AHA says they're "pleased" with the increase, but complain it "still falls short".
Acute care hospitals could see a 4.3% bump in reimbursements in fiscal year 2023 under a revised Inpatient Prospective Payment System final rule released Monday, about $1 billion more than the federal government had proposed in April, the Centers for Medicare & Medicaid Services announced.
"This reflects a FY 2023 hospital market basket update of 4.1% reduced by a 0.3 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by statute," CMS says in a media release. "This update reflects the most recent data available, including a revised outlook regarding the U.S. economy and, as a result, is 1.1 percentage point higher than the proposed update for FY 2023."
The higher reimbursement will go to hospitals that successfully participate in the Hospital Inpatient Quality Reporting Program and that are meaning users of electronic medical records, CMS says.
The cost of the IPPS payment increase will be about $2.6 billion. CMS projects that increase will be partially offset with decreases in disproportionate share payments and uncompensated care costs totaling about $300 million, and reductions of about $750 million for inpatient payments for cases involving new technologies.
In April, CMS had initially proposed an IPPS increase of 3.2% for FY 2023, an additional $1.6 billion. However, that proposal drew flack from the hospital lobby. The Federation of American Hospitals called the proposed increase "woefully inadequate."
"It does not reckon for the hyper-inflation, staffing crisis, and the continuing pandemic, which will impact resources necessary for patient care well into the future," FAH said in April.
The announcement Monday that the reimbursement would be bumped up to 4.3% brought a tepid response from a "pleased" American Hospital Association.
"This update still falls short of what hospitals and health systems need to continue to overcome the many challenges that threaten their ability to care for patients and provide essential services for their communities," AHA Executive Vice President Stacey Hughes says in a media release.
"This includes the extraordinary inflationary expenses in the cost of caring hospitals are being forced to absorb, particularly related to supporting their workforce while experiencing severe staff shortages," Hughes says. "We will continue to urge Congress to take action to support the hospital field, including by extending the low-volume adjustment and Medicare-dependent hospital programs."
HCA denies the allegations and calls the new complaint 'a rehash of claims this group purported in 2020.'
A union-backed investment group has filed a complaint with federal regulators against HCA Healthcare, claiming that the nation's largest for-profit hospital chain failed to disclose "elevated risk" to shareholders stemming from allegations of Medicare fraud.
The complaint was filed Thursday with the Securities and Exchange Commission by the Strategic Organizing Center Investment Group (formerly known as the Change to Win Federation), formed in 2006 by a coalition of labor unions that includes the Service Employees International Union, which represents workers at a number HCA facilities.
SOC said it filed the complaint six months after a report written by the SEIU revealed that HCA may be unnecessarily admitting patients from hospital ERs, putting shareholders at grave risk.
"Since at least 2014, HCA has consistently explained its corporate strategy to investors by noting that higher hospital admissions reliably translate into high company earnings, and that emergency departments are one of the key mechanisms through which hospitals can increase their admission rates," the complaint reads. "For over a decade, Medicare regulators at HHS have identified high levels of emergency department admissions as a potential indicator of improper practices."
In its February report, the SEIU said that "HCA has potentially been engaging in widespread Medicare fraud through the systematic over-admittance of patients from Emergency Departments at HCA hospitals—a practice that may have continued throughout the pandemic."
"Data from the report reveals that HCA may have collected nearly $2 billion in excess Medicare payments since 2008 through these potential ED over-admissions—information that HCA failed to disclose to shareholders," the SOC says.
The complaint asks the SEC to investigate HCA's "failure to disclose to shareholders potential liability of these alleged practices and for the agency to hold the nation's largest for-profit healthcare corporation accountable for alleged wrongdoing."
SOC says there is precedent for the federal action, noting that in 2007 the SEC leveled civil fraud charges against Tenet Healthcare for "failing to disclose to investors that the company's earnings between 1999 and 2002 were 'driven by exploiting a loophole in the Medicare reimbursement system,' a scheme that cost investors billions in lost share value when brought to light."
HCA responds
HCA issued this statement when contacted by HealthLeaders.
"SOC Investment Group is a union-backed organization that formerly called themselves CtW Investment Group, and this appears to be a rehash of claims this group purported in 2020."
