GAO: rural hospital closures increasing, South hardest hit

https://www.healthcaredive.com/news/gao-rural-hospital-closures-increasing-south-hardest-hit/538604/

Dive Brief:

  • Hospitals across the U.S. are being battered by financial headwinds, and rural hospitals are vulnerable because they don’t have capital or diversified services to fall back on when the going gets rough. Between 2013 and 2017, 64 rural hospitals closed due to financial distress and changing healthcare dynamics, more than twice the number in the previous five years, a new Government Accountability Office analysis shows.  
  • Rural hospital closures disproportionately occurred in the South, among for-profit hospitals and among organizations with a Medicare-dependent hospital payment designation.
  • One potential lifeline was Medicaid expansion. According to GAO, just 17% of rural hospital closures occurred in states that had expanded Medicaid as of April 2018.

Dive Insight:

Declining inpatient admissions and reimbursement cuts have taken a toll on rural hospitals. Since 2010, 86 rural hospitals have closed, and 44% of those remaining are operating at a loss — up from 40% in 2017.

CMS Administrator Seema Verma released a rural health strategy in May aimed at improving access and quality of care in rural communities. Among its objectives are expanding telemedicine, empowering patients in rural areas to take responsibility for their health and leveraging partnerships to advance rural health goals.

The agency also expanded its Rural Community Hospital Demonstration from 17 to 30 hospitals. The program reimburses hospitals for the actual cost of inpatient services rather than standard Medicare rate, which could be as little as 80% of actual cost.

Such initiatives can be helpful, but if a hospital can’t make ends meet on its Medicare and Medicaid businesses and has only a modicum of privately insured patients, “that’s just not a balance that works financially,” Diane Calmus, government affairs and policy manager at the National Rural Health Association, told Healthcare Dive recently.

In all, 49 rural hospitals closed in the South, or 77% of rural hospital closures from 2013 through 2017, according to GAO. Texas had the most closures with 14, followed by Tennessee with eight and Georgia and Mississippi, each with five. By contrast, there were eight rural hospital closures in the Midwest and four each in the West and Northeast.

GAO also looked at closures by Medicare rural hospital payment designation. Critical access hospitals made up 36% of rural hospital closures, 30% were hospitals receiving Medicare standard inpatient payment, 25% had Medicare-dependent hospital designation and 9% were sole community hospitals.

To aid rural hospitals and ensure access for patients, NRHA has urged CMS to adopt a common sense approach to the “exclusive use” standard and lobbied lawmakers to pass legislation eliminating the 96-hour condition of payment requirement, two policies that are particularly hard on rural providers.

Another bill, the Save Rural Hospitals Act, would reverse reimbursement cuts to rural hospitals, provide other regulatory relief and establish the community outpatient hospital, a new provider type offering 24/7 emergency services plus outpatient and primary care.

 

 

 

 

 

Hospital profits in Massachusetts shriveling due to financial pressure

https://www.healthcarefinancenews.com/news/hospital-profits-massachusetts-shriveling-due-financial-pressure?mkt_tok=eyJpIjoiWWpFek9EVm1ZbU5tT0RWaSIsInQiOiI2YVwvTFhvMGpzWkpHSkttMFgrS253RWU5RlNJRE51ZzF0Zkdadjd4MmRKVVwvTUpYZW5qTjF2OU1LQnJcL3hDN1l4aGRnRmo0cWxGZk9CcXBRdm9Ga21iUkNhVG9XVTQ5UFZUbGZpbHRXTUgwcng4M081S3hpQ1dQMCt2N2lCQU5VTyJ9

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Hit especially hard were Massachusetts’ community hospitals, with median operating margins plunging to 0.9 percent.

Acute care hospitals in Massachusetts are turning a profit for the most part, but in many cases those profits are less than robust. The state’s Center for Health Care Information and Analysis found that many are in a financially precarious position.

According to the report, about 65 percent of the commonwealth’s hospitals have operating margins below three percent. Overall, hospitals’ operating margins hovered around 1.6 percent. That’s down from 2.8 percent during the previous fiscal year.

While 49 of 62 hospitals were profitable in the fiscal year ending Sept. 30, many low margins low enough not to be considered financially healthy.

Hit especially hard were Massachusetts’ community hospitals, with median operating margins plunging to 0.9 percent — down two full percentage points from the previous year.

The northeastern part of the state saw the lowest margins geographically, at 1.6 percent, with some facilities operating on negative margins and hemorrhaging cash. North Shore Medical Center in Salem was among the hardest hit, seeing $57.7 million evaporate in fiscal year 2017.

