The two voluntary initiatives will launch in 2020, and CMS Administrator Seema Verma called them 'prime examples' of modernized Medicare programs that ensure greater benefits at lower costs.
The Centers for Medicare & Medicaid Services on Friday unveiled a new payment model for Medicare Part D, and "transformative updates" to the Medicare Advantage Value-based Insurance Design.
"The American healthcare system is very different today than it was 13 years ago when the Medicare Advantage and Part D programs were launched in their current forms," CMS Administrator Seema Verma said during a media availability Friday. "But due to the slow pace of change in government, these programs have not been fully updated to reflect today's realities."
Verma called the two voluntary initiatives "prime examples" of how the Centers for Medicare and Medicaid Innovation can modernize programs to ensure greater benefits at lower costs.
"These two models ignite greater competition among plans, creating pressure to improve quality and lower costs in order to attract beneficiaries," she said.
Part D Tries a New Payment Model
The Part D Payment Modernization initiative is part of the Trump Administration's Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, which calls for increased competition, better negotiations, and creating incentives to lower prices and reduce out-of-pocket costs for seniors.
Under existing Part D, once a patient's prescription drug spending is high enough for the patient to enter the final phase of the benefit, known as the "catastrophic phase," Medicare is responsible for 80% of drug costs.
"This introduces perverse incentives and leaves plans with little reason to negotiate lower costs for the highest-spending patients," Verma said.
From 2008-2017, Verma said that federal spending during the Part D catastrophic phase has nearly quadrupled from $9.4 billion to $37.4 billion, an average increase of 17% per year.
In 2016, 3.2 million beneficiaries reached the Part D catastrophic phase, and those who didn't qualify for low-income subsidies paid average out-of-pocket drug costs of more than $3,000, Verma said.
"This structure introduces perverse incentives to push patients to the catastrophic phase and leave plans with little reason to negotiate lower costs for the highest spending patients," she said. "This means that plans are more likely to manage drug spending for low-cost patients, since plans are responsible for a greater share of drug costs at their level for the benefit structure."
Under the new model, which takes effect in 2020, plans will assume greater risk in the catastrophic phase, which creates new incentives for plans, patients, and providers to choose drugs with lower list prices, Verma said.
Based on plan year performance, Verma said CMS will calculate a spending target for what governmental spending would have been without plans taking on this additional risk. Part D plans will share the savings if they stay below the target but will be accountable for losses if they exceed the target.
"For the first time, the model also introduces a Part D rewards and incentives program to align this model with the changes to VBID, and to provide Part D plans with additional tools to control drug costs and help enrollees in choosing drugs with lower list prices," Verma said.
VBID Gets an Update
The updates to Medicare Advantage Value-based Insurance Design will also take effect in 2020 and Medicare Advantage plans across the United States will be able to apply.
The updates include:
Allowing plans to provide reduced cost sharing and other benefits to enrollees in a more targeted fashion, including customization for chronic conditions, socioeconomic status, and for benefits such as transportation.
Bolstering rewards and incentives that plans can offer beneficiaries to improve their health by permitting plans to offer higher-value rewards.
Increasing access to telehealth services, along with in-person options, to meet network requirements.
Verma said that beginning in the 2021 plan year, the VBID model will also test allowing Medicare Advantage plans to offer Medicare's hospice benefit.
"Today, hospice is covered separately under fee-for-service Medicare, so patients do not have a single provider network that is managing all of their conditions and taking responsibility for their overall health," Verma said.
"This change is designed to increase access to hospice services and encourage better coordination between patients' hospice services and their other clinicians," she said.
Average total drug spending per hospital admission increased by 18.5% between 2015 and 2017, forcing hospitals to cut staff, delay capital improvements, and develop alternative therapies.
Rising drug prices and shortages of critical medications are hurting patient care, and stressing hospital staffs and budgets, according to a new report commissioned by hospital associations.
The analysis, conducted by National Opinion Research Center at the University of Chicago, expands on a 2016 report commissioned by the American Hospital Association and the Federation of American Hospitals.
