Tag Archives: Hospital

Medical Loss Ratio: Updates and Impact

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http://bhmpc.com/2017/04/medical-loss-ratio-updates-impact/

Medical Loss RatioMedical Loss Ratio

Healthcare spending is on the rise. The federal government has begun several initiatives to control costs, increase efficiency, and increase quality. Revisiting one of the Affordable Care Act’s (ACA) metrics, Medical Loss Ratio.

As we all know, healthcare costs are skyrocketing. The US government is trying to look at healthcare spending from all angles in an effort to control costs while increasing quality. It has become a balancing act. The evolution of the American Health Care Act (AHCA) leaves open the possibilities of re-imagining a number of provisions of the ACA increasing the effectiveness of reducing costs and increasing quality. One provisios of particular interest is the Medical Loss Ratio which was supposedly designed to add efficiency, reduce waste, and control administrative costs for a currently broken healthcare system.

Medical Loss Ratio  (MLR) Rule

MLR existed long before ACA; was used to evaluate performance of managed care companies. ACA created a federal standard and modified the calculation.

The Affordable Care Act requires health insurance companies to disclose how much they spend on health care and how much they spend on administrative costs, such as salaries and marketing. If an insurance company spends less than 80% (85% in the large group market) of premium on medical care and efforts to improve the quality of care, they must refund the portion of premium that exceeded this limit. This rule is commonly known as the 80/20 rule or the Medical Loss Ratio (MLR) rule.

Modern Healthcare reports, House conservatives and outside experts doubt HHS Secretary Tom Price has legal authority to substantially revise the Affordable Care Act’s key insurance market regulations and other provisions by issuing new rules and guidance. Price could also withdraw the rule released last year that overhauled regulation of Medicaid managed care programs. If Price tries to rescind that rule, network adequacy provisions, a medical loss ratio mandate for managed care plans, and managed long-term services and supports policies would all be eliminated.

Forbes reports this week, “The Trump administration can start by modifying Obamacare’s “medical loss ratio” rules, which dictate how insurers must spend the money they collect in premiums. If or when the MLR requirement ends, maybe the MLR’s impact and importance remains a visible measuring stick of performance.

CNBC used MLR in this story, yesterday. “UnitedHealthcare reported medical care ratio, or the amount it spends on medical claims compared with the insurance premiums that it brings in, of 82.4 percent, an increase of 70 basis point. “We see a positive set up for peers based on a read through of the company’s better-than-expected medical loss ratio and strong Medicaid performance,” Piper Jaffray analyst Sarah James said.”

11 health systems with strong finances

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http://www.beckershospitalreview.com/finance/11-health-systems-with-strong-finances-041117.html

Here are 11 health systems with strong operational metrics and solid financial positions according to recent reports from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.

Note: This is not an exhaustive list. Health system names were compiled from recent credit rating reports and are listed in alphabetical order.

1. Allina Health has an “AA-” rating and stable outlook with Fitch and S&P and an “Aa3” rating and stable outlook with Moody’s. The Minneapolis-based system has a leading market position in a competitive service area and favorable balance sheet metrics, according to Moody’s.

2. Coral Gables-based Baptist Health South Florida has an “AA-” rating and stable outlook with S&P. The system maintained key balance sheet metrics and generated better-than-projected financial results in fiscal year 2016, according to S&P.

3. Christiana Care Health Services has an “Aa2” rating and stable outlook with Moody’s. The Wilmington, Del.-based system has solid liquidity and a history of above average financial performance, according to Moody’s.

4. Froedtert Health has an “AA-” rating and positive outlook with S&P. The system has healthy financial metrics, and its market share in a competitive service area is improving, according to S&P. The debt rating agency expects Froedtert’s financial profile to remain consistent over the next one to two years.

5. St. Joseph, Mich.-based Lakeland Hospitals has an “AA-” rating and stable outlook with Fitch. The health system has a strong financial profile and leading market position, according to Fitch.

6. Mercy Health has an “Aa3” rating and stable outlook with Moody’s. The St. Louis-based system’s balance sheet measures and financial performance have improved in the last three years, according to Moody’s. The debt rating agency expects Mercy Health’s operating margins to continue to improve.

