The full effect of the Change Healthcare hack has yet to be measured.
Hospital Margins averaged 3.96% in February, continuing a strong trend in 2024. However, the data collected for February from more than 1,300 hospitals nationwide do not reflect the total effect of the Feb. 21 Change Healthcare hack, Kaufman Hall says in March National Hospital Flash Report.
While the numbers are generally favorable, especially when compared to those of the pandemic era, Erik Swanson, senior vice president of Data and Analytics at KH says hospitals aren't in the clear.
"Robust hospital margins in February demonstrate continued recovery from the pandemic years, but challenges are on the horizon," Swanson says. "The aftermath of the Change Healthcare cyberattack and continued competition from industry disrupters may test financial performance in coming months, as disrupters capture more profitable, lower-acuity, and lower-capital-intense services from hospitals."
The flash report also notes that gross revenue continues to rise at a faster rate than net revenue, highlighting payer mix changes, while bad debt and charity care have also risen over the last few years. And while revenue growth is primarily being driven from the outpatient setting, the ongoing decline in inpatient revenue continues.
In the aftermath of the Change Healthcare hack and its effect on provider cash flows, KH notes that cybersecurity has become a top priority of hospital leaders, who are still sorting out the operational implications.
With that in mind, KF recommends that hospitals:
• Prioritize steps to preserve liquidity, including extending accounts payable, slowing capital spending, drawing on lines of credit, or liquidating assets such as T-bills;
• Monitor denial rates as claim backlogs lessen. If denials spike, manage the processing backlogs as well as possible; determine the impact of delayed claims on cash, both for operations and balance sheet metrics;
• Anticipate interest in cybersecurity in future rating presentations, paying special attention to how they are dealing with cyber hygiene and the risk of contamination in interactions with third-party vendors.
• Diversify clearinghouses and banking partners to diminish counterparty concentration risk;
• Anticipate rating pressures on lower-liquidity credits, although wholesale rating downgrades are not likely.
The suit says diabetes care costs the Hoosier State $5 billion annually.
IndianaAttorney General Todd Rokita has filed suit against several of the nation's largest drugmakers and pharmacy benefit managers for allegedly conspiring to inflate insulin prices.
"Diabetes is a public health crisis for Hoosiers," Rokita says, noting that 640,435 Indiana residents have diabetes -- more than 12% of the state's population -- and more than 1.7 million are pre-diabetic. Diabetes is the seventh-leading cause of death in Indiana and the leading cause of blindness, kidney failure, and lower limb amputations.
The complaint claims that direct medical expenses associated with diabetes in Indiana are around $5 billion annually and that, if diabetics adhered to their medication protocols, more than $8.3 billion in direct medical costs would be saved each year.
"This is a serious condition that requires insulin, putting patients in the impossible position of choosing between health and financial security," Rokita says.
Named in the lawsuit are drugmakers Sanofi-Aventis and Novo Nordisk and PBMs CaremarkPCS Health, Express Scripts, CVS Health Corp., and Optum RX. The suit, filed in Lake County Superior Court, alleges that the companies conspired to raise prices on insulin medications by more than 1000% in the last decade despite manufacturing costs decreasing.
Several of the companies named in Indiana complaint face similiar allegations in a lawsuit filed last year by California Attorney General Rob Bonta.
The suits are proceeding despite numerous reports suggesting that insulin prices peaked in early 2023 and have since declined significantly.
"Too many Hoosiers have been forced to ration because drug manufacturers and PBMs have prioritized profits over patients," Rokita says. "Hundreds of thousands of Indiana residents rely on these medications to stay alive and these prices discourage people to take care of their health. Our office hopes this case will also set a strong precedent for other pharmaceutical companies who want to take advantage of everyday Hoosiers."
This is not Rokita's first clash with Big Pharma. He won a $66.5 million settlement against Centene for their failure to disclose true costs, took part in a $573 million multi-state settlement against McKinsey & Company for its role in "turbocharging" the opioid epidemic with Purdue Pharma, and secured nearly $7 million in an Indiana Medicaid fraud settlement against Mallinckrodt.
Nearly one-third of providers say the turnaround time for primary source verifications takes one month or longer.
Clinician credentialling remains a pricey sticking point for many providers, nearly half of whom say that error-prone, manual processes they often rely on are costing them money, a new report shows.
