The payer giant is once again facing a dispute over reimbursement issues, this time from Howard Memorial Hospital.
Payer-provider relationships are already strained from the financial pressures coming out of the pandemic. What won't help the cause is the nation's largest health insurer allegedly failing to properly pay a small, nonprofit hospital.
Arkansas-based Howard Memorial Hospital has filed a complaint against UnitedHealthcare's Medicare Advantage program, claiming the insurer underpaid based on their contract, Southwest Arkansas Radio reported.
The hospital's CFO, Bill Craig, alleges that, according to the 31 accounts he analyzed, UnitedHealthcare underpaid by $250,000. Craig also said he's been working with the payer for approximately six months via email and UnitedHealthcare realizes they have been underpaying but hasn't resolved the issue.
The report states that the complaint was filed with the Medicare Part D complaint division on June 12 and that Craig said he would give the division about 45 days before following up and considering further action.
Howard Memorial Hospital's complaint against UnitedHealthcare comes quickly on the heels of another dispute over underpayment the insurer faced in recent months.
In May, UnitedHealthcare was ordered to pay $91.2 million to Envision Healthcare for reducing reimbursement for care provided in 2017 and 2018. An independent three-member panel of the American Arbitration Association ruled that the insurer breached the terms of the contract with the for-profit physician services provider by unilaterally cutting payments for services Envision rendered as an in-network provider.
"This decision sets a critical precedent for insurers like UnitedHealthcare to pay in full for the high-quality care its members receive in their most acute time of need," Jim Rechtin, CEO of Envision, said in a press release. "While we are disappointed that we had to take the step of entering into arbitration to compel UnitedHealthcare to pay its bills, we are satisfied with the panel's decision against UnitedHealthcare and its systematic underpayment to clinicians for the care they provide."
Contract negotiations between payers and providers are already contentious with both sides fighting to claim as much ground as they can.
When one side, particularly the one that often has more leverage, chooses not to honor an agreed-upon contract, it only erodes trust and creates more friction, which ultimately ends up hurting everyone in the healthcare system.
The estimated increase for payers is in both the individual and group market and outpaces projections for 2022 and 2023.
Healthcare costs will swell 7% next year as inflationary pressures impact health insurers' contracts with providers and drug costs continue to rise, according to PwC's annual report.
Researchers surveyed health plans covering 100 million employer-sponsored large and small group members and 10 million Affordable Care Act marketplace members to identify key inflators and deflators in 2024, as well as trends to watch.
The estimated 7% increase in year-over-year healthcare costs for 2024 is higher than the projected costs of 5.5% for 2022 and 6% for 2023.
"The higher medical cost trend in 2024 reflects health plans' modeling for inflationary unit cost impacts with their contracted healthcare providers, as well as persistent double-digit pharmacy trends driven by specialty drugs and the increasing use of certain medications used to treat Type 2 Diabetes or weight loss," the report stated.
The workforce shortage is expected to compound inflationary pressure, with providers continuing to seek higher reimbursement and rate increases from insurers in contract negotiations.
On the opposite end, factors like the shift in sites of care and biosimilar drugs coming to the market are projected to deflate costs.
"With the increased demand for home-based services and virtual care, the healthcare delivery system has reached a new phase," the report said. "Plans are factoring in higher utilization of less expensive care settings and virtual care when pricing their 2023 plans and beyond, helping plans offset the trend inflators."
Researchers also identified six issues that could influence medical costs going forward and are worth paying attention to:
Total cost of care management: This is expected to be deflator on costs as national insurers grow and acquire other plans.
COVID-19: The effect will likely be neutral as health plans did not report higher utilization of care stemming from suppressed demand during the pandemic.
Health equity: As health plans continue to focus on health equity, the short- and long-term effect is yet to be seen on plans' cost of care models.
Behavioral health: Utilization spiked during the pandemic but has since slowed down, with payers not anticipating it as an inflator in the future.
Price transparency rule: The regulation for health plans is still in its infancy after going into effect July 2022.
Medicaid redetermination: Most plans view this as neutral, with the individual market expected to feel the most impact.
The deal will exit Bright Health from the insurance business as it shifts its focus to consumer care.
Molina Healthcare is set to acquire floundering Bright Health Group's Medicare Advantage (MA) business in California in a deal worth approximately $510 million, net of certain tax benefits, the company announced today.
