The prevailing notion that a catheter-associated urinary tract infection costs about $1,000 is 'an underestimate and an oversimplification,' say two researchers. Some CAUTIs cost $10,000 or more.
For the past decade, Medicare has declined to reimburse hospitals for catheter-associated urinary tract infections (CAUTI) and other preventable hospital-acquired conditions.
The goal has been to create a financial incentive for hospitals to take infection prevention steps. But, without a clear sense for how much CAUTIs cost, hospitals may not be responding appropriately to that financial incentive, according to research published online Thursday by the American Journal of Infection Control (AJIC).
Although $1,000 is often cited as the average cost of treating one CAUTI, that figure is likely too low, according to researchers Christopher S. Hollenbeak, PhD, professor of surgery and public health sciences at Pennsylvania State University, and Amber L. Schilling, PharmD, MEd, research analyst at the Penn State College of Medicine.
Hollenbeak and Schilling conducted a systematic review of existing literature in an effort to better understand available cost data. They excluded studies that were based on the marked-up prices providers charged for CAUTI-related goods and services, focusing instead on studies conducted in the United States between 2000 and 2017 with novel patient-level cost data.
These stringent parameters left only four studies for Hollenbeak and Schilling to analyze. Due to differences in design, patient population, and cost perspective, data from the four studies could not be pooled, so the researchers were unable to conduct meta-analysis.
“However, we can conclude that the prevailing notion of a CAUTI costing approximately $1,000 is an underestimate and an oversimplification of its true economic burden,” Hollenbeak and Schilling wrote. “Many factors can increase the attributable cost well above $1,000.”
Costs attributable to a CAUTI, as reported in the four studies, ranged from $876 to $10,197 when inflation-adjusted into the equivalent of 2016 dollars.
The low end of that range came from a study of adult patients in an inpatient setting, with costs calculated from the hospital’s perspective. The high end came from a study of intensive care unit patients, with costs calculated from Medicare’s perspective.
The review suggests that a CAUTI’s cost depends heavily upon the patient’s acuity, the population being served (e.g., adult or pediatric), and the cost perspective (e.g., hospital or Medicare), the researchers wrote, noting that more research is needed.
Even with these rough numbers, however, there is reason to believe CAUTIs could be costing the U.S. much more than previously thought, Hollenbeak and Schilling wrote.
The Centers for Disease Control and Prevention’s National Healthcare Safety Network estimated in 2009 that CAUTIs place a total economic burden of $340 million annually in the U.S., but the AJIC study suggests the number is closer to five-times that amount, at $1.7 billion.
The for-profit rural hospital operator reported a fourth-quarter loss of $27.5 million.
LifePoint Hospitals Inc., based in Brentwood, Tennessee, reported fourth-quarter and year-end financials Friday, falling short of analyst expectations.
The for-profit rural hospital operator posted a fourth-quarter loss of $27.5 million, sending stock prices downward more than 13% in mid-morning trading.
LifePoint’s fourth-quarter numbers included a one-time non-operational adjustment that increased doubtful accounts by $72.6 million, as the company has reevaluated the likelihood of collecting on certain of its accounts receivable.
The adjustment, which translates to $1.15 loss per diluted share, was made as LifePoint installs new systems and enhances analytical procedures “to centralize, standardize and refine its estimation processes to more precisely estimate the collectability of accounts receivable at a more detailed and disaggregated level,” the company said.
During a call with investors Friday morning, LifePoint executives said they first realized this quarter that a change was needed.
The tax law recently signed by President Donald Trump is expected to give LifePoint incremental cash savings of $30 million annually, Executive Vice President and CFO Michael S. Coggin said.
Without being terribly specific, Chairman and CEO William F. Carpenter III said LifePoint would put its tax savings to good use.
“We anticipate deploying these cash savings in a manner consistent with overall company strategies,” Carpenter said.
LifePoint recently sold Rockdale Medical Center in Conyers, Georgia, to Piedmont Healthcare.
Looking forward, President and COO David M. Dill told investors that LifePoint is in the process of overhauling its strategic plans companywide.