"We took their concerns seriously and we analyzed the data and our procedures, and our publicly filed-response can be found here. We remain confident in our processes and robust audit systems. In addition to our internal reviews, independent third-party audits provide additional confidence in our compliance with regulatory requirements. Our hospitals are staffed by physicians, clinicians and nurses who work tirelessly to ensure our patients receive medically necessary care in the appropriate clinical setting."
"This year, HCA Healthcare was named one of Ethisphere's World’s Most Ethical Companies for the 12th time and we are confident that our operational processes and procedures are working well and that we are meeting the healthcare needs of our patients and communities."
HHS OIG says CMS has not properly documented more than half of overpayment collections it claims to have made.
Federal watchdogs say the Centers for Medicare & Medicaid Services still has not collected the nearly $500 million in Medicare overpayments identified in audits over a two-year period dating back to 2014.
The Office of the Inspector General at the Department of Health and Human Services did a follow-up review of 148 Medicare audits it conducted between October 1, 2014, and December 31, 2016, and could verify that CMS had collected only $120 million of the $498 million in overpayments.
CMS told auditors that it has collected $272 million (55%) of the overpayments. However, OIG says the agency’s documentation shows that it had collected only $120 million, and that CMS failed to properly document the recovery of the remaining $152 million.
“In that audit report, issued on May 18, 2012, we made six recommendations and CMS agreed to implement four of them. Of those four recommendations, CMS implemented two, partially implemented one, and did not implement one.”
In this new audit, OIG recommends that CMS: (1) continue to recover the $226 million in uncollected overpayments, (2) determine what portion of the $152 million was collected and recorded in its accounting system, (3) revise 42 CFR section 405.980 and corresponding manual instructions related to the reopening period for claims to be consistent with statutory provisions contained in section 1870 of the Social Security Act, and (4) develop a plan for resolving cost reports applicable to the nine audit reports discussed in this report.
CMS agreed with only one of nine recommendations put forward by OIG – to continue efforts to collect $226 million in overpayments.
The ship would operate in federal waters — up to nine miles off the coasts of Texas, Alabama, Louisiana and Mississippi — and beyond their jurisdiction.
A UCSF OBGYN professor has launched an initiative to provide abortions for women from the Deep South in federal waters off the Gulf Coast.
Meg Autry, MD, who describes herself as "a lifelong educator, a lifelong career abortion advocate," began PRROWESS before the recent U.S. Supreme Court ruling that overturned the right to an abortion, but she said theDobbsruling has increased the urgency.
"Part of the reason we’re working on this project so hard is because wealthy people in our country are always going to have access [to abortions], so once again it’s a time now where poor, people of color, marginalized individuals, are going to suffer — and by suffering I mean like lives lost," Autry told NBC Bay Area.
PRROWESS would operate in federal waters — anywhere from three to nine miles off the coasts of Texas, Alabama, Louisiana and Mississippi — and beyond the jurisdiction of those states. Autry and other licensed clinicians would offer surgical abortions for up to 14 weeks of pregnancy, and other gynecological services such as testing and treatment for sexually transmitted infections.
It's not immediately clear how much PRROWESS hopes to raise, or how much it has raised to date.
"PRROWESS is a solution for individuals seeking reproductive healthcare and surgical abortion where it is illegal or impossible," the initiative's website states. "Those in the most southern parts of Mississippi, Alabama, Louisiana, and Texas may be closer to the coast than to facilities in bordering states where abortion and reproductive healthcare are available."
"PRROWESS is committed to providing a safe haven for individuals in states where their rights are severely impacted by legislation limiting their access to reproductive healthcare. PRROWESS believes that no matter how draconian measures targeting reproductive rights become, together we can and will re-assert control over our bodies and lives," the website says.
A hospital coalition is circulating a petition to get the 41,000 signatures needed for force a referendum on the issue.
Los Angeles County hospitals and other providers are working to repeal the recently enacted ordinance mandating $25 per hour minimum wage for some healthcare workers.
The No Unequal Pay coalition, sponsored by the California Association of Hospitals and Health Systems, says the ordinance – which took effect this month -- exempts workers at state and county healthcare facilities and unfairly penalizes private hospitals and providers.
