Over 48,000 clinicians polled say payers are manipulating the surprise billing law.
Health insurers are acting in bad faith in a multitude of ways when it comes to the No Surprises Act, a survey by Americans for Fair Health Care (AFHC) reveals.
The coalition of clinical and advocacy organizations polled 48,005 physicians in 45 states to investigate concerns over insurer abuse in the surprise billing law. The survey results suggest that providers are often on the wrong end of power dynamics, which includes payers withholding payments, limiting patients access to in-network care, and ignoring mechanisms of the independent dispute resolution (IDR) process.
The No Surprises Act is meant to protect patients from unexpected bills when they receive services from out-of-network providers at in-network facilities. When there is a dispute between providers and payers over price, the two sides can enter an IDR arbitration.
However, according to the surveyed clinicians, 52% of payments determined by independent dispute resolution entities were not made at all, while 49% were not made in the required 30-day timeframe, and 33% were made in an incorrect amount.
Since going into effect on January 1, 2022, the No Surprises Act has run into a litany of problems. Providers have challenged the law several times in court, with the latest resulting in a federal court suspending the IDR process once again by striking down an increase in administrative fees for arbitration and restrictions on batching related claims.
The IDR process has also been inundated with a massive influx of disputes. A recent status update by CMS revealed a total of 334,828 billing disputes had been filed, nearly 14 times more than initially expected.
Litigation challenges and surveys such as the one conducted by AFHC have illustrated how providers feel about the balance of power within the law. Without the necessary cooperation from insurers, the No Surprises Act will continue to impose financial challenges that will fall on the shoulders of providers.
New analysis reveals UnitedHealthcare and Humana are expected to earn nearly half of total bonus payments.
Federal spending on Medicare Advantage (MA) bonus payments will reach at least $12.8 billion this year, with UnitedHealthcare the biggest winner among payers, according to research by KFF.
Bonus payments in the program have increased every year since 2015 and the 2023 figure represents an increase of nearly 30% ($2.8 billion) from 2022. As Medicare Advantage enrollment continues to grow, understanding how the quality rating system and bonus payments affect Medicare spending and beneficiary premiums will be critical, KFF analysts wrote.
Eighty-five percent of MA enrollees are in plans that are receiving bonus payments this year, compared to just 55% in 2015. The share of enrollees in plans that receive bonus payments this year is the highest since the current iteration of the program was implemented.
The average bonus payment per enrollee highest for employer- or union-sponsored MA plans ($460) and lowest for special needs plan ($374). Comparatively, the average bonus per enrollee is $417 for individual plans and $374 for special needs plans.
UnitedHealthcare will is expected to receive the biggest bonus payment at $3.9 billion, followed by Humana at $2.3 billion. The two payers, which account for 47% of all MA enrollment, will make up 49% of total bonus payments this year as payments largely correlate to distribution of enrollment.
Behind them are BCBS affiliates at $1.7 billion, CVS Health at $1.3 billion, Kaiser Permanent at $966.8 million, Centene at $321.6 million, and Cigna at $247.3 million.
The average bonus per enrollee ranges from $251 for those in Centene plans, to $523 for those in Kaiser Permanent plans.
As the share of MA enrollment in plans with at least a four-star quality rating increases, spending on bonus payments follows.
"This spending comes at a time when the Medicare program is facing growing fiscal pressures, which are exacerbated by growth in quality bonus program spending," analysts wrote. "Growth in the quality bonus program is projected to lead to faster growth in Medicare Advantage benchmarks (and corresponding spending) compared to traditional Medicare spending in upcoming years."
MA insurers experienced a rude awakening with star ratings in 2023 as the average rating across all plans declined to from 4.37 in 2022 to 4.15, while the number of a five-star contracts fell to 57, down from 74 in 2022.
Insurers like Centene are feeling the pain, with CEO Sarah London telling investors on a recent earnings call that the payer anticipates losing its only four-star MA contract.
The quality bonus program as a whole has received criticism for overpaying MA plans. A recent report by the Urban Institute found Issues with measures of beneficiary experience and administrative effectiveness, as well as the star rating system suffering from score inflation.
New findings reflect the differences in negotiating dynamics and financial incentives in the two markets.
