Safety-net providers operated with an average margin of 1.6% in 2017

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This is less than half their 2016 average and below the 7.8 percent average of other U.S. hospitals, according to the annual study.

Hospitals that serve vulnerable patients have much lower average margins that other providers, according to America’s Essential Hospitals.

The safety-net providers have persistently high levels of uncompensated and charity care that pushed average margins down to one-fifth that of other hospitals in 2017, according to the annual study, Essential Data: Our Hospitals, Our Patients. They operated with an average margin of 1.6 percent in 2017 — less than half their 2016 average and far below the 7.8 percent average of other U.S. hospitals, according to the data from Essential Hospitals’ 300 members.

While these hospitals represent about 5 percent of all U.S. hospitals, they provided 17.4 percent of all uncompensated care, or $6.7 billion, and 23 percent of all charity care, or $5.5 billion in 2017, the study said.

THE IMPACT

Amercia’s Essential Hospitals fears further financial pressure from $4 billion in federal funding cuts to disproportionate share hospitals slated to go into effect on October 1. This represents a third of current funding levels.

The DSH payments are statutorily required and are intended to offset hospitals’ uncompensated care costs. In 2017, Medicaid made a total of $18.1 billion in DSH payments, including $7.7 billion in state funds and $10.4 billion in federal funds, according to the Medicaid and CHIP Payment and Access Commission, or MACPAC.

MACPAC recommends starting with cuts of $2 billion in the first year.

The association and other organizations have been urging Congress to stop or phase-in the cuts. Speaker Nancy Pelosi said Congress must take action to ease the DSH cuts.

TREND

Since 1981, Medicaid DSH payments have helped offset essential hospitals’ uncompensated care costs.

The study data shows essential hospitals provide disproportionately high levels of uncompensated and charity care.

In 2017, three-quarters of essential hospitals’ patients were uninsured or covered by Medicaid or Medicare and 53 percent were racial or ethnic minorities. They served 360,000 homeless individuals, 10 million with limited access to healthy food, 23.9 million living below the poverty line, and 17.1 million without health insurance, the study said.

The association’s members averaged 17,000 inpatient discharges, or 3.1 times the volume of other acute-care hospitals. They operated 31 percent of level I trauma centers and 39 percent of burn care beds nationally.

ON THE RECORD

“Our hospitals do a lot with often limited resources, but this year’s Medicaid DSH cuts will push them to the breaking point if Congress doesn’t step in,” said association President and CEO Dr. Bruce Siegel. “Our hospitals are on the front lines of helping communities and vulnerable people overcome social and economic barriers to good health, and they do much of this work out of their own pocket. They do this because they know going outside their walls means healthier communities and lower costs through avoided admissions and ED visits.”

 

 

COMMUNITY HEALTH CENTERS MORE FINANCIALLY STABLE UNDER MEDICAID EXPANSION

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Facilities are faring better in states that expanded Medicaid, according to a new Commonwealth Fund report.


KEY TAKEAWAYS

A year after facing a federal funding cliff, CHCs in expansion states are thriving. 

CHCs provide care to 27 million patients each year, according to the Health Resources and Services Administration.

The financial stability of CHCs, which serve medically vulnerable communities, is a benefit for health systems.

Community health centers (CHC) operating in states that expanded Medicaid under the ACA are 28% more likely to report improvements to their financial stability, according to a Commonwealth Fund report released Thursday morning.

CHCs in Medicaid expansion states reported were more likely to report improvements in their ability to provide affordable care to patients, 76%, than their counterparts in non-expansion states, 52%.

More than 60% of CHCs in expansion states reported improved ability to fund service or site expansions and upgrades for facilities, while only 46% of CHCs in non-expansion states said the same.

These facilities reported higher levels of unfilled job openings for mental health professional and social workers, while also implying a greater openness to operating under a value-based payment model.

The success and viability of CHCs are essential for larger health systems, according to Melinda K. Abrams, M.S., vice president and director of the Commonwealth Fund’s Health Care Delivery System Reform program, adding that CHCs act as a strong foundation for providing primary care to medically vulnerable populations in rural communities.

Abrams said that by making sure patients are insured and receiving care up front, rather than delaying treatment and exacerbating their condition, they are less likely to end up in a hospital emergency room and contribute to a rise in uncompensated care for hospitals.

She also told HealthLeaders that populations with higher enrollment rates make it easier for CHCs to innovate, invest in technology, hire new staff, train existing the workforce, and adopt new models of care.

