HOSPITALS SHOULD BE BRACING FOR SITE-NEUTRAL PAYMENTS

https://www.healthleadersmedia.com/finance/hospitals-should-be-bracing-site-neutral-payments

Even if the Trump administration were to delay its proposed site-neutral payments policy for outpatient facilities another year or longer, the political debate isn’t going away.


KEY TAKEAWAYS

Prominent hospital groups have said the rule, as proposed, would be illegal.

Lawmakers from both sides of the aisle in both chambers of Congress have voiced opposition.

Hospitals should do their long-term budgeting and strategizing with site-neutrality in mind.

A controversial proposal to cut reimbursement rates for hospital outpatient departments could be finalized this week if the Centers for Medicare & Medicaid Services hits its target date to publish the final rule.

The proposed change to the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System unveiled last July has drawn criticism from the American Hospital Association (AHA), America’s Essential Hospitals (AEH), lawmakers in both houses of Congress, and others who contend the so-called “site-neutral” payment policies fail to account for the added burden hospital-owned facilities shoulder.

Both AHA and AEH said in formal comments last month that the OPPS/ASC proposal for 2019 appears to be illegal. And lawmakers raised related concerns in two separate letters to CMS Administrator Seema Verma, suggesting the proposal flouts congressional intent.

A bipartisan group of 48 senators signed a letter last month urging CMS to rethink its approach, and a bipartisan group of 138 representatives followed suit this month with a letter of their own.

The political pressure could very well leave an imprint on the final version of the rule, which has been under review by the Office of Management and Budget since October 10. A spokesperson for CMS told HealthLeaders that the agency would not speculate on the potential outcome of the review process, reiterating the agency’s plan to publish the final version on or about Thursday, November 1.

But even if the Trump administration were to postpone the site-neutral payments policy another year or longer, hospitals should still be preparing for site-neutrality, since this political debate will play itself out over the next several years one way or another, says Greg Hagood, a senior managing director with the financial advisory firm SOLIC Capital.

That preparation for site-neutrality should include an ambulatory strategy with investments in outpatient settings, Hagood said, with a word of caution for hospitals and health systems.

“I think they need to do their budgeting, though, with an eye toward the fact that certain areas that have historically been anchors to the hospital—whether that’s the emergency room, cardiac care, or some of these hospital outpatient departments—are likely to see diminished margins,” he said.

Basing a budget around more-conservative revenue estimates for these service lines could prompt hospitals to rationalize their cost structures or even adjust their infrastructure, such as by reducing their number of clinics or inpatient beds, Hagood said.

Although the concept of site-neutrality “makes a ton of sense” on the surface, there’s also a complex history in how American reimbursement models have evolved over the past few decades, and hospitals provide expensive services that other outpatient facilities often don’t, such as indigent care, Hagood said. Switching to a site-neutral system would have “a very economically disruptive impact on a lot of large health systems,” he added.

The debate gains another layer of intrigue when you consider how any action taken by lawmakers will be perceived by their constituents.

“If you want to make a congressman vulnerable,” Hagood said, “you’ll say he was supportive of a policy that results in a closure of a hospital in your district.”

 

 

Universal Health Services Q3 income spikes 22%

https://www.healthcaredive.com/news/universal-health-services-q3-income-spikes-22/540697/

Dive Brief:

  • Universal Health Services reported net income soared 22% to $171.7 million during the third quarter this year compared to a year ago. Net revenue experienced a 4% bump to $2.65 billion during the same period. 
  • The King of Prussia, Pennsylvania-based hospital chain also said it put $90 million aside for civil matters related to the Department of Justice’s investigation into the company’s behavioral health facilities. Nearly $50 million was added to the fund during the third quarter, the company said Thursday.
  • UHS narrowed its full-year earnings guidance to be between $9.25 and $9.60 per diluted share compared to the previously range of $9.25 to $9.90. The upper range of the guidance was narrowed by 3%.

Dive Insight:

Mizuho analysts said that despite the softness, UHS “handily” beat its earnings expectations, largely driven by the hospital operator’s acute care unit. Both admissions and patients days increased in the company’s acute care facilities by 1.5% and 4.1%, respectively.

