"This is a real cry for cost transparency and for the billing departments of our hospitals and clinics and insurance companies to be more open," says a researcher with the American College of Physicians.
Only about 25% of internal medicine residents say they know where to find costs estimates for tests and treatments and that they can share those estimates with patients, according to a survey by the American College of Physicians.
"I was surprised that so few of the residents knew where to find costs of tests and treatments and that so few of them incorporated costs into any clinical decision-making," says study co-author Cynthia Smith, MD, ACP's Senior Physician Educator. "Patients are picking up more of those costs out of pocket and so they start to ask 'what are the relative costs?'"
ACP and the Alliance for Academic Internal Medicine designed the survey to determine U.S. internal medicine residents' knowledge of, attitudes toward, and self-reported practice of High Value Care, or care that balances the benefits, harms, and costs of tests and treatments. The IM-ITE helps residents prepare for the specialty certification exam.
Source: American College of Physicians
Smith says many of the problems identifying costs stem from a sector-wide lack of transparency in healthcare billing. "This is a real cry for cost transparency and for the billing departments of our hospitals and clinics and insurance companies to be more open," she says.
"A lot has been written about the variation of charges for various medical procedures and therapies and the lack of transparency. So it's very hard, particularly within your own clinical microenvironment to find out exactly what patients will be charged for what and combine that with insurance and the variability in insurance coverage, estimating what folks will pay out-of-pocket," Smith adds.
The survey also found that:
88% said they "incorporate patients' values and concerns into clinical decisions."
42% said that balancing the benefits, harms, and costs of treatments with faculty during patient care was discussed at least a few times a week.
Training hospitals' care intensity was inversely associated with self-reported incorporation of costs and patient values into clinical decisions but not with other self-reported behaviors.
46% said they "incorporate the cost of tests and treatments into clinical decisions."
More than 66% reported adequate knowledge of the benefits and harms of tests and treatments, offering patients alternatives, considering patients' values and concerns, and avoiding unnecessary care.
59% said they worked to reduce healthcare waste in their hospital or clinic.
85% said overuse was driven by defensive medicine, followed by diagnostic uncertainty (60.9%), patient demands (54.8%), and concerns about patient follow-up (47.1%).
ACP has an HVC initiative, which includes a curriculum for residents co-developed with the AAIM, designed to help doctors and patients understand the benefits, harms, and costs of tests and treatment options for common clinical issues so they can pursue care together that improves health, avoids harms, and eliminates wasteful practices.
"This is really important because physicians need to make informed decisions in collaboration with the patient sitting in front of them. Ideally, it would nice if we could create tools so this would be a synchronous process," Smith says.
"It's not just about saving the U.S. economy because we are spending too much on healthcare. It's really about the harm we are inflicting on individual patients when we don't talk about what the medication is potentially going to costs or if we don't understand the logistical or financial barriers to care that have a real impact on outcomes."
A hardship exemption is needed for physicians who've tried in good faith to meet the Oct. 1 implementation deadline, but who've been hamstrung by issues beyond their control, says the president of the American Medical Association.
Less than 100 days before the federally mandated switch to the ICD-10 diagnostic code, the American Medical Association is renewing its call for contingency plans to ensure that physicians struggling to meet the Oct. 1 implementation are not unfairly penalized, nor care disrupted.
"This transition to ICD-10, if it goes forward on Oct. 1, and that appears to be the current trajectory, [means] it is absolutely imperative that there is better end-to-end testing, a grace period, and hardship exemptions in place," says recently elected AMA President Steven J. Stack, MD.
Steven J. Stack, MD
Stack says the AMA has also called on Health and Human Services Secretary Silvia M. Burwell to exercise her prepayment authority "to ensure that claims get paid on a timely basis in those first weeks and months, and then as we navigate those early days of the transition so that the care system is not brought to a halt as hundreds of thousands of claims per day could potentially get disrupted."
Stack says physicians are not necessarily assuaged by assurances from the Centers for Medicare & Medicaid Services and ICD-10 advocates that sufficient testing is underway for the diagnostic code set that will replace ICD-9.
"Our major concern is that it is a 400% or so explosion in the number of codes," he says. "It's being treated like a flip-the-switch activity, where on Sept. 30 we use ICD-9 and on Oct. 1 one-fifth of the nation's economy is supposed to just on one day switch to an entirely new coding set that is over a 400% increase in the total number of codes."
"This fails to take into consideration that physicians are being compelled to do this at the same time that they are being compelled to do multiple different quality reporting programs, let alone all the private payer quality reporting programs," Stack says.
A survey of more than 800 providers released in March by the Workgroup for Electronic Data Interchange, found that only 25% of respondents had begun external testing of their ICD-10 capacity, a decrease from the 35% of providers who'd begun external testing in August, 2014.
However, the WEDI survey also found that the biggest hurdle was not so much the complexity of the implementation, but more the uncertainty around the Oct. 1 implementation date, which has already been delayed three times at the behest of the AMA and other provider associations.
"While the delay provided more time for the transition to ICD-10, many organizations did not take full advantage of this additional time and many providers are falling further behind," WEDI ICD-10 Workgroup Co-Chair Jim Daley said in remarks accompanying the survey.
The AMA has called for delays of the implementation, and even skipping ICD-10 and awaiting ICD-11, which by some estimates could become operable by 2020. However, Stack says the nation's largest physicians' society has also "moved forward in parallel to our advocacy because we have an obligation to ensure that physicians are as ready as possible so they can be there to take care of patients."