“These measures mandate higher wages for workers at private health care facilities but provide zero increases for workers at public hospitals and smaller clinics that primarily serve uninsured and disadvantaged communities,” the coalition’s website says. “This will lead to workforce shortages at smaller clinics and public health care facilities, jeopardizing access and quality of care for Southern California’s most disadvantaged and already underserved communities.”
The coalition is circulating a petition to get the 41,000 signatures needed for force a referendum on the issue.
The SEIU-UHW had sought to put the wage mandate on the Nov. 8 ballot, and had already collected more than 145,000 signatures when the Los Angeles City County preempted that and adopted the measure last month.
The ordinance has the support of Los Angeles Mayor Eric Garcetti, who said during a signing ceremony on July 8 that “our healthcare heroes deserve fair compensation for their critical work, countless sacrifices and incredible service to our city and its people.”
However, the Los Angeles Times reports that Gateways Hospital and Mental Health Center in Echo Park is considering scaling back services — possibly by as much as 20% — to account for increased costs, and that the nonprofit Motion Picture and Television Fund in Woodland Hills anticipates a $1.5-million yearly increase in labor costs and it has yet to identify how to cover it.
The payer also allocated $45.2 million for digital transformation assistance to improve provider interactions.
CalOptima's board of directors has approved $64 million in supplemental funding for its contracted Orange County providers, including $58.2 million for COVID-19 expenses, and $6 million to cover Medicare funding cuts.
The CalOptima board also allocated $45.2 million for digital transformation assistance to streamline and improve interactions with providers.
The COVID-19 payment hikes of up to 7.5% will fund efforts by providers to administer COVID-19 vaccinations, cover costs for tests and treatment, and address virus variant outbreaks.
"COVID-19 cases are fluctuating, and providers are continuing to grapple with the pandemic. CalOptima wants to support our partners with the resources they need to ensure quality care for our vulnerable member population," CalOptima CEO Michael Hunn says. "The supplemental funding will provide stability for the health care system as we prepare to transition out of the Public Health Emergency."
The payments will be made for a full year, from July 1, 2022, to June 30, 2023. The board first approved supplemental payments in 2020 after noting the strain on providers. The supplemental funding also supports the healthcare safety net, as CalOptima membership has grown 23% during the pandemic to nearly 900,000.
CalOptima's Medicare programs OneCare, OneCare Connect Cal MediConnect Plan, and the Program of All-Inclusive Care for the Elderly are subject to 2% federal cuts that total $6 million a year.
The board voted to protect providers from this reduction particularly during this time as CalOptima will transition approximately 14,500 members from OneCare Connect to OneCare on Jan. 1, 2023. California is closing Cal MediConnect Plans as part of a larger initiative known as California Advancing and Innovating Medi-Cal.
CalOptima's digital transformation is part of a new three-year strategic plan to deliver efficiencies for providers, including same-day treatment authorizations and real-time claims payment. CalOptima's new budget allocates $45.2 million to this effort and signifies that the agency is moving forward with strengthening its systems on behalf of Orange County providers.
A few initiatives identified for the first year are provider portal enhancements, a provider data management system the integrates contracting and credentialling, and robotic process automation to better connect members to providers offering the services they need.
The gap between the state's wealthiest and poorest widened by an additional four years over the two-year span.
Life expectancy in California fell by more than three years during the first two years of the COVID-19 pandemic, with lower-income people and communities of color suffering disproportionately, new research shows.
In the study, published this month in JAMA Network, Northwestern University and UCLA researchers looked at nearly 2 million deaths in California between 2015 and 2021 and found that life expectancy shortened from 81.40 years in 2019 to 79.20 years in 2020, and 78.37 years in 2021.
The life expectancy gap between the state's wealthiest ($232,261 mean household income) and poorest ($21 279 MHI) widened by an additional four years over the two-year span, growing from 11.52 years in 2019 to 14.67 years in 2020 and 15.51 years in 2021, while life expectancy for the richest 1% dropped less than one year, the study found.
"Families of lower socioeconomic status are more vulnerable to economic instability and were less likely to access income support programs during the pandemic," the study says, "raising concerns that the stresses brought on by the pandemic might have widened health gaps related to income and race and ethnicity."