The DOJ is investigating whether some UHS facilities submitted false claims related to services allegedly provided at the sites. For Q3, behavior health facilities experienced admissions increases of nearly 5% and patient days barely increased — by 0.6%.

Net income for the first nine months increased nearly 26% to $674.3 million, or $7.16 per diluted share, as compared to $535.8 million, or $5.53 per diluted share, during the previous time period.

During the third quarter, UHS repurchased about 940,000 shares for a total of about $117.9 million. During the first nine months of the year, the company has repurchased 2.1 million shares for a total of $252 million, or about $120 per share.

UHS shares were down slightly to $121.50 for Thursday’s close, about 52 cents lower than Wednesday’s $122.02 close.

Community Health Systems and HCA both report third quarter earnings next week.

 

 

Community hospitals fight for survival amid ‘precarious’ financial outlook

https://www.beckershospitalreview.com/finance/community-hospitals-fight-for-survival-amid-precarious-financial-outlook.html

 

Many of the struggles facing hospitals and health systems are worse for community hospitals that  often resort to drastic measures to keep their doors open, according to the North Bay Business Journal.

Jan Emerson-Shea, vice president of external affairs for the California Hospital Association, called  the financial situation of most community hospitals “precarious at best,” partially because of low reimbursement rates from government payers, such as those made via her state’s MediCal Medicaid program.

“There’s a host of challenges that all hospitals face, but particularly these small, independent hospitals,” said Ms. Emerson-Shea. “Some of these hospitals file bankruptcy, some shut altogether, some are able to go to local voters, and some affiliate with larger healthcare systems that have the ability to keep them open and provide them access to capital.”

Sonoma (Calif.) Valley Hospital, a 75-bed facility, has been busy this year making moves to stay afloat. his year the hospital  closed its obstetrics unit, finalized an affiliation agreement with the University of California San Francisco Health and transferred ownership of its home healthcare service to Hospice by the Bay, a UCSF affiliate.

“It’s become clear that a community hospital can no longer try to be all things to all people, but must refocus on essential community needs,” said Kelly Mather, president and CEO of Sonoma Valley Hospital. “We’re all facing the same issues.”

 

Arizona hospital rebrands after bankruptcy

https://www.beckershospitalreview.com/finance/arizona-hospital-rebrands-after-bankruptcy.html?origin=cfoe&utm_source=cfoe

Image result for distressed hospital

Green Valley (Ariz.) Hospital has emerged from the bankruptcy process with a new owner and a new name, according to the Arizona Daily Star.

Green Valley Hospital entered Chapter 11 bankruptcy in early 2017 and received permission from the bankruptcy court to sell its assets. In January, Lateral GV, part of equity firm Lateral Investment Management, submitted the winning bid for the facility.

In February, the bankruptcy court approved the sale to Lateral GV, and the hospital emerged from bankruptcy in July with a new name: Santa Cruz Valley Regional Hospital.

Although the hospital exited the bankruptcy process, its financial challenges continued. Santa Cruz Valley Regional Hospital laid off 60 employees in July.

The hospital’s financial footing has stabilized over the past few months, and it is now looking to grow its workforce.

“We’re staffed and ready (for the influx in winter population) and look forward to adding more employees back in,” Santa Cruz Valley Regional Hospital CEO Kelly Adams told the Arizona Daily Star.

The hospital may also add more services in the future.

“I talk with patients every day, and they say they’re tired of going to Tucson for their healthcare,” Ms. Adams said. “This encourages us to bring more physicians in and more services.”

 

 

Bon Secours’ hospital proposal in Suffolk gets an edge over Sentara’s expansion request

https://pilotonline.com/news/local/health/article_a058693e-d630-11e8-a732-eb28ce327e7d.html

Bon Secours Harbour View Hospital

In a race to build-out hospital services in the northern part of Suffolk, Bon Secours has received an edge over Sentara.

State health staff, who reviewed expansion requests from both health care systems this summer, recently provided a recommendation of conditional approval for Bon Secours. Its proposal seeks to add 18 in-patient beds and four operating rooms to a facility at the Harbour View campus.

The plan calls for a two-story, 76,000-square-foot facility on the northeast corner of Bon Secours Drive and Harbour Towne Parkway. Bon Secours executives say it’s an effort to better reach western Hampton Roads patients and establish a short-stay, surgically focused hospital.