The updated NORC analysis found that hospitals continue to face budget pressures resulting from the ongoing "dramatic" increases in drug prices have hurt patient care, forcing hospitals to reduce staff, delay infrastructure improvements and develop alternative therapies.
The shortages also disrupt staff work flow and require significant staff time to develop work-arounds, the report said.
"This report confirms that we are in the midst of a prescription drug spending crisis that threatens patient access to care and hospitals’ and health systems’ ability to provide the highest quality of care," said AHA President and CEO Rick Pollack.
"Solutions must be worked on to rein in out-of-control drug prices and ease the drug shortages that are putting a strain on patient care,” he said.
The updated report showed that:
Average total drug spending per hospital admission increased by 18.5% between FY2015 and FY2017.
Outpatient drug spending per admission increased by 28.7% while inpatient drug spending per admission increased by 9.6% between FY2015 and FY2017. This 9.6% increase was on top of the 38% increase in inpatient drug spending between FY2013 and FY2015 included in the previous report.
More than 80% increases of unit prices were seen across different classes of drugs, including those for anesthetics, parenteral solutions, and chemotherapy.
More than 90% of hospitals reported having to identify alternative therapies to manage spending.
One in four hospitals had to cut staff to mitigate budget pressures.
Almost 80% of hospitals found it extremely challenging to obtain drugs experiencing shortages. Almost 80% also said that drug shortages resulted in increased spending on drugs to a moderate or large extent.
As HealthLeaders reported in December, the one-two punch of exorbitant prices and sketchy access to inpatient drugs have left hospitals across the nation reeling.
The shortages are often accompanied by dramatic price hikes. Sometimes the supply is readily available, but the price is prohibitively high, as is often the case when sole suppliers leverage their monopolies.
PhRMA on Wednesday morning did not respond to HealthLeaders' requests for comment on the study.
The software giant and the retail pharmacy chain signed a multiyear agreement, pledge to improve health outcomes and lower costs using digital and retail expertise.
Walgreens Boots Alliance Inc. and Microsoft Corp. have formed a seven-year partnership that they claim will create a patient-centered healthcare delivery system that improves outcomes and lowers costs.
In a joint announcement Tuesday, the two companies said they would partner to develop new care delivery models by combining the power of Microsoft's Azure cloud and artificial intelligence platform with Walgreens' customer reach, convenient locations, outpatient clinics and industry expertise.
"Improving health outcomes while lowering the cost of care is a complex challenge that requires broad collaboration and strong partnership between the health care and tech industries," said Microsoft CEO Satya Nadella.
The two companies committed to a multiyear research and development investment to build healthcare solutions, improve health outcomes and lower the cost of care. This investment will include funding, subject-matter experts, technology and tools.
The companies will also establish innovation centers in key markets, and this year Walgreens will pilot a dozen store-in-store "digital health corners" to sell healthcare-related hardware and devices.
"Our strategic partnership with Microsoft demonstrates our strong commitment to creating integrated, next-generation, digitally enabled healthcare delivery solutions for our customers, transforming our stores into modern neighborhood health destinations and expanding customer offerings," Walgreens CEO Stefano Pessina said.
"WBA will work with Microsoft to harness the information that exists between payers and healthcare providers to leverage, in the interest of patients and with their consent, our extraordinary network of accessible and convenient locations to deliver new innovations, greater value and better health outcomes in health care systems across the world," Pessina said.
Pessina said that Amazon's interest in entering the healthcare market was not an incentive for the Walgreens-Microsoft alliance.
"If they will come, they will create another ecosystem and people will live together," Pessina told CNBC. "We have never believed that someone could monopolize the market. We believe that if you do the right things you can drive even if you have hard competitors."
The two companies said they were brought together by the joint recognition of a need and an opportunity to fully integrate healthcare delivery to make it cheaper and more efficient "through data-driven insights."