With the sale, which is expected to close in the first quarter of 2024, Bright Health is now completely out of the insurance business and will turn its efforts to its consumer care products, according to a press release put out by the insurer.
Bright Health said it will take the proceeds of the sale to pay off its debts and obligations to benk lenders, with the remaining funds going towards liabilities in its discontinued Affordable Care Act insurance business.
"We are excited to enter into this agreement with Molina as it will allow Brand New Day and Central Health Plan to continue delivering localized, personal care to California consumers and will position Bright Health's Consumer Care Delivery business for long-term success," Mike Mikan, president and CEO of Bright Health, said in a statement. "The sale allows us to focus on driving differentiation and sustainable growth through our Consumer Care Delivery business."
For Molina, the deal gains them Bright Health's Medicare membership of approximately 125,000 enrollees in 23 counties in California, with 60% overlap with Molina's Medicaid footprint.
As part of the purchase, Bright Health will also enter into an agreement with Molina to serve Medicaid and ACA Marketplace members in Florida and Texas in 2024.
Joe Zubretsky, president and CEO of Molina, said in a statement: "These additions fit perfectly with our strategy of serving high-acuity, low-income members and represent a textbook execution of our growth playbook. We acquire viable assets at attractive valuations, then deploy our proven team of operators to deliver improved financial results. We are pleased to continue our meaningful growth in California as the latest realization of our national growth strategy."
AdvancedMD's Amanda Hansen outlines what providers should consider as they pursue partnerships with private equity firms.
The turbulent nature of the current financial climate for private practice owners makes the concept of partnering with a private equity (PE) firm appealing.
Practicing independently can be liberating, but it can also come with burden that is currently being exacerbated by challenges like staffing shortage.
It's no surprise then that there's plenty of activity happening in the PE space as practices explore the possibility of selling and joining a larger group.
"Private equity activity, it can be exciting," says Amanda Hansen, president of cloud medical software company AdvancedMD. "There can be a draw, you can feel like there's going to be good financial payout and reducing that administrative person. But I think doing an honest assessment and making sure that if it is something you're considering that, similar to choosing a new vendor, you would do even more diligence on the PE firm that you're looking at."
For those wanting to take the leap into private equity M&A, Hansen detailed to HealthLeaders the five steps practices should take:
Clean up your KPIs
"The most important thing to help a process go smoothly and help PE firm make an educated informed decision is data," Hansen says. "If you don't measure it, you can't impact it. So make sure as a business you're measuring the right things to help a PE firm or anyone else understands how valuable the business actually is."
Those key performance indicators (KPIs) can be broken up into three different areas:
Clinical outcomes: Measure over time and show improvement in areas like no-show rate, preventative care measures, and patient satisfaction.
Financial health outcomes: On the billing and coding side, look at areas like revenue growth rate, net revenue per visit, operating margin, and collection rate.
Productivity data: Show that the physicians and staff are maximizing their time by measuring aspects like patient visits, average patient wait time, and billing and coding accuracy.
Improve your practice's financial health
Once practices measure their KPIs, it will become easier to see where the gaps and opportunities are to improve financially.
One of those areas of opportunity is often revenue cycle management (RCM). "Practices, providers, and physicians are leaving hundreds of thousands of dollars on the table by having poor revenue cycle management processes," Hansen says.
To improve RCM, practices can make sure they've negotiated favorable rates with payers, as well as making sure they're following up, working denials, and cleaning up denials on the front end.
"A really important one is enhancing your patient experience, which will drive better retention and it will drive more visits and more opportunity in the future," Hansen says.
Audit your workflow processes
Practices can drive efficiency by ensuring they don't have time or resources going unused.
"That can be looking at your operational effectiveness from the registration, from a check-in perspective, documentation," Hansen says. "It's automating administrative tasks that will help improve efficiency for your staff."
This could involve allowing patients to schedule appointments online themselves and making sure your schedule is updated so patients can be called if there are openings. Or it could mean allowing patients to upload their insurance card as part of the registration process so that they don't have to scan every time they go for an appointment.
Embrace innovation
Innovation became even more important during the COVID-19 pandemic, when healthcare still had to happen while everyone was sheltering in place.
That gave rise to telehealth, which went from a secondary option to the primary form of delivery of healthcare.
Being able to maximize value by coming up with and implementing similarly innovative solutions will allow practices to generate the most operating income possible.