Within days of each other, Bon Secours and Sentara filed letters to state health officials seeking permission to add or move beds to their respective northern Suffolk campuses.

Bon Secours filed its letter of intent first to apply for a “certificate of public need” to move hospital beds and a few surgery rooms from its Maryview Medical Center in downtown Portsmouth. Days later Sentara submitted a similar request for in-patient beds, operating rooms and a CT scanner at its Sentara Belleharbour campus on Route 17 Bridge Road.

That plan would involve moving beds from Sentara Obici Hospital. Hospital executives have said the shift would meet patients closer to where they are: About 14 patients at Obici each day are coming from Belleharbour, said Dr. Steve Julian, president of Obici, in a June interview.

But the Sentara project “duplicates” services already available in the district, according to the state’s review, and would contribute further to the hospital system’s market dominance. Staff recommended denial of the request, stating it could be “harmful to competition in the region.”

In a statement issued through a spokesman, Julian said Sentara was disappointed with the review but would consider next steps in the state’s certificate of public need process.

“We believe our application offered the most benefit for the least cost in a hospital-ready building already under construction,” Julian said in the statement.

The competing mini medical center proposals demonstrate how hospital systems vie for turf – and how the state tries to weigh those requests in the balance of keeping health care costs reasonable for patients.

The state health commissioner will render a final decision on the projects later this year.

Two letters of opposition against the Sentara project appear to have factored into the staff’s preference for the Bon Secours plan.

Dr. Joseph Verdirame, former president of the medical staff at Obici, wrote that, since acquiring Obici, Sentara has migrated many resources away from downtown Portsmouth and central Suffolk to Belleharbour and Sentara Norfolk General. He believes those shifts are detrimental to care in central Suffolk.

In another letter, Virginia Slocum, strategic operations planning manager at Chesapeake Regional Healthcare, said Sentara doesn’t have enough competition and that allowing it to spend more on expansion could drive “increases in health care costs” for consumers. 

 

 

Anthem ER policy could deny 1 in 6 visits if universally adopted, JAMA study warns

https://www.healthcaredive.com/news/anthem-er-policy-could-deny-1-in-6-visits-if-universally-adopted-jama-stud/540241/

Dive Brief:

  • Anthem Blue Cross Blue Shield’s controversial policy that denies emergency coverage based on a patient’s diagnosis after a visit to the ER, would affect as many as one in six (15.7%) ER visits if adopted universally by commercial insurers, according to a new study from JAMA Network.  
  • Anthem’s policy is currently active in six states. In July, the American College of Emergency Physicians and the Medical Association of Georgia filed a federal lawsuit asserting that Anthem BCBS of Georgia is violating federal law requiring insurers to cover the costs of emergency care based on a patient’s symptoms rather than their final diagnosis.
  • “Our results demonstrate the inaccuracy of such a policy in identifying unnecessary emergency department visits,” Shih-Chuan Chou, lead author of the JAMA study, wrote. “This policy could place many patients who reasonably seek emergency care at risk of coverage denial.” 

Dive Insight:

As healthcare costs rise, insurers continue to seek ways to stem payments for emergency care, which hit their pockets the hardest. Anthem’s approach, taken in the summer of 2017, is to disincentivize what it deems to be unnecessary ER visits by denying coverage for patients with non-emergent ER discharge diagnoses. 

Earlier this year, UnitedHealth Group began reviewing ER claims with the most serious conditions in an effort to reduce or deny claims with improper evaluation and management codes. While similar in that they both crack down on ER visits, Anthem’s policy looks to move patients away from ERs and into less expensive urgent care centers and retail clinics, while UnitedHealth’s policy change is about making sure hospitals are billing properly.

The backlash has been much harsher for Anthem. According to a report issued this past July by Sen. Claire McCaskill, D-Mo., Anthem denied roughly 12,200, or 5.8%, of all emergency room claims in Missouri, Kentucky and Georgia from July 2017 to Dec. 2017 through this policy. Missouri’s hospital association was one of many health organizations to publicly oppose the policy.

