As COVID-19 volumes declined in February, hospitals saw new admissions, margins and revenues fall.
Despite the rising numbers of vaccinations and signs that the COVID-19 pandemic may be receding, the nation's hospitals continued to struggle with thinning margins in February, Kaufman Hall reports.
"February hospital margins remained slim to negative," KH said in its National Hospital Flash Reportfor March. "Margins were affected by continued low outpatient volumes combined with declining inpatient volumes following January’s record-high COVID-19 hospitalizations."
Hospitals saw record numbers of COVID-19 patients in January but as those pandemic-related volumes declined in February, they weren't replaced by other admissions, and so hospitals saw expenses rise while margins, volumes, and revenues fell below levels seen in February 2020, KH said.
"As COVID-19 metrics begin to wane and much of the country turns to talk of a possible forthcoming end to the pandemic, hospitals and health systems remain in a tenuous position," KH said. "Organizations continue to bear the high costs of fighting the unpredictable virus as many non-COVID patients remain reluctant to seek outpatient services."
KH cited COVID Tracking Project data showing that COVID-19 hospitalizations were down to 47,352 on February 28, the lowest since late October 2020. Centers for Disease Control and Prevention data show that new daily admissions of infected patients dropped 74% from a high of 18,009 on January 5 to 4,772 on February 28. At the same time, the number of new cases continued to fall in February as vaccinations surged. As of March 16, more than 39 million Americans were fully vaccinated.
Among the KH metrics for February:
Not counting federal aid through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the median Kaufman hall hospital Operating Margin Index was –0.5%. With the funding, it was 0.4%."
Median Operating EBITDa Margin was 4 .1% without CARES and 5.4% with CARES.
Operating Margin fell 30.8% (3 percentage points) from February 2020 to February 2021 without the federal aid, while Operating EBITDa Margin was down 22.6% (3.2 percentage points).
With CARES, Operating Margin fell 23.4% (2.6 percentage points) and Operating EBITDA Margin fell 18.3% (2.4 percentage points) year-over-year.
Year-to-date, Operating Margin declined 48% (4.2 percentage points) without CARES and 36% (3.3 percentage points) with CARES.
Adjusted Discharges fell 16.8% YTD and 13.8% YOY, Adjusted Patient Days declined 8.8% YTD and 8.3% YOY, and Operating Room Minutes fell 13.0% YTD and 6.9% YOY.
Emergency Department Visits—which have seen double-digit declines every month since the start of the pandemic—continued to see the largest volume declines, down 25.6% YTD and 26.8% YOY in February.
Average Length of Stay was up 8.5% YTD and 7.3% YOY, but fell 3.4% compared to January, reflecting a decline in high acuity COVID-19 patients.
February revenue results varied, with declines in overall revenues but increases in adjusted revenues. Gross Operating Revenue (not including CARES) dropped 5.2% YTD and 4.6% YOY.
Continued declines in outpatient visits drove Outpatient Revenue down 8.8% YTD and 5.5% YOY, falling below prior-year levels for the tenth time in 11 months.
Inpatient Revenue was down 1.3% YTD and 4.4% YOY. After adjusting for the month’s low volumes, Net Patient Service Revenue (NPSR) per Adjusted Discharge rose 16.9% YTD and 14.9% YOY, and NPSR per Adjusted Patient Day rose 7.1% YTD and 7.6% YOY.
Total expenses showed relatively low increases but jumped significantly once adjusted for volume levels. Total Expense was up 2.6% YTD and just 1.1% YOY.
Total Labor Expense rose 3.9% YTD and 1.0% YOY, and Total Non-Labor Expense increased 1.2% YTD and 2.2% YOY. Total Expense per Adjusted Discharge, however, was up 24.4% YTD and 19.6% YOY. Labor Expense per Adjusted Discharge increased 25.4% YTD and 18.8% YOY as hospitals maintained elevated staffing levels.
Non-Labor Expense per Adjusted Discharge rose 22.1% YTD and 20.7% YOY, driven in part by a 29.1% YOY increase in Drug Expense per Adjusted Discharge and a 24.3% YOY increase in Purchased Service Expense per Adjusted Discharge.