“[Medicaid expansion] makes it a lot easier to provide high-quality comprehensive care when [a CHC’s] patients have health insurance,” Abrams said. “In this particular instance, it’s a lot easier to innovate and have financial stability when you have more paying patients, which means that it is easier if you are [a CHC] in a state that has expanded Medicaid.”

The Commonwealth Fund report provides a welcome note of positivity for CHCs, which serve vulnerable populations primarily composed by the uninsured, but have faced funding challenges in the past.

During the budget battles that produced multiple government shutdowns throughout the early portion of 2018, advocates wondered anxiously whether Congress would provide long term funding to the nearly 1,400 CHCs operating at nearly 12,000 service delivery sites across the country.

According to the Health Resources and Services Administration, CHCs provide care to more than 27 million patients annually.

The Community Health Center Fund (CHCF), created in 2010 as a result of the ACA, is the largest source of comprehensive primary care for medically underserved communities, according to the Kaiser Family Foundation.

However, Abrams said that Medicaid expansion has also been a beneficial tool for CHCs, as they have begun to see more insured patients while also benefiting from Medicaid reimbursements, even though they are low compared to other reimbursement rates.

CHCs in states that expanded Medicaid have been able to grow the services that are offered while assisting in the ongoing fight against the opioid epidemic, according to the Commonwealth Fund report.

Abrams said that one downside to the growing success of CHCs have been the unfilled positions, mostly for mental health providers, that are falling behind rising demand levels, though she added that this finding is not surprising.

“I think it’s in part because the supply of the workforce is lagging a little bit behind the demand,” Abrams said. “There’s no reason to think that over time that this gap wouldn’t be closed. But we did find that as a challenge, that [CHCs] have a lot of positions open [yet] they’re hiring. A number of these CHCs are in economically depressed areas, so the good news is that there are some jobs available.”

CHCs are much more likely to participate in value-based payment models as a result of Medicaid expansion, with Abrams explaining that changes in payments and delivery models are common during insurance expansions.

She sees the continued progress made on the value-based front by CHCs as a way to “promote better healthcare and save money” over time.

 

 

HRSA rolls out drug pricing site for 340B hospitals

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Drug prices

After multiple delays, the Health Resources & Services Administration (HRSA) has finally launched an online tool that 340B hospitals can use to determine the maximum that pharmaceutical companies can charge for drugs.

HRSA’s new pricing site went live on Monday morning and is one of the elements mandated in the long-delayed final rule for the 340B drug discount program. That rule, which took effect on Jan. 1, also adds monetary penalties for drug companies that overcharge hospitals in the program.

The final rule was first issued in January 2017 and was delayed five times by the Trump administration before going into effect this year. HRSA finally rolled out the rule as it determined the provisions would not interfere with the administration’s broader drug pricing policy

Provider groups and 340B advocates cheered the website’s launch. Maureen Testoni, CEO of 340B health, a group that represents more than 1,300 providers participating in the program, said in a statement that the new tool’s release “marks a positive milestone in the history of the 340B program.” 

“Today’s launch of a secure website listing the maximum allowable prices for all 340B covered drugs brings a healthy dose of sunshine into a marketplace that has, for far too long, been a black box,” Testoni said. “Until today, hospitals, clinics and health centers participating in 340B had no way to be sure they were paying the correct amount for the drugs they purchase.” 

340B Health was joined by the American Hospital Association (AHA), America’s Essential Hospitals and the Association of American Medical Colleges on a lawsuit filed in September with the goal of pushing HRSA to implement the rule.

Tom Nickels, executive vice president at AHA, said in a statement that the group was “pleased” that its lawsuit led to the site’s launch.

“As prescription drug prices continue to skyrocket, the 340B program is as crucial as ever in helping hospitals provide access to healthcare services for patients in vulnerable communities,” Nickels said. 

Amid the drug price debate, the 340B program has been under the microscope. The program has enjoyed traditionally bipartisan support, but intense lobbying from the pharmaceutical industry has led to criticism that it has grown too large.

The Centers for Medicare & Medicaid Services also slashed the program’s payment rate in 2017, a shift in a longstanding Medicare policy that culled $1.6 billion in payments from the program. Hospital groups are currently battling the payment changes in court

 

 

Congress Warns Against Medicaid Cuts: ‘You Just Wait for the Firestorm’

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WASHINGTON — If President Trump allows states to convert Medicaid into a block grant with a limit on health care spending for low-income people, he will face a firestorm of opposition in Congress, House Democrats told the nation’s top health official on Tuesday.