"I am very excited about the work we will be doing during the first half of 2018 to update our operating strategies across the entire organization to ensure that we continue to be well-positioned to capitalize on the evolving industry trends for the next five to seven years," Dill said. "This project, an in-depth review, will be focused on both long-term and short-term strategies to accelerate our growth into the future."
Editor's note: This story has been updated to include additional information from the investors call.
Lawmakers in Ohio are calling for the insurer to be penalized for a policy that would deny claims for emergency department visits that Anthem deems to be non-emergencies.
Anthem BlueCross BlueShield is facing more criticism over its policy to deny coverage for emergency department visits that the company deems to be for non-emergency situations.
Three state lawmakers in Ohio say they plan to draft legislation to penalize any insurer that implements a policy like Anthem’s, by excluding such insurers from tax breaks and contracts to cover government workers.
“We will not stand idly to the side and see the changes and the company taking advantage of individuals and putting them at financial risk and, more importantly, putting their lives at risk,” state Rep. Stephanie Howse, D-Cleveland, told reporters during a press conference Wednesday alongside state Rep. Alicia Reece, D-Cincinnati, and state Rep. Thomas West, D-Canton, as The Columbus Dispatch reported.
The trio said they would also ask Attorney General Mike DeWine to investigate whether Anthem’s policy complies with all relevant Ohio laws, the Dispatch reported.
The lawmakers aren’t the only voices warning that Anthem’s policy could put patients at risk. Ryan Stanton, MD, an emergency medicine physician and CEO of Everyday Medicine in Lexington, Kentucky, told HealthLeaders Media last month that Anthem is unlikely to change its policy “until somebody dies and they get sued.”
Anthem has said that this policy would come into play only for egregious cases in which an emergency visit was clearly unnecessary.
“Anthem’s ER program aims to reduce the trend in recent years of inappropriate use of ERs for non-emergencies,” the company’s Ohio-based spokesperson, Jeff Blunt, told the Dispatch in a statement. “For non-emergency health-care needs, ERs are often a time-consuming place to receive care and in many instances 10 times higher in cost than urgent care.”
The system implemented accounting reforms to avoid overestimating its revenue moving forward.
Edward-Elmhurst Health, an integrated system based in Naperville, Illinois, went public this week with sour news: The three-hospital nonprofit system discovered a $92 million accounting error.
Accounts receivable had been overstated for a number of reasons over the course of six years, making it appear as though Edward-Elmhurst was poised to collect more revenue than it should reasonably expect. Upon discovering the problem late last fall, the system hired an independent auditor and began implementing a few accounting changes.
President and CEO Mary Lou Mastro, MS, RN, FACHE, who is scheduled to speak about the accounting changes with investors on a conference call Thursday afternoon, says leaders at other hospitals and health systems across the country should take another look at their books to make sure they’re not falling into the same predicament.
“Given the complexities of healthcare reimbursement and the incredible number of assumptions that go into calculating accounts receivable, I would recommend that anyone do a valuation of their accounts receivable, as we did, which included what’s called a ‘cash waterfall analysis,’” Mastro tells HealthLeaders Media.
That analysis revealed Edward Hospital and Elmhurst Hospital had each contributed to the problem before they merged to form Edward-Elmhurst Health in 2013. About $42 million of the error accumulated prior to the merger.
The system’s financial statements for fiscal years 2016 and 2017 will be restated to reflect a reduction in expected revenue, and the changes will lower the system’s operating income for the first half of fiscal year 2018 by $10.4 million, from negative $5 million to negative $15 million.
Even so, Mastro says the forthcoming savings from a $50 million cost-cutting initiative the system already implemented will keep the books balanced.
“We’ve identified the problem. We have worked rapidly to put corrective actions in place, and we’re confident that moving forward we will have reliable financial statements,” she says.
“We are a strong organization. We have a strong cash position and certainly have a solid market share, and we’re growing in our market, so going forward we’re very optimistic about the future and that we will be profitable or break even this year.”
Three major causes
Mastro cites three major variables in the equation that gave leadership too-rosy a picture of the system’s expected revenue: contractual allowances, charity care, and bad debt.
First, contractual allowances—which Mastro describes as “the difference between what we bill and what we actually get paid”—can vary drastically depending on the payer. It can be quite difficult, therefore, to account accurately for every negotiated discount, she says.