Medallion, the San Francisco-based credentialling and provider network management company, says 46% of the 337 provider-based healthcare businesses that responded to its survey reported that inefficiencies in enrollment workflows created costly delays that adversely affected their bottom lines.
"This report dives into how much time is spent on administrative tasks rather than patient care," Derek Lo, CEO and founder of Medallion, said in a media release. "It also highlights the collective optimism and support our industry has for technology solutions that help speed up these processes and eliminate wasteful tasks."
While noting that the timeliness of reimbursements depends upon the payer, Lo says providers aren't helping the process with slow turnaround times from onboarding to application submissions.
Ultimately, the report notes, nearly one-third of respondents say the turnaround time for their end-to-end primary source verifications takes one month or longer.
The report also notes that:
52% of respondents reported entirely manual credentialing workflows, including provider data collection, application receipt, credential file creation, review, primary source data verification, committee evaluations and approvals.
Nearly 40% of providers reported moderate reliance on manual processes in their payer enrollment workflows. Beyond that, 69% of providers rely on two or more software tools to complete enrollment.
57% of providers saw turnover and staffing challenges in their credentialling teams during the past year. The report notes that turnover in credentialling is higher than in other healthcare administrative areas, and that these staffing fluctuations delay credentialling, delay in-network patient care, and delay payments.
Nearly 60% of respondents spend more than four hours on primary source verifications, which are only a single step in the multi-step credentialing process.
Healthcare job growth in February outpaced the sector's 58,000 monthly average over the past 12 months.
The healthcare sector booked 67,000 new jobs in February, continuing a years-long trend of strong job growth and representing nearly one-in-four (24.3%) of the 275,000 new jobs created in the larger U.S. economy, new federal data show.
Ambulatory care and hospitals lead in job creation within the healthcare sector, each accounting for 28,000 new jobs in February, while nursing and residential care created 17,000 new jobs, according to the Bureau of Labor Statistics monthly jobs report.
The unemployment rate in the larger U.S. economy ticked up 0.2% to 3.9%, BLS says, with 6.5 million people reporting as unemployed, up 334,000 from January. In February 2023, the jobless rate was 3.6%, with 6 million unemployed.
Big job gains in February 2024 were also seen in government (52,000), food service (42,000), social assistance (24.000).
The average hourly earnings for all employees on private nonfarm payrolls in January rose by 5 cents (0.1%) to $34.57. Over the past 12 months, average hourly earnings have increased by 4.3%. The average hourly earnings of private-sector production and nonsupervisory employees rose by 7 cents, or 0.2%, to $29.71.
February and January job numbers are considered preliminary by BLS, and subject to revisions.
A bipartisan coalition of 39 AGs wants Congress and the FTC 'to ensure fulsome regulation of PBMs nationwide.'
The National Association of Attorneys General is urging Congress to pass legislation that cracks down on "deceptive practices" used by pharmacy benefits managers that allegedly drive up the costs of prescription drugs for consumers.
"The PBMs' original purpose was to protect and negotiate on behalf of employers and consumers after pharmaceutical manufacturers were criticized for overpricing medications," the letter states. "Unfortunately, in recent years, the PBMs have only made the pharmaceutical market more opaque and have been a cause of rising drug prices."
The AGs claim that a "small number of PBMs hold significant market power and are reaping abundant profits at the expense of the patients, employers, and government payors the PBMs are supposed to help."
"Pharmaceutical buyers and sellers have little choice but to employ PBMs, allowing them to extract both monopoly profits from individuals and monopsony profits from the market. Moreover, PBMs often dictate reimbursement rates and rules to independent pharmacies, making it difficult for many to survive," the letter states.
States Take the Lead
The AGs noted that states have already taken actions to cut down on PBM abuses that are "often more stringent than federal law," and they urged Congress to follow their lead.
"For example, in 2018 and 2019, respectively, Ohio and Arkansas passed legislation prohibiting spread pricing, in which a PBM charges payors such as Medicare more than they pay the pharmacies supplying the medication, keeping the difference for the PBM," the letter states. "The U.S. House of Representatives also passed legislation barring spread pricing for Medicaid just this month, but it is still awaiting a vote in the Senate."
Without federal law supporting state action, the AGs say, "PBMs routinely try to evade state law and obstruct state regulatory efforts by refusing to disclose data to state regulators as well as their own clients (i.e., health plans operated by employers and the government)."