The collaborative will focus on four key areas:
Connecting Walgreens stores and health information systems to people wherever they are through their digital devices to access healthcare services such as virtual care. The partnership will leverage the data gleaned from this service and insights gained from AI that could encourage medication adherence, and reduce emergency department visits and hospital readmissions.
Personalizing healthcare from preventative self-care to chronic disease management. Walgreens will provide lifestyle management tips for nutrition and wellness using digital devices and apps, and in-store expert advice.
Building a network of participating organizations to better connect consumers, providers, drug makers and payers.
Transitioning Walgreens IT platform to Microsoft Azure. The partnership will also provide Microsoft 365 to Walgreen's more than 380,000 employees across the world, to improve productivity, collaboration and customer engagement.
The early renewal of a four-year contract ensures that Humana's 21 million members will have in-network access to Tenet hospitals and ancillary healthcare services in 47 states.
Tenet Healthcare Corp. and Humana Inc., once locked in a bitter contract dispute, have renewed a long-term relationship.
The two companies announced jointly on Tuesday that they signed an early renewal of their current contract that extends their relationship through May 2023 and gives Humana's members in-network access toTenet hospitals, outpatient centers and employed physicians.
George Renaudin, senior vice president at Louisville, Kentucky-based Humana, said the agreement with Tenet "ensures continued in-network access to Tenet facilities and physicians for Humana members, and it reflects our ongoing commitment to provide a broad range of high quality healthcare options for the people we serve."
Tenet and Human were locked in a months-long contract dispute and severed ties on Oct. 1, 2016, with each side blaming the other. That dispute was eventually resolved, and Tenet hospitalsrejoined the Humana network in June 2017.
Dallas-based Tenet operates 68 acute-care and specialty hospitals in 47 states, an expanded network of clinics and outpatient services, and is affiliated with more than 32,000 physicians. Humana covers more than 21 million people nationwide.
Ron Rittenmeyer, Tenet executive chairman and CEO, said he was "pleased to have reached this agreement with Humana, and look forward to continuing to provide their members with high-quality care and trusted service today and into the future."
The injunction applies only in the 13 plaintiff states that filed suit against a Trump administration final rule allowing employers to deny birth control coverage based on religious grounds, and comes just hours before the final rule was set to take effect Monday.
Update (January 14): A federal judge in Pennsylvania issued a nationwide injunction Monday blocking these two new rules.
A federal judge in California has blocked a Trump administration final rule that would have allowed employers to deny birth control coverage for employees based on religious objections.
The ruling, which applies only to the 13 plaintiff states and the District of Columbia, was handed down Sunday afternoon, just hours before the final rule was set to take effect on Monday.
In his 45-page preliminary injunction, U.S. District Judge Haywood Gilliam Jr. in Oakland said California and the other plaintiff states in the suit had compelling claims that the final rule violates the Affordable Care Act, and that the plaintiff states would be harmed economically because women will have to use state programs to access affordable contraception and healthcare services.
However, Gilliam said his injunction would apply only to the plaintiff states, and not the rest of the country, owing to an earlier ruling from the 9th U.S. Circuit Court of Appeals,
"The Court fully recognizes that limiting the scope of this injunction to the Plaintiff States means that women in other states are at risk of losing access to cost-free contraceptives when the Final Rules take effect," Gilliam wrote. "On the present record, the Court cannot conclude that the high threshold set by the Ninth Circuit for a nationwide injunction, in light of the concerns articulated in the California opinion, has been met."
California Attorney General Xavier Becerra, the lead plaintiff in the suit, cheered the ruling.
"The law couldn't be clearer – employers have no business interfering in women's healthcare decisions," Becerra said.
"Today's court ruling stops another attempt by the Trump Administration to trample on women's access to basic reproductive care," Becerra said.
"It's 2019, yet the Trump Administration is still trying to roll back women’s rights. Our coalition will continue to fight to ensure women have access to the reproductive healthcare they are guaranteed under the law."
The Department of Health and Human Services, the lead defendant, did not issue a statement on the ruling. However, The New York Times cited Justice Department lawyers in the case arguing that HHS policymakers "reasonably exercised their rule-making authority to protect a narrow class of sincere religious and moral objectors from being forced to facilitate practices that conflict with their beliefs."
