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.
The health insurer's PXDX system rejected coverage for "hundreds or thousands [of claims] at a time," the lawsuit states.
Cigna is on the wrong end of a class action lawsuit that alleges the payer improperly denied members' claims through an algorithm.
The lawsuit was filed in the Eastern District of California by two Cigna members who claim they were both denied payment due to Cigna's PXDX algorithm—one plaintiff was rejected for an ultrasound and the other was denied for a vitamin D test.
According to the lawsuit, PXDX allows doctors to automatically reject payments "in batches of hundreds or thousands at a time," enabling Cigna to bypass the legally-required individual physician review process.
"Relying on the PXDX system, Cigna's doctors instantly reject claims on medical grounds without ever opening patient files, leaving thousands of patients effectively without coverage and with unexpected bills," the lawsuit states. "The scope of this problem is massive."
PXDX first came under fire in a ProPublicaarticle in March, which reported Cigna denied 300,000 requests for payments over two months in 2022 through the algorithm, spending an average of just 1.2 seconds reviewing each case. One Cigna doctor denied roughly 60,000 claims in a single month, according to the report.
The ProPublica article set off an investigation by the House Energy and Commerce Committee into Cigna's actions, as well as a probe by the Senate Permanent Subcommittee on Investigations into the use of algorithms to deny claims in Medicare Advantage.
In response to the recent lawsuit, a Cigna spokesperson said in a statement: "PXDX is a simple tool to accelerate physician payments that has been grossly mischaracterized in the press. The facts speak for themselves, and we will continue to set the record straight."
Further, Cigna hit back with a post on their website in which it detailed its claims review process, saying: "A recent media story riddled with factual errors and gross mischaracterizations may lead to a misunderstanding and distorted view of a simple process used by Cigna Healthcare and other health insurers to expedite payments to physicians and other providers. We are committed to being transparent about our policies and practices, and we are proud of the work our medical directors and other clinical experts do every day to help patients get the care they need and achieve value for both patients and their health plans."
The lawsuit also alleges that Cigna can utilize PXDX because it knows only a small fraction of members appeal denied claims, highlighting a Kaiser Family Foundation report that revealed only 0.2% of all denied claims by health insurers were appealed in 2021.
The case with Cigna raises more questions about the use of automation in claims processing. With AI's presence continuing to grow, the downside of implementing such technology has the potential to negatively affect patients and members.
Researchers synthesized individual studies to review the impacts of private equity ownership across healthcare settings.
Private equity ownership in healthcare more often than not negatively affects quality of care and costs to patients or payers, according to analysis published in The BMJ.
With private equity ownership accelerating across healthcare settings in recent years, researchers attempted to measure the impact by systematically reviewing and synthesizing 55 individual studies between 2000 and 2023.
Of the 27 studies that assessed quality, 12 found harmful impacts, three found beneficial impacts, nine found mixed impacts, and three were neutral.
When it came to measuring costs to patients or payers, researchers observed the most consistent pattern across all the impacts. Of the 12 studies examined, nine showed increased costs, three found no differences, and zero showed lowered costs.
Studies on health outcomes, meanwhile, produced no definitive conclusions, researchers said. Of the eight studies used, two found beneficial impacts, three found harmful impacts, and three were neutral.
Though arguments in favor of private equity ownership point to firms improving the acquired company's value through operational and financial changes, researchers stated that these changes often result in increased costs to patients and payers.
"The fact that no consistently positive effects of PE in healthcare were identified also provides an evidentiary basis to remain cautious about claims that PE ownership is a self-evident benefit to healthcare provision," the authors wrote.
The analysis also found a "noticeable influx" of private equity ownership in the past 10 to 15 years, with nursing homes the most common setting for growth. That was following by dermatology, ophthalmology, hospital settings, and general physician groups.
A recent report by the American Hospital Association revealed that private equity makes up the overwhelming majority of physician acquisition at 65%, ahead of physician groups (14%), insurers (11%) and hospitals and health systems (4%).