7. Dallas-based Methodist Health has an “Aa3” rating and stable outlook with Moody’s. The system has a low debt burden and strong balance sheet measures, according to Moody’s.

8. Seattle Children’s Healthcare System has an “Aa2” rating and stable outlook with Moody’s. The system has strong balance sheet measures and operating performance, according to Moody’s. The debt rating agency expects Seattle Children’s Healthcare System’s overall profitability to remain strong and its debt coverage measures to improve.

9. Madison-based University of Wisconsin Hospital and Clinics has an “Aa3” rating and stable outlook with Moody’s. The system has strong balance sheet resources and established clinical and academic market positions, according to Moody’s.

10. Richmond-based Virginia Commonwealth University Health System has an “Aa3” rating and stable outlook with Moody’s. The health system has solid operating performance and a strong credit profile, according to Moody’s. The debt rating agency expects the health system to sustain cash flow margins at close to current levels and maintain its liquidity.

11. WellSpan Health has an “Aa3” rating and stable outlook with Moody’s. The York, Pa.-based system has a strong and broadening market position and a track record of healthy financial performance, according to Moody’s

 

Patient Mortality During Unannounced Accreditation Surveys at US Hospitals

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http://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2610103

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Key Points

Question  What is the effect of heightened vigilance during unannounced hospital accreditation surveys on the quality and safety of inpatient care?

Findings  In an observational analysis of 1984 unannounced hospital surveys by The Joint Commission, patients admitted during the week of a survey had significantly lower 30-day mortality than did patients admitted in the 3 weeks before or after the survey. This change was particularly pronounced among major teaching hospitals; no change in secondary safety outcomes was observed.

Meaning  Changes in practice occurring during periods of surveyor observation may meaningfully improve quality of care.

Conclusions and Relevance  Patients admitted to hospitals during TJC survey weeks have significantly lower mortality than during nonsurvey weeks, particularly in major teaching hospitals. These results suggest that changes in practice occurring during periods of surveyor observation may meaningfully affect patient mortality.

Healthcare Competition Needs a Priority Check and Reset, Experts Say

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http://www.healthleadersmedia.com/leadership/healthcare-competition-needs-priority-check-and-reset-experts-say

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Farzad Mostashari, MD, the former National Coordinator for Health IT at the Department of Health and Human Services, and Martin S. Gaynor, a professor of economics and health policy, discuss how policy helps and/or harms competition in the healthcare marketplace.

Despite the near-universal agreement that the U.S. healthcare delivery system should remain market-based, there has been surprisingly little talk amongst government policy makers and private payers about the potential for stifling competition with over-regulation.

An essay this month in JAMA calls for a re-examination of how healthcare rules, regulations, and policies help or harm competition in the healthcare marketplace.

Farzad Mostashari, MD, the former National Coordinator for Health IT at the Department of Health and Human Services, and Martin S. Gaynor, a professor of economics and health policy at Carnegie Mellon University, two authors of the essay, spoke with HealthLeaders last week. The following is a lightly edited transcript.

US For-profit Hospital Outlook Holds Stable

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http://www.healthleadersmedia.com/finance/us-profit-hospital-outlook-holds-stable?spMailingID=10772724&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1140471104&spReportId=MTE0MDQ3MTEwNAS2

Moody’s foresees modest revenue growth, flat margins over the next 12 to 18 months; Profit margins will stabilize after a significant drop between 2015 and 2016.

The outlook for the for-profit hospital industry remains stable over the near term, with earnings expected to grow in the low-single digits over the next 12 to 18 months, while volume and pricing trends will continue to be modestly positive, Moody’s Investors Service says.

“Positive same-facility revenue growth and flat margins drive our stable outlook for the US for-profit hospital sector,” Moody’s Senior Vice President Jessica Gladstone said in a media release Thursday.

“Aggregate EBITDA will grow between 2.5% and 3.5% over the next year or so. Margins will hold steady as company-specific actions offset multiple industry challenges, including higher wage and benefits expense stemming from nursing shortages and increased physician employment.”

Gladstone says many companies’ margins will benefit as they integrate acquisitions and divest less-profitable hospitals and other facilities.