"We have encouraged physicians to follow guidance given by their organizations and by others that tell them to run the code set, compare their practices, make sure they prepare for what we are fearful will be significant disruption, where we could have physicians facing substantial disruptions with 10% to 20% of their claims starting Oct. 1," he says.
Stack says the AMA's call for a two-year grace period for physicians transitioning to the new code has been mischaracterized by some critics as foot-dragging.
"Our assertion for a two-year grace period does not very clearly assert that a person can code for a heart attack when in fact it was an ankle sprain," he says. "We are asserting that if we properly diagnose somebody with hypertension and say it's a new diagnosis, then the payers should not be able to deny a claim because we're unable to say that it was hypertension new diagnosis, secondary to renal disease, secondary to diabetes, secondary to poverty or some other things."
Lynne Thomas Gordon
"When we get to these layers of specificity that ICD-10 permits, it is very important that payers not deny payment for lack of some falsely perceived level of specificity that the physician may not be able to provide, particularly as we learn the new code set and find a new equilibrium with all of those who are using it," he says.
Stack says a hardship exemption is needed for physicians who've tried in good faith to meet the Oct. 1 deadline, but who've been hamstrung by software or clearing house snafus and other issues beyond their control.
"All of those things would imperil patient access because the physician has an interruption of their claims paying process and has no reimbursement coming in for claims," he says. "Patients are going to find it more difficult to seek care because the physician is going to struggle just to keep the office open."
Lynne Thomas Gordon, CEO of the American Health Information Management Association, says the AMA's contingency plans would create confusion.
"The end-to-end testing, we know based on the testing that has already taken place that only 2% of the errors in codes in the last testing period were due to ICD-10," she says. "There are always going to be problems. We are taking the time to do the testing and get it right. Will it be perfect on Day One? No, because it's change and everybody will be getting used to it."
Thomas Gordon says most of the survey data indicates that it is the rural and smaller physician practices that are having the most difficulty. "If I were the AMA and I was that concerned I would take a representative sample of my members and get them to test and see what happens," she says. "They want more testing, but why aren't they doing it now?"
"As far as the grace period, what they are looking for is "do the best you can for two years, but don't penalize us,'" she says. "I would hate to be a payer in that situation. I would hate to be a hospital trying to compare things. It would confuse the market. You'd have some people forging ahead with ICD-10. You'd have other people who weren't. I've even heard some people say this grace period is another term for 'delay.'"
As for the hardship exemption, Thomas Gordon says CMS has already said it will not penalize providers who are struggling with the implementation if they can show they've acted in good faith.
"However, if don't do anything and you don't prepare, they aren't going to," she says.
Thomas Gordon says about 50% of the approximately 68,000 new codes under ICD-10 are "lateralities."
"Left or right. Most physicians know that. It's 'did you break the right or left hip,'" she says. "As far as the remainder, physicians are just going to have to know their specialty. Doctors will become familiar with their areas."
Thomas Gordon was asked to predict how the ICD-10 launch will go on Oct. 1.
"For those who've prepared it won't be that hard," she says. "If people are waiting until the last minute and thinking there will be an extension, they will struggle more."
"It would be naïve to say that people shouldn't prepare, but it would also be naïve to say that there won't be a few bumps or that they don't need to monitor after the fact," she says. "It's like when you put in a new computer system. You get used to it, you tweak and adjust and go back and do some retraining. After a while people forget they even changed. Is it overnight? No. It won't be so smooth that people don't have to pay attention."
No money is being exchanged among the four hospitals that have agreed to form an alliance, but the members believe their combined scale will leverage savings and boost physician recruiting while preserving autonomy.
Four rural nonprofit hospitals in Southern Arizona have formed a hub-and-spoke alliance with Tucson Medical Center that they hope will allow them to remain independent while leveraging their combined scale to reduce costs, improve services, and bring more physicians into the desert.
Susan Willis
The nonprofit Southern Arizona Hospital Alliance was launched this week and includes critical access hospitals in Benson and Bisbee, and community hospitals in Safford and Willcox, all are located east of the TMC hub. Combined, the hospitals serve about 70,000 people.
Susan Willis,TMC's executive director for network development, and president of SAHA, says the five hospitals have a longstanding relationship that had never been formalized, until this week. No money is being exchanged among the hospitals, but Willis says the members believe their combined scale will leverage savings and boost physician recruiting.
"There will be greater collaboration around grant applications, and we are using TMC's status with VHA to improve purchasing power," Willis says, "but the greatest benefit to the rural hospitals, and their biggest challenge, is recruiting and retaining physicians in their communities; both primary care, recruited directly to their communities as well as specialty and sub-specialty visiting professionals."
Rich Polheber
"TMC has been successful in crafting unique relationships with specialty physicians and we have put rural outreach as one of the key deliverables of our service line agreement," Willis says. "We think we can leverage the strong building of relationships with our specialists to find creative new ways to get specialists consistently rotating through those communities and helping those patients get their care closer to home."
Rich Polheber, CEO of Benson Hospital, a 22-bed critical-access hospital about 48 miles southeast of Tucson, is board chairman for SAHA. He says the member hospitals want to strike that balance between the scale that comes with a system and the autonomy that comes with independence.
"Our board has made a decision that we don't want to merge with anybody else," Polheber says. "We think healthcare has a local focus and we are going to work to provide pre-eminent and quality care and do so through various alliances."