The full effects of private equity ownership, however, may not be known for some time, researchers of the study published in The BMJ stated.
Even though the analysis only captures a short time before and after private equity ownership, "the current body of evidence is robust enough to confirm that PE ownership is a consequential and increasingly prominent element in healthcare, warranting surveillance, reporting, and possibly increased regulation."
New analysis of low value care in the state looks at utilization and how it affected spending.
Coloradans received almost two million unnecessary healthcare services in 2021 which cost patients and payers approximately $134 million, according to a new report by the Center for Improving Value in Health Care (CIVHC).
Researchers examined claims from the Colorado All Payer Claims Database from 2017 to 2021 and used Milliman's MedInsight Health Waste Calculator to evaluate potentially low value services.
Of the 58 services analyzed, inappropriate opioid prescribing was at the top of the list for spending, accounting for 36% of all low value spending at $48 million.
That was followed by screening for Vitamin D deficiency at $12.4 million, prostate cancer screening at $6.6 million, imaging test for eye disease at $6.2 million, and coronary angiographies to assess risk in asymptomatic patients at $6 million.
"This most recent analysis puts crucial information into the hands of the people who need it most," Kristin Paulson, president and CEO of CIVHC, said in the press release. "Understanding the most frequent low value services occurring in Colorado and how much they cost can help health insurance companies, providers, and patients work together to improve care and lower costs."
The low value services evaluated cost $70 per instance on average, but some services like proton beam therapy for prostate cancer can cost almost $19,000 per procedure, the report stated.
Among payers, Medicaid and Child Health Plan Plus have the highest percent of spending on low value care, while top services by spending vary across payer type.
The report highlights that provider-focused and patient education interventions, as well as multi-stakeholder collaborations, have shown to have positive results to reduce low value care in other states.
"Initiatives are most effective when each unique low value care service is evaluated individually based on the patient diagnosis and history, patient expectations regarding treatment, and payment incentives," the report said.
A report by the Office of Inspector General (OIG) finds Medicaid managed care members may not be receiving all medically necessary services.
Medicaid managed care organizations (MCOs) denied one out of every eight prior authorization requests in 2019 and lack oversight of denials in most states, according to a report by OIG.
The HHS watchdog conducted the review after receiving a congressional request to gauge whether MCOs are properly providing services to their enrollees.
"In recent years, allegations have surfaced that some MCOs inappropriately delayed or denied care for thousands of people enrolled in Medicaid, including patients who needed treatment for cancer and cardiac conditions, elderly patients, and patients with disabilities who needed in-home care and medical devices," the report stated.
Researchers evaluated the seven MCO parent companies with the largest number of enrollees in comprehensive, risk-based MCOs across all states. In total, the companies operated 115 MCOs in 37 states, consisting of 29.8 million enrollees in 2019.
In addition to collecting data on prior authorization denials, OIG also surveyed State Medicaid agency officials to determine oversight of MCO prior authorization denials and appeals.
Of the 115 MCOs reviewed, 12 had prior authorization denial rates greater than 25%, twice the overall rate.
Even though denial rates were high, the report found that most State Medicaid agencies did not routinely review those rates and many did not collect and monitor data on these decisions.
"The absence of robust oversight of MCO decisions on prior authorization requests presents a limitation that can allow inappropriate denials to go undetected in Medicaid managed care," OIG wrote.
The report highlights how oversight of denials by private health plans is different in Medicare Advantage, which has a yearly review of a sample of denials by CMS and requires health plans to report standardized data on denials and appeals.
"These differences in oversight and access to external medical reviews between the two programs raise concerns about health equity and access to care for Medicaid managed care enrollees," the report said.
To improve access to care for Medicaid manage care enrollees, as well as bolster oversight, OIG recommended CMS do the following:
Require states to review the appropriateness of a sample of MCO prior authorization denials regularly.
Require states to collect data on MCO prior authorization decisions.