In a statement to Healthcare Dive, Anthem defended its ER policy as a way to “ensure access to high quality, affordable healthcare” by encouraging consumers to receive care in “the most appropriate setting.” 

“If a consumer reasonably believes that he or she is experiencing an emergency medical condition, then they should always call 911 or go to the ED,” the statement reads. “But for non-emergency health care needs, EDs are often a time-consuming place to receive care and in many instances 10 times higher in cost than urgent care.” 

 

 

Dinged, Dented, Defiant: The ACA Is Still Standing

https://www.healthleadersmedia.com/dinged-dented-defiant-aca-still-standing

Texas v. Azar is the latest in a long line of lawsuits and legislation that Republicans have used to undermine the Affordable Care Act, which has shown itself to be remarkably resilient.


KEY TAKEAWAYS

A federal judge in Texas could slap a preliminary injunction on the ACA.

The case is the latest in a long string of efforts to dismantle the ACA since its inception in 2010.

A federal judge in Texas is poised to drop a ruling that could determine the future of the Affordable Care Act.

Or, maybe not.

The Republican plaintiffs from 20 states in Texas v. Azar argued before U.S. District Judge Reed O’Connor in early September that the entire ACA became unconstitutional when Congress zeroed out the individual mandate penalty, effective 2019.

Led by Texas Attorney General Ken Paxton, the Republican plaintiffs are asking for a preliminary injunction. The Department of Justice, which declined to defend portions of the ACA, also urged O’Conner to delay any injunction until after the enrollment period, saying any attempts to impose the injunction during the enrollment period would invite “chaos.”

If the injunction goes through, it could end premium subsidies for ACA beneficiaries and cripple enrollment. The Urban Institute has estimated that 17 million people would lose their health insurance coverage if the ACA was overturned.

As potentially catastrophic as this sounds, the healthcare sector doesn’t seem to be overly concerned. In fact, business couldn’t be better.

A report in Axios shows that many players in the healthcare sector are prospering under the ACA. The website notes that S&P 500 healthcare index of 63 major companies has grown by 186% since the ACA became law in 2010, outstripping the S&P 500 and the Dow Jones.

In addition, health insurance companies are flush. Shares of UnitedHealth Group have gone up more than 700% since 2010, and the stock price of ACA marketplace insurer Centene has gone up 1,100% over the same period, Axios reports.

While hospitals have had a tougher time of it, especially in states that refused to expand Medicaid, they’re still seeing reductions in charity care and bad debt owing.

Regardless of how O’Connor rules in Texas v. Azar, ACA payers, providers, and other stakeholders will continue to presume that the law isn’t going anywhere, says healthcare economist Gail Wilensky.

“They’re assuming it’ll be around, or something very similar will be,” says Wilensky, a former director of Medicare and Medicaid, and a former chair of the Medicare Payment Advisory Commission.

“I don’t think people are regarding any serious likelihood of it going away again,” she says.

Even if O’Connor, appointed to the court in 2007 by President George W. Bush, agrees with the severability arguments raised by the Republican governors and attorneys general in 20 states who brought the suit, the matter likely would get shot down on appeal, Wilensky says.

” I would be surprised if it doesn’t get reversed someplace else,” says Wilensky, now a senior fellow at Project HOPE.

“If it had go all the way to the Supreme Court, the Supreme Court isn’t going to tolerate it, but I don’t know that it would even get that far,” she says.

The case is just one in a long string of legal and legislative actions Republicans are taking at the state and federal level to either undermine or bolster the ACA.

Earlier this year, O’Connor sided with Texas and five other states and threw out an Obama administration tax on states receiving Medicaid funds.

The Republican-controlled Congress has tried more than 50 times to repeal Obamacare, and Senate Majority Leader Mitch McConnell said this week that Republicans may try again in 2019.

While the signature legislation of the Obama era has been dinged and dented, it’s also proven to be remarkably resilient.

Wilensky says the ACA is resilient because it solves a problem “for a small but non-trivial group of people,” and that Republicans don’t have a credible alternative.

“Once a benefit is in place for any measurable amount of time, certainly two or three years would qualify, there’s no precedent for removing it,” she says.

“And most of the proposals that had come up did not seriously get the job done,” Wilensky says.