"In healthcare there are so many unknowns," he says. "This is going to be a bit of a journey, but for us, it is going to provide several things that we can't do by ourselves without this alliance with a larger high-quality delivery system. We are excited about it."
Polheber says much of the resistance in Benson to an outright merger or acquisition comes from a feared loss of local control, which he says is not unwarranted.
"I have worked in two hospitals that have become part of a system," he says. "When you're part of a system, it can happen that you're at the end of the food line and you don't quite get the attention from the organization and some of the support services are looked down upon as the poor mission hospital."
"This alliance clarifies our continuation of our independence and our responsibility to continue to drive revision, to work with our community, to pursue a whole series of initiatives," he says.
SAHA is also non-exclusive, which means that any member hospital is free to work with hospitals outside of the alliance.
"That gets more complicated when you are part of a closed system," Polheber says. "The other problem is the corporate overhead that gets assigned and you see money leave the community for the headquarters. We want that money to stay in the community and the only time it should leave is if we want to buy a service from TMC."
As for metrics, Polheber says it should be relatively easy to determine whether or not SAHA is working.
Recruiting and Managing Physicians
"On the physician side, it's 'do we have more specialty doctors available to patients in the community and do we have primary care?' To me that is our number one agenda item. If we can accomplish that we know this is fruitful," he says.
Benson has only five primary care physicians and needs at least four more to serve a year-round population of about 12,500 people that grows to more than 16,000 in the winter. The service area has no OB-GYN and is in dire need of cardiology and pulmonary services.
"TMC has a very strong relationship with their specialists so they can engage in meaningful dialog to get specialists who for economic reasons have historically said they don't want to spend the energy or time traveling to Benson," Polheber says.
Benson and TMC are negotiating now to recruit primary care physicians who would be managed by TMC.
"It's subtle, but it eliminates me having to manage a doctor in Benson who is now seen as competing with the rest of the doctors in the community," Polheber says. "That is strategically important because I want to engage in partnership with all of our physicians. When you start to manage a subset of doctors, unless you manage them all, it can get unhealthy in the way you work cooperatively with the physicians in the community."
Other SAHA metrics will be easy to measure.
"If our costs per patient day begin to go down as a result of lower supply costs that is an easy metric we track now," Polheber says. "We'll also look at employee surveys and satisfaction levels about their opportunities. In about one year from now we'll do a survey to see if there's a buzz in the community that people are appreciative that this alignment exists and that there is a relationship with TMC that gets a good housekeeping seal of approval."
Emergency department visits should increase as the people of Benson learn of the affiliation with TMC for emergency services and admitting.
"If you have a diagnosis and we can't keep you here, we have a guaranteed 15-minute commitment for a bed at TMC," Polheber says. "That is unheard of! That's good because people could end up going to TMC faster than they could by going to the emergency room at TMC."
Willis sees opportunities in the coming years to pool resources on electronic health records and telemedicine. "That could be a longer-term outcome," she says. "In the meantime we are trying to find the most efficient and effective ways to hand off medical information because we do transfer a lot of patients back and forth between these communities and Tucson."
At some point, Willis says, SAHA likely would consider bringing in new members "as long as it's a good fit for us that would make good sense."
"Right now it's important that collectively we deliver on what we are intending to do, which is to make things better for the five of us," she says. "It makes sense to get going with what we have right now."
Many of the health issues that plagued rural America a decade ago are still prevalent today, research finds. "It is very discouraging," says the director of Southwest Rural Health Research Center.
We know the healthcare challenges facing the 60 million Americans living in rural areas, a population that is generally older, less-healthy, and less-affluent than people living in urban areas.
The health issues for rural America are variations on a theme. In one region, the leading health concern might be diabetes and obesity. In another area it might be substance abuse, or mental health, or oral health.
The underlying problem that ties these all together, however, is access. The plain fact is that there aren't enough providers in rural America to cover the people who live there.
A new guidebook out this week from Texas A&M School of Public Health makes this abundantly clear. Rural Healthy People 2020 is a follow-up report coming a decade after the highly successful Rural Healthy People 2010.
Thumb through this reference book, which compiles stats and data from a number of sources, and you get the impression that living in rural America is hazardous to your health.
For example, RHP 2020 notes that people with a health emergency who live more than 30 minutes from a hospital emergency department have a 46% mortality rate, compared to a 21% mortality rate for people living within 30 minutes of an ED.
RHP 2020 notes that while 17% of the U.S. population lives in a rural area, only 9% of primary care physicians practice in rural areas.
Jane Bolin, PhD, JD, BSN, senior editor of Rural Healthy People 2020 and director of the Southwest Rural Health Research Center, says it's difficult to determine if rural healthcare delivery has progressed over the past 10 years.
"I wouldn't say the problems have gotten much worse, but the priorities have remained the same and many of the problems, not for lack of trying, have remained the same," Bolin says. "People are trying to address these issues, but it's difficult."
"The takeaway we found for Rural Healthy People 2020 a decade later is that many of the issues remain the same, many of the goals have not been met. There has been some modest progress in target areas, but there continue to be significant concerns expressed about access to healthcare, either insurance, emergency care services, and primary care services."
The study ranks the top issues facing rural healthcare providers, based on the survey responses of more than 1,200 providers from across the country.
The closure of more than 50 critical access hospitals across the nation in the past five years–and the threat of a nearly 300 hospitals closing in the near future–represents the greatest threat and challenge to rural health.