Issue guidance to states on the use of MCO prior authorization data for oversight.
Require states to implement automatic external medical reviews of upheld MCO prior authorization denials.
Work with states to identify and correct MCOs that may be issuing inappropriate prior authorization denials.
OIG said that CMS concurred with the fifth recommendation, but did not concur with the first four.
The payer saw "encouraging" signs that Medicaid members losing coverage are transitioning into Affordable Care Act (ACA) exchange plans.
Elevance Health charged forward in the second quarter by positing $1.9 billion in profits, despite dealing with a drain in Medicaid membership due to the redeterminations process.
In the company's second quarter earnings report, the payer said it lost 135,000 Medicaid beneficiaries, but managed a net income increase of 13.2% on revenue growth of 12.7% year-over-year to $43.4 billion.
As a whole, Elevance's medical membership increased 938,000 year-over-year to 48 million, driven largely by growth in Medicaid, BlueCard, ACA health plans, and Medicare Advantage members.
"Our solid execution and continued progress of our strategy to become a lifetime trusted health partner resulted in strong second quarter and first half results," Elevance president and CEO Gail Boudreaux said in a press release. "Our focused efforts to optimize our mature businesses, invest in high-growth opportunities, and accelerate our growth through Carelon to meet the whole health needs of consumers positions us well for the rest of 2023 and beyond."
To tackle Medicaid eligibility redeterminations, Boudreaux said in an earnings call that the payer has contacted more than 1.5 million of its Medicaid members to help them renew their coverage or enroll in forms of coverage.
One of those forms of coverage is ACA plans, which Boudreaux identified as a landing point for many members shifting from Medicaid.
"Transitions of coverage are not typically immediate, but emerging data points suggest consumers using Medicaid are starting to transition onto ACA exchange plans," Boudreaux said on the call. "It's still early in the process, and our expectations for coverage transitions remain unchanged. Our deep local roots and diversified product portfolio positions us uniquely well to meet consumers' needs, regardless of age or socioeconomic status."
John Gallina, Elevance executive vice president and CFO, stated on the earnings call that the company expects 40% to 45% of new Medicaid beneficiaries added during the public health emergency will stay on Medicaid by the end of the initial redetermination cycle. Meanwhile, 20% to 25% are expected to end up on employer-sponsored plans, with another 20% to 25% ending up in an individual ACA plan.
New polls reveal patients, nurses, and physicians face issues due to health insurance policies and practices.
Commercial health insurer policies create care barriers for patients, administrative burden for nurses and physicians, and high healthcare costs, according to surveys by Morning Consult for the American Hospital Association.
The polls included samples of 1,502 adults, 500 nurses, and 500 physicians between December 2022 and April 2023.
More than three out of five patients (62%) said they have had care delayed because of their insurer in the past two years, with 43% of those patients reporting their health worsened as a result.
When it comes to determining what care they receive, patients overwhelmingly (83%) prefer their provider decides, rather than their insurer.
Most nurses (84%) also said insurance administrative policies delay patient care, while 74% said it reduces the quality of care and 63% said it interferes with a patient being transferred to the right care setting.
Of the physicians surveyed, more than 80% said insurers affect their ability to practice medicine.
Further, 84% of physicians said insurer policies make it difficult to operate a solo practice and 56% of nurses reported their job satisfaction has decreased because of insurance administrative requirements.
"These surveys bear out what we've heard for years — certain insurance companies' policies and practices are reducing health care access and making it more difficult for our already overwhelmed clinicians to provide care," AHA president and CEO Rick Pollack said in a press release. "Health insurance should be a bridge to medical care, not a barrier to it for patients. If policymakers are serious about expanding access and addressing the health care workforce crisis, then we must hold insurance companies accountable for these harmful practices."
Another survey, by Kaiser Family Foundation, also found that most insured adults experience problems when using their insurance.
More than half (58%) of respondents reported experiencing issues with their insurance in the past 12 months, with problems ranging from denied claims to prior authorization hold-ups.
