cuts greater than 10%.

But the concurrent increase in non-drug payments will mean that most hospitals will have very minimal changes to their revenues, according to the study. Because the drug-related cuts will disproportionately impact 340B hospitals while the non-drug payment increases will be distributed evenly across facilities, some hospitals would see increased payments while hospitals with high 340B volumes will likely see decreases.

Still, any reduction to the already thin margins of hospitals could spell trouble for providers.

Consumers stand to benefit from the cuts, researchers said. Since Medicare beneficiaries are responsible for a portion of the total drug reimbursement, consumers in California, North Carolina and New York would save a range of $15 million to $32 million. Ten states will have aggregated Medicare beneficiary savings greater than $10 million in 2018.

“The 340B program has become a big business for hospitals,” Avalere President Dan Mendelson said. “As a result, all hospitals in the program have to think about this carefully going into next year.”

Beginning in 2018, Medicare intends to reduce 340B payments from average sales price (ASP) plus 6% to ASP minus 22.5%, which the CMS estimates to be closer to the hospitals’ acquisition cost. With the proposed changes, if a drug costs $84,000, the CMS would pay just over $65,000, instead of the current $89,000. Hospital groups have sued to prevent those cuts and litigation is ongoing.

About half of the hospitals across the country participate in the 340B program, which has been criticized because it does not restrict how hospitals spend 340B money. Critics say that some hospitals use the program to pad profits while rural and critical access hospitals maintain that it’s a vital revenue source and helps support preventive services.

In a House Energy and Commerce Committee hearing on the pharmaceutical supply chain on Wednesday, U.S. Rep. Dr. Larry Bucshon (R-Ind.) said that some hospitals manipulate the program. A financially stable hospital could acquire a physician practice in a rural community and get a 340B distinction for it, he said.

Mandating more transparency on how hospitals use 340B money would prevent abuse, Bucshon said.

“The rules allow the hospitals to pursue these mechanisms aggressively,” said Mendelson. “Some members of Congress believe the rules diverge from the original intent of the program as a way for low-income individuals to access drugs.”

 

Hospital Distress to Grow If Congress Closes Door to Muni Market

https://www.bloomberg.com/news/articles/2017-12-08/hospital-distress-to-grow-if-congress-closes-door-to-muni-market

  • Small, lower-rated facilites could see costs rise 1-2 percent
  • At least 26 non-profit hospitals already in default, distress

As Congress moves to assemble the final version of its tax plan, projects like Spooner, Wisconsin’s 20-bed hospital hang in the balance.

The rural community, about 110 miles (177 kilometers) northeast of Minneapolis, sold tax-exempt bonds to build the $26 million facility it opened last May. The hospital’s chief executive officer said that if its access to such low cost financing had been cut off it would have paid over $6 million more in interest.

That may soon be an expense that other hospitals across the country will have to shoulder. The House’s tax legislation revokes non-profit hospitals’ ability to raise money in the municipal market, where investors are willing to accept lower interest rates because the income is exempt from federal taxes. That’s threatening to saddle health-care providers with higher borrowing costs at a time when their finances are already under pressure.

“Should tax-exempt financing not be available in the future, it may really harm our ability to build affordable senior housing and assisting living facilities,” said Michael Schafer, Spooner Health’s CEO.

For small, rural hospitals across the country, labor, drug, and technology costs are increasing faster than the revenue and patients’ unpaid debts are on the rise. Higher financing costs would be one more challenge.

David Hammer, head of municipal bond portfolio management for Pacific Investment Management Co., said the loss of the tax-exemption could raise borrowing costs by 1 to 2 percentage points at small facilities with a BBB rating or below. That “could have a meaningful impact on their balance sheets,” he said.

At least 26 non-profit hospitals are already either in default or distress, meaning they’ve notified bondholders of financial troubles that make bankruptcy more likely, according to data compiled by Bloomberg. That includes falling short of financial terms set by their debt agreements and having too little cash on hand.

Many of them are based in rural communities where the populations tend to be “older, poorer and sicker,” according to Margaret Elehwany, the vice president of government affairs and policy at the National Rural Health Association. She estimates that about 44 percent of rural hospitals operate at a loss. There have been at least seven municipal bankruptcy filings by hospitals since last year, the most of any municipal sector excluding Puerto Rico.

The risk that Congress will prevent hospitals from accessing the municipal market worries Dennis Reilly, the executive director of the Wisconsin Health & Educational Facilities Authority, an agency that issues debt for non-profits such as Spooner Health.

“All of us in the industry were completely blindsided by the House proposal,” Reilly said in an interview from Washington, where he was meeting with members of Congress about the proposed bill.

“Without tax-exempt financing, not-for-profits across the country will have increased borrowing costs of 25 to 35 percent because they’ll have to access the taxable market,” he said. “For many of the rural providers like Spooner, much of their project they would not have been able to do with the higher cost of capital.”