"It is very discouraging when we are continuing to deal with closures of critical access hospitals and reduced payments to doctors," Bolin says. "These small rural hospitals are doing everything they can, they're operating with no margins. They're losing money. It's really tough for them."
Health Challenges
Nutrition and weight status in rural America moved from No. 10 in RHP 2010 to No. 2 in the latest survey, just ahead of diabetes.
"Many people consider those to be part and parcel of the same issue," Bolin says. "People are becoming more obese, yet they seem to live in food deserts where there is just junk food, and diabetes rates are continuing to climb."
Mental health and access to mental health services climbed to No. 4 on the list. That's not surprising, Bolin says, because more than 85% of mental health professional shortage areas are in rural areas.
"Depression and diabetes go hand in hand. They have high rates of comorbidities," Bolin says.
"There hasn't been the same concern shown for reimbursement for mental healthcare services, although that is beginning to be addressed under the Affordable Care Act. In many rural areas, their only recourse for someone acting out violently or who is causing disturbances with mental health problems is to put them in jail. That is hardly adequate for someone who needs mental healthcare services."
Topping off the Top 5 is substance abuse, tracking right behind mental health issues, which really is no surprise. People who don't have access to proper mental health services likely will self-medicate with whatever may be more readily available. For example, nonmedical prescription opioid abuse is raging in many parts of Appalachia.
Other areas of concern identified in the survey include heart disease and stroke, a lack of physical activity, and tobacco use.
Poverty Pervasive
Many of these problems affecting rural America play out in a backdrop of grinding poverty. The study notes that two-thirds of rural counties in this country have poverty rates at or above the national average. In rural Florida, for example, the poverty rate is at the historically high level of 20.3%.
Related to this poverty is the scarcity of jobs, the relatively low pay of the jobs that do exist, and the higher mortality and injury risks associated with jobs in agriculture, mining, fishing, and other manual labor common in rural areas.
Bolin and the team at A&M who compiled Rural Healthy People 2020 should be commended for providing a valuable resource that doesn't sugarcoat the problems facing rural America.
If you care about rural health, download the study and keep it as a reference. Better yet, make sure that every media source you know, and every elected official from the town selectmen to your U.S. Senator has a copy of this reference.
The problems are right there in front of us, in every state in the union. The job of rural advocates is to make sure people see them.
Researchers using 2012 data find that the markup for most hospitals averaged 3.4 times the Medicare-allowable cost. By that measure, a hospital incurring $100 of Medicare-allowable costs charges $340. In a Top-50 hospital, the charge is $1,000.
For-profit hospitals comprised 49 of the nation's Top 50 hospitals with the highest charge-to-cost ratios for out-of-network and uninsured patients, according to a study published this week in Health Affairs.
Researchers Gerald Anderson from Johns Hopkins Johns Hopkins Bloomberg School of Public Health, and Ge Bai of Washington & Lee University examined 2012 Medicare cost reports from the Centers for Medicare & Medicaid Services to determine a charge-to-cost ratio. The metric shows the mark-up that hospitals charge beyond what Medicare agrees to pay.
Gerald Anderson
The 50 hospitals identified from more than 4,000 hospitals across the nation charged an average of more than 10 times the Medicare-allowed costs. Beyond that, Anderson and Bai found that the mark-up for most hospitals averaged 3.4 times the Medicare-allowable cost in 2012. By that measure, when a hospital incurs $100 of Medicare-allowable costs, the hospital charges $340. In a Top-50 hospital, the charge is $1,000.
"The main causes of these extremely high markups are a lack of price transparency and negotiating power by uninsured patients, out-of network patients, casualty and workers' compensation insurers, and even in-network insurers," the study concludes. "Federal and state policymakers need to recognize the extent of hospital markups and consider policy solutions to contain them."
The study recommends limiting mark-ups on overall charge-to-cost ratios, mandating price disclosures, and creating some form of all-payer rate setting.
Ge Bai
Community Health Systems, Inc., operates 25 of the 50 hospitals. Hospital Corporation of America operates more than one-quarter of them, and 20 of the hospitals are in Florida. Only one not-for-profit hospital, Crozer Chester Medical Center,in Chester, PA, made the list.
"For-profit hospitals only account for 30% of all U.S. hospitals. They are a minority. But on our list, they are the majority," Bai says. "They are vital players in this price-gouging game. Nobody tells these hospitals not to do that. For-profit hospitals are more profit-oriented so they have more incentive to do these high mark-ups."
Bai says HCA and CMS hospitals dominate the list most likely because they are also the largest for-profit hospital chains in the nation.
No Regulations
She says the mark-ups are not illegal because only Maryland and West Virginia have regulations limiting fees. "The problem is that the market forces have stopped working here," Bai says. "Consumers don't have the time or knowledge or ability to do comparison shopping of hospitals. We don't have the options. There are no state or federal regulations in general to protect uninsured patients, so we have a market failure."
Bai says states or the federal government could tell hospitals that "this is the maximum mark-up you could have, for example 300% of what Medicare would pay. You can't charge over that."
The lack of price regulation deeply affects the more than 30 million people in the United States without insurance. "They are the most vulnerable among us with no market power," Bai says. "Those debts will turn over to a collection agency, and the result is personal bankruptcy."
"This also costs those of us who are insured. We are not immune from this system. Our premiums are higher because our employers have to pay a higher price. We are all victims of this price-gouging game."
The Federation of American Hospitals, HCA, CHS all take issue with the study's findings.