Second, the need for charity care, which systems provide to patients who cannot afford to pay, has begun to crop up in unexpected populations, Mastro says.
“Traditionally, we’ve always thought of charity care as people who don’t have insurance, and really what we’ve found in the last couple, three years is that we have so many insured patients with high-deductible plans,” she says.
Patients have been drawn to cheaper insurance options with deductibles as high as $5,000 to $10,000; when a major accident or illness strikes, the patients are often unable to pay, Mastro says.
“So part of our charity care now includes people who have insurance. That’s another factor that has sort of played into this.”
Third, about one-third of the miscalculation, or $30.4 million, was attributed to bad debt, “which is what people should pay but don’t,” Mastro says.
“We had historically calculated our bad debt write-offs based on what our historical experience has been, and I think what we’re finding is we really don’t collect much after 365 days,” Mastro says.
Moving forward, Edward-Elmhurst Health will zero out all accounts receivable older than one year. The system will still attempt to collect what it’s owed, but for accounting purposes, it will not include these unpaid bills in its tally of anticipated revenue.
Search for CFO underway
Vincent Pryor was executive vice president and CFO for Edward-Elmhurst following the merger, but he took a new job as senior vice president and CFO for Silver Cross Hospital late last summer.
Pryor and Silver Cross could not be reached for comment.
Edward-Elmhurst’s vice president for finance, Jeff Friant, CPA, stepped in as interim CFO. But the system is still conducting a search for Pryor’s permanent successor, a system spokesperson said.
Mastro has more than three decades of hospital work experience, including several years as president and CEO of Elmhurst Memorial Healthcare, but she took her current post just last year, following the retirement of former CEO Pam Davis.
The system notified Pryor of the accounting error before going public, but the former CFO is not considered to have done anything wrong, Mastro says.
“We’re focused on what we need to do going forward.”
Numbers crunched by the Trump and Obama administrations, and others, indicate loosening restrictions on short-term options would harm ACA exchanges.
Following up on a directive the White House issued last October, the departments of Health and Human Services and the Treasury issued a proposed rule Tuesday that would ease restrictions on cheaper short-term, limited-duration coverage options.
Such plans are exempt from certain provisions of the Affordable Care Act, so making them more accessible is expected to further increase premiums for those who secure coverage on an ACA exchange—a fact the proposed rule itself acknowledges.
Short-term coverage used to be capped at 12 months, but in 2016 the Obama administration proposed lowering that limit to three months. That lower cap took effect last April, but the Trump administration now proposes reverting to the 12-month limit.
Centers for Medicare and Medicaid Services Administrator Seema Verma said the longer time frame will make it easier for Americans who are stuck between jobs or are otherwise unable to find affordable coverage.
“In a market that is experiencing double-digit rate increases, allowing short-term, limited-duration insurance to cover longer periods gives Americans options and could be the difference between someone getting coverage or going without coverage at all,” Verma said in a statement.
HHS Secretary Alex Azar similarly said this change is about offering people affordable options.
“Americans need more choices in health insurance so they can find coverage that meets their needs,” Azar said in the statement. “The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer options.”
It’s true that these short-term plans are cheaper. They cost about $124 per month in 2016’s fourth quarter, while unsubsidized ACA-compliant plans cost about $393 per month, according to a fact sheet published Tuesday with the proposed rule. But they’re also skimpier than ACA plans, which is why companies that offer them will be required to include a notice in the application materials and contract to ensure consumers know their plans fall short of the ACA's minimum essential coverage requirements.
The Obama administration restricted short-term plans precisely because they could be used to undermine healthcare reforms, citing the possibility that short-term plans could cater to healthier populations, exclude consumers with preexisting conditions, or impose lifetime and annual dollar limits on essential health benefits.
American Hospital Association President and CEO Rick Pollack came out against the proposal Tuesday.
"Today’s proposed rule is a step in the wrong direction for patients and health care providers because it would allow insurers to sell products that do not constitute true 'insurance,'" Pollack said in a statement. "These products would appear cheaper to consumers, but would do so at a significant cost: by covering fewer benefits and ensuring fewer patient protections, such as coverage of pre-existing medical conditions."