The official, Alex M. Azar II, the secretary of health and human services, endured more than four hours of bipartisan criticism over the president’s budget for 2020, which would substantially reduce projected spending on Medicaid, Medicare and biomedical research. Democrats, confronting Mr. Azar for the first time with a House majority, scorned most of the president’s proposals.

But few drew as much heat as Mr. Trump’s proposed overhaul of Medicaid. His budget envisions replacing the current open-ended federal commitment to the program with a lump sum of federal money for each state in the form of a block grant, a measure that would essentially cap payments and would not keep pace with rising health care costs.

Congress rejected a similar Republican plan in 2017, but in his testimony on Tuesday before the Health Subcommittee of the House Energy and Commerce Committee, Mr. Azar refused to rule out the possibility that he could grant waivers to states that wanted to move in that direction.

Under such waivers, Mr. Azar said, he could not guarantee that everyone now enrolled in Medicaid would keep that coverage.

“You couldn’t make that kind of commitment about any waiver,” Mr. Azar said. He acknowledged that the president’s budget would reduce the growth of Medicaid by $1.4 trillion in the coming decade.

Representative G. K. Butterfield, Democrat of North Carolina, said that “block-granting and capping Medicaid would endanger access to care for some of the most vulnerable people” in the country, like seniors, children and the disabled.

Mr. Trump provoked bipartisan opposition by declaring a national emergency to spend more money than Congress provided to build a wall along the southwestern border. If the president bypasses Congress and allows states to convert Medicaid to a block grant, Mr. Butterfield said, he could face even more of an outcry.

“You just wait for the firestorm this will create,” Mr. Butterfield said, noting that more than one-fifth of Americans — more than 70 million low-income people — depend on Medicaid.

As a candidate, Mr. Trump said he would not cut Medicare, but his new budget proposes to cut more than $800 billion from projected spending on the program for older Americans in the next 10 years. Mr. Azar said the proposals would not harm Medicare beneficiaries.

“I don’t believe any of the proposals will impact access to services,” Mr. Azar said. Indeed, he said, the cutbacks could be a boon to Medicare beneficiaries, reducing their out-of-pocket costs.

After meeting an annual deductible, beneficiaries typically pay 20 percent of the Medicare-approved amount for doctor’s services and some prescription drugs administered in doctor’s offices and outpatient hospital clinics.

Mr. Azar defended a budget proposal to impose work requirements on able-bodied adults enrolled in Medicaid. Arkansas began enforcing such requirements last year under a waiver granted by the Trump administration. Since then, at least 18,000 Arkansans have lost Medicaid coverage.

Mr. Azar said he did not know why they had been dropped from Medicaid. It is possible, he said, that some had found jobs providing health benefits.

Representative Joseph P. Kennedy III, Democrat of Massachusetts, said it would be reckless to extend Medicaid work requirements to the entire country without knowing why people were falling off the rolls in Arkansas.

If you are receiving free coverage through Medicaid, Mr. Azar said, “it is not too much to ask that you engage in some kind of community engagement.”

Representative Fred Upton, Republican of Michigan, expressed deep concern about Mr. Trump’s proposal to cut the budget of the National Cancer Institute by $897 million, or 14.6 percent, to $5.2 billion.

Mr. Azar said the proposal was typical of the “tough choices” in Mr. Trump’s budget. He defended the cuts proposed for the National Cancer Institute, saying they were proportional to the cuts proposed for its parent agency, the National Institutes of Health.

The president’s budget would reduce funds for the N.I.H. as a whole by 12.6 percent, to $34.4 billion next year.

Mr. Azar was also pressed to justify Mr. Trump’s proposal to cut federal payments to hospitals serving large numbers of low-income patients. Representative Eliot L. Engel, Democrat of New York, said the cuts, totaling $26 billion over 10 years, would be devastating to “safety net hospitals” in New York and other urban areas.

Mr. Azar said that the Affordable Care Act, by expanding coverage, was supposed to “get rid of uncompensated care” so there would be less need for the special payments.

While Democrats assailed the president’s budget, Mr. Azar relished the opportunity to attack Democrats’ proposals to establish a single-payer health care system billed as Medicare for all.

Those proposals could eliminate coverage provided to more than 20 million people through private Medicare Advantage plans and to more than 155 million people through employer-sponsored health plans, he said.