Not all Massachusetts hospitals are feeling those kinds of pressures. Northeast Hospital enjoyed a 9 percent operating margin during the past fiscal year, translating into a $33.1 million surplus.

That the state’s rural hospitals are struggling isn’t surprising, given the national trend. A recent report found that nearly half are operating at negative margins, fueled largely by a high rate of uninsured patients. Eighty rural hospitals closed from 2010 to 2016, and more have shut their doors since.

Aside from the high uninsured rate, a payer mix heavy on Medicare and Medicaid with lower claims reimbursement rates is a contributing factor. More patients are seeking care outside rural areas, which isn’t helping, and many areas see a dearth of employer-sponsored health coverage due to lower employment rates. Many markets are also besieged by a shortage of primary care providers, and tighter payer-negotiated reimbursement rates.

 

 

 

Proposed changes to 340B program would cut DSH eligibility by half

https://www.beckershospitalreview.com/hospital-management-administration/proposed-changes-to-340b-program-would-cut-dsh-eligibility-by-half.html

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A new congressional proposal would raise the minimum disproportionate share hospital adjustment percentage that DSH hospitals must meet to qualify for the 340B drug discount program, eliminating 340B eligibility for over half the participating hospitals, according to a study by 340B Health.

Under the bill, proposed by Rep. Joe Barton, R-Texas, 573 of the 1,115 DSH hospitals enrolled in the 340B program would no longer be eligible for the drug discounts. Under the current rules, DSH hospitals are eligible for the 340B program if their Medicare DSH adjustment percentage is greater than 11.75 percent. The proposal would raise the qualifying rate to 18 percent.

Here are the 10 states with the most DSH hospitals that would lose 340B eligibility under the proposal:

  1. California (39)
  2. Texas (35)
  3. North Carolina (33)
  4. Georgia (31)
  5. Ohio (29)
  6. Michigan (23)
  7. New York (21)
  8. Illinois (19)
  9. Alabama (19)
  10. Pennsylvania (18)

 

 

Vulnerable Rural Hospitals Face Quandaries Over Questionable Billing Schemes

Vulnerable Rural Hospitals Face Quandaries Over Questionable Billing Schemes

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Two rural Missouri hospitals recently handed over their operations to a private company that promised to turn them around with a billing practice it calls “a lab outreach program.”

But the approach that company is using is drawing attention from lawmakers and Missouri’s auditor. It is similar to a tactic underway at 20 rural hospitals in Missouri, Kansas, Oklahoma, Florida and California.

Read KHN’s previous coverage of this topic: “Outsiders Swoop In Vowing To Rescue Rural Hospitals Short On Hope — And Money” by California Healthline senior correspondent Barbara Feder Ostrov.

 

A Long Road to Care for Rural Californians

https://www.chcf.org/blog/long-road-to-care-for-rural-californians/

Cramped rural hospital in Happy Valley California

In the northeast corner of California, nearly kissing Nevada and Oregon, lies Surprise Valley. At approximately 70 miles long, the valley is home to 1,232 people, which works out to about two people per square mile. Services are sparse: The Chamber of Commerce website lists two grocery stores, one insurance agency, and one hospital with an emergency room to provide care to its residents.

Essential CoverageThat hospital, Surprise Valley Community Hospital, is a vital institution, but it is bankrupt. Barbara Feder Ostrov of Kaiser Health News reports that years of mismanagement caught up to the hospital in 2017. By the time state inspectors arrived that June, the hospital was in a state of disarray — crushed by debt, it had only one acute care bed and a chief administrator who was MIA. Residents of Surprise Valley were torn between keeping it open and shuttering it even though the nearest hospital with an emergency room is 25 miles away on the other side of a mountain pass. In the June 5 California election, county voters chose to sell the hospital to an out-of-state entrepreneur rather than risk the hospital’s closure.

Surprise Valley isn’t alone in its lack of access to health care. Since 2010, 83 rural US hospitals have closed, Michael Graff writes in the Guardian. For residents of rural areas, the closure of the local hospital can cut off a lifeline. When Portia Gibbs of Belhaven, North Carolina, had a heart attack in 2014, her husband, Barry, had to choose between driving her 60 miles east to a hospital in Nags Head or 70 miles west to a hospital in the town of Washington. Portia never made it to a hospital.

It’s difficult to attract physicians and hospitals to rural areas, where wages and reimbursement rates tend to be lower. “What happens is if you’re a cardiologist you have a tendency to move to the East Coast where you can get paid more for the same procedure,” said US Senator Jerry Moran (R-Kansas) in a meeting with HHS Secretary Alex Azar, according to Modern Healthcare.