The Little Sisters of the Poor, interveners in the case,filed an appeal late Sunday.
Their attorney, Mark Rienzi with the Becket Fund for Religious Liberty, said Gilliam's ruling "will allow politicians to threaten the rights of religious women like the Little Sisters of the Poor."
"Now the Little Sisters have no choice but to keep fighting this unnecessary fight so they can protect their right to focus on caring for the poor. We are confident this decision will be overturned," Rienzi said.
The ruling applies to the plaintiff states of California, Connecticut, Delaware, Hawaii, Illinois, Maryland, Minnesota, New York, North Carolina, Rhode Island, Vermont, Virginia, Washington State and the District of Columbia. Oregon this month petitioned the court to join the suit.
The CEO of the renowned health system talks about its latest acquistions in Florida, the importance of aligning culture and caring, and the need for scale in the transition to value-based care.
Cleveland Clinic has officially welcomed two southeastern Florida health systems under the renowned brand.
With the acquisition of Martin Health and Indian River Medical Center, Weston-based Cleveland Clinic Florida expands its footprint in the Sunshine State to include five hospitals.
Tomislav Mihaljevic, MD, president and CEO of Cleveland Clinic, spoke with HealthLeaders about the new acquisitions and the Clinic's plans to integrate the new health systems. The following is an edited transcript.
HLM: Why is Florida such an attractive market for hospital acquisitions?
Mihaljevic: We believe that there is a great need for healthcare as the population is aging. We're a known entity in Florida. We've been here for 30 years and it's just a logical place to grow because we have had thousands of patients who have experienced Cleveland Clinic care. We believe that we have an obligation to serve them in a much more comprehensive manner.
HLM: Why did you acquire these two hospitals?
Mihaljevic: We believe that there's a larger opportunity for our extended presence here in Florida. What we have experienced at our Cleveland Clinic facility in Weston is just an unprecedented demand for our services. So, we started looking for partner organizations that really fit culturally and organizationally and from the quality standpoint. The definition of ideal partners were Martin Health and Indian River Medical Center.
HLM: Martin Health and Indian River Medical Center had a lot of suitors. Why do you think they picked Cleveland Clinic?
Mihaljevic: When I spoke with the leaders of both organizations they highlighted the alignment around culture. In healthcare it's important to have a strong cultural alignment so that these type of collaborations and mergers make sense. Indian River Medical Center and Martin Health have a value system and a sentiment and a quality of their workforce that strongly mirrors Cleveland Clinic's.
HLM: What specifically did you find attractive about Indian River and Martin?
Mihaljevic: Whenever we look for organizations to partner with, we look for healthy organizations, meaning that they're organizations that in their own right perform well. But we also look for the organizations that have a similar cultural framework. Both Indian River and Martin Health are healthy organizations. They have great reputations and a stellar tradition. But also they have a culture and a sentiment that did aligns with the culture and the sentiment of organizations like us.
HLM: What differences do you think the people in the service areas of these two hospitals are going to see under Cleveland Clinic leadership?
Mihaljevic: Our priority is to provide our patients with the same quality and experience of care in every location. What that means for residents here in southeast Florida is that they will have an access to Cleveland Clinic quality of care in very concrete terms. There's going to be an expanded scope of medical services. We are passionate about increasing the quality and experience of the services. But also immediately they will have access to the combined expertise of healthcare providers from an organization that is 60,000 people strong. There will be opportunities for second opinions, for aligning plans of care with the experts in Cleveland Clinic worldwide, with an immediate benefit for patients in this area.
HLM:How will referrals work?
Mihaljevic: The vast majority of the healthcare needs are provided locally. We believe that here in Florida, with Martin Health and Indian River Medical Center joining us, we will have a full complement of services that the vast majority of people require.
Of course, not every hospital will offer every service. There are going to be certain hospitals that have different services. What we strive for is to provide an integrated system for healthcare delivery in Florida.