But Mr. Azar found himself on defense on another issue aside from the president’s budget: immigration. He said he was doing his best to care for migrant children who had illegally entered the United States, were separated from their parents and are being held in shelters for which his department is responsible.

He said he was not aware of the “zero tolerance” immigration policy before it was publicly announced in April 2018 by Attorney General Jeff Sessions. If he had known about the policy, Mr. Azar said, “I could have raised objections and concerns.”

Representative Anna G. Eshoo, Democrat of California and the chairwoman of the subcommittee, summarized the case against the president’s budget.

“The Trump administration,” she said, “has taken a hatchet to every part of our health care system, undermining the Affordable Care Act, proposing to fundamentally restructure Medicaid and slashing Medicare. This budget proposes to continue that sabotage.”

 

 

 

 

Providers argue against Medicaid rate cuts without oversight

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States with at least 85% of their Medicaid population in managed care could implement nominal payment cuts without assuring care.

Hospitals, particularly rural providers, would be hurt by a Centers for Medicare and Medicaid Services proposed rule that would force them to take lower Medicaid rates without a review of the impact of the cuts, according to comments made to CMS asking for a reconsideration of the plan.

Provider organizations, hospitals, the Medicaid and CHIP Payment and Access Commission, are among those asking the Centers for Medicare and Medicaid Services to rethink its proposed rule.

Comments were due this week.

CMS proposed the rule in March to allow states that have a comprehensive, risk-based Medicaid managed care enrollment that is above 85 percent of their total Medicaid population to get around network adequacy rules when implementing “nominal” rate changes.

States had raised concern over the administrative burden associated with the current requirements, particularly for states with high rates of Medicaid managed care enrollment.

For states proposing nominal cuts below 4 percent a year or 6 percent over two years, the rule amends the process for them to document whether Medicaid payments in fee-for-service systems are sufficient to enlist providers to assure access to covered care and services.

These states would be exempt from access monitoring requirements and they would not need to seek public input on the rate reductions.

America’s Essential Hospitals said, “Requiring states to ensure, through monitoring, that rate reductions do not diminish access to needed services is particularly important now, as access monitoring reviews are the only vehicle left for providers to challenge state payment rate decisions.”

The Federation of American Hospitals contends that the rule would allow for more than nominal rate changes. If finalized, FAH said, the rule would allow for an estimated 18 states to implement a rate reduction of up to 12 percent over a period of four years or 16 percent over five years, without going through requirements for ongoing monitoring of the impact of the rate changes.

This would disproportionately impact vulnerable Medicaid beneficiaries and subject providers with unsustainable rate reductions, FAH said.

Most states, even those with very high rates of managed care enrollment, often exclude certain categories of particularly vulnerable groups from managed care plans, the organization said. People with physical, mental or intellectual disabilities or who are elderly, largely get services through fee-for-service, FAH told CMS Administrator Seema Verma.

The Medicaid and CHIP Payment and Access Commission said it did not find the states’ argument of administrative burden compelling enough given the federal government’s obligations to oversee state performance and assurances related to access.

“Moreover, exceptions to reporting may introduce gaps in oversight,” MACPAC Chair Penny Thompson said. “In short, the need for states to maintain resources and tools to monitor access as an ongoing element of state program administration and decision making outweighs the limited savings states would achieve as a result of these changes.”

 

Study: Meal delivery programs linked to fewer emergency visits, lower costs

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Providing home-delivered meals to food insecure people may decrease healthcare spending, according to a study published by Health Affairs.

For the study, researchers examined data for members of Commonwealth Care Alliance, a Boston-based nonprofit healthcare organization that serves adults ages 21 to 64 who are dually eligible for MassHealth (Medicaid) and Medicare. They specifically looked at members who were enrolled in a medically tailored or nontailored meal delivery program for at least six continuous months between January 2014 and January 2016. More than 130 medically tailored meals program participants and 624 nontailored food program participants were then compared with CCA members who were not enrolled in a meal program.

Researchers found medically tailored meals program participants experienced fewer emergency department visits, inpatient admissions and emergency transportation use compared with nonparticipants. They said nontailored food program participants also saw fewer ED visits and emergency transportation use, but not fewer inpatient admissions.

Additionally, both the medically tailored meal program and the nontailored food program were associated with lower medical spending, according to the study. The estimated average monthly medical spending per person was $843 for the medically tailored meals program compared with $1,413 for nonparticipants. For the nontailored food program, it was $1,007 for participants and $1,163 for nonparticipants.