KH warned that February's metrics "illustrate the ongoing uncertainty stemming from a devastating pandemic."
"The pace of these dynamics will vary over time, impacting volumes, revenues, and expenses. as many push for a rapid return to "normal," hospital and health system leaders face a hard reality that there may never be a return to the old normal," KH said.
"The pandemic likely will have long-lasting repercussions on patient behavior, volumes, and the role of telehealth in an evolving healthcare landscape."
Of those recoveries, $855 million were from 786 civil settlements or judgments and $173 million were for criminal convictions, OIG reported, adding that the MFCUs recovered $3.36 for every $1 spent investigating fraud.
In addition, the 53 fraud units – one for each state, the District of Columbia, and Puerto Rico and the U.S. Virgin Islands -- secured 1,017 criminal convictions, 744 of which were fraud-related, and 243 of which were for patient abuse or neglect.
"Similar to previous years, significantly more convictions for fraud involved personal care services (PCS) attendants and agencies than any other provider type," the report said.
Fraud investigations also resulted in 928 people or entities to be banished from Medicare.
The bill heads to the Senate, which must act before the moratorium expires on April 1 and 2% cuts to Medicare kick in.
On a heavily partisan vote, U.S. House Democrats on Friday extended through the end of 2021 a moratorium on about $12 billion in Medicare sequester cuts that were supposed to take effect April 1.
It now heads to the Senate, which must act before the March 29 Easter break to avoid the deadline.
The tepid support among Republicans is troubling for the bill's supporters because it cannot pass the Senate through reconciliation and would require 60 votes. It is not clear how much support the bill has among Senate Republicans.
A bill sponsored by Sens. Jeanne Shaheen, D-N.H., and Susan Collins, R-Maine, would prevent the 2% sequestration cuts from taking effect during the COVID-19 public health emergency and would be paid for with a one-year extension of the sequestration period, which now expires in 2030.
The House bill also excludes the budgetary effects of this bill and the American Rescue Plan Act of 2021 from the Statutory Pay-As-You-Go Act of 2010 scorecards, which otherwise could trigger across-the-board cuts to Medicare and other programs. Without this, additional sequester cuts will kick in at the end of session.
A Pay-As-You-Go sequester has never been triggered. Congress always pushes the deadline back.
The bill also makes technical changes to the rural health clinic provisions in the Consolidated Appropriations Act, 2021. Specifically, the CAA required that the payment rate for RHCs certified after Dec. 31, 2019, be capped at $100 per visit, starting April 1, 2021. This rate will increase gradually through the Medicare Economic Index but will remain below provider-based RHC rates.
American Hospital Association President and CEO Rick Pollack thanked the House for passing the bill and urged the Senate to do the same.
"Now is not the time to pull resources away from these critical efforts," he said. "We now look forward to working with the U.S. Senate to achieve relief from the pending Medicare sequester cuts before they go into effect."
An over-the-counter mouthwash could slow the spread of the virus.
A swig of good old Listerine could "disrupt" transmission of the COVID-19 virus, a new study shows.
Under laboratory conditions, researchers at Rutgers School of Dental Medicine found that two types of mouthwash – over-the-counter Listerine and prescription Chlorhexidine – disrupted the virus within seconds after being diluted to concentrations that would mimic actual use.
The study, published in Pathogens, was conducted using concentrations of the mouthwash and the time it would take to contact tissues to replicate conditions found in the mouth. Study senior author Daniel H. Fine, chair of the school's Department of Oral Biology, said further studies are needed to test real-life efficacy in humans.
"The ultimate goal would be to determine whether rinsing two or three times a day with an antiseptic agent with active anti-viral activity would have the potential to reduce the ability to transmit the disease," Fine said. "But this needs to be investigated in a real-world situation."
Fine's study found two other mouthwashes could potentially providing some protection in preventing viral transmission: Betadine, which contains povidone iodine, and Peroxal, which contains hydrogen peroxide.
However, only Listerine and Chlorhexidine disrupted the virus with little impact on skin cells inside the mouth that provide a protective barrier against the virus, he said.