Currently, the ACA’s individual mandate imposes a financial penalty on those who go without a compliant plan. With the passage of the tax reform law late last year, however, that penalty will go away in 2019, making these short-term options more attractive.
Moody’s Investors Service said last October that the promotion of skimpy plans would undermine the ACA exchanges by incentivizing healthier populations to leave, while a sicker population stays behind, as HealthLeaders Media reported.
The administration estimates 100,000 to 200,000 people—most of them young and healthy—will switch next year from the exchanges to the short-term option next year. This exodus is expected to increase average premiums for those left behind, as well as expected subsidies paid by the government, according to the proposed rule, which is slated to be published Wednesday in the Federal Register.
The estimated average monthly premium for those who rely on the ACA exchanges in 2019 rose from $649 to $714 as a result of the ACA’s individual mandate penalty being eliminated, according to the proposed rule. That estimated monthly average will rise another $2 if 100,000 people switch to short-term plans, or another $4 if 200,000 people make the switch.
Meanwhile, the proposed rule would increase the federal government’s expenditures on healthcare subsidies—via advance payments of the premium tax credit (APTC)—by $96-168 million annually, according to the proposed rule.
“There is significant uncertainly regarding these estimates,” the proposal notes, “because changes in enrollment and premiums would depend on a variety of economic factors and it is difficult to predict how consumers and issuers would react to the proposed policy changes.”
The uncertainty goes beyond tabulating the government's future bills. Pollack said hospitals and health systems will ultimately incur more bad debt because many consumers will be unaware of the gaps in their short-term coverage.
"The AHA strongly believes that patients should have access to affordable, comprehensive health care coverage options," he said, "and we encourage the Administration to achieve this goal without removing critical consumer protections for patients."
Editor's note: This story has been updated to include a statement from the American Hospital Association and additional information about the Obama administration's rationale for restricting short-term coverage options.
Assessing the impact of the Tax Cuts and Jobs Act, the investors service picked winners from among for-profit hospitals, most of which stand to gain as their nonprofit competitors reckon with added financial pressures.
Eleven for-profit hospitals stand to save $700-800 million more this year collectively than they would have under previous tax rules, according to a Moody’s Investors Service report published Friday.
Although two of the 11 rated hospitals are projected to have a negative change in cash flow as a result of the tax law change, most are expected to benefit, and three are projected to see their cash flows increase 10% or more, thanks in large part to a lower corporate tax rate and greater potential for deductions.
Jessica Gladstone, a Moody’s senior vice president, said in a statement that HCA Healthcare and Universal Health Services are expected to reap the greatest benefits.
"For most others, the benefit will be more muted as limits on interest deductibility offset the lower tax rate,” Gladstone said. “Highly leveraged companies, such as CHS/Community Health and Quorum, may have to pay more in taxes. However, these companies will likely be able to utilize net-operating loss carryforwards in 2018, mitigating the cash impact."
The anticipated windfall at for-profit hospitals comes as nonprofit organizations reckon with the Tax Cuts and Jobs Act's impact on their operations.
During an earnings call late last month, HCA Healthcare Chairman and CEO R. Milton Johnson said the company estimates its cash taxes were reduced about $500 million for the year as a result of the law.
The tax law’s other big beneficiaries are likewise likely to find potential investments in capital projects and merger-and-acquisition activity to be more moderately more attractive, according to the Moody’s report.
“Operating hospitals is highly capital intensive with ongoing investment necessary to build replacement hospitals, invest in IT and clinical technologies and patient access points such as outpatient facilities,” the report states. “Without these investments, hospitals can often be competitively disadvantaged.”
The cash influx is projected to help mitigate industrywide headwinds, including Medicare and Medicaid reimbursement rates that fail to keep pace with rising costs. Nonprofits, however, which comprise the majority of U.S. hospitals, won’t receive the same boost.
“Not-for-profits will not be significantly affected by the tax law changes,” the report states. “This will likely give certain for-profit hospitals, like HCA, an edge in some markets where non-profit competitors won’t receive a similar cash benefit.”