"Thus, the FTC and Congress must act to ensure fulsome regulation of PBMs nationwide," the letter states. "Such legislation should reform PBM practices to curtail their ability to unreasonably raise the price of drugs and to require greater transparency.
Such transparency should, among other things, require PBMs to produce pricing data to health plans and federal and state regulators in a standardized format. This will enable health plans to negotiate better deals with PBMs and will allow regulators to better hold PBMs accountable."
PBM Push Back
The Pharmacy Care Management Association, the lobbying arm for PBMs, has complained that it is being unfairly scapegoated for high drug costs that are set by drugmakers using anti-competitive tactics such as extending drug patent monopolies.
"Make no mistake, drug companies' constant blaming of pharmacy benefit companies is designed to avoid accountability and further boost profits and pricing power," the PCMA says.
Instead, the PBMs want Congress to pass S. 3583, a bill that would crack down on drug company patent thickets, which PBMs have called "a common drug company anti-competitive tactic to stifle competition."
The PBMs also pointed to a proposed "delinking" effort by drug makers that would ban PBM compensation in Medicare Part D from being tied to a drug's list price, essentially restricting the proprietary terms between PBMs and payers.
A Matrix Global Advisors study cited by the PCMA estimates that delinking "would boost drug company profits by $32 billion annually in the Medicare and commercial health insurance markets, while increasing healthcare premiums for patients by nearly $40 billion."
PCMA also cited its own 2023 analysis that used Centers for Medicare & Medicaid Services data showing that the price increases for the top 250 brand-name drugs in Medicare Part D by total spending in 2020 were unrelated to rebates.
"Congress should reject drug companies' self-serving blame game, and instead focus on solutions to encourage greater competition in the prescription drug market that would lower costs for patients," PCMA says.
The initiative aims to reduce costly up-front, out-of-pocket prescription drugs costs for seniors.
The Centers for Medicare & Medicaid Services this month issued a second round of draft guidance for the Medicare Prescription Payment Plan and its requirements for organizations participating in Part D.
The draft guidance for the plan, which launches in 2025, is mandated by the Inflation Reduction Act, and aims to reduce the pricey upfront out-of-pocket prescription drug costs for seniors and disabled people enrolled in Part D by allowing them to spread costs over a year rather than in one lump sum.
"Too many seniors and people with disabilities can't afford to fill their prescriptions at the pharmacy – and that is unacceptable," Health and Human Services Secretary Xavier Becerra says.
"In addition to adding flexibility through a payment plan, the law cuts drug costs through provisions such as caps on out-of-pocket costs and the cost of insulin, and a mandate on drug companies to pay a rebate to Medicare if they raise prices faster than inflation," Becerra says.
The second draft guidance details the outreach, education, and communication requirements for organizations to ensure that Medicare Part D enrollees are aware of the MPPP.
CMS is also planning a national education and outreach initiative targeting pharmacies, providers, and beneficiary advocates, to acquaint them with the program and ensure that they have the needed support and materials.
Meena Seshamani, MD, PhD, CMS deputy administrator and director of the Center for Medicare, says MPPP "helps alleviate cash flow issues for people who face high out-of-pocket costs early in the year that may prevent these individuals from taking a drug that could keep them healthy."
"The draft guidance we have released is a blueprint to help operationalize this program to ensure both healthcare organizations and people with Medicare are empowered and educated," Seshamani says. "That way, people in Medicare can make the best choices for their health and financial needs."
On Jan. 1, 2024, the IRA expanded eligibility for Part D's Low-Income Subsidy program – also known as "Extra Help." So far, the program has enrolled about 300,000 low-income people, and CMS estimates that another 3 million people are eligible but have yet to enroll.
Before finalizing the guidance, CMS is soliciting public feedback in a comment period that expires on March 16. Comments should be sent to PartDPaymentPolicy@cms.hhs.gov with the following subject line: "Medicare Prescription Payment Plan Guidance – Part Two."
Dumpster dives found hundreds of containers of hazardous chemicals; unredacted patient data; and used blood and urine specimen containers.
Quest Diagnostics will pay 10 California counties $5 million to settle allegations that it illegally dumped hazardous and medical waste and protected patient data generated at several of its testing labs and patient service centers, California Attorney General Rob Bonta says.
The settlement comes after 30 inspections conducted by the district attorneys' offices at four Quest Diagnostics laboratories in the California and several of the more than 600 patient service centers statewide.