Moody’s projects patient volumes to increase 1% to 2% over the next 12 to 18 months, with declining unemployment and an aging population among the macro trends that will spur demand for healthcare.

However, structural shifts in payer programs that to reduce utilization and the cost of care by shifting patients to lower-cost settings will offset these positive trends, Moody’s says.

Higher private payer rates will be the main driver of revenue growth over Moody’s outlook period. Medicare rates for inpatient services will rise, though cuts to laboratory and outpatient reimbursement and reduced Medicaid disproportionate share hospital payments will constrain growth.

Hospitals will continue to employ specialist physicians and make capital improvements for more profitable procedures, contributing to pricing growth.

Political uncertainty doesn’t change long-term outlook for healthcare, Fitch says

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http://www.beckershospitalreview.com/finance/political-uncertainty-doesn-t-change-long-term-outlook-for-healthcare-fitch-says.html

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Fitch Ratings said it maintains a stable outlook and sector rating for healthcare, even as the current political climate generates uncertainty.

The agency initially published its 2017 outlook for the industry last December, shortly after the 2016 presidential election. Since then, the agency said rating actions on healthcare companies have primarily been affirmations, and it believes the medium- to long-term fundamental outlook for healthcare is intact. Fitch analysts added the drivers of healthcare trends have not significantly changed.

“As the industry struggles to meet the cost burden of increasing healthcare demand, the long-term solution will require finding a balance between an individual’s access to healthcare and its affordability,” Megan Neuburger, managing director of U.S. Corporates at Fitch, said in a news release. “Without any concrete solutions currently on the table, near-term uncertainty may force providers to rethink aspects of their business, but this is unlikely to overhaul the industry’s broader dynamics.”

Fitch cites a number of issues it believes are current risks to healthcare, including repeal and replacement of the ACA, drug pricing, the shift from fee-for-service to value-based care and healthcare consumerism.

The GOP’s ACA replacement plan was pulled from the House floor last month. However, Fitch said HHS could still potentially cut funding for federal cost-sharing subsidies that help individuals purchase insurance coverage.

Additionally, Fitch said federal lawmakers have introduced legislation with the goal of lowering drug prices. “Policy objectives are aimed at addressing both drug manufacturers taking advantage of supply dislocations to increase prices on established products and hefty price tags for new, truly innovative therapies,” the agency said.

As far as the shift to value-based care, the agency believes “both political parties are philosophically aligned on the benefits of alternative payment models like the Medicare Comprehensive Joint Replacement bundle, so they are likely to continue in some form, although the role government will explicitly play is still up for debate.” And regarding healthcare consumerism, Fitch noted patients’ desire for price transparency will continue as they take on more financial responsibility for their care.

Collection company president accused of stealing $1.6M from NYC hospital

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http://www.beckershospitalreview.com/legal-regulatory-issues/collection-company-president-accused-of-stealing-1-6m-from-nyc-hospital.html

The president of Rockville Centre, N.Y.-based collection firm MBI Associates was arrested March 29 and charged with first-degree grand larceny for allegedly stealing $1.6 million from St. Barnabas Hospital in New York City, according to Rockville Centre Patch.

According to prosecutors, from Nov. 25, 2012, to Feb. 18, 2015, MBI Associates failed to give St. Barnabas Hospital $1.6 million the company had collected for services provided to the hospital’s patients. Norman Alpren, the 71-year-old president of MBI Associates, allegedly used the $1.6 million to cover operating expenses for his company, according to the report.

Mr. Alpren’s lawyer Robert Abiuso told Rock Centre Patch he expects his client to be “vindicated at trial.” If convicted, Mr. Alpren faces up to 25 years in prison.

Markups on care can fatten hospital budgets—even if few patients foot the full bill

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http://www.fiercehealthcare.com/finance/markups-care-can-fatten-hospital-budgets-even-if-few-patients-foot-full-bill?mkt_tok=eyJpIjoiTUdJMU1UYzBZMlptTlRFNSIsInQiOiIxU3dwUGNwOEpwMmQyQk9NNklmU3NOaTVuY3FcL0t6UjNVeHhNMFdPRmplQktSNWRcL2NhdW50a2d3cmJrelBlWUxobkIyemU3TGpVejE4akRvT3RpekFOZW84bXpnaHFpcXl2ME1USCtCSVVKZ2Jhdldlc0tmRUFWbUY4Z1lLbzRLIn0%3D&mrkid=959610&utm_medium=nl&utm_source=internal

Finances

This story originally appeared in Kaiser Health News.