"Both Povidone iodine and Peroxal caused significant skin cell death in our studies, while both Listerine and Chlorhexidine had minimal skin cell killing at concentrations that simulated what would be found in daily use," Fine said.
Until the findings can be proven in clinical trials on humans, Fine warned the public against relying on mouthwash as a way to slow the spread of the virus.
The hospital association says the deal would squash competition and raise costs for consumers and providers.
The American Hospital Association has asked the Department of Justice to launch an anti-trust investigation of United Health Group's proposed $8 billion acquisition of software and data analytics provider Change Healthcare.
In a seven-page letter Thursday to Richard Powers, acting assistant attorney general at DOJ's Antitrust Division, AHA General Counsel Melinda Reid Hatton raised concerns that the deal "threatens to reduce competition for the sale of healthcare information technology services to hospitals and other health care providers, which could negatively impact consumers and health care providers."
Reid Hatton said UHG and Change are aware that the deal "presents substantial antitrust concerns because the transaction agreement provides that the Parties will divest assets that generate hundreds of millions of dollars in revenue in order to obtain DOJ approval."
In a joint press release at the time of the announcement, Eden Prairie, Minnesota-based UnitedHealth, and Nashville-based Change Healthcare said the combined company "will more effectively connect and simplify core clinical, administrative and payment processes - resulting in better health outcomes and experiences for everyone, at lower cost."
Optum issued a statement Thursday night that skirted the issues raised in the AHA letter.
“Optum and Change Healthcare share a vision for better health outcomes and experiences for everyone, at lower cost. With distinct and complementary capabilities, this combination will help healthcare providers and payers better serve patients by more effectively connecting and simplifying key clinical, administrative and payment processes to the benefit of the health system and the people we serve,” the company said.
Reid Hatton said the deal would consolidate and shift away competitively sensitive healthcare data from Change Healthcare, now a neutral third-party, to UGH subsidiary Optum.
"Because Optum's parent, UHG, also owns the largest health insurance company – UnitedHealthcare – in the United States, the combination of the Parties' data sets would impact (and likely distort) decisions about patient care and claims processing and denials to the detriment of consumers and health care providers, and further increase UHG’s already massive market power," Reid Hatton said.
The letter noted that UHG generated more than $242 billion in 2019, and that subsidiary UnitedHealthcare is the largest health insurance company in the nation, with more than 70 million members, and commercial, Medicare and Medicaid insurance plans.
Reid Hatton said UnitedHealthcare also has the largest or second largest market share in 20 states, with a network that includes 1.4 million physicians and other clinicians, and more than 6,500 hospitals.
Optum and its OptumHealth, OptumRx, and OptumInsight businesses generate about 50% of UHG's earnings, Reid Hatton said, and are expected to continue to drive UHGs revenues over the next three years.
Reid Hatton cited UHG's company reports boasting that OptumInsight provider health care IT services to more than 5,000 (9 out of 10) hospitals and 100,000 physicians, and processes more than 5 billion pages of clinical documents and processes data covering 240 million people each year.
Change Healthcare reported a net loss of nearly $59 million in Q1 2021, attributed largely to the negative impact of the coronavirus disease 2019 (COVID-19) pandemic on the business model, according to the company's latest earnings results released Wednesday afternoon.
Change Healthcare LLC, a joint venture previously held by McKesson that Change purchased in early March, delivered a net income of nearly $72 million and an adjusted net income of $141.5 million.
The two California nonprofit health systems have signed a letter of intent and have begun due diligence.
Keck Medicine of USC and Methodist Hospital of Southern California are "exploring an affiliation" that "would bring Methodist Hospital into the Keck Medicine clinical enterprise," the two Southern California-based health systems announced this week.
The two nonprofit health systems signed a letter of intent and are entering a due diligence period for the merger, which both systems say would improve care access in the San Gabriel Valley region.
Financial terms were not disclosed.
Three-hospital Keck Medicine of USC is one of two university-based medical systems in Los Angeles and includes flagship Keck Hospital of USC, USC Norris Cancer Hospital, USC Verdugo Hills Hospital and more than 80 outpatient clinics in Los Angeles, Orange, Kern, Tulare and Ventura counties.