HLM: Were these acquisitions motivated by a need to increase your footprint in the transition to value-based care?
Mihaljevic: In order for us to provide coordinated and seamless care of the highest quality and with the lowest costs we have to have a substantial footprint. Yes, value-based care, and any care that is delivered through population health initiatives is a strategic objective for us that will ultimately lead to the better care in southeast Florida.
HLM: Are you considering any additional acquisitions in Florida or elsewhere?
Mihaljevic: None right now. We are determined to focus on our integration with our newest members.
HLM: Can you provide any details on the financial terms of these acquisitions?
Mihaljevic: We're still working on detailing the amount of capital that is needed for both of our new acquisitions, and we will be able to speak in greater detail once that assessment has been completed.
We may be looking at investments that need to focus in different areas. We have just started our work on the creation of a full integration plan, and we'll be happy to share more details, probably towards the end of the year, once we have a greater understanding of the needs of patients and healthcare organizations here.
HLM: Do you have any specific plans for population health with these new hospitals?
Mihaljevic: The big opportunity here comes through the shared electronic medical records that makes us capable of leveraging our expertise as a system more evenly for a larger number of patients. It also gives patients access to their medical data, the ability to schedule appointments, and access care in a much more seamless way.
On the population health front, that accomplishes several things. The good care becomes much more predictable, more standardized, more accessible, and cheaper, so the value of the care that we provide grows.
HLM: Is there an acclimation process for these two health systems as they join Cleveland Clinic?
Mihaljevic: Probably the most important thing to emphasize is that both Martin and Indian River can expect the full commitment of Cleveland Clinic. This is not a branding exercise for us. We're focused on delivering the Cleveland Clinic quality experience of care for every patient who walks in at any location with the Cleveland Clinic name.
There's going to be an integration process that is typically a combination of several things. First is the bi-directional communication, meaning we're not coming into new organizations with a cookie cutter approach. We learn a lot from our partners and have a conversation about the areas that they know are in need of help, so that we can improve jointly.
We do share best practices and the EMR allows us to share those practices much more efficiently. We have educational programs for our caregivers where we speak about what matters for Cleveland Clinic, what Cleveland Clinic quality and experience of care look like. Then there's a process that involves capital investments and investments in the services that patients require.
From comprehensive risk management to leveraging rising interest rates, Mercer offers seven investment strategies that not-for-profit healthcare organizations should consider to ensure financial stability in 2019.
Not-for-profit healthcare organizations facing tighter margins and demographic and regulatory pressures should undertake an "enterprise-level" review of their investment strategies and risk management for the new year, according to a new whitepaper commissioned by Mercer.
"Healthcare systems are facing significant financial pressure. Americans are getting older, increasing the demand for healthcare, while reimbursements aren't going up in kind," the paper said. "Uncertainty regarding national healthcare policy, as well as the constant challenge of recruiting and retaining high-quality nurses and doctors, are adding to these formidable challenges."
With that in mind, Mercer offered seven investment strategies that not-for-profit healthcare organizations should consider to ensure financial stability. They include:
Consider the "healthcare foundation" – With anticipated lower-returns from traditional investments, health systems should re-assess liquidity needs and should consider adopting asset allocations that are similar to those of healthcare foundations.
Conduct comprehensive enterprise planning and risk management – Health systems may be holding back on aggressive investment allocations because of increased capital spending plans. Health systems should integrate their investment strategy with their long-term financial plan to gain a holistic financial picture of their organization.
Recognize that governance may need to evolve – Transitioning to an enterprise-wide approach might require adjustments from health system oversight committees, which ideally, would see a roll-up of risk and how it impacts the system as a whole.
Leverage rising interest rates – As interest rates rise, most health system debt service costs won't increase much, but yields on fixed income and cash may rise significantly. Systems should assess how much interest rate risk they carry and consider repositioning so that the next rate-cutting cycle won't hurt profitability.