A Rush to Beat the Clock

Hospitals are among those rushing to issue tax-exempt debt while they still can. Mercy Health, a Catholic health-care system that operates in Ohio and Kentucky, is scheduled to sell $585 million tax-exempt bonds next week. The deal, originally planned for early next year, was moved up after the release of the House proposal.

Spending more on debt would cut into the funds available for facilities, equipment and charitable outreach, like programs for opioid addiction, according to Jerome Judd, Mercy’s senior vice president and treasurer. “Things like that are impacted,” he said.

At least some members of Congress share the hospital executives’ concerns. Last month, some Republican lawmakers sent a letter to leadership pushing for the final plan to preserve the ability of hospitals and other entities, like affordable housing agencies and universities, to issue tax-exempt bonds.

“Private activity bonds finance exactly the sort of private public partnerships of which we need more of, not less,” they wrote. “These changes are incompatible with President Trump’s priority for infrastructure investment in the United States.”

It’s Tough to be Small

Some hospitals already opt to sell their bonds in the taxable municipal market to avoid disclosures and restrictions over how the proceeds are used, though they are typically larger entities that can secure advantageous rates because of the size of their deals. Patrick Luby, a municipal analyst at CreditSights, said smaller clinics with only a few million of bonds to sell would have a hard time accessing that market, which attracts corporate debt investors accustomed to big issues.

“Even what we would consider a large deal in the muni market is almost an odd lot in corporate bonds,” he said. “Very large hospital chains, large household name universities — global investors will buy those names, but they’re not going to buy a $15, $25, $50 million local hospital.”

If the House plan is enacted, hospitals “will have a really difficult time accessing the market,” he said.

 

Will Getting Bigger Make Hospitals Get Better?

https://tincture.io/will-getting-bigger-make-hospitals-get-better-d3c565223670

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This month, two hospital mega-mergers were announced between Ascension and Providence, two of the nation’s largest hospital groups; and, between CHI and Dignity Health.

In terms of size, the CHI and Dignity combination would create a larger company than McDonald’s or Macy’s in terms of projected $28 bn of revenue. (Use the chart of America’s top systems to do the math).

For context, other hospital stories this week discuss layoffs at Virtua Health System in southern New Jersey. And this week, the New Jersey Hospital Association annual report called the hospital industry the “$23.4 billion economic bedrock” of the state.

Add a third important item to paint the state-of-the-U.S. hospital-industry picture: Moody’s negative ratings outlook for non-profit hospital finances for 2018.

So will getting bigger through merger and consolidation make the hospital business better?

In the wake of the CVS-Aetna plan to join together, the rationale to go big seems rational. Scale matters when it comes to contracting with health insurance plans at the front-end of pricing and financial planning for the CFO’s office, and to managing population health by controlling more of provider elements of care from several lenses: influencing physician care; crafting inpatient hospital care; doing smarter, cheaper supply purchasing; and leaning out overhead budgets for things like marketing and general management.

But the Wall Street Journal warned today the “serious condition” of U.S. hospitals, despite these big system mergers.

Health Populi’s Hot Points: In the past two years, I’ve had the amazing opportunity of speaking about new consumers and patients growing into healthcare payors with leadership from hospitals in over 20 states, some more rural, some more urban, and all in some level of financial crisis mode.

After describing the state of this consumer in health and healthcare, and how she/he got here, I have challenged hospital leadership to think more like marketers with a fierce lens on consumer experience and values. That equal proportions of U.S. consumers trust large retail and digital companies to help them manage their health is a jarring statistic to these hospital executives. The tie-up between CVS and Aetna marries the retail health/healthcare segments and responds to this consumer trust issue.

But then, I remind them that nurses, pharmacists, and doctors are the three most-trusted professions in America.

These three professional clinicians are the human capital that comprise the heart of a hospital in a community.

Hospitals should be mindful that trust is necessary for patient/health engagement. And the trust is with hospitals if the organization chooses to leverage that goodwill for a value-exchange. Hospitals are economic engines in their local communities — often, the largest employer in town. “Everyone” in most communities knows someone who works in a hospital.

And hospital employees spend money in communities, bolstering local employment and tax bases.

Partnering with patients means empathizing with them as both clinical subjects and consumers. For the latter, refer to the sage column from JAMA which recommends that Value-Based Healthcare Means Valuing What Matters to Patients. This means thinking about the value-chain of the patient journey, from keeping people well in their communities through to managing sticker-shock in the financial office. The financial toxicity of healthcare is one risk factor threatening the hospital-patient relationship with the patient-as-payor.

As Mufasa told Simba in The Lion King, “You are more than what you have become. Remember who you are.”