The 11 hospitals included in the report are as follows: CHS/Community Health, Quorum, Select Medical, Acadia Health, Tenet Health, Prospect Medical, RegionalCare, Encompass Health, HCA Healthcare, Universal Health Services, and LifePoint Health.
Kindred Healthcare was excluded because it is being acquired and divided into two companies, according to a footnote. Ardent was excluded because its taxed are filed as a consolidated entity that Moody’s does not rate.
The definitive agreement adds Presence Health’s 10 Chicagoland hospitals to the nine-hospital integrated system AMITA Health, which is a joint venture by Ascension’s Alexian Brothers Health System and Adventist Midwest Health.
The largest Catholic health system in the U.S. has signed a definitive agreement with one of the largest Catholic health systems in Illinois, the organizations announced Thursday, signaling that they expect to finalize the transaction soon.
Ascension’s planned acquisition of Presence Health was made public last summer when the organizations signed a nonbinding letter of intent. The arrangement comes as Presence Health President and CEO Michael Englehart has, since taking the job in 2015, sought to steer the system into safer financial waters after a few stormy years.
The system reduced its workforce by about 700 positions in 2016 then sold two hospitals to Peoria-based OSF HealthCare in 2017, as the Chicago Tribune reported.
In a statement, Englehart described joining the Ascension family as “a natural evolution” for Presence Health, given their shared sense of values and mission.
Presence Health’s 10 remaining hospitals are set to become a part of AMITA Health, a nine-hospital system in suburban Chicago formed in 2015 as a partnership between Ascension’s Alexian Brothers Health System, based in Arlington Heights, Ill., and Adventist Health System, based in Hinsdale, Ill., more than doubling the integrated health system’s hospital count.
AMITA Health President and CEO Mark A. Frey said his team is excited to partner with Presence Health.
“From our discussions the past several months, we know we share a strong commitment to providing care to all who need it in the many communities we are privileged to serve,” Frey said in the statement. “Together, we can do even more to deliver the holistic care our patients and their families need, and do it even more efficiently.”
Presence Health has annual revenue of $2.6 billion, according to the statement.
Ascension President and CEO Anthony R. Tersigni, EdD, FACHE, described the deal between Ascension and Presence Health as part of a charitable mission.
“Both our systems are dedicated to providing compassionate and personalized care for all, with special attention to persons living in poverty and those most vulnerable,” Tersigni said in the statement. “We believe that by coming together, we will strengthen Catholic healthcare as we provide affordable, accessible and quality care to the community.”
The HHS secretary’s words of support coincide with a number of other promising signs for burgeoning acceptance and application of the technology.
During his third congressional hearing within 24 hours, Health and Human Services Secretary Alex Azar told lawmakers Thursday he’s looking forward to clearing reimbursement obstacles that have impeded the growth of telemedicine.
Azar, who’s been on the job two weeks, fielded questions from the House Energy and Commerce Committee, covering a wide range of issues facing the massive department.
Rep. Morgan Griffith, R-Va., asked specifically about how payments for telehealth services are handled currently and how they might be better handled in the future.
“If the doctor is willing to conduct a telehealth consult, I believe they should not be prevented or discouraged from providing the service because of outdated reimbursement policies,” Griffith said, “and I would like to work with you and HHS to help find ways to alleviate reimbursement challenges that are in the way of telehealth exploding and bringing medicine to the nooks and crannies of every part of America.”
“What do we need to change to help you all allow reimbursement for telehealth services so that people can get services all over the country?” Griffith added.
In reply, Azar suggested that current policies could be too outdated to accommodate the latest technological innovations.
“I am a big supporter of telehealth and how we can harness that, especially for underserved areas like our rural communities,” Azar said. “I do suspect there’s significant statutory barriers around reimbursement there, given that most of our constructs were set up in the 1960s for our payment regimes.
“So I would love to work with you on that as I go back and we plow through and identify those barriers to see where we might make changes,” he added, noting that a Medicare Advantage provision in the budget would add flexibility for telemedicine payments.
Under the new law, as far as Medicare Advantage is concerned, telehealth services will be classified as benefits provided to patients at in-person visits, rather than “additional telehealth benefits,” as HealthLeaders Media reported last week.