"As a practice, it's making sure that you're evaluating what you do have and trying to find the best available out there in order to better position. It just makes the whole business look more attractive when you can do things efficiently and you're doing it with the least expense possible."
Implement the right technology
Finally, practices need to put in place technology that makes the most sense, which can be tricky with the wide range of options available.
Finding the right fit for your practice requires vetting, both of your own processes and of the vendor you're considering. After implementing the technology, practices also need to help staff understand why and how to use the system.
"There's some sort of balance that comes from making smart adjustments to your workflow to meet the system, but also making sure the system is customizable enough that it can also meet the needs of your workflow without having to disrupt your entire business," Hansen says. "So it takes a lot of diligence on the front end and the people that we've seen do that have had a lot of success down the road."
Following these five steps will benefit practices in both the short term and the long run, M&A activity or not.
"It's going to better position you to have a more successful business regardless of whether there's some sort of divestiture involved in that," Hansen says.
Research examines whether financial penalties are a useful policy enforcement mechanism to get hospitals to comply with price transparency regulations.
The answer to the question of what it will take to get more hospitals compliant with the price transparency rule is as simple as increased financial penalties, according to a study published in JAMA Network Open.
Researchers from Georgetown University and Harvard University looked at the responses of 4,377 acute care hospitals operating in 2021 and 2022 to changes in financial penalties by CMS for hospital price transparency regulations.
Financial penalties for noncompliance increased from $300 per day for all hospitals in 2021 to $10 per bed per day, with a minimum of $300 per day for hospitals with no more than 30 beds and a maximum of $5,500 for hospitals with 550 or more beds in 2022.
For the study, hospitals were deemed compliant if they posted a machine-readable file with private, payer-specific negotiated prices at the service-code level.
The analysis uncovered that between 2021 and 2022, compliance rates for the 4,377 hospitals increased by 17.3%, from 70.4% to 87.7%, respectively. Noncompliance rates decreased by more than half, from 29.6% to 12.3%.
According to the researchers, the findings suggest that increasing penalties by another $1.4 million per hospital would increase compliance rates above 95%.
To date, CMS has only hit four hospitalswith fines for not adhering to the rule:
Northside Hospital Atlanta in Georgia, fined $883,180
Northside Hospital Cherokee in Georgia, fined $214,320
Frisbie Memorial Hospital in New Hampshire, fined $102,660
Kell West Regional Hospital in Texas, fined $117,260
In a recent Health Affairsarticle by CMS leaders, the agency said it "plans to take aggressive additional steps to identify and prioritize action against hospitals that have failed entirely to post files."
The article also highlighted that hospital compliance had significantly improved since the agency's first assessment. Between January and February 2021, 66% of hospitals met consumer-friendly display criteria, 30% posted a machine-readable file, and 27% did both. Between September and November 2022, 82% of hospitals posted a consumer-friendly display, 82% posted a machine-readable file, and 70% did both.
For hospitals to be in full compliance, they must have both a machine-readable file with all items and services, as well as a display of shoppable services in a consumer-friendly format.
The Georgetown and Harvard researchers didn't account for the consumer shoppable service tool in their study, which likely led to higher estimations of compliance. However, hospitals have incentive to "quasi-comply" by posting prices that can be difficult to locate, the study noted.
"Quasi-compliance allows hospitals to minimize the costs of disclosing sensitive information while reducing their regulatory risk," the researchers wrote. "Characterizing this quasi-compliance phenomenon is an important direction for future work."
Ultimately, CMS can do its part to boost compliance by enforcing the rule and not letting hospitals skirt regulations.
"Overall, the results of this cohort study suggest that financial penalties may be a valuable tool for ensuring compliance with CMS policy when fines are sufficiently large, noncompliance is readily observable and well defined, and enforcement is credible," the researchers concluded.
Analysis by the American Hospital Association (AHA) reveals hospitals are not near the top of the list of groups acquiring physicians.
Physician acquisition is largely driven by private equity, physician groups, and payers, according to a report published by AHA.
The analysis of Levin Associates data finds that hospitals and health systems are not among the top three groups acquiring physicians since 2019.
Private equity makes up the majority of physician acquisition at 65%, followed by physician groups at 14%, insurers at 11%, and hospitals and health systems at 4%.
