DCMedical News: Tuesday, December 6, 2022
DCMedical News is published every day both the House and the Senate are scheduled to be in session.
THE BIG STORY Tuesday, December 6, 2022
Full Court Press, Continued
One hundred health care organizations, this time including the AMA, but not the American Hospital Association, have urged Congressional leaders (here) to “Prevent the entire 4.5% reduction to Medicare payment rates from being implemented on January 1, 2023. This desperately needed relief will help provide financial stability for practices until permanent payment reforms are established . . . We cannot overstate the importance of Congress stopping the entirety of the upcoming 4.5% reduction. Anything less will result in an across-the-board cut that will further exacerbate the significant financial hardship clinicians are already facing and undermine Medicare’s ability to deliver on its promises to seniors and future generations.”
Pandemic Relief for Those Who Didn’t Need It
The Wall Street Journal (here) has gone back to examine the fall-out from the decision by CMS to send Pandemic Relief Fund money to hospitals based on hospital revenue, the greater the revenue, the higher amount received by the hospital. The WSJ report noted that distribution based upon revenue did not take into account the financial resources of the hospitals, the additional burden of COVID-19 patient care, or even volume, since rewarding revenue frequently rewards higher prices, not necessarily higher volume.
“Among the recipients were large, wealthy hospital owners—including some nonprofits—that reported profits from patient care during the periods they got aid. Some were well off enough to put money into investment funds, while others spent on new facilities and extended campuses.”
Hundreds of other hospitals that got federal funding, however, reported losses. Some were forced to lay off nurses and make other cuts, saying they didn’t get enough aid to overcome their strains. Some served areas that had among the highest Covid death rates.”
“The Department of Health and Human Services, which administered the aid program, said it was designed under the Trump administration and changed after President Biden took office to target providers most in need. The Biden administration has handled about 10% of the relief funds, it said.” Officials responsible at the time said they needed to make decisions on money distribution quickly, although Medicare cost reports would have given the officials additional (and arguably more relevant) information from hospital balance sheets.
“Overall, 1,257 hospitals that got federal pandemic aid were profitable when they got the funding, according to the Journal’s analysis of financial-disclosure reports. These hospitals, which got a total of $16.7 billion in aid, reported $53.6 billion in profits from patient care, not including the aid, for the years during the pandemic that they have documented in filings with the government. For 783 hospitals, $10 billion in aid helped swing their losses to profits. But 1,644 hospitals, which received $35 billion in federal pandemic aid, reported a loss of $129.1 billion during the period, not counting the added funds.”
For-profit Hospital Pandemic Financial Performance
For-profit hospital chains (HCA, Tenet and CHS) also did especially well during the pandemic. The Kaiser Family Foundation analysis (KFF report here, Becker’s coverage here) found that “Operating margins among all three systems . . . were positive and exceeded pre-pandemic levels for most of the pandemic, including in the third quarter of 2022. HCA and Tenet had positive operating margins throughout the pandemic, according to the analysis. CHS had positive operating margins in all but two quarters of the pandemic, and one of those quarters was at the beginning of the pandemic. For nine out of the last 11 quarters, HCA had operating margins of at least 10 percent.”
HOSPITALS, NURSING HOMES AND OTHER HEALTH CARE FACILITIES
USA Today Puts Spotlight on Patient Safety in Nursing Homes, Check Time Cards
The national paper (here) reported that its examination of timesheets and inspection reports for nursing homes show that “One-third of U.S. facilities fell short of multiple benchmarks the federal government has created for nurse and aide staffing. Low-income residents, disproportionately people of color, fare the worst. Their nursing homes report the lowest staffing levels, but data show they seldom get in trouble because of it.”
“A USA TODAY investigation has documented, for the first time, how rarely the federal government enforces decades-old staffing guidelines and rules for nursing homes. Citations and penalties remained sparse even as regulators developed three ways to measure staffing.”
“USA TODAY compared millions of nursing home timesheets and thousands of inspection reports to the staffing numbers set down by federal rules and formulas. It found a staggering pattern of failure.”
“In his State of the Union address this year, President Joe Biden promised sweeping nursing home reforms. But the government’s persistent failure to crack down on facilities that fall short of nursing home standards could render his plan ineffective.”
MEDICARE, MEDICAID AND COMMERCIAL HEALTH INSURANCE
United Pays Itself for Care, Does Well
STAT+ reports (here) on intercompany transfers at the largest U.S. commercial health insurer, noting that the amount United pays itself in such transfers, $130 billion a year, is roughly the size of the GDP of Morocco. “Next year, UnitedHealth Group — one of the largest health care companies on the planet — expects to make a lot more money in a relatively simple way: by funneling more of the insurance premiums it collects from workers and taxpayers toward itself. That’s possible because UnitedHealth, known for its sprawling insurance presence, has pivoted to become one of the largest providers of outpatient care by acquiring numerous physician practices, surgery centers, urgent care facilities, and pharmacy benefit managers. And whenever possible, UnitedHealth is directing more of its insurance members to get care and prescription drugs through those entities that are owned by its Optum division — essentially allowing its left hand to pay its right.”
Observers note that the “insurance side” of United has a cap on profitability, the medical loss ratio limits of the Patient Protection and Affordable Care Act. However, providers have no such limit, so, in what might have been a predictable consequence, “United is passing money from the insurance side to the provider side.” STAT+’s report notes “What UnitedHealth has done is part of a long, deliberate shift in the industry. A decade ago, when the Affordable Care Act was changing the standards for what care had to be covered, health insurers were worried that selling and administering insurance wasn’t going to be as profitable. For example, they could no longer turn people away if they had cancer or some other health condition. So insurers made it a priority to enter other areas of health care — in particular, owning more providers that operate outside of hospitals. ‘Now, they view themselves as health care delivery companies and not as insurance companies,’ said Cheryl Damberg, a senior economist and health care director at RAND Corp.”
Says STAT+, “There’s a straightforward way to measure this shift. UnitedHealth’s “intercompany eliminations” will total up to $130 billion in 2023, according to estimates the company released at its investor day last week. That figure . . . is a 20% jump from this year and more than double the amount from 2019. Intercompany eliminations represent money — the insurance premiums and fees that come from workers and taxpayer-funded government programs — that flows from one part of the conglomerate to another. However, it can’t be recorded as revenue because UnitedHealth is paying itself with money it already booked.”
PUBLICATION SCHEDULE FOR DCMEDICAL NEWS
December 7, 8, 12, 13, 14, 15
January 3, 4, 5, 9, 10, 11, 12, 24, 25, 26, 27, 30, 31
February 1, 2, 6, 7, 8, 9, 27, 28
March 1, 7, 8, 9, 10, 22, 23, 24, 27, 28, 29, 30
Notes to Fred Hyde, MD, JD, MBA, news@dcmedicalnews.org