“I don’t think it’s a partisan issue,” Griffith told Azar. “I think you’d find support on both sides of the aisle to change laws that are keeping you all from doing things that we all want you to do … in relation to telehealth.”
The measure would restore tax exemption for advance refunding bonds, which nonprofit organizations have used to finance major projects and manage debt.
The tax-exempt status for advance refunding bonds ended January 1 as a result of the Tax Cuts and Jobs Act, which President Donald Trump signed into law late last year. But a bipartisan bill introduced in the House this week would undo that, restoring a tool nonprofits have used to keep their costs down.
Reps. Randy Hultgren, R-Ill., and Dutch Ruppersberger, D-Md., who co-chair the Congressional Municipal Finance Caucus, introduced the measure Tuesday, arguing the bill is warranted because hospitals and other public and private entities serving local communities across the country need access to affordable debt.
“In recent years, tax-exempt advance refunding bonds have saved Illinois taxpayers $80 million per year on average,” Hultgren said in a statement. “Given that interest rates are expected to increase, this tool is especially important to states and local governments responsibly planning for the future.”
Ruppersberger said the tool had been saving nearly $37 million annually in Maryland.
The legislation won support from the American Hospital Association, which published a letter praising Hultgren for the bill.
“Tax-exempt advance refunding bonds were an important financing tool that allowed 501(c)(3) hospitals to respond to credit market conditions to reduce the cost of capital,” AHA Executive Vice President Tom Nickels wrote. “They have resulted in billions of dollars of savings for hospitals and the health care system. Loss of the ability to restructure debt with tax-exempt advance refundings will divert resources from patient care and could diminish access to needed health care services.”
There was concern among healthcare leaders last fall that Congress would revoke access to tax-exempt private activity bonds (PABs), as earlier drafts of the tax law would have done. But Hultgren and other lawmakers persuaded their colleagues to preserve PABs.
Their efforts to spare the tax-exempt status of advance refunding bonds, however, were unsuccessful, which is why they’re circling back now to push for the policy as a standalone measure.
Original cosponsors of the bill, H.R. 50003, include Reps. Luke Messer, R-Ind.; Ed Royce, R-Calif.; Dan Kildee, D-Mich.; and Michael Capuano, D-Mass.
The bill was sent to the House Ways and Means Committee, where it is unlikely to find support from chairman Rep. Kevin Brady, R-Texas, according to The Bond Buyer’s Lynne Hume, who reported Wednesday that Brady this week reiterated his opposition to expanding tax-exempt PABs or restoring advance refundings.
When quality metrics are too numerous or complicated, they create ‘roadblocks to quality care,’ said the CMS administrator.
Centers for Medicare and Medicaid Services Administrator Seema Verma renewed her commitment Monday to reshaping the U.S. healthcare delivery system into one that values quality over quantity.
Delivering prepared remarks at the CMS Quality Conference in Baltimore, Verma cited the progress CMS has made in her less-than-one-year on the job and outlined the agency’s path forward under direction from the Trump administration and Alex Azar, the new Health and Human Services secretary.
“Let me be clear: Moving away from fee-for-service is something that Secretary Azar and I are committed to, and ensuring quality is an essential component of this,” Verma said. “We want to support quality, but there have been unintended negative consequences of too many quality measures.”
“When a provider has to spend more time looking at a screen than engaging with a patient, or spend more time reporting data than actually providing care, then we’re collecting measures at the expense of patients,” she said to applause.
“When there are too many measures or measures are too complex, then we’re actually creating roadblocks to quality care,” Verma added.
She cited the CMS “Meaningful Measures” initiative, which the agency announced last fall, as one of the core components of its mission to focus on quality metrics that pertain to outcomes without obsessing over process.
The agency put out a request for information on the initiative, and Verma said Monday that feedback from physicians must remain central.
“I promise that this will always be a partnership, a dialogue. This won’t be Washington simply telling you what to do,” she said. “Working together, I know we can always put the patient first.”
We’ve already achieved some results!
-We removed a number of hospital measures, resulting in an estimated burden reduction of almost half a million provider hours.
-We changed home health quality reporting, saving more than $145 million per year. #PatientsOverPaperwork