Additionally, the data shows that in deals where payers acquire physician practices, the average number of acquired physicians per deal was more than 10 times higher for insurers than for any other acquiring group. To this point, the report highlights acquisitions by CVS Health of Oak Street Health and Signify Health in deals that were valued at nearly $20 billion.
A separate report conducted by Morning Consult on behalf of AHA looked at the factors driving physician practice acquisition. Of the physicians polled, 94% said they believe it has "become more financially and administratively difficult to operate a practice."
Further, 81% said that commercial insurer policies and practices have "interfered with their ability to practice medicine" and 84% reported they have had job interference from commercial payers.
"As physician polling data has shown, most physicians are choosing to become employed rather than operate their own practice due to increased costs and burden from policies like commercial insurer prior authorizations," AHA wrote.
Medicare Advantage specifically has been identified as the most burdensome payer program when it comes to obtaining prior authorization.
A survey by the Medical Group Management Association revealed that 77% of physicians said they have hired or redistributed staff to work on prior authorizations due to an increase in requests, while 60% said there are at least three different employees involved in completing a single prior authorization request.
The group are urging CMS to enhance its proposed rule and build on the regulations for the administrative process.
CMS has released its proposed rule to streamline prior authorization in government-sponsored health insurance programs, but a contingent of lawmakers want the agency to go further.
A bipartisan group of 233 representatives and 61 senators penned a letter asking CMS to both expand the proposed rules and promptly finalize the changes to improve the administrative process in Medicare Advantage (MA), Medicaid, and Affordable Care Act exchange plans.
Specifically, the lawmakers are urging CMS to:
Establish real-time electronic prior authorization decisions for routine services.
Require plans to respond to prior authorization requests within 24 hours for urgent care.
Require detailed transparency metrics.
Combined with the Improving Seniors' Timely Access to Care Act, the prior authorization regulations would put in place electronic prior authorization processes for MA plans, accelerate prior authorization time frames, reduce administrative burden on providers and health plans, increase transparency around prior authorization requirements, and expand beneficiary protections.
"We urge CMS to promptly finalize and implement these changes to increase transparency and improve the prior authorization process for patients, providers, and health plans," the lawmakersstated. "We are pleased that these proposed rules align with the bipartisan, bicameral Improving Seniors' Timely Access to Care Act, which proposes a balanced approach to prior authorization in the [Medicare Advantage] program that would remove barriers to patients' timely access to care and allow providers to spend more time treating patients and less time on paperwork."
Prior authorization has particularly been a problem in MA. Despite longstanding concerns over the administrative process in the private program, a recent survey by the Medical Group Management Association found that little progress has been made. Of the medical groups surveyed, 84% said prior authorization requirements in MA increased in the past 12 months, with less than 1% reporting requirements had decreased.
With MA continuing to experience consistent growth, it's imperative that its expanding membership have access to necessary when they need it.
New research compares prices for eight shoppable services between physician-owned hospitals (POHs) and their competitors.
Median commercial negotiated prices and cash prices are lower for general acute-care POHs than for non-physician-owned facilities in the same market, according to a study published in JAMA Network Open.
Researchers examined 156 POHs and 1,116 non-POHs located in 78 hospital referral regions to better understand the differences in commercial negotiated prices and cash prices between hospitals for most common procedures.
The analysis focused on eight CMS-designated shoppable services: spinal injection, physical therapy–therapeutic exercise, MRI scan of lower spinal canal, CT scan of abdomen and pelvis, comprehensive metabolic panel, blood test-clotting time, and emergency department visit levels 3 and 4.
Using pricing information (as of January 2023) available through the hospital price transparency rule, the researchers expected to find that POHs would have higher prices than their competitors.
Instead, the study uncovered that for the same procedure in the same region, median commercial negotiated prices and cash prices among POHs were 33.7% and 32.7% lower than those of non-POHs, respectively.
Additionally, POH status was associated with 17.5% and 46.7% lower negotiated prices and cash prices, respectively.
MRI and physical therapy services had the biggest differences in commercial negotiated prices between facilities, costing 33% and 30% less at POHs, while CT and MRI services had the widest gap in cash prices at 36% and 35% lower at POHs.
Researchers posited that POHs might be able to accept lower commercial prices because they serve fewer Medicaid patients and provide less charity care. In the study, POHs served fewer Medicaid patients than non-PHOs at 3% vs 7.1%, respectively, and provided less charity care at 1.3% vs 3.2%, respectively.