Solving the Rural Hospital Puzzle

There is no easy fix for the decline in the number of rural hospitals, but Moran and other senators have proposed fixing the Medicare wage index. The index, which factors into reimbursement of hospitals serving Medicare patients, is a formula that accounts for geographic differences in wages and the cost of living. Some lawmakers contend that the formula penalizes rural hospitals and exacerbates the hospital shortage. Updating the index to increase payments to Medicare providers in underserved areas could draw more physicians to rural hospitals, which could help prevent hospitals from going under.

Some rural hospitals have tried another solution: joining multihospital systems. In California, where 25% of rural hospitals have closed over the past two decades, 19 rural hospitals have combined forces in systems composed of at least two other hospitals. However, our analysis of six of these hospitals showed mixed results for this strategy: The financial status of one rural hospital improved substantially after joining a system, but two others saw lower net income.

Perhaps a more feasible solution to lack of access to care in rural areas can be found in expanding the health care workforce. A study published in Health Affairsfound a growing presence of nurse practitioners (NPs) among rural practices nationwide. From 2008 to 2016, the number of NPs in rural areas increased 43%. Not surprisingly, “states with restricted scopes of practice had lower NP presence and slower growth.” The authors conclude that “adding nurse practitioners is a useful way for practices to align themselves with contemporary efforts to improve access and performance.”

It seems fitting and bittersweet to end this edition of Essential Coverage with our tribute to the late Herrmann Spetzler, the visionary CEO and the heart of Open Door Community Health Centers in rural Humboldt and Del Norte Counties. To underscore his commitment to providing health care in remote locales, he often described himself in meetings and speeches as “Herrmann Spetzler, RURAL.” Spetzler’s unexpected death in March cut short his life’s work to provide health care to everyone, regardless of income or geography. His passing leaves a huge hole in the community he served.

 

Auditor “shocked” by massive billing schemes at rural hospitals

https://www.cbsnews.com/news/questionable-billing-schemes-rural-hospitals-costing-health-insurance-companies-millions/

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Rural hospitals across the country are closing at the highest rates in decades. Since 2010, 83 have shuttered. Desperate to stay open, some hospitals got caught up in dubious billing schemes. In March, CBS News investigated questionable billing at rural hospitals in Georgia and Florida.

Insurance companies reimburse rural hospitals at higher rates to help keep critical healthcare in those communities. Those higher rates have made rural hospitals attractive targets for schemes that have generated nearly half a billion dollars in allegedly fraudulent billing.

In 2016, Missouri state auditor Nicole Galloway began examining the finances of several rural hospitals in her state. One was Putnam County Memorial, a 15-bed hospital in Unionville, Missouri, struggling to keep its doors open.

“We were shocked….When we started to look at the financial records and notice that tens of millions of dollars were coming through, I remember sitting down at the table with my audit staff and, you know, I just said we gotta dig deeper on this,” Galloway told CBS News’ Jim Axelrod.

Her team discovered a management company called Hospital Partners had swooped in weeks before Putnam was about to close, promising to turn it around. They made deals with labs around the country to funnel billing for blood tests and drug screens through Putnam, which collects higher reimbursement rates as a rural hospital. Putnam kept about 15 percent; most of the money was wired back to the labs and the management company.

“Essentially the hospital appeared to act as a shell company for these questionable lab billings,” Galloway explained. “In a six-month period, the hospital funneled through about $92 million in revenues. To put that in perspective, the previous year their total revenues were $7.5 million.”

And it wasn’t just happening at Putnam. According to court filings reviewed by CBS News, insurance companies are now attempting to claw back nearly a half a billion dollars they paid rural hospitals across the country with similar billing arrangements which they call “fraudulent.” They all declined our requests for an interview so we sat down with Jason Mehta, a former federal prosecutor who specialized in healthcare fraud.

“The question’s gonna be did the laboratories intend to cheat? Did they intend to trick? Did they mislead the insurance companies? Because simply making extra money isn’t a crime in and of itself. It’s the question of, was someone tricked? Was some deceived?” Mehta said.

Insurance companies say one way labs deceived them was paying kickbacks to healthcare providers for specimens they could then bill at the higher reimbursement rates. CBS News obtained a voicemail of a lab representative soliciting samples from a rehab center in California.

“He would send about, as soon as you guys sent 300 samples he would just send you $100,000 right then and there,” the representative is heard saying on the message.