“They really weren’t effective as an alternative and you simply aren’t going to take away a benefit, like the extension of insurance to people who are above the poverty line and not offered traditionally employer sponsored insurance without having a credible alternative.

“It’s just not going to happen because there are too many issues that have already been adjudicated at a more serious level,” Wilensky says. “I don’t know why they did this other than that this is 20 attorneys general and they’re running for something.”

 

 

 

 

Jersey City hospital to pay ‘voluntary’ taxes after city challenged tax-exempt status

https://www.nj.com/hudson/index.ssf/2018/10/jersey_city_hospital_settle_legal_matter_over_hosp.html

Jersey City Medical Center will pay Jersey City $550,000 annually in exchange for the city dropping an appeal of the hospital's tax-exempt status.

After city officials appealed Jersey City Medical Center’s tax-exempt status, the Downtown hospital has agreed to kick in $550,000 annually to the city’s coffers for the next six years.

The agreement, which is part of a legal settlement between the hospital and the city, comes three years after a tax court judge ruled that Morristown Medical Center should pay Morristown property taxes because it fails to meet the legal test that it operates as a nonprofit. That ruling led dozens of towns statewide to sue hospitals seeking tax revenue.

JCMC, now part of the RWJBarnabas Health system, owns four properties in Jersey City, tax records show. Its main campus, located on Grand Street in an upscale area of the city, is assessed at $126 million. If the hospital were not tax-exempt, it would pay $800,000 in property taxes this year, city attorney Nick Strasser told the City Council on Oct. 9.

The settlement, approved by council members on Oct. 10, comes in two parts. The first includes JCMC’s agreement to pay $300,000 in “voluntary” property taxes annually until 2023, retroactive to 2016. In exchange, the city will end its challenge of the hospital’s tax-exempt status and the hospital will drop its counterclaim.

A second agreement has JCMC agreeing on annual “health care collaboration” payments to the city, also retroactive. The payments for 2016 and 2017 will be $1 million total and from 2018 through 2023 they will amount to $250,000 annually.

The tax agreement does not preclude the city from challenging the hospital’s tax-exempt status after 2023.

A bill under review by state lawmakers would require nonprofit hospitals in New Jersey pay a “community service contribution” equal to at least $2.50 per bed daily. If that becomes law, the agreement between the city and JCMC would allow JCMC to reduce that contribution by the amount JCMC will pay under the settlement.

JCMC has about 320 beds.

At the council’s Oct. 9 caucus, Councilwoman Joyce Watterman asked if the settlement was the best the city could do.

“It’s perhaps not the best we could do but it’s definitely not the worst we could do,” Business Administrator Brian Platt told her. “The worst is actually zero, is what we get now.”

The council approved the JCMC agreements 8-0-1. Council President Rolando Lavarro abstained from voting. His wife, Veronica, works at Barnabas in media relations.

“Jersey City Medical Center is pleased that the City of Jersey City has accepted this agreement,” Veronica Lavarro said in a statement. “We look forward to our collaborative work to reduce health disparities and improving health equity in Jersey City.”

 

Bad Debt Grows as Out-Of-Network Benefits Shrink

https://www.healthleadersmedia.com/finance/bad-debt-grows-out-network-benefits-shrink?utm_source=silverpop&utm_medium=email&utm_campaign=ENL_181018_LDR_FIN_resend%20(1)&spMailingID=14460272&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1501451819&spReportId=MTUwMTQ1MTgxOQS2

Doc taking money

A lack of OON benefits leads to never-ending financial obligations for patients and a greater likelihood of bad debt for providers.

Surprise, sky-high medical bills have been irking patients and legislators a lot lately, but as the number of patients with out-of-network (OON) benefits shrinks, the problem of high bills will continue to grow, according to research from the Robert Wood Johnson Foundation.

A lack of OON benefits leads to never-ending financial obligations for patients and a greater likelihood of bad debt for providers, according to Katherine Hempstead, PhD, senior policy adviser at the Robert Wood Johnson Foundation.

Hempstead authored the new analysis, which looked at trends in OON benefits in the individual and small group markets.

“Out of network benefits have become much less common, especially in the individual market, where the proportion of plans with OON benefits has declined from 58% in 2015 to 29% in 2018 in the individual market,” she tells HealthLeaders via email.