Consider how you are integrating environmental, social and governance, impact, community and innovation investing – Organizations should think about trending topics around governance. impact and community and how to integrate these programs into their investment portfolio.
Pay attention to retirement plans – Recent lawsuits against higher educational institutions regarding governance of 403(b) plans have sent a warning to all plan sponsors that they have a fiduciary duty to obtain competitive services for their plans. The Retirement Enhancement and Savings Act is a bipartisan bill in Congress that may permit commingled investment trusts in a 403(b) plan structure, which could significantly lower plan costs. Fiduciaries must monitor this issue.
Have a plan for corralling pension risk – Untimed contributions and the rising costs of overall pension plan management pose financial risks for some healthcare organizations, many of which have eliminated pension risk by terminating their plans, using lump-sum buyouts and limited annuity purchases.
NAACOS says its members need an additional month to examine the complex 267-page final rule, which was issued on December 21, before making critical decisions affecting participation.
Accountable care organizations are asking the federal government to push back by at least one month the application deadline for the new Pathways to Success program.
The Centers for Medicare & Medicaid Services released the bulky, 267-page final rule for Pathways to Success on December 21, and this week announced that applications to participate in the program would be due February 19.
The National Association of ACOs said that's not enough time, and they're asking CMS to give ACOs until later in March to understand the complex changes and participation options with physicians and other providers.
“There are too many difficult decisions to rush," NAACOS President and CEO Clif Gaus said in a media release. "ACOs barely have time to understand the new rules, and organizing an application is very complicated and for some it is now a high-risk decision."
The February 19 deadline applies to new ACOs, ACOs whose agreements expired at the end of 2018, and ACOs who want to end their current agreements and start under the new Pathways structure.
ACOs with three-year agreements that expire at the end of 2019 or 2020 are allowed to finish those contracts before starting in the new structure.
NAACOS said that CMS's final rule "dramatically" shortens the time ACOs have before being put at risk for repaying losses for not hitting pre-set spending targets.
The changes also lowered the financial incentive to participate in no-risk models by cutting the shared savings rate to 40%. CMS also established a distinction between so-called "high revenue" and "low revenue" ACOs, forcing high revenue ACOs into risk-bearing models faster," NAACOS said.
NAACOS had already raised concerns that some changes in the final rule would limit interest in the voluntary program and compel participating ACOs to drop out and harm Medicare’s largest value-based care program. MSSP accounts for 561 ACOs with 10.5 million Medicare patients, roughly 20% of Medicare.
"Setting an application deadline two months after publishing the final rule does not give ACOs that have expiring agreements the necessary time to vet the decision internally or the time to process the many elements of the application," said NAACOS board member Jennifer Moore, COO at MaineHealth ACO in Portland, Maine.
"Given the significant changes, ACOs need to engage actuaries to understand how we would fare in downside risk. Such an analysis takes time. Without that time, we would have to enter an upside track out of the gate," Moore said.
Those new challenges include critical decisions on which physician and provider groups to include in the ACO, choosing risk levels and track participation, selecting waiver applications, and repayment options, Moore said.
Complicating matters further, Moore said, is the March 1 deadline to apply for CMS's Bundled Payments for Care Improvement Advanced Model. Quality reporting for various Medicare programs is also done in January and February.
"Our ACO has more than 125 tax IDs that need to sign new agreements. On top of that, we must secure a letter of credit (banks indicate that is a six-to-eight-week process), evaluate the new waivers, and vet provider and supplier lists," Moore said. "I am hopeful that CMS will reconsider this aggressive timeline and balance the need to get started with the understanding that the application process takes planning time."
In its initial commentsto the August proposed rule, NAACOS recommended that CMS allow ACOs with agreements expiring in 2018 to extend through December 31, 2019. NAACOS last June urged CMS to provide information regarding the expected timeline for 2019 applications so that ACOs could begin preparing for the condensed deadline.
Patients will continue to see their same physicians and providers at their current locations and all operations and appointments for outpatient services will proceed as scheduled.
Cleveland Clinic on Wednesday completed its acquisition of two South Florida health systems.