“If I heard that message and we were talking about Medicare money, I would be very, very concerned and I would be opening an investigation immediately,” Mehta said. “In my experience, some of the most sophisticated actors in this space, some of the ones that….get the most amount of money from the healthcare programs, are those that know exactly where the line is, and skirt right up to that line.”

What Mehta told us could cross the line is a key finding of Nicole Galloway’s audit.

“Several months after the questionable lab billings had started, there was no operating lab in the hospital,” she said.

Which begs the question, how could they be billing for lab tests if there was no lab in the hospital?

In March, Blue Cross Blue Shield filed a $60 million lawsuit against Hospital Partners, alleging their arrangement with labs was a “fraudulent scheme.” Hospital Partners is suing Galloway, claiming she had no right to audit Putnam.

“They (Hospital Partners) are pushing back on us but I will tell you that will not stop me from doing my job on behalf of taxpayers,” Galloway said.

In a statement, Hospital Partners said “Putnam County Memorial Hospital is authorized by law to assign and bill for clinical laboratory testing provided at a reference lab.” On Tuesday, the Missouri Attorney General’s office told “CBS This Morning” it is actively investigating this matter.

 

 

340B Drug Program Sees Massive Changes on the Horizon

http://www.healthleadersmedia.com/health-plans/340b-drug-program-sees-massive-changes-horizon?spMailingID=12791316&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1321984466&spReportId=MTMyMTk4NDQ2NgS2#

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A proposal in the Senate aims to create savings for health providers while a new report details how to maximize the program’s pharmacy benefits.  

The 340B Drug Pricing Program represents ample healthcare and business opportunities to some, while others see it as a federal program in need of significant reforms to address outstanding cost concerns.

The program, which provides Medicare payments for outpatient drugs to hospitals serving high volumes of low-income patients, has garnered both praise and controversy in recent months. The program is viewed as crucial for rural hospitals attending to high Medicare populations, but also as a lightning rod for perceived governmental mismanagement.

Sage Growth Partners, a healthcare business consultant agency based in Baltimore, released a report Thursday titled, “Realizing the Full Power of 340B Pharmacy Benefits.” The report includes three distinct 340B models health systems can implement: do-it-yourself, contract pharmacy, or global managed services.

Dan D’Orazio, CEO of Sage Growth Partners, said while contract pharmacy models have been the most popular approach, businesses have to assess their own expectations and needs when getting involved with the 340B program.

“This report takes a look at how you decide to manage or operate one of these entities and whether you go it alone, find a commercial partner like a pharmacy or find a managed partner to help you do that,” D’Orazio told HealthLeaders Media. “There are different models to do that and I think they have different ramifications for profitability, patient care, coordination of care, and medication adherence.”

D’Orazio said recent reports have indicated the 340B program is “a little out of control” but said the public should not be scared, adding the program represents a “real opportunity” for health systems dealing with financial pressures. He also said the program’s rules are clear, though hospitals may need to engage with managed partners for experience and assistance with any lingering complexities.

Ire, attention center on 340B

Despite the enthusiasm to maximize 340B benefits, the program has sustained pointed criticism in recent months.

A recent Pacific Research Institute study found numerous cases of abuse and profiteering, ultimately urging Congress to reform the program. A report from the Department of Health and Human Services’ Office of Inspector General last month highlighted $4.4 billion in federal funds misspent on health care programs last year, including 340B.

Those interested in implementing the strategies detailed in the Sage Growth Partners’ report will have to account for legislative corrections, which could be on the way.

Sen. Bill Cassidy, R-La., introduced the HELP Act on Tuesday, which would create a moratorium on registering “new non-rural section 340B hospitals and associated sites.” In a press release, Cassidy stated his support for 340B while highlighting the need for improvement after documented instances of wasteful spending.

“But too often the program’s discounts are used to pad hospitals’ bottom lines instead of helping disadvantaged patients afford their treatments,” Cassidy said. “This bill will increase transparency and accountability and help ensure these discounts reach patients.”

The group 340B Health, which represents hospitals and health systems, issued a statement responding to Cassidy’s legislative proposal.

“We agree the 340B program is an important resource for hospitals and their patients, and support having a thoughtful conversation about transparency in the 340B program,” the statement read. “However, we are concerned by the proposals included in the HELP Act.

“If enacted, these changes would limit the ability of 340B hospitals to fulfill their mission to care for all Americans regardless of their ability to pay. The legislation would make changes to the rules on which hospitals can participate in 340B, which could reduce the number of hospitals that could qualify for the drug discounts. It would also impose significant new reporting requirements that would not shed any light on what hospitals do with their 340B savings to help patients.”

So far, the bill has not even advanced to a committee vote.