Few patients pay a hospital’s full price for a procedure or test. But a new study shows why those charges still matter.

Economists at the Federal Reserve Board and the American Enterprise Institute found that list prices, often dismissed as meaningless by the hospital industry, are a critical gauge of which hospitals ultimately receive higher payments.

An additional dollar in list price was associated with an additional 15 cents in payment to a hospital for privately insured patients, according to the study, which relies heavily on data from California. It was published Monday in the journal Health Affairs.

The researchers, Michael Batty and Ben Ippolito, also found key differences in list prices across hospitals and how much they were marked up, compared to operating costs. A large, for-profit urban hospital that was part of a chain had list price markups that were 360 percent higher than those of a small, independent nonprofit hospital in a rural area. (The hospitals were not named in the study.)

Consumers might assume that higher prices indicate better care and improved outcomes for patients. However, the study looked at rates of hospital readmission—a potential indicator of poor outcomes—and couldn’t find any evidence that higher list prices corresponded with better quality.

Hospital care accounts for a third of the nation’s $3.4 trillion in annual health spending. Hospital prices and payments are key to any discussion about bringing the high cost of healthcare under control for U.S. employers, government programs and consumers.

“High list prices do matter for patients,” said Ippolito, one of the study’s co-authors and a healthcare economist at the American Enterprise Institute, a conservative think tank in the District of Columbia. “This directly contradicts the mantra you hear from providers that there’s no reason to pay attention to this.”

 

WHO puts medication-related errors on global hit list

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http://www.fiercehealthcare.com/healthcare/who-puts-medication-related-errors-global-hit-list

Medication errors cause at least one death every day and injure roughly 1.3 million people each year in the United States alone. But it’s not only a national problem, and the World Health Organization is taking action to reduce these preventable adverse events worldwide.

The WHO aims to reduce severe, avoidable medication-associated harm in all countries by 50% over the next five years.

“We all expect to be helped, not harmed, when we take medication,” said WHO Director-General Dr. Margaret Chan in an announcement about its new initiative. “Apart from the human cost, medication errors place an enormous and unnecessary strain on health budgets. Preventing errors saves money and saves lives.”

Indeed, the costs related to medication errors are high. The WHO estimates the costs are $42 billion worldwide, almost 1% of total global health expenditure

To reduce these errors, the WHO intends to address weaknesses in health systems that lead to medication errors, offer ways to improve the way providers prescribe and distribute medicine, and increase patient awareness about the risks associated with the improper use of medication.

Reasons for the errors are often associated with health worker fatigue, overcrowding, staff shortages, poor training and wrong information given to patients. In many cases any of these causes or a combination of them can affect the prescribing, dispensing, consumption and monitoring of medications, according to WHO.

But all of these medication errors are potentially avoidable, according to WHO, if organizations put systems and procedures in place to ensure the right patient receives the right medication at the right dose via the right route at the right time.

“Most harm arises from systems failures in the way care is organized and coordinated, especially when multiple health providers are involved in a patient’s care. An organizational culture that routinely implements best practices and that avoids blame when mistakes are made is the best environment for safe care,” the WHO said in the announcement.

Although many organizations rely on health IT systems that are designed to improve prescription ordering and medication administration, a recent study finds these systems can actually contribute to medical errors. Some experts warn that digital prescription systems miss potential drug errors, and the Office of the National Coordinator for Health IT has called on vendors and providers to reduce the number of “pick list” medication errors.

To achieve its goal of cutting the number of these mistakes by half, WHO is calling on countries to focus on medicines with a high risk of harm if used improperly, patients who take multiple medications for different diseases and conditions, and patients who are going through transitions of care.

The initiative aims to make improvements in each stage of the medication use process including prescribing, dispensing, administering, monitoring and use. WHO aims to provide guidance and develop strategies, plans and tools to ensure that the medication process has the safety of patients at its core, in all healthcare facilities.