FAH
FAH President and CEO Chip Kahn issued a 404-word rebuttal of the Anderson-Bai study, and noted that the research "does not recognize that the listed hospitals provided nearly $450 million in uncompensated care in 2012 alone."
"FAH member companies have been pioneers in creating and implementing programs that provide substantial discounts to uninsured and underinsured patients who cannot cover their out-of-pocket costs," Kahn says. "The FAH member companies cited in this study have these programs firmly in place."
Kahn says that the study's authors acknowledge "a critical limitation" in the study that omits discounts attributable to these programs. "Including these discounts would have had a significant effect on the charge-to-cost-ratio reported, and therefore the implications of the study's results," Kahn says.
"Indeed, had the authors instead compared the actual payment-to-cost ratio of these hospitals compared to the national average, they would have discovered virtually no difference between the two groups– 1.3 for the 50 hospitals and 1.2 for the national average."
"These figures illustrate, in part, the significance of discounts, and more broadly, why a myopic focus on charges misses the mark on what matters and is no justification for the menu of policy options offered."
Kahn says the for-profit sector backs price transparency, but that it still won't help the uninsured patients.
"Absent coverage, the true resolution is having programs in place, like those in our hospitals, which offer discounts so that these patients do not have to prioritize concern about their ability to pay over their own health and well-being," he says.
"The notion advanced by the authors that hospital charges determine the results of negotiations with insurers is false and misleading. Insurers have tremendous market power and assert this power in arms-length rate negotiations with healthcare providers."
Kahn also questions "a puzzling disconnect between the authors' conclusion that charges drive rising health care spending, and widely known and readily available data."
"We have experienced a historic slowdown in spending growth over the last five years, while hospital price growth remains at record lows – 0.3% in April compared to the prior year," he says.
"Indulging the same arguments about hospital charges, over and over again, does not make them more meaningful and does not justify the reforms the authors recommend. It is not the time to embark on the major policy changes suggested, which could have unintended consequences or disrupt recent positive trends, especially for patients."
CHS
CHS issued this statement: "All hospitals are required by CMS to maintain a charge master – or a list of prices – for the numerous services they provide. However, these charges rarely reflect what consumers actually pay for their healthcare.
"All hospitals affiliated with Community Health Systems offer significant discounts for uninsured patients and charity care for those who qualify. Last year, our organization provided over $3.3 billion in charity care, discounts and other uncompensated care for those who can't afford healthcare services. Our hospitals also paid millions of dollars in taxes that help fund critically important services in every community where we operate.
"We support pricing transparency, but a hospital's charges, and its charge-to-cost ratio, are not relevant measures of what consumers, insurers or the government pay for services. Medicare and Medicaid determine the rates they will pay for our services, and those rates don't always cover the cost of providing care. Insurance companies negotiate the rates that they will pay. And uninsured patients are offered significant discounts or charity care. Because we know the financial aspects of healthcare can be confusing, each hospital provides financial counselors to assist our patients and to answer billing and insurance questions.
"Finally, it is important to note that the study is based on data that is approximately three years old and that one-third of the CHS-affiliated hospitals on this list were acquired from HMA two years after the reporting period."
HCA
HCA issued this statement: "The amount patients pay for hospital services has more to do with the type of coverage they have than prices listed in the charge master. As the study notes, government programs like Medicare and Medicaid determine how much they reimburse hospitals, and insurance plans negotiate rates. Uninsured patients are eligible for free care through our charity care program or they receive our uninsured discounts, which are similar to the discounts a private insurance plan gets. In addition, we were one of the first providers to make detailed pricing information publicly available; we have been providing this information on hospital web sites since 2007."
The 50 Hospitals with Highest Charge-to-Cost Ratios, 2012:
1.
North Okaloosa Medical Center
FL
2.
Carepoint Health-Bayonne Hospital
NJ
3.
Bayfront Health Brooksville
FL
4.
Paul B Hall Regional Medical Center
KY
5.
Chestnut Hill Hospital
PA
6.
Gadsden Regional Medical Center
AL
7.
Heart of Florida Regional Medical Center
FL
8.
Orange Park Medical Center
FL
9.
Western Arizona Regional Medical Center
AZ
10.
Oak Hill Hospital
FL
11.
Texas General Hospital
TX
12.
Fort Walton Beach Medical Center
FL
13.
Easton Hospital
PA
14.
Brookwood Medical Center
AL
15.
National Park Medical Center
AR
16.
St. Petersburg General Hospital
FL
17.
Crozer Chester Medical Center (NFP)
PA
18.
Riverview Regional Medical Center
AL
19.
Regional Hospital of Jackson
TN
20.
Sebastian River Medical Center
FL
21.
Brandywine Hospital
PA
22.
Osceola Regional Medical Center
FL
23.
Decatur Morgan Hospital - Parkway Campus
AL
24.
Medical Center of Southeastern Oklahoma
OK
25.
Gulf Coast Medical Center
FL
26.
South Bay Hospital
FL
27.
Fawcett Memorial Hospital
FL
28.
North Florida Regional Medical Center
FL
29.
Doctors Hospital of Manteca
CA
30.
Doctors Medical Center
CA
31.
Lawnwood Regional Medical Center & Heart Institute
Hospitals in the 29 states and Washington, D.C. that expanded Medicaid saw bad debt drop an average of 13%. Some hospitals saw reductions of 40%, but that's not the entire story, says a Moody's Investors Service analyst.