Study co-author and Northwestern University Prof. Hannes Schwandt, PhD, says he was "shocked by how big the differences were, and the degree of inequality that they reflected."
"We've had indications that the pandemic affected economically disadvantaged people more strongly, but we never really had numbers on actual life expectancy loss across the income spectrum," he says.
Communities of color were disproportionately affected by the pandemic, with life expectancy declining 5.74 years among Hispanics, 3.04 years among the non-Hispanic Asians, 3.84 years among the non-Hispanic Blacks, and 1.9 years among the non-Hispanic Whites.
"The disproportionately large decreases in life expectancy among Hispanic and non-Hispanic Black populations reflect their exposure to higher COVID-19 infection, hospitalization, and death rates, especially early in the pandemic," the study notes. "This disparity, much like other racial and ethnic inequities, has roots in the social determinants of health as well as structural barriers resulting from systemic racism that have helped perpetuate disparities for generations."
"In the case of COVID-19, Hispanic and non-Hispanic Black populations were more likely to rely on jobs (often as frontline workers), transportation, and housing conditions that heightened viral exposure and to encounter barriers to healthcare, a higher prevalence of comorbid conditions, and socioeconomic challenges that jeopardized their health."
S&P reports that inflation, rising labor and borrowing costs, and sputtering investments are stressing margins.
The first quarter of 2022 proved to be one of the toughest performance quarter on record for the nation's not-for-profit hospitals, according to a midyear analysis by S&P Global Ratings.
The bond rating agency reports that hospitals in early 2022 struggled with inflation and high but possibly plateauing labor costs, while simultaneously confronting rising interest rates and demands on cash flow, and underperforming investments in a weakened market, all of which are likely to hobble operations for the rest of the year, and into 2023.
"Midway through 2022, not-for-profit hospitals and health systems face a difficult operating environment that, while easing from the extreme pressures of late December 2021 and early January and February related to the omicron surge, is still causing operating cash flow compression for many of them across the U.S.," S&P says.
"Although many entities, particularly those with healthy business positions and unrestricted reserves, should be able to handle the stress as they implement near- and medium-term solutions, S&P Global Ratings believes those with weaker financial profiles and business positions or those that have had underlying operational problems in recent years or have less balance sheet cushion, could be at increased risk for a downgrade or negative outlook revision. Much will depend on the extent and duration of the operating pressures as well as the broader macroeconomic conditions," S&P says.
Unless Congress acts, providers will also have to contend with further reductions in federal funding with the re-introduction of sequestration and the anticipated end of the public health emergency later this year.
"That said, for many hospitals and health systems, underlying demand, including pent-up needs for care that was deferred during the omicron surge earlier in the year, remains sound," S&P says. "However, if a structural imbalance of labor supply and demand persists, it could be hard to meet those patient needs, thereby further elevating the human capital social risks that we capture under our environmental, social, and governance (ESG) factors."
"We had noted these operating pressures, but some of them are more pronounced than anticipated, with the financial flexibility provided by unrestricted reserves starting to lessen for certain organizations, as investment markets have been volatile since the beginning of 2022," S&P says.
Inflation and Labor Costs
Earnings were down in the first quarter of 2022 for almost every hospital rated by S&P, primarily because of inflation and rising labor costs.
"The questions are: How much of the heightened expenses are temporary due to the omicron surge at the beginning of the year versus how much is built into base salaries and will be ongoing? And when does the imbalance of labor supply and demand begin to ease?" S&P says.
In the short term, providers have had to spend more to recruit and retain staff as burned-out clinicians either retire or quit. All this is happening, S&P says, amid "significant uncertainty on how long it might take to fill vacancies, reduce agency usage, address staff burnout, and return to a more balanced labor market."
While the reliance on travel nurses and other temporary clinicians has eased somewhat since the height of the pandemic in 2021 and early 2022, S&P projects that labor costs "will likely remain higher for at least the next year and possibly for several years to come as staff shortages could continue and more workers may seek to become travelers than before the pandemic," S&P says.