The two health systems are now Cleveland Clinic Indian River Hospital, located in Vero Beach, and Cleveland Clinic Martin Health.
The three hospitals in Martin Health are now Cleveland Clinic Martin North Hospital, in Stuart; Cleveland Clinic Martin South, also in Stuart; and Cleveland Clinic Tradition Hospital, in Tradition.
Cleveland Clinic Indian River Hospital and Cleveland Clinic Martin Health join as the first regional hospitals in the Cleveland Clinic Florida region. Patients will continue to see their same physicians and providers at their current locations and all operations and appointments for outpatient services will proceed as scheduled. All insurance plans accepted at the hospitals will continue to be accepted.
"These are well-respected hospitals that have a long history of taking great care of their communities. We are very proud they are now part of Cleveland Clinic's health system," Cleveland Clinic CEO Tom Mihaljevic, MD, said in a media release.
"As healthcare continues to evolve, this integration will strengthen our ability to deliver on our mission and provide the best care to our patients together," he said.
Under the deal reached last fall with Martin Health, Cleveland Clinic agreed to invest $500 million in the health system, and to maintain its charity care services.
The deal to secure Indian River Medical Center was finalized last fall, and it comes with a $250 million investment commitment on the part of Cleveland Clinic. In addition, Cleveland Clinic agreed to maintain maternity care, in-patient well baby care/pediatrics and gynecology services, behavioral health/mental health services, inpatient and outpatient cardiovascular services, inpatient and outpatient cancer care services and gastroenterology services at IRMC for at least 10 years.
Also as part of the agreements, the Indian River Hospital District's support for indigent care at IRMC will phase out over three years, while Cleveland Clinic's charity care policy will go into effect on the first day. After the three years, Cleveland Clinic/ IRMC will assume responsibility for indigent care in general at the hospital.
Cleveland Clinic said its integration of both health systems will focus initially on learning more about each hospital, the needs of patients, caregivers and the communities. Integration teams will focus on understanding the needs and establishing priorities. These teams will also share best practices, learn from one another and help to guide the integration together.
A robust job market bolstering employer-sponsored plans, Baby Boomers transitioning to Medicare Advantage, and ACA exchanges attracting new payers are good signs for health plans in the coming year.
Despite the uncertainty over the future of the Affordable Care Act, the U.S. health insurance sector remains stable heading into 2019, according to a new analysis by S&P Global Ratings.
"A combination of still-favorable business conditions, financial factors, and diminished near-term legislative uncertainty balances our concerns relating to merger and acquisition activity, elevated policy risk, and re-emergent legal overhang," said S&P analyst Joseph Marinucci.
Strong job growth is bolstering commercial markets, aging Baby Boomers are driving Medicare Advantage growth, states are shifting their high acuity populations into managed Medicaid, and the ACA exchanges are stabilizing and attracting new competitors, S&P said.
"We assess capital and liquidity as strong or better for most of our rated U.S. health insurers, which supports balance-sheet strength," Marinucci said. "U.S. health insurers' operating performance reflects sustained earnings strength and improved earnings quality."
However, Marinucci said that profitability could moderate somewhat this year.
M&As remain a key rating factor, especially with larger transaction sizes, raising concerns about financial leverage, integration, and cultural compatibility. Consolidations, joint ventures, and partnering among larger insurers are defragmenting the sector, allowing the big insurers to build scale, "and create more touch points as the trend toward consumerism gains traction."
"This is making it harder for newer and smaller players to enter the market or sustain their presence," S&P said. "As a result, we continue to see larger health insurers taking a bigger share of the marketplace, and smaller players being displaced or struggling to achieve profitable growth as the competitive gap widens."
"Although the mid-term elections removed a good deal of legislative uncertainty for the industry, policy risk remains elevated given the administration's preference for ACA alternatives," S&P said.
In addition, S&P says that payment and delivery reforms mandated in the ACA around value-based care will continue to drive greater cross-sector collaboration among payers and providers.