Not-for-profit hospitals operating in the 29 states that expanded their Medicaid rolls under the Affordable Care Act saw "significant" decreases in bad debt when compared with hospitals in non-expansion states, according to Moody's Investors Service.
However, Moody's also found that the Medicaid expansion did not affect the bottom-line financial performance of the hospitals. In fact, financial performance improved for hospitals in every state in 2014 thanks largely to an improving economy.
"The lower bad debt in and of itself is not surprising or necessarily the headline here," says Daniel Steingart, a senior analyst for Moody's and the lead author of the study. "What is interesting is the lack of difference in financial performance between the expansion and the non-expansion states. There was a lot of press coverage over the past year talking about expansion states, what a difference we are seeing, how they are pulling ahead. This is showing that this is not the entire story."
Moody's examined the unaudited interim financial reports from about 150 not-for-profit hospitals for 2014, the first full year of the Medicaid expansion. Hospitals in the 29 states and Washington, D.C. that expanded Medicaid saw bad debt drop an average of 13%. Some hospitals saw reductions of 40%.
In contrast, bad debt for hospitals in non-expansion states rose for most of 2014, although it dropped in the fourth quarter for as yet undetermined reasons.
Steingart says the numbers are just a snapshot, and could fluctuate in the coming months,
"I wouldn't look to that 13% as the final end-all be-all number," he says. "That bad debt clearly dropped throughout the year and the pace clearly accelerated throughout the year. If it ends up being 15% to 20% that would surprise me. The trend is clear."
In 2013, bad debt accounted for only 4.8% of a median hospital revenues in Medicaid expansion states. While the reduction in bad debt is a credit positive, Steingart says hospitals in expansion states have yet to shift their reduced exposure into higher cash flow of better financial results.
"They are taking the savings and putting it into other investments. They probably could flow it to the bottom line but they are not," Steingart says. "You're seeing more investment in population health strategies, putting it back into salaries and other deferred investments that have been cut over the past several years as hospitals have been laser focused on expense control."
The improved financial performance for hospitals in all states, regardless of their Medicaid expansion status, was less about reduced bad debt, Steingart says, and had more to do with "macroeconomic conditions" around an improving economy, and cost cutting and improved management by the hospitals.
"Big drops in bad debt do not necessarily lead to big improvements in operating performance," he says. "It goes to show that there are so many other factors that drive performance. Volumes, the general economic environment, are much better than they have been in the last several years. Those factors are themselves are overpowering what it is happening on the payer mix bad debt side."
In the near-term, Steingart says bad debt "will continue to trend along at whatever level it settles out at."
"I don't know that we are quite at that settled-out point. We are only now into the full 12 months of Medicaid expansion. The exchange rollout was so troubled in the first quarter that I almost don't consider that quarter as a part of the expansion. Even though Medicaid, technically, sits outside of that, it was all wrapped up in it," he says.
"We have another quarter to go to see a little more improvement and then the pace of improvement will taper off. What you will see are bad debt levels, as a share of overall revenues, will remain much lower than they were historically in the expansion states, but I do not think you will see continued major year-over-year improvements."
"The other thing to mention, the big thing that people have been waiting for is King v. Burwell," he says. "Although that doesn't impact Medicaid expansion, it does affect the exchanges. Depending upon how the Supreme Court rules, that could have a very disruptive effect on how people are accessing insurance and that in and of itself could have a spillover."
"People are dying, and if you have 283 hospitals close you are going to have something equivalent to 9/11 happening every year… all over this country, and it is completely and totally unacceptable," says Belhaven, NC, Mayor Adam O'Neal.
For the second time in two years, O'Neal and civil rights veteran Bob Zellner are marching to Washington, DC to draw attention to the plight of the nation's rural hospitals.
On Monday, the two men and 20 supporters representing 11 states, carrying an empty wooden coffin with "Save our Hospitals" written on the side, departed coastal Belhaven (pop. 1,687) on a two-week, 283-mile march to the nation's capital. Each mile of the trek represents one of the 283 rural hospital that could close because of financial stress. The march is scheduled to end on June 15 on the steps of the Capitol.
HealthLeaders Media caught up with the trekkers on the second day of their journey, just north of Plymouth, NC.
"It is a national crisis when you have 283 hospitals close," O'Neal says. "Can you imagine 283 urban hospitals closing? Do you think there would be an outcry? Well, let me tell you these rural hospitals are more important than the urban hospitals because these rural hospitals serve a radius of maybe 100 miles. In a city if a hospital closes, most times there are two or three other ones in town."
O'Neal, a Republican, acknowledges that the Republican-led North Carolina legislature and Republican Gov. Pat McCrory, are responsible for much of the misery in Belhaven because they have refused to expand Medicaid under the Affordable Care Act.
"The Medicaid expansion was supposed to fill that gap," O'Neal says. "When you don't accept Medicaid expansion there is nothing to bridge that gap for the cost of indigent care and those falling revenues. The states that aren't accepting Medicaid, like my state of North Carolina, need to fill the gap with some other money. They don't need to let hospitals close."
"The ACA is the law now. That's the way it is. I understand that they have some concerns with it, but they need to go to Washington and deal with it there."
O'Neal notes that 62 million Americans live in rural areas, which means that the federal government must find money to keep rural hospitals afloat. He has a solution.
"This year we are going to give away $27.2 billion to other countries in foreign aid. How 'bout we keep $300 million of that for these hospitals," he says. "One million dollars per hospital is a lot of money for these small rural hospitals. Let's give away $26.9 billion and keep our rural hospitals open. That's a good idea!"