"Anecdotally, we've observed nurse agency rates of more than $200/hour from providers at the height of the omicron surge; for many, those rates have fallen and still vary widely, but may be closer to $130-$150--and are still higher than agency rates before the pandemic," S&P says.
Pay Raises
Salary and wage hikes, and signing and retention bonuses -- key components of employee retention -- are also much higher rate than previous annual increases of around 3% and often higher than what was budgeted.
"Some hospitals and health systems are making further wage and benefit adjustments midyear to retain and attract staff," S&P says. "All of this is in addition to absorbing the agency and one-time impacts previously mentioned."
M&A Options Limited
Whereas in the past, hospitals facing financial duress often looked to mergers, S&P notes that the regulatory crackdowns on healthcare consolidation may close that outlet.
"Given recent denials by the Federal Trade Commission and other regulatory agencies, this option may be increasingly difficult to deploy," S&P says. "If these denials affect organizations that are already struggling operationally, options could become increasingly limited for certain providers."
Molina has also paid $80 million in disputed and delayed claims to providers, plus $1.8 million in interest.
Molina Healthcare of California has paid a $1 million fine levied by state regulators for failing to timely acknowledge and resolve nearly 30,000 provider disputes between September 2017 and September 2018.
In addition to corrective actions ordered by the California Department of Managed Health Care, Molina has also paid $80 million in disputed and delayed claims to providers, plus $1.8 million in interest.
"It is important health plans promptly and accurately pay claims to hospitals, doctors and other providers when health care services are provided to enrollees to ensure the financial stability of providers, and the overall stability of the healthcare delivery system," DMHC Director Mary Watanabe said.
"Molina's systemic failures to timely resolve provider disputes caused payment delays, potentially jeopardizing the financial stability of providers. The plan has agreed to take corrective actions including remediating payments to impacted providers plus interest."
Molina did not return email requests for comment from HealthLeaders.
California health plans are required to have a Provider Dispute Resolution program for claims dispute with providers. State law requires plans to identify and acknowledge each provider dispute within two working days of the date of receipt of an electronic provider dispute, with 15 business days to respond.
Plans must also resolve each provider dispute or amended provider dispute and issue a written determination stating the pertinent facts and explaining the reasons for the plan's determination within 45 working days after the date of receipt.
As part of the required corrective actions, and in addition to remediating payments to providers, Molina must demonstrate compliance with acknowledgment and resolution timeliness requirements.
If a provider disputes Molina's PDR process, or the plan takes longer than 45 days to issue a written determination, the provider can contact the DMHC Help Center's Provider Complaint Unit for further assistance.
The Lown Institute Hospitals Index for Social Responsibility, launched in 2020, identifies leading and laggard hospitals nationwide using benchmarks for hospitals to measure how well they serve their patients and communities.
Adventist Health Howard Memorial was named the top hospital among the 66 hospitals nationwide that earned the “most socially responsible” designation by Lown.
In total, Lown ranks 3,606 hospitals—with less than 2% earning top marks across metrics that include racial inclusivity of patients, employee pay equity, and avoidance of unnecessary and potentially harmful procedures.
“Citizens put their lives and billions of tax dollars in the hands of America’s hospitals,” said Vikas Saini, MD, president of the Lown Institute. “We believe communities should have high expectations and the most socially responsible institutions should be lifted up as models for the system.”
Among the 66 most socially responsible hospitals, Lown Institute analysts identified 15 hospitals that had an extraordinary COVID burden—defined as having 26 or more weeks with at least 10% of inpatient beds filled by COVID-19 patients during the first year of the pandemic.
“Achieving the trifecta of great outcomes, value, and equity is hard—especially under the pressures of a global pandemic,” Saini said. “Hospitals that met the unprecedented challenges of COVID while staying committed to their social mission should be very, very proud.”
The Lown Institute Hospitals Index measures social responsibility of more than 3,600 hospitals nationwide, evaluating hospitals on 53 metrics across equity, value, and outcomes. Hospitals with “A” grades on each of the three major categories achieve the title of “most socially responsible.”
The Lown Institute used publicly available data from Medicare claims, CMS hospital cost reports, IRS 990 forms, and other sources. COVID burden for March 2020-2021 is reported for each hospital but does not factor into the hospital social responsibility ranking.