Arcadia-based Methodist is a 348-bed community hospital that during a normal year records about 16,000 patient admissions and 50,000 emergency department visits.
"Methodist Hospital has a longstanding history of providing excellent care in the San Gabriel Valley and has the potential to be a strong partner as we work together to expand services and create easier access to primary and complex care for the people we serve," Keck Interim CEO Rodney Hanners said in a media release.
"This affiliation would not only complement our current satellite in Arcadia, but also provide opportunities to elevate our entire network that we are excited to explore further," he said.
Executives at both systems will speak with Keck Medicine clinical faculty, physician leaders at Methodist Hospital, and other stakeholders across the region in the coming months to finalize the terms of merger.
No date was given for when the affiliation will be finalized.
"This affiliation represents an opportunity to ensure that our hospital remains well-positioned to meet the health care needs of generations to come," said Methodist President and CEO Dan Ausman.
"It would enable our physicians to care for their patients as they always have, with expanded access to the USC network of care teams, clinical services and outpatient facilities throughout the San Gabriel Valley," Ausman said.
Telehealth visits saw a 20-fold increase when the pandemic began in March 2020, as office-based visits fell nearly 50%.
The great promise that telehealth will bring remote care access to rural and underserved communities across the nation isn’t happening yet, a new RAND Corporation study suggests.
The study -- published this month in the American Journal of Preventive Medicine -- looked at more than 6 million employer-based private insurance claims in 2019 and 2020, representing 200 employers across all 50 states. It found that most of the telehealth claims were for more affluent beneficiaries who lived in metropolitan areas.
The study authors said their findings suggest that the pandemic is worsening healthcare access and use disparities.
"This study expands our understanding about the growing use of telehealth as the pandemic progresses," said lead author and RAND researcher Jonathan Cantor. "Given our findings, policymakers should consider increasing efforts to reach populations that are deferring in-office care and not replacing it with telehealth visits."
The study found a dramatic, 20-fold increase in telemedicine use when the pandemic began in March 2020, as office-based visits fell nearly 50%.
The researchers also examined the number and types of care received by enrollees from January 2019 through July 2020.
The increase in telemedicine was greatest among patients in counties with low poverty levels -- about 48 visits per 10,000 people versus 15 per 10,000 people in high-poverty areas -- and among patients in urban areas -- about 50 visits per 10,000 people versus about 31 visits per 10,000 people in rural areas.
Adults were more likely to have a telehealth visit as compared to children aged 12 and younger -- about 65 visits per 10,000 adults as compared to about 50 visits per 10,000 children.
Cantor said the finding suggest that "more intensive training for parents and pediatricians about telehealth, as well as efforts to address barriers to children’s access to telemedicine, may be necessary."
The advisory panel wants more evidence supporting the efficacy of remote care.
The federal advisory panel for Medicare is recommending continuing temporary payments for telehealth services after the coronavirus public health emergency expires, with the additional time used to gather evidence about the efficacy of remote care.
The Medicare Payment Advisory Commission, in its newly released March 2021 report to Congress, applauded the Centers for Medicare & Medicaid Services for "acting rapidly to preserve access to care during the PHE."
However, the panel said questions remain about the effectiveness of remote care.
"The Commission has previously recommended that policymakers use the principles of access, quality, and cost to evaluate individual telehealth services before covering them under Medicare," MedPAC said. "There are some clinical trials comparing telehealth and in-person care, but at this time, there is not yet evidence on how the combination of telehealth and in-person care affects quality and costs in the Medicare program."
MedPAC is recommending that Medicare fee-for-service coverage of telehealth services be expanded after the PHE expires for up to two years "to gather more evidence about the impact of telehealth on access, quality, and cost, and they should use this evidence to inform any permanent changes."
During this limited period, MedPAC said Medicare should temporarily:
Pay for specific telehealth services for all FFS beneficiaries regardless of their location;
Cover some telehealth services with services covered before the PHE if there is a potential clinical benefit;
Cover some audio-only telehealth calls if there is potential for clinical benefit.