 

 

Top Ambulatory EHR Systems by Hospital Implementation

https://www.definitivehc.com/news/top-ambulatory-ehr-systems?source=newsltr-blog&utm_source=newsletter&utm_medium=email&utm_campaign=12-12-17

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EHR system implementation has been on the rise over the past 10 years. This is, at least in part, attributed to the Centers for Medicare and Medicaid Services (CMS) Meaningful Use initiative that began in 2011. Under the Health Information Technology for Economic and Clinical Health (HITECH) Act, eligible providers who demonstrated meaningful use of Electronic Health Record (EHR) technology received incentive payments. The intent was to encourage healthcare providers to utilize electronic data recording and sharing technology to improve clinical quality and care transparency.

More than 92 percent of hospitals in the U.S. use an EHR system, according to Definitive Healthcare data. The implementation rate is even higher among acute care hospitals, with over 95 percent of long- and short-term facilities using EHR systems. Vendors Epic and Cerner dominate the EHR market, holding a combined 52 percent market share. There are two varieties of EHR systems: inpatient and ambulatory. Inpatient EHR is designed for use on patients staying at a facility for at least one night and is therefore primarily used by hospitals. Ambulatory EHR is designed for outpatient facilities and small physician practices, where patient visits do not include an overnight stay.

Top 5 Ambulatory EHR System Vendors

  1. Epic
  2. Cerner
  3. Meditech
  4. CPSI (Evident and Healthland)
  5. Medhost

An EHR is the digital version of a patient’s medical history. Generally, a patient’s EHR includes demographic information, diagnosis history, prescription data, laboratory results, vital signs, immunizations, progress notes, and more. Digital records allow providers to quickly and easily share patient data with providers in other facilities, regardless of whether the facility is in-network. Electronic record sharing can improve patient care and experience by allowing providers anywhere to access and understand an individual’s medical history. This is particularly useful in cases where a patient may be unconscious or unable to communicate upon arrival to a facility, when a patient is visiting a facility out-of-state, or if a patient visits a retail clinic or freestanding urgent care clinic.

 

What all these health care mergers mean for patients

The health care industry is on a mergers-and-acquisitions bender right now. But, as my colleague Bob Herman reports this morning, it’s not clear whether all of that consolidation will leave patients any better off.

  • Five proposed megamergers have been announced just within the past few weeks. They would create the top two largest non-profit hospital systems in the country. The proposed CVS-Aetna deal alone would be creating a giant pharmacy chain, clinic operator, pharmacy benefit manager and health insurer — all under one roof.

Why now? As more Baby Boomers age into Medicare and more low-income families gain coverage through the ACA’s Medicaid expansion, hospitals are taking on a lot more patients whose bills get paid by the government.

  • Merging into bigger, more concentrated health systems gives them more bargaining power with private insurance, where they can command higher rates than what they get from Medicare and Medicaid

Yes, but: The risk to the broader system is that health care companies might see savings from mergers, but people won’t feel the benefits.

  • “If you become too big, you don’t have the incentives to turn that into lower prices for consumers. That’s sort of the sticking point for when the merger gets out of hand for its size and scope,” says Tim Greaney, a former Department of Justice antitrust official who’s now a health law professor at the UC Hastings.

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AARP: Congress must prevent ‘sudden cut’ to Medicare in 2018

http://thehill.com/policy/healthcare/363825-aarp-congress-must-prevent-sudden-cut-to-medicare-in-2018

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The AARP is urging House and Senate leaders to waive congressional rules so the Republican tax bill doesn’t trigger deep cuts to Medicare.

If Republicans pass their tax bill, which would add an estimated $1 trillion to the federal deficit, congressional “pay-as-you-go” rules would require an immediate $150 billion in mandatory spending cuts to offset the impact.

“The sudden cut to Medicare provider funding in 2018 would have an immediate and lasting impact, including fewer providers participating in Medicare and reduced access to care for Medicare beneficiaries,” AARP said in a letter sent to congressional leaders Thursday.

Under the bill, according to the Congressional Budget Office, Medicare would be faced with a $25 billion cut in fiscal 2018.

But Senate Majority Leader Mitch McConnell (R-Ky.) and Speaker Paul Ryan (R-Wis.) have promised the cuts won’t happen.

In a joint statement sent just ahead of the Senate vote on the tax bill last week, Ryan and McConnell said there is “no reason to believe that Congress would not act again to prevent a sequester, and we will work to ensure these spending cuts are prevented.”

Lawmakers have voted numerous times in the past to waive the rule, and even House conservatives have said they’ll likely support a waiver once the tax bill passes.

“I can’t imagine any scenario where there’s not a waiver for PAYGO,” House Freedom Caucus Chairman Mark Meadows (R-N.C.) said Wednesday. “It’s using a hammer when maybe a scalpel would do.”

But in the Senate at least, Republicans will need the support of Democrats to waive the rules. So far, they have been reluctant to offer it.