DCMedical News: Tuesday, September 20, 2022
DCMedical News is published every day both the House and the Senate are scheduled to be in session.
THE BIG STORY Tuesday, September 20, 2022
Government Health Insurance Plans Fuel Profits of Commercial Health Insurance Companies. Market Saturation and Investigations of Upcoding Loom as Challenges to Medicare Advantage Plans, and MedPAC Eyes Standardization
Fourth quarter and full year 2021 results of commercial health insurers showed their heavy dependence for profit on the government programs Medicare and Medicaid. Megan Houston, a researcher at Georgetown University’s Center on Health Insurance Reforms, wrote about insurers’ growing reliance on taxpayer-funded insurance programs earlier this year (here).
“In their fourth quarter earnings reports, large for-profit insurers reported strong financial performance in 2021, thanks in large part to revenue from Medicare and Medicaid. For most major insurers, their profits in 2021 exceeded those in 2020, which was widely seen as an unusually profitable year, thanks to the depressed utilization of preventive and elective health care services during the height of the COVID-19 pandemic. While the intended audience for these financial reports is investors and financial analysts, the information can also provide insights into how public policies and programs are affecting health insurance markets.”
For example, Humana. Medicare Advantage contributes 80% of Humana’s revenue, which is expected to hit $93 billion this year. STAT+ reports (here) that “Humana appeases Wall Street with big projections of Medicare Advantage growth.” The report notes that “Humana is targeting ambitious growth of its Medicare Advantage plans and primary care clinics over the next three years, which executives said Thursday will significantly propel Humana’s profitability . . . The main purpose of Humana’s messaging was to comfort Wall Street over concerns the company was losing ground in the booming Medicare Advantage market.”
Problems with the MA market may be reflected in the hair trigger investor reaction to good (or bad) MA news. Says STAT+, “Almost half of all Medicare beneficiaries are in an MA plan now after a decade of frenzied growth, but enrollment will inevitably peak and slow down.” Also of concern, investigations of upcoding. Says the STAT+ report, “Humana’s rosy projections are due in part to record-high federal payments to MA carriers. But that optimism also coincides with federal regulators not addressing some of the program’s most glaring problems, especially coding practices that exaggerate how sick people are and barriers to necessary care.”
In addition to saturation and investigation of upcoding, MA plans may be substantially changed (and made much les profitable) through standardization, a theme discussed by the Medicare Payment Advisory Commission (MedPAC) at its meeting September 1 and 2 (here). A staff presentation noted that “Researchers have found that people have more trouble comparing plans when they have a lot of choices” and “Requiring plans to have standardized benefits could make it easier to compare plans.” Could insurers continue to offer non-standardized plans? The staff responded that “this could make plan selection even more difficult.”
DOCTORS, NURSES AND OTHER HEALTH PROFESSIONALS
Private Equity Ownership Drives Up Utilization in Physician Practices
A study in JAMA (here) found that “of 578 private equity−acquired dermatology, gastroenterology, and ophthalmology physician practices and 2874 similar independent practices found that spending, new and unique patient volume, and total encounters increased differentially compared with controls. The share of outpatient visits [coded as] longer than 30 minutes increased, and there were modest differences along key outcomes within specialties . . . private equity acquisitions of physician practices were associated with increased health care spending and several measures of utilization.”
HOSPITALS, NURSING HOMES AND OTHER HEALTH CARE FACILITIES
Public Citizen Finds “Private” Equity May Mean Secret Equity
A new report from Public Citizen (here) complains of the lack of transparency associated with private equity investment in nursing homes. Even accurate information on nursing home ownership is difficult to find, as noted in this report, entitled “Federal Database on Owners of Nursing Homes Is Incomplete and Out-of-Compliance with the Law”
Why does it matter? Public Citizen reports that “Evidence has mounted for a decade-and-a-half that nursing homes controlled by private equity firms tend to offer lesser care than their peers. Meanwhile, figuring out who actually owns a given nursing home can be extremely difficult. The public has a particular right to this information because about 85 percent of nursing home revenue comes from the taxpayer-funded programs Medicare and Medicaid.”
“This disclosure problem appeared to be solved by language in the 2010 Affordable Care Act that 1) vastly increased the ownership information that nursing homes would need to submit to the government and 2) called for that data to be shared with the public. But, despite a deadline to do so within two years, the U.S. Department of Health and Human Services (HHS) never issued a regulation to formally implement those requirements.”
Also, “During the first six months after Covid-19 landed on American shores, residents and staff in nursing homes accounted for nearly half of all U.S. Covid fatalities.”
MEDICARE, MEDICAID AND COMMERCIAL HEALTH INSURANCE PLANS
Insurance Lobby Finds Private Equity in Health Care, Doesn’t Like It
America’s Health Insurance Plans (AHIP) has published a report (here) on why it does not like private equity ownership in health service organizations for whose services it pays. The title of AHIP’s report, “Lower Quality at Higher Cost,” gives away its main thrust: “When private equity firms apply a short-term profit driven business model to the unique nature of our nation’s health care system, the consequences can be dire for patients, consumers, and the availability of quality health care in the future.”
Says AHIP, “Hospitals owned by private equity firms bring in nearly 30% more income than hospitals owned by other entities by using a number of tactics to boost revenue including cutting staffing and supplies; pressuring providers to bill for unnecessary services, and up-coding claims,” and “The need for those private equity firms to achieve high returns on investment on a fast time horizon is in direct conflict with the goal of lower health care costs for all Americans and greater investments in quality and safety.”
PUBLICATION SCHEDULE FOR DCMEDICAL NEWS
September 21, 22, 28, 29, 30
October 11, 12, 13, 14, 17, 18, 19, 20, 21
November 14, 15, 16, 17, 18, 29, 30
Notes to Fred Hyde, MD, JD, MBA, news@dcmedicalnews.org