Regulators reviewed the contents of Quest's compactors and dumpsters and found hundreds of containers of chemicals, bleach, reagents, batteries, and electronic waste; unredacted medical information; medical waste such as used specimen containers for blood and urine; and hazardous waste such as used batteries, solvents, and flammable liquids, the AG says.
The disposals violate California's Hazardous Waste Control Law, Medical Waste Management Act, Unfair Competition Law, and civil laws prohibiting the unauthorized disclosure of personal health information.
After Quest was notified of the infractions, the AG's office notes that the company sought to bring its labs into compliance with California law. It hired an independent environmental auditor to review the disposal of waste at its labs and modified operations and training to improve handling, storage, and disposal of hazardous waste, medical waste, and patient data at all four laboratories and more than 600 service centers in California.
Under the settlement, Quest will pay $3.9 million in civil penalties, $700,000 in costs, and $300,000 for a Supplemental Environmental Project to support environmental training and enforcement in California.
The affected counties include Alameda, Los Angeles, Monterey, Orange, Sacramento, San Bernardino, San Joaquin, San Mateo, Ventura, and Yolo.
"We will not allow the public's health to be jeopardized by laboratories who prioritized cutting corners over protecting the health of the very people they were supposed to be caring for," says Orange County District Attorney Todd Spitzer. "This was not an isolated incident by a single Quest Diagnostics testing facility; this was Quest Diagnostics laboratories and testing facilities across the state skirting California's hazardous waste laws while ignoring the very real environmental and health impacts of these illegal actions."
The settlement also orders Quest to maintain an environmental compliance program, including hiring a third-party waste auditor, and report annually on its status.
Quest Responds
Quest offered this statement: "Quest takes patient privacy and the protection of the environment very seriously and has made significant investments to implement industry best practices to ensure hazardous waste, medical waste, and confidential patient information are disposed of properly. These include investing in technologies for treatment of biological waste, secured destruction of patient information, programs to maximize recycling efforts and minimize waste-to-landfill disposal, waste-to-energy recovery of non-recyclable wastes, and enhanced waste audit and inspection measures to ensure continued compliance with applicable laws."
Healthcare created one-in-five new jobs in the U.S. economy in the first month of 2024.
Healthcare sector job growth entered 2024 with a full head of steam, creating 70,000 jobs in January, representing 20% of the 353,000 jobs created in the larger U.S. economy, new federal data show.
Healthcare job growth in January was nearly double the 38,000 jobs created in December and well above the sector's 54,000 monthly average in 2023, the Bureau of Labor Statistics reported on Friday.
Ambulatory care continued to lead in job creation within the healthcare sector, accounting for 33,000 new jobs in January, followed by hospitals (20,000 jobs) and nursing and residential care (17,000).
The unemployment rate in the larger U.S. economy held fast at 3.7%, BLS says, with 6.1 million people reporting as unemployed, unchanged from December.
Big job gains were also seen in professional and business services (74,000), retail (45,000), and government (36,000).
The average hourly earnings for all employees on private nonfarm payrolls in January rose by 19 cents, or 0.6%, to $34.55. Over the past 12 months, average hourly earnings have increased by 4.5%. The average hourly earnings of private-sector production and nonsupervisory employees rose by 13 cents, or 0.3%, to $29.66.
January and December job numbers are considered preliminary by BLS, and subject to revisions.
With newfound authority granted by the IRA, HHS bids on 10 drugs selected for the first round of negotiations.
The federal government on Thursday offered its opening bid for mandated discounts on 10 pricey but widely used drugs in the Medicare program, beginning what are expected to be contentious and months-long negotiations with the nation's largest drug makers.
"Today is another milestone on the march to ensure people with Medicare get fair prices for prescription drugs. I am confident that this process will lead to lower prices, putting an end to exorbitant price gouging by pharmaceutical companies," Health and Human Services Secretary Xavier Becerra said in a media release.
With newfound authority granted by the Inflation Reduction Act, HHS named the 10 drugs selected for the first round of negotiations in August and announced in October that the makers of the 10 selected drugs agreed to negotiate a "maximum fair price."
The negotiations are expected to be drawn out over several months and finalized by August 1, with the new prices taking effect in 2026.
Pharmaceutical Research and Manufacturers of America (PhRMA) spokesman Alex Schriver called the negotiations "an exercise to win political points on the campaign trail rather than do what's in the best interest of patients."