“These findings suggest the potential for meal delivery programs to reduce the use of costly healthcare and decrease spending for vulnerable patients,” the study authors concluded.

 

 

U.S. Pays Billions for ‘Assisted Living,’ but What Does It Get?

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WASHINGTON — Federal investigators say they have found huge gaps in the regulation of assisted living facilities, a shortfall that they say has potentially jeopardized the care of hundreds of thousands of people served by the booming industry.

The federal government lacks even basic information about the quality of assisted living services provided to low-income people on Medicaid, the Government Accountability Office, a nonpartisan investigative arm of Congress, says in a report to be issued on Sunday.

Billions of dollars in government spending is flowing to the industry even as it operates under a patchwork of vague standards and limited supervision by federal and state authorities. States reported spending more than $10 billion a year in federal and state funds for assisted living services for more than 330,000 Medicaid beneficiaries, an average of more than $30,000 a person, the Government Accountability Office found in a survey of states.

States are supposed to keep track of cases involving the abuse, neglect, exploitation or unexplained death of Medicaid beneficiaries in assisted living facilities. But, the report said, more than half of the states were unable to provide information on the number or nature of such cases.

Just 22 states were able to provide data on “critical incidents — cases of potential or actual harm.” In one year, those states reported a total of more than 22,900 incidents, including the physical, emotional or sexual abuse of residents.

Many of those people are “particularly vulnerable,” the report said, like older adults and people with physical or intellectual disabilities. More than a third of residents are believed to have Alzheimer’s or other forms of dementia.

The report provides the most detailed look to date at the role of assisted living in Medicaid, one of the nation’s largest health care programs. Titled “Improved Federal Oversight of Beneficiary Health and Welfare Is Needed,” it grew out of a two-year study requested by a bipartisan group of four senators.

Assisted living communities are intended to be a bridge between living at home and living in a nursing home. Residents can live in apartments or houses, with a high degree of independence, but can still receive help managing their medications and performing daily activities like bathing, dressing and eating.

Nothing in the report disputes the fact that some assisted living facilities provide high-quality, compassionate care.

The National Center for Assisted Living, a trade group for providers, said states already had “a robust oversight system” to ensure proper care for residents. In the last two years, it said, several states, including California, Oregon, Rhode Island and Virginia, have adopted laws to enhance licensing requirements and penalties for poor performance.

But the new report casts a harsh light on federal oversight, concluding that the Centers for Medicare and Medicaid Services has provided “unclear guidance” to states and done little to monitor their use of federal money for assisted living.

As a result, it said, the federal health care agency “cannot ensure states are meeting their commitments to protect the health and welfare of Medicaid beneficiaries receiving assisted living services, potentially jeopardizing their care.”

Congress has not established standards for assisted living facilities comparable to those for nursing homes. In 1987, Congress adopted a law that strengthened the protection of nursing home residents’ rights, imposed dozens of new requirements on homes and specified the services they must provide.

But assisted living facilities have largely escaped such scrutiny even though the Government Accountability Office says the demand for their services is likely to increase because of the aging of the population and increased life expectancy.

That potential has attracted investors. “Don’t miss out on the largest market growth in a generation!” says the website of an Arizona company, which adds that “residential assisted living is the explosive investment opportunity for the next 25 years.”

Carolyn Matthews, a spokeswoman for the company, the Residential Assisted Living Academy, said: “Unfortunately, there has been elderly abuse in this business. We are trying to change the industry so the elderly have better quality care and we are not warehousing them.”

The government report was requested by Senator Susan Collins of Maine, a Republican who is the chairwoman of the Special Committee on Aging; Senator Orrin G. Hatch of Utah, a Republican who is the chairman of the Finance Committee; and two Democratic senators, Claire McCaskill of Missouri and Elizabeth Warren of Massachusetts.

The Trump administration agreed with the auditors’ recommendation that federal officials should clarify the requirement for states to report on the abuse or neglect of people in assisted living facilities. The administration said it was studying whether additional reporting requirements might be needed.

“Although the federal government has comprehensive information on nursing homes providing Medicaid services, not much is known about Medicaid beneficiaries in assisted living facilities,” the report said.

Assisted living was not part of the original Medicaid program, but many states now cover it under waivers intended to encourage “home and community-based services” as an alternative to nursing homes and other institutions.

The report said that assisted living could potentially save money for Medicaid because it generally cost less than nursing home care. Under the most common type of waiver, Medicaid covers assisted living only for people who would be eligible for “an institutional level of care,” in a nursing home or hospital.