Not Their First Walk
In 2014, O'Neal and Zellner walked a more direct route of 273 miles to Washington to protest the closure of the Belhaven's Vidant Pungo Hospital, one of the nation's first designated critical access hospitals. Now, Belhaven residents have to drive about one hour to Greenville, 49 miles away, to access emergency services. Vidant Health is building a $4.2 million, 12,000-square-foot "multispecialty center" to replace the hospital, but it won't include an emergency room. O'Neal says that's not good enough, and the town is trying to wrest control of the old hospital from Vidant.
Since Vidant Pungo shuttered last year, O'Neal says there have been two avoidable deaths, including Portia Gibbs, 48. The mother of two suffered a heart attack and died waiting for a helicopter.
"Portia Gibbs spent the last hour of her life in a high school parking lot waiting for a helicopter. She died as it landed," O'Neal says. "Before, when our hospital was open, she would have been in an emergency room physician's hands within 25 minutes."
"People are dying, and if you have 283 hospitals close you are going to have something equivalent to 9/11 happening every year to our children, our parents, and friends all over this country and it is completely and totally unacceptable."
It's not just the loss of healthcare services. O'Neal says closing rural hospitals is a huge economic blow to small towns. Hospitals are often the largest employers in their communities, and healthcare jobs are often the highest paying. It also makes it difficult to attract new businesses and residents to a town that has no hospital.
O'Neal says last year's trek created a lot of media attention for Belhaven, and he's hoping this year's walk will increase public awareness of the plight of rural hospitals across the nation and maybe prompt elected officials to stop the partisan bickering and work toward a solution.
"Back in the 1940s this country saw the need for rural hospitals and they created theHill-Burton Act. The first Hill-Burton hospital in the U.S. opened in Belhaven in 1947 and now that hospital is closed. That is a sign of how our priorities have gotten screwed up," O'Neal says. "When these hospitals close, it's not just Democrats or Republicans or Libertarians or Independents or blacks or whites or Latinos, it's everybody dies. This is something that has to go beyond politics."
"I understand the ACA is very controversial, but President Obama, the Congress, the states and governors have to work together. They can't let 283 hospitals close while they fuss and fight."
Various patient-centered and value-based programs have also generated about $1 billion in savings in 2013 by reducing costly and wasteful care duplication, according to the Blue Cross Blue Shield Association.
The nation's Blue Cross and Blue Shield plans saw $71 billion in spending directed toward patient-centered, value-based care in 2013, according to an in-house survey released this week.
That $71 billion represents about one-in-five dollars in medical spending in 2013 by the 37 BCBS companies across the nation, an increase of 9% over the $65 billion in value-based care the plans identified in 2012.
The various patient-centered and value-based programs also generated about $1 billion in savings in 2013 by reducing costly and wasteful care duplication, according to the Blue Cross Blue Shield Association, which compiled the survey.
"It's only going to go up," says Justine Handelman, vice president, legislative and regulatory policy, at BCBSA. "We are really trying to push the move away from fee for service in how we incentivize quality over quantity. This report really illustrates how we've been able to hone in on what's been working and how we can work with public payers and the government to reform the healthcare system."
Handelman says the Blue Cross plans have keyed on four strategies to shift away from fee-for-service, which she identified as:
Changing how providers are paid to include incentives for delivering better care.
Providing doctors and hospitals with tools and real-time patient data to transform their practices.
Helping consumers to become active in their healthcare.
Promoting savings by reducing duplicative or unnecessary services and tests.
"Our goal is to continue to raise the bar and move in the direction and as we learn what's working to make sure that we are adapting our system to provide the best quality care and ensure we have the best outcomes for people," Handelman says.
The 2013 survey identified 570 locally-developed, patient-centered care programs in 48 states, Washington D.C. and Puerto Rico, up from 350 such programs in 2012. Combined, the Blues contract with more than 228,000 physicians and 1,500 hospitals to expand value based care. More than 25 million BCBS customers are enrolled in some sort of value-based plan that include accountable care organizations, patient-centered medical homes, pay-for-performance programs and episode-based payment programs.
"The acceleration is tremendous," Handelman says. "We've got more than one-in-five medical claims dollars. That is growing. We are excited that the government is moving in the direction of working to align with what is already working in the private sector. We have the results and the acceleration as you see Medicare coming online with what we are already doing and what is working. We will see it accelerate even more."
"In five years we are really going to see a transformed delivery system with the Blues leading the way," Handelman says. "The way we are using data and technology is really going to explode over the coming years. We are going to be in a truly value-based system."
Performance improvements are attributed in part to tying physicians' performance bonuses to actionable patient data. But "not all medical home interventions are alike," one researcher notes.
A medical home model in Pennsylvania that provided timely and pertinent patient data to physicians and paid bonuses for the resulting improved care showed significant improvements over comparison practices, a RAND study shows.
The study analyzed data from 17,363 patients from 27 pilot and 29 comparison practices in the northeast region of the Pennsylvania Chronic Care Initiative from 2009–2012. The pilot practices were recognized by the National Committee for Quality Assurance as medical homes, but did not receive payment for the designation.
By year three, the pilot practices had achieved statistically significantly better changes in performance on four measures of diabetes care and breast cancer screening. In addition, as measured per 1,000 patients per month, the pilot practices saw:
1.7 fewer hospitalizations
4.7 fewer emergency department visits
A 3.2% lower rate of ambulatory care-sensitive emergency department visits
Specialty care visits declined by 17.3 visits per month
Mark W. Friedberg, MD, the study's lead author and a senior natural scientist at RAND, says a key component of the success for the northeast region pilot medical homes was tying the performance bonuses with actionable patient data.