"Government bureaucrats are operating behind closed doors to set medicine prices without disclosing for months how they arrived at the price or how much patient and provider input was used," Schriver said. "This lack of transparency and unchecked authority will have lasting consequences for patients long after this administration is gone."
Reports: U.S. Consumers Pay A Lot More
HHS fired back with fresh reports detailing the high prices that U.S. consumers pay for common drugs, such as insulin, when compared with other industrialized countries.
A new RAND report released this week to coincide with the launch of the negotiations found that prescription drug prices in the U.S. are about 2.78 times those seen in 33 other nations. That gap is even larger for brand-named drugs, RAND reports, with U.S. prices averaging 4.22 times those in comparison nations. Prices for generics -- which account for 90% of prescription volume in the U.S. -- are about 67% of the average cost in the comparison nations, the report notes, while prices for insulin are five to 10 times higher than those in other countries.
"These findings provide further evidence that manufacturers' gross prices for prescription drugs are higher in the U.S. than in comparison countries," said Andrew Mulcahy, lead author of the study and a senior health economist at RAND. "We find that the gap is widening for name-brand drugs, while U.S. prices for generic drugs are now proportionally lower than our earlier analysis found."
In addition, a report from Accountable.US found drug makers with products targeted for negotiation—including Merck, Eli Lilly, and Johnson & Johnson's Janssen—reported combined earnings of $38.7 billion in 2022, with combined stock buybacks and dividends increasing by $1.9 billion and $1.5 billion, respectively.
The allegations stem from a whistleblower lawsuit filed against a former neurosurgeon at Deaconness Hospital in Spokane.
Tacoma-based MultiCare Health System faces state and federal allegations that it "knowingly endangered patient safety" when it billed Medicare, Medicaid and other government health plans for unneeded spinal surgeries performed by a surgeon with a checkered clinical history.
The allegations stem from a whistleblower lawsuit filed against neurosurgeon Jason Dreyer, MD, a former staff physician who worked at MultiCare Deaconess Hospital and MultiCare Rockwood Clinic in Spokane from 2019 to 2021.
MultiCare said Monday it is "aware of the Department of Justice's allegations, and we believe them to be unfounded and without merit. We plan to vigorously defend MultiCare in this matter."
The Backstory
Before MultiCare hired Dreyer, he practiced for six years at Providence St. Mary's Medical Center in Walla Walla, a hospital owned and operated by Providence Health & Services, but resigned "amidst allegations that he was performing medically-unnecessary surgeries, harming patients, and falsifying diagnoses," Vanessa R. Waldref, U.S. Attorney for the Eastern District of Washington, said in a media release.
Eventually, Providence paid $22.7 million in 2022 to resolve False Claims Act allegations related to Dreyer's conduct, while Dreyer paid $1.2 million in 2023 for his role at Providence and was barred from billing government-sponsored health plans for nine years.
Disregarding well-documented "red flags," MultiCare's Deaconess hired Dreyer in July 2019. Three months later, Dreyer's high volumes were generating "significant revenue for MultiCare" and the health system put him on an incentive plan that paid the surgeon more money for greater volumes and complex surgeries, the complaint alleges.
Despite warnings in February 2020 that federal prosecutors were "investigating concerns that Dreyer was harming patients, falsifying diagnoses, and performing medically-unnecessary surgeries," MultiCare allowed Dreyer to maintain his practice until March 2021, when the Washington Department of Health suspended him.
In addition to endangering patients, the complaint alleges that MultiCare fraudulently claimed and was paid millions of dollars from state and federal healthcare programs, including Medicare, Washington State Medicaid, TRICARE, the Federal Employees Health Benefits Program, and the Department of Veterans Affairs Community Care program.
"MultiCare was aware of serious concerns that Dr. Dreyer was putting patients in danger," Waldref said. "The complaint alleges that MultiCare nonetheless made the decision to allow him to treat and operate on patients, even after it became aware of the federal investigation. This is an egregious breach of the public trust."
MultiCare Responds
MultiCare issued this response to a request for comment from HealthLeaders.
"MultiCare has not yet been served with the complaint filed by the DOJ. We can assure you that MultiCare's commitment to our mission – partnering for healing and a healthy future – and our dedication to the health of the communities we serve is as strong as ever. The safety of our patients is and will always be our highest priority. We are aware of the Department of Justice's allegations, and we believe them to be unfounded and without merit. We plan to vigorously defend MultiCare in this matter."