Hospital prices for commercial health plans are, on average, two to three times higher than Medicare Advantage (MA) plans prices in the same location for the same service when negotiated by the same insurer, according to a new study published in Health Affairs.
With the cost of health insurance in the commercial insurance market increasing over the past decade, the research highlights how the commercial and MA markets face different financial incentives and regulations.
Using 2022 price information given by hospitals in compliance with the price transparency rule, the researchers examined the ratio of commercial-to-MA prices negotiated by the same insurer, in the same hospital, and for the same services.
The results showed that median commercial prices ranged between 1.8 and 2.7 times more expensive than MA prices across all services. In dollar terms, commercial prices were between $660 and $707 more expensive than MA prices, on average.
Within the same hospital, the median commercial-to-MA price ratio varied, from 1.8 for surgery and medicine services, to 2.2 for laboratory tests and emergency departments visits, and 2.4 for imaging services.
The price ratio is higher at larger, teaching, and system-affiliated hospitals, and is higher for larger national payers with a major presence in both the MA and commercial markets.
"High commercial prices are ultimately passed on to employees and their dependents in the form of lower wages, higher premiums, and higher out-of-pocket expenditures," the authors wrote. "The large price gap between commercial and MA prices within an insurer reveals the pricing consequences of differing incentives across markets."
Why would insurers knowingly negotiate commercial prices so much higher than MA? The study highlights that out-of-network prices for MA plans are set at 100% of Medicare fee-for-service rates, which means that hospitals receive Medicare fee-for-service prices from MA insurers if they don't join their network. This allows insurers more negotiating power for their MA plans.
Another explanation the authors posit is that insurers bear more risk for their MA plans than for their commercial plans.
"All else being equal, insurers may accept higher prices for their commercial plans if it allows them to remain competitive in the MA market, where gross margins are nearly twice as high per enrollee," researchers wrote.
The study's findings have implications for policymakers and stakeholders interested in containing commercial hospital prices, the authors said.
"Because insurers respond to differing incentives by negotiating substantially different prices across markets, policy and practice efforts that alter incentives for insurers may have the potential to lower commercial pricing."
The court invalidated the federal government's federal fee increase and batching restrictions as part of the No Surprise Act.
CMS has once again paused the independent dispute resolution (IDR) process for out-of-network bills after a Texas judge struck down portions of the No Surprise Act to side with providers in the latest chapter of a back-and-forth saga.
Judge Jeremy Kernodle for the Eastern District of Texas ruled in favor of the Texas Medical Association (TMA) by vacating an increase in administrative fees for arbitration processes from $50 to $350, as well restrictions on "batching" related claims for resolution in a single arbitration proceeding. Kernodle, however, didn't grant TMA's requests for a refund of previously paid fees and an extension of the IDR deadline.
This marks the second time CMS has had to suspend the IDR process this year—the first coming in February when Kernodle vacated the revised process, saying it unfairly favored payers. TMA has now challenged the law four times and expressed satisfaction with latest ruling.
"While the court declined to provide deadline extensions and certain other requested relief, we remain pleased with the overall outcome," Rick Snyder, TMA president, said in a press release. "Yesterday's decisions on batching rule provisions and administrative fees will aid in reducing barriers to physician access to the law’s arbitration process, which is vital to both patient access to care and practice viability."
While CMS reviews the court's decision and evaluates updates to the IDR process, the ruling is a win for revenue cycle leaders' bottom line. The 600% price hike was putting providers in the difficult position of deciding whether disputing a payer's payment was worth the increased fee.
The reason for the fee hike was attributed by the federal government to the increase in volume of IDR cases. CMS recently published a status update that showed a total of 334,828 billing disputes had been filed, nearly 14 times more than initially expected.
Seniors especially are slipping through the cracks without guidance on maintaining their coverage and benefits.
Many Medicaid members are being left in the dark during the redetermination process, according to a survey conducted by The Harris Poll on behalf of digital health platform Icario.
Millions are expected to lose Medicaid coverage during the unwinding of the continuous enrollment provision, which is why it's necessary for health plans to reach out to their members to assist with enrollment or guide those who are no longer eligible to other sources of coverage.