"The health plans that were participating in the northeast region in this paper also gave timely data to the participating practices on whether their patients were going to see their partners at hospitals and which ones they were going to, and which patients were going," he says.
"That was not part of the intervention in the southeast region, nor in a lot of the other medical home interventions. That may have had something to do with the effect we saw. That can be just as important as financial incentives. It's one thing to give more incentives and another to help them achieve those incentives, and they did both here."
Friedberg says it's too early to determine if the northeast pilot could provide a standard roadmap for successful medical homes.
"It's hard to make that kind of a big statement based on just one study, but this suggests features of medical home interventions that others may want to replicate," he says.
"When you create a medical home initiative to produce changes in utilization of care it makes sense to both give providers an incentive to control utilization and also to give them the means and ability to control the utilization, not just in the primary care practice but also in hospitals and emergency departments and unless you know where your patients are at all times that is very hard to do."
Friedberg says it's important to remember that the medical home is an evolving model.
"We and other researchers are continuing to evaluate different medical home pilots with different ingredients and different settings," he says. "The next big task—and we aren't ready to do this study yet—is to put all of those evaluations together and start to look at the differences in the results and see what seems to be the ideal way to construct a medical home intervention."
"The big take-away here is that not all medical home interventions are alike," he says. "As with any new attempt to try to improve the healthcare system, the first few attempts out of the starting blocks will include some experiences that we can learn from to make them more effective later. We are starting to see the second generation of these interventions. It seems so far to be potentially more effective than the earliest iterations.
Simply stated, the rule would better align Medicaid and Children's Health Insurance Program regulations to make them more consistent with the federal rule governing commercial, marketplace, and Medicare Advantage plans.
For the first time in more than a decade the federal government is proposing sweeping changes to the rule governing managed care programs under Medicaid and the Children's Health Insurance Program known as CHIP.
Late Tuesday afternoon the Centers for Medicare & Medicaid Services rolled out the 700-page tome for public view.
Simply stated, the rule would better align Medicaid and CHIP regulations to make them more consistent with the rule governing commercial, marketplace, and Medicare Advantage plans.
"A lot has changed in terms of best practices and the delivery of important health services in the managed care field over the last decade," Andy Slavitt, Acting Administrator of CMS, said in remarks accompanying the report.
"This proposal will better align regulations and best practices to other health insurance programs, including the private market and Medicare Advantage plans, to strengthen federal and state efforts at providing quality, coordinated care to millions of Americans with Medicaid or CHIP insurance coverage."
Medicaid managed care rules were last updated in 2002 and 2003, even as growth in Medicaid managed plans has flourished in the last two decades. In 1992 only 8% of Medicaid beneficiaries were in capitated health plans. Most recent data from 2011 show that 58% of all Medicaid beneficiaries in 39 states and the District of Columbia access some of their care in capitated plans.
A Regulatory Minefield
The regulatory boundaries between the federal government and the states' various Medicaid programs and waivers is a minefield, and the National Association of Medicaid Directors is urging the federal government to tread lightly.
"It will be important for the rules to balance the needs for stewardship of the taxpayer dollar with state flexibility to design programs that can reflect local health care conditions," NAMD said in prepared remarks.
Medicaid is one of the largest items in state budgets, and any overly burdensome rule change could be viewed as a hated "unfunded federal mandate" in state Capitols. NAMD warned that a new rule must not become "overly prescriptive" in areas such as administration, rate setting, network adequacy, and program integrity.
"The rules must help, not hinder, the outpouring of innovation that states are driving in how to improve the health and well-being of traditionally hard-to-serve populations, such as those needing long-term services and supports, those dually eligible for both Medicare and Medicaid, and individuals with multiple chronic conditions," NAMD said.
The health insurance industry cast a wary eye on a provision in the rule that attaches medical loss ratios to Medicaid managed care plans.
"An arbitrary cap on health plans' administrative costs could undermine many of the critical services—beyond medical care—that make a difference in improving health outcomes for beneficiaries, such as transportation to and from appointments, social services, and more," Dan Durham, interim CEO for America's Health Insurance Plans said in prepared remarks.
That concern was echoed in remarks from Jeff M. Myers, president and CEO of the Medicaid Health Plans of America, the advocacy arm for 124 plans in 33 states.
"We urge CMS to rethink standards for a federal minimum medical loss ratio given that MLR is already built into health plans' contracts with the states," Myers said.
On the other hand, Myers said he was "encouraged to see CHIP included in the proposed rule given the fact that half of US births are covered by Medicaid. We're also glad that the rule seems to cover long-term care, actuarial soundness and rate-setting, and quality ratings of health."
Comments to Come
Other key lobbies that undoubtedly will have something to day over the 60-day comment period are holding back on any detailed critiques until they can pore through the fine print.
Jeff Goldman, vice president of coverage policy at the American Hospital Association, offered guarded support: "We believe the proposals strengthen Medicaid and Children's Health Insurance Program managed care regulations by aligning them with Qualified Health Plans and Medicare Advantage plans.
We look forward to providing feedback to CMS after consultation with our members."
The American Medical Association says it's reviewing the rule and isn't ready to talk, yet.
The comment period ends on July 27. We'll be hearing more detailed comments from these lobbies in the coming weeks.