Under the Affordable Care Act, POHs are prohibited from expanding or establishing new facilities, but there have been efforts to reverse the ban.
The American Hospital Association (AHA) recently pushed back on those efforts by releasing a study showing POHs treat less medically complex patients and have margins over 15 times higher than other facilities.
"The growth of physician-owned hospitals was restricted by Congress for good reasons and those remain valid today as this analysis shows," AHA president and CEO Rick Pollack said in a statement. "Physician-owned hospitals undermine our nation’s health care safety-net and jeopardize access to care by cherry-picking the most profitable cases and avoiding patients with complex conditions and lower-reimbursing coverage."
Analysis by Kaiser Family Foundation (KFF) examines consumer experiences with health insurance.
Though the majority of insured adults give their health insurance positive ratings, more than half experience problems when using their insurance, according to a KFF survey.
To better understand how people feel about their health coverage and how it works for them, the KFF Survey of Consumer Experiences with Health Insurance interviewed 3,605 insured adults with Medicare, Medicaid, or a health plan through the Affordable Care Act marketplace.
The data revealed that 81% of respondents give their insurance an overall rating of "excellent" or "good," with ratings varying based on health status.
Despite the positive ratings, 58% of adults said they have experienced a problem using their insurance in the past year, with issues including denied claims, provider network problems, and prior authorization snags.
Among those that reported issues with their insurance, nearly half said their biggest problem was either not resolved (19%) or resolved in a way they were unsatisfied with (28%). Furthermore, 17% said they were unable to receive recommended care as a direct result of their problems, while 15% reported they experienced a decline in their health and 28% said they paid more than they expected for care because of their problems.
The survey also asked the respondents how well they understand aspects of their insurance and found that 51% find at least one aspect of how their insurance works at least somewhat difficult to understand. Meanwhile, more than a third of adults (36%) said it is at least somewhat difficult for them to understand what their insurance will and will not cover.
Making health plans more understandable and easier to navigate can go a long way for payers in improving member satisfaction. According to the recent J.D. Power study, commercial health plans are struggling to meet patients' engagement needs as member satisfaction continues to decline.
"Having coverage is valuable to people, and so not surprisingly, most who have it rate it favorably overall," KFF wrote. "But we don't buy health insurance in case we stay healthy, so monitoring how coverage works for people who are sick is particularly important in gauging how well our health insurance system works when people need it the most."
Analysis by Kaufman Hall advises hospital and health system leaders on responding to present and future economic pressures.
The federal government and its current budget construct are the biggest challenges to healthcare organizations' financial sustainability, according to Kaufman Hall.
Eric Jordahl, the managing director of the financial and performance consulting company, offered his insight on how hospitals and health systems must adapt to the government dictating the financial environment as the leading payer.
Though an agreement to suspend the $31.4 trillion debt ceiling until January 2025 was reached earlier this month, the federal budget construct is unsustainable in the long term and Congress' eventual attempts to restructure spending will impact healthcare organizations, Jordahl writes.
The analysis highlights that the Congressional Budget Office (CBO) earlier estimated federal spending to reach $9.8 trillion (25% of forecasted GDP) by 2033 and debt held by the public to exceed $45 billion (118% of forecasted GDP) over the same period. CBO's estimates indicate that the 2023 debt ceiling agreement should generate around $1.3 trillion in savings over a decade, which Jordahl states isn't consequential due to expected expenditures.
"All this confirms that the greatest threat to healthcare's financial and credit foundation remains the federal government's role as lead payer," Jordahl writes. "Other important pressure points include state fiscal health and the specter of recession (which may work differently if continued hiring translates into a 'full-employment recession'). But the big resource engine is the federal government, and its current budget construct isn't sustainable."
Jordahl mentions that Congress can attempt one or a combination of: restructuring programs to reduce cost, raise taxes, or tolerate escalating debt. Regardless, " any solution is likely to mean constrained resources for healthcare."
To prepare, hospitals and health systems should improve cash flow to improve both internal capital and the ability to access external capital, Jordahl advises.
Focusing only on improving operational performance won't be enough—organizations should also aim to manage their balance sheet.
As hospitals and health systems continue to combat challenges stemming from the COVID-19 pandemic, they also need to plan for the realities of the federal budget, an issue that "is likely to define healthcare’s experience for the foreseeable future."