Yet, the Harris Poll/Icario survey, which polled 957 adults covered by Medicaid from July 18-20, found that 35% of members said their health plan didn't reach out about renewing their coverage.
"It's on health plans to engage with members and educate them on what needs to happen to avoid being disenrolled, and the survey results indicate a significant number of plans aren’t doing so sufficiently," Icario chief commercial officer Troy Jelinek said in the release.
Senior members have experienced the least outreach, the survey revealed. Over half (55%) of respondents aged 65 and older said their health plan hasn't contacted them to help with their coverage options.
"This means that plans can do a better job of tracking down their older members, who also tend to be a part of higher-risk populations, and educating themselves about communication preferences across age groups," Jelinek said.
When health plans have gotten in touch with members, 93% of respondents who were contacted said their health plan provided the appropriate information and resources to complete the renewal process.
The affects of Medicaid redetermination on payers are now being seen with insurers recently releasing their second quarter earnings report.
Elevance Health reported a loss of 135,000 Medicaid members in the second quarter but still experienced 13.2% net income increase year-over-year, while Centene CEO Sarah London said the company's Medicaid performance was "running slightly ahead of expectation."
Still, payers need to continue outreach efforts to ensure they can maintain as much of their membership as possible to help the bottom line during a time when many are focusing on cutting costs.
The company announced restructuring and layoffs to offset expenses as net income dropped in the second quarter.
CVS Health wants to trim up to $800 million in expenses in 2024 while shifting resources to expand Oak Street Health, the healthcare giant shared with investors in an earnings call.
The company released its second-quarter earnings, which showed a net income of $1.9 billion for a 37% decline year-over-year, and announced restructuring plans one day after eliminating 5,000 jobs to save $600 million.
"These actions enable us to reallocate resources and invest in critical growth areas, such as health services and technology, which are the biggest enabler of our strategy," CVS Health president and CEO Karen Lynch said on the call. "We've taken meaningful steps executing on our long-term strategy with tangible proof of the value of our unique integrated offering."
Despite beating Wall Street expectations with total revenue increasing 10.3% to $88.9 billion, CVS Health reduced its 2024 adjusted earnings per share target from $9 to a range of $8.50 to $8.70 and said it doesn't expect to reach its target of $10 for 2025.
Increased expenses stem from greater-than-expected Medicare Advantage utilization in outpatient settings, fewer COVID-19 cases contributing to lower volume in retail, and significant expansion of Oak Street Health clinics.
CVS Health completed its acquisition of Oak Street Health in May for $10.6 billion, adding 600 primary care providers and more than 170 medical centers across 21 states. The company expects to build 50 to 60 clinics next year, increase its reach to 25 states by the end of 2023, and open new Oak Street clinics co-located with CVS pharmacies this year, Lynch said.
The company also closed its purchase of home care provider Signify Health for $8 billion this year and is pursuing opportunity to connect it and Oak Street Health to its other businesses, such as CVS Pharmacy, Aetna, and MinuteClinic.
While CEOs everywhere are telling their CFOs to focus on cutting costs, innovating and using technology to optimize operations is a key trend for 2023.
Lynch said CVS Health is identifying opportunities to utilize technology, which includes "selectively using artificial intelligence for some time," while Oak Street Health president Mike Pykosz emphasized the advantage Oak Street has with the same operating model and same technology in all their centers.
The company will deal with headwinds across their set of assets in the coming year, but is proactively positioning itself to navigate a shifting financial climiate.
The latest Kaufman Hall report highlights that most hospitals continue to struggle despite overall stabilization.
Hospital margins for the year rose in June, but the divide between the haves and have-nots widened as expenses and economic pressures remained high, according to new Kaufman Hall analysis.
The consulting firm's National Hospital Flash Reportrevealed that most hospitals underperformed in June, even as the median year-to-date operating margin index increased to 1.4%, compared to 0.7% in May. Kaufman Hall noted that the bump was helped by fiscal year-end accounting adjustments.
"As margins continue to stabilize on the surface, the gap between high-performing hospitals and those struggling in this new financial environment is widening," Kaufman Hall said in the press release.
The report uses actual and budget data over the past three years, sampled from more than 1,300 hospitals from Syntellis Performance Solutions.