When the PHE ends, MedPAC said Medicare should return to paying the fee schedule's facility rate for telehealth services and collect data on the cost of providing these services.
The panel added that providers should not be allowed to reduce or waive cost sharing for telehealth services after the PHE, and that CMS should implement safeguards to protect Medicare and its beneficiaries from unnecessary spending and potential telehealth fraud.
Those safeguards could include additional scrutiny to "outlier clinicians" who bill for a high percentage of telehealth visits, mandated face-to-face visits before ordering expensive durable medical equipment or lab, and banning "incident to" billing for telehealth services provided by a clinician who can bill Medicare directly.
Medicare payments will increase from $28 to $40 for one-dose vaccines, and from $45 to $80 for two-dose vaccines, effective immediately.
In a bid to accelerate vaccinations for COVID-19, the federal government is offering Medicare providers a big bump in the reimbursements it pays for the single- and two-dose vaccinations.
The new payments -- which go into effect immediately -- will increase from $28 to $40 for one-dose vaccines, and from $45 to $80 for two-dose vaccines, increases of 43% and 78%, respectively, the Centers for Medicare & Medicaid Services announced Monday.
The exact payment rate will depend on the provider venue that administers the vaccination, and on the geographic location of the providers.
"These updates to the Medicare payment rate for COVID-19 vaccine administration reflect new information about the costs involved in administering the vaccine for different types of providers and suppliers, and the additional resources necessary to ensure the vaccine is administered safely and appropriately," CMS said in a media release.
CMS said the higher payments will incentivize providers to increase the daily volume of vaccines they can administer, expand vaccination sites, conduct community outreach and education, and hire additional staff.
Providers receive the coronavirus vaccines for free from the federal government and cannot charge Medicare, Medicare Advantage or Medicaid patients. Most private health insurers are required to provide the vaccination to their beneficiaries with no out-of-pocket costs.
AMA Cheers
American Medical Association President Susan R. Bailey, M.D. said her group has been pushing for more money since President Joseph R. Biden took office in January.
"The additional resources will increase the number of clinicians who can administer the vaccine," she said. "This has been a trying time for physician practices, and we thank the administration for acknowledging the challenges of practicing medicine during a pandemic."
"The $1.9 trillion coronavirus relief bill will boost the ongoing progress in delivering mass vaccinations, which will likely contribute to a continued decline in COVID-19 infection rates and facilitate a more rapid reduction in curbs on social interactions across the US," Moody's says.
"The bill includes provisions that will be positive for health insurers and healthcare providers should they lead to expanded enrollment in private health insurance plans and reductions in uncompensated care," Moody's says.
The 591-page Rescue Act passed the House on Wednesday on a 220-211 party-line vote. No Republicans in the House or Senate voted for it.
The Act provides billions of dollars for state and local governments, Medicaid, providers, health insurers, and individuals, including stimulus checks of up to $1,400 for most Americans, extended unemployment benefits, increased subsidies for health insurance bought on the federal Marketplace, $8.5 billion in additional funding for rural healthcare, and an increased federal match for home- and community-based services.
"The measures, which aim to make healthcare coverage more affordable for lower and middle-income households, include temporary increases in subsidies to purchase health insurance on the individual marketplaces created by the Affordable Care Act," Moody's says.
The bill also subsidizes COBRA premiums for up to six months to help laid-off workers keep their employer-sponsored health insurance. However, it does not cover copays or deductibles.
Moody's says the financial assistance for households in the form of $1,400 direct payments for most American, and the extension of $300 weekly unemployment compensation – all of which represent the bulk of the Act's spending – should reignite the sputtering economy.
"The financial assistance to individuals will also support a rebound in demand for services, underpinning Moody's Investors Service's forecasts of 4.7% real GDP growth in the US this year and 5% next year," Moody's says.
"Additionally, the potential for a broad resumption of activity this spring – which would be earlier than our current expectations – would be an upside to our 2021 growth forecasts," Moody's says.
The $1.9 trillion Rescue Act is the equivalent of about 8.5% of Moody's U.S. GDP forecast for 2021.