“In the small group market, the decline was smaller: 71% to 64%,” she says.

However, even plans that do offer OON benefits increasingly have very high deductibles and maximum out-of-pocket (MOOP) caps.

For instance, in the individual market, the median OON deductible is approximately $12,000, the analysis shows. Some are even higher.

“A sizable share of plans in the individual markets have OON deductibles that exceed $20,000, and have no MOOP, meaning that patient obligations can continue infinitely,” Hempstead says.

For hospitals and health systems, all of this adds up to more patients who will be unable to pay their bills.

“The takeaway for revenue cycle managers is that most customers in the individual and small group market have little or no out-of-network coverage,” Hempstead says.

Because of this lack of OON coverage, hospitals and health systems should do some investigating beforehand.

“It will be important to ascertain in-network status before providing services, or the likelihood of bad debt will be high,” Hempstead says.

That’s something that hospitals and health systems can feasibly do, “especially if they have a price estimator tool,” says Donella J. Lubelczyk, RN, BSN, ACM-RN, CRC, CRCR, executive director of revenue cycle at Catholic Medical Center in Manchester, New Hampshire.

“They would need to do this with the patient and make sure the patients understand their out-of-network costs prior to selecting the service(s),” Lubelczyk says via email.

Patients also have a responsibility to know which providers are in and out of their networks.

A recent HealthSparq survey shows that 40% of patients who received a surprise bill said they could have done more to better understand their benefits and healthcare processes.

“Patients really need to understand their in-network plans, but most people do not and need to get assistance,” Lubelczyk says.

 

Hospitals Still Lagging on Cost Transformation Measures

https://www.healthleadersmedia.com/finance/hospitals-still-lagging-cost-transformation-measures?utm_source=silverpop&utm_medium=email&utm_campaign=ENL_181018_LDR_FIN_resend%20(1)&spMailingID=14460272&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1501451819&spReportId=MTUwMTQ1MTgxOQS2

Health system executives have to pick up the pace on implementing effective cost transformation initiatives, according to a new survey from Kaufman Hall.

The focus on adequately addressing the rising cost transformation issues facing health systems has not resulted in significant progress, according to an annual survey from Kaufman Hall.

The healthcare management consulting firm reported that less than 20% of healthcare executives surveyed saw cost reductions exceed 5% in priority areas in 2017. Additionally, the report raised concerns on the lack of accountability measures in place to ensure that leaders have consequences for achieving cost transformation goals for their respective organizations.

Data from executives surveyed:

  • 32% saying that goal setting for cost reduction is absent in their organizations.
  • More than 70% indicating a lack of confidence in the accuracy of their current costing accounting solutions.
  • 12% increase reporting that their organizations have implemented processes to hold leaders accountable for cost transformation goals.
  • 56% witnessing effective use of clinical pathways, protocols, and guidelines to develop a common approach to treatment, a 9% increase compared to last year.
  • 73% saying cost transformation improvement targets have been distributed across the organization, up from 53% in 2017.

Lance Robinson, managing director of Kaufman Hall’s performance management improvement practice, told HealthLeaders that while health system executives have focused on traditional areas of cost, like labor operations, they have overlooked other areas like service rationalization, clinical variation, length of stay, and integrating the physician enterprise. Robinson said those areas require immediate attention from hospital executives in order to sustain opportunities going forward.

“One thing I found surprising was that they’re not actually holding people accountable to the targets that are set,” Robinson said. “On the positive side, I think they have a good idea of what needs to happen. If you look at what factors are driving the need for cost transformation, like the move toward value-based care models and the advent of many disuptors in the industry, they need to be more price conscious and competitive.”

The report added that the need to generate capital to fund strategic initiatives is also driving system executives to revisit their cost transformation goals. Robinson said that as factors surrounding the system change, such as labor market and supply chain operations, executives have to evolve their cost transformation goals as well rather than seeking a “shot in the arm” to fix organizational weaknesses. 

While focus still revolves around traditional areas like labor and non-labor costs, Robinson said leading health systems are analyzing ways to address clinical variation, service rationalization, and other areas that can create meaningful change to their capital structure rather than reducing costs “around the edges.”