Other takeaways from the analysis include average length of stay remain on the decline, dropping 2% from May, while emergency department visits are down 1%. Operation revenue climbed by 2%, indicating "people are continuing to shift away from inpatient settings," the report stated.
The proportion of full-time equivalents per adjusted occupied beds fell 8% from May, which analysts said may illustrate workforce reductions and staff turnover.
Lowering labor expenses helped HCA Healthcare experience higher profits as the health system reported net income of $1.193 billion for the second quarter.
Kaufman Hall's report also showed that bad debt and charity per calendar day was up 3% from May, with hospitals affected by states increasing efforts to redetermine Medicaid eligibility, leading to more disenrollments.
"This 'new normal' is an incredibly challenging environment for hospitals," Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall, said in the press release. "It's time for hospital and health system leaders to begin developing and implementing a strategy for long-term sustainability, including expanding their outpatient footprint and re-evaluating where finite resources are being utilized."
Cost reduction is the focal point of CEOs, according to a new report from Deloitte. More than half (54%) of CFOs indicated that their CEOs are asking them to focus on cost reduction, while 40% said their CEOs want them focused on strategy/transformation.
The payer forecasts that its star ratings in the private program could suffer further after a difficult 2022.
Centene could soon be without any four-star Medicare Advantage (MA) contracts, CEO Sarah London told investors in the company's second-quarter earnings call.
After sharing that the payer expected "minimal progress" in adding four-star plans in the first-quarter call, London's most recent update warned that the insurer may lose its current lone four-star contract which represents 2.7% of its members.
MA plans with star ratings of at least four out of five qualify for bonus payments that are used to offer supplemental benefits to enrollees.
Due to CMS adjusting its methodology to account for the COVID-19 pandemic no longer being at the height it was in recent years, the average star rating and number of five-star MA contracts declined for 2023.
Centene in particular felt the drop among its 55 plans—the second-most to receive a star rating. According to CMS data, the payer represented all four two-star plans and had 20 policies receive 2.5 stars.
While the insurer is bracing to lose its only four-star plan, London stated on the call that "improvements in admin and ops and pharmacy measures" should result in progression among its other star rating contracts.
"While this is disappointing, we do expect to see meaningful movement in our three- and 3.5-star plans in October, and roughly two-thirds of our members are in plans showing year-over-year improvement," London said. "Pulling up these underperforming contracts represents tangible progress in delivering economic value to Medicare as we look to 2025 and beyond."
As a whole, Centene reported a strong second quarter, consisting of $1.1 billion in net earnings—a significant increase from $172 million in net loss year-over-year.
"Our balanced portfolio of core businesses delivered strong second quarter financials, with Marketplace growth and Medicaid performance both running slightly ahead of expectation," London said on the call.
Marketplace membership grew to 3,295,200, up from 2,033,300 over the same period in 2022, while the Medicaid business swelled to 16,059,600, compared to 15,446,000 year-over-year.
With the Medicaid redeterminations under way, London stated that the insurer is handling the process as expected so far.
The organizations say the agency's proposed standards will be both conflicting and costly.
The American Hospital Association (AHA), the American Medical Association (AMA), the Blue Cross Blue Shield Association, and AHIP came together to urge CMS to not proceed with implementing proposed prior authorization (PA) standards that the organizations stated would be costly and conflicting.
In a letter penned to the federal agency, the groups argued that the provisions of the December 2022 Notice of Proposed Rule Making (NPRM) would be detrimental "due to conflicting regulatory proposals that would set the stage for multiple PA electronic standards and workflows and create the very same costly burdens that administrative simplification seeks to alleviate."
The organizations shared their concern that the provisions would establish two different sets of PA standards. While the NPRM would require a combination of both X12 and Health Level 7 (HL7) standards, the Advancing Interoperability and Improving Prior Authorization NPRM would require health plans to offer HL7 Fast Healthcare Interoperability Resources (FHIR)-based application programming interfaces to support electronic PA information exchange.
Additionally, the groups highlighted that efforts to automate PA-related data exchange use HL7 FHIR implementation guides.
"This outcome would directly counter the foundational principles of the original HIPAA administrative simplification statute and regulations (i.e., adoption of electronic standards to support uniform communication between providers and all health plans); cause widespread industry confusion; slow implementation; and be enormously expensive for both health plans and providers, as they would undoubtedly need to implement technologies to meet the requirements of both NPRMs," the organizations wrote.
Prior authorization reforms have garnered widespread support and the need to streamline the administrative process is clear. A recent poll of 1,001 practicing physicians by AMA revealed that 89% of respondents felt PA had a negative impact on patient clinical outcomes.
However, enforcing a singular set of standards would be the most efficient way to get health plans to comply, resulting in less waste of resources and more timely care for patients.
Getting bills in patients' hands faster is paying dividends for the physical therapy group.
If you're a healthcare organization that's thinking of improving its payment collections strategy, don't hesitate to pull the trigger, says Janet Carbary.
The CFO of Integrated Rehabilitation Group (IRG) knows all too well the difference payment solutions can make to the bottom line. Since the 40-location physical therapy group based in the Northwest implemented mobile pay, patient collections have doubled while the organization has seen increased financial stability.
At a time when many providers are in turmoil due to the abundant financial challenges in the wake of the pandemic, IRG has opened four new clinics since January thanks to increased cash flows.
Carbary spoke with HealthLeaders on what has been working so well for IRG, how to identify the right technology to invest in and implement, and what other providers should consider when evaluating their collections strategy.
HealthLeaders: With the financial climate right now being what it is coming out of the pandemic, how have you found this time in your role as a CFO of a healthcare organization?
Carbary: Stressful. We had to rethink the way we did lots of things. We were considered essential, so we stayed open through the pandemic, but keeping staff, making our staff feel safe, making our patients feel safe… Even today, one of the biggest things that we have seen as an ongoing result is our no-show and cancellation rates went up pretty dramatically obviously through COVID, but have continued to remain really high. I don't think we'll see them drop back down. That's something that healthcare, especially outpatient settings where it's scheduled appointments, are going to have to deal with that's a little different. We used to average about 12% cancellation, no-show rate, and right now we're sitting at about 20%. That was a big change for us. Certainly staffing has been a big challenge for us.
Janet Carbary, CFO, IRG. Photo courtesy of IRG.
HL: What strategies have you utilized or are looking to in the future to deal with these financial challenges?
Carbary: We continue to grow. We continue to be available. We listen to our patients and what they want. There's a pent-up demand for therapy, so we've been trying to be responsive to that. We've looked for ways to make it more accommodating for our patients. Some of the things that we've done is, in the past you used to come in and have to fill out all the paperwork, or we would mail you the paperwork and you fill it out and bring it in with you. We now do it all online with tablets. Part of that paper trail with patients was we used to mail paper statements and now having electronic, the patient sees their balance immediately. Our patients have been asking for that for a while.
We also implemented technology that does online scheduling. We use software for the intake documentation and for our billing process and it made it very seamless to the patient. People want to access things on their mobile devices these days. They don't want paper. They don't want to deal with it and manage it that way. So those are three major things that we've adopted to make it easier for our patient to manage their care without a lot of barriers.
HL: How do you identify the right technology to invest in and how much of the focus is on improving patient experience?
Carbary: A lot of the focus is about improving the patient experience. We look at a couple of things. What are our patients asking for and complaining about, so to speak. We look at if we implement this, what is the ROI for the company as a whole? Can I have better patient satisfaction? Do I have less cancellations? Am I paid faster? So those are all things that I look for when we bring in new technology. If my COO had her way, we'd have all the bells and whistles. It's a slow roll out there.
Part of it is, in healthcare and technology, all the different systems don't often play nice together. That's always a challenge, getting them to interface. We looked for a long time for a mobile pay company and it was out there, but it unfortunately didn't interface with our EMR and our billing system. And then we found PatientPay and it did, so that that was a no-brainer for me to get the bills in patients' hands faster.
HL: For other providers that may be considering evaluating their collections strategy, what advice would you give them?
Carbary: Do it. If you can get the bill in the patient's hands sooner, you're going to get paid sooner. I know what happens in my home if I get a paper statement, it goes in a stack. And that's what was happening, it wasn't that people didn't want to pay their bill, it was just an antiquated process that didn't fill in with their workflow anymore. So anybody that's considering it, just do. Pull the trigger, you will not regret it.