The Dec. 19 podcast episode was so full that there wasn’t time for Nick Hut and Shawn Stack’s entire segment on healthcare headlines. This week, we’re sharing the entire thing in a special year-end bonus episode.
Erika Grotto: An extended year-end news update, today on a special episode of HFMA’s Voices in Healthcare Finance podcast. Hello, and welcome to the podcast. If you listened last week, you heard a brief year-end wrap-up by our news team. But 2022 was such an eventful year in the healthcare industry that there was way too much to fit into one little segment. So today, we’ve got a special episode with the entire update. Here’s HFMA Senior Editor Nick Hut and HFMA Policy Shawn Stack.
Nick Hut: Hello, everybody. As part of this 2022 year-end special, we’re reviewing a few of the big healthcare policies and trends for the year. Shawn, I think the big story this year for our listeners and HFMA members is quite simply that the financial deterioration that we saw over the previous couple of years not only was not alleviated like we hoped it might be but actually was exacerbated. We’ve talked about this downswing before on the podcast, but by way of review, how tough of an environment is it right now?
Shawn Stack: Yeah, Nick. It’s still pretty tight. You know, wages and labor have somehow gotten under control, but they’re still very high for hospitals and organizations. Reimbursement is scarce as we come into the new year, as you know, and as we talked about before with the reimbursement updates or Medicare although sometimes, you know, on the inpatient side, maybe record breaking for the last several years but still not keeping up with inflation. Ability to pivot service lines that are losing money and get healthcare professionals to get their arms around that piece has been a challenge because you not only have reimbursement issues, high cost, high labor, high real estate, leases, you also have disruption coming into the market more than ever in healthcare and scraping off the cream, right, the patients who can pay for care. So it is very challenging and continues to be very challenging for small and large organizations.
Hut: No doubt. And we’re going to get to trends in disruption for the past year in just a moment, but it also needs to be said that operationally speaking, hospitals are having a really tough time with discharges and with throughput from the emergency department since mid-2020 when we were a few months into the pandemic. Hospitals have had to report on their capacity, and early December marked only the second time since then that nationwide capacity is past the 80% mark. The other time was in January of this year, right around the peak of the initial omicron variant. So we’ve got this so-called “tripledemic” of viruses, and with that onslaught, it just seems like front-line clinicians can’t catch a break, and the reverberations for the work force will be felt for some time.
Stack: That’s right, Nick, and lengths of stay of course, as you hinted at, are up because the post-acute setting is even in worse dire straits than the hospitals, with funding, with staffing, and hospitals can’t get their patients released to post-acute care facilities because they don’t have the bandwidth to take on the patients.
Hut: Absolutely. It’s a really tough situation, and we’ll just have to see the strategies and tactics that industry leaders implement to try to mitigate these concerns to some degree. Moving on to healthcare industry disruption in the year 2022, you know, in the past year, we did an hour-long webinar and two full podcast episodes on that topic, but Shawn, to review, what is there to say about the trends we saw in disruption, including the implications for value-based care?
Stack: Right. I mean, CMMI has been very busy reevaluating and restructuring their value-based models, really trying to focus on making them more meaningful as far as quality outcomes, cost savings and simplicity in implementing those with providers so they don’t have such a heavy lift in administrative burden launching the value-based care programs. We have seen in 2022 private equity continuing to dump money into digital health venture funding. I think we’re at $2.2 billion the last quarter that I looked at, the third quarter. So not as hectic as 2021 but still very hectic in digital health venture funding. And then, of course, just the single new entrants to the healthcare market. We’re waiting to hear, the Amazon purchase of One Medical being approved soon. Mark Cuban, although not really hospital centric but more pharmaceutical industry centric, Mark Cuban just announced that he’s going to be focusing on an online pharmacy. He’s made a huge dent in the market, in the pharmacy market, so lots of disruption still coming into play here, even ending the year and looking into 2023.
Hut: Absolutely. And so the No Surprises Act, you’ve been staying on top of those developments all year for a couple of years now really. Can you sum up what’s happened on that front in 2022, including the fact that within the last few months, HHS has given providers and health plans a couple of fairly nice breaks in terms of compliance mandate?
Stack: Yes. Still hectic for a lot of hospitals, but yes. CMS and HHS came out and gave a little bit of reprieve, saying that they would audit with discretion the all-inclusive good faith estimate for self pay and insured individuals. So now hospitals do have a little bit longer reprieve on getting those co-provider costs wrapped into that all-inclusive good faith estimate for patients. But you know, I hope they’re taking advantage of this time because this is going to be short lived, and I do think that hospitals who are not working toward gathering all those costs to include in a good faith estimate, you know, are going to be into the crunch at the end of 2023. That being said, we see continued delays of the advanced EOB that fell under the provisions of NSA, the advanced EOB being kind of the more robust good faith estimate that would come from the health plans on prescheduled visits. So we’re watching that closely on how that build goes and getting that information from the provider to the health plan and then from the health plan to the patient to let them know what true out-of-pocket cost would be for their scheduled procedure. So more to come there.
Hut: For sure. Yeah, there was a request for information put out by HHS regarding the advanced explanation of benefits, so hopefully the feedback that comes in from stakeholders will be incorporated in any future regulations in that respect. And then I would say, a related topic is price transparency regulations. We had this massive data drop in the form of the health plan transparency files this past summer, but it’s been a challenge, hasn’t it, to make use of that information, as it has really since 2021 with the hospital transparency files, for that matter.
Stack: Yeah, I would say even more difficult to make use of that information. However, someone has. Turquoise Health has standardized the health plan contracted rate files. They’re working now, and you can purchase this now through Turquoise Health. I think these transparency health plan contracted rate files are going to be the No Surprise scuttle and No Surprise panic that was in 2022. I think transparency is going to be the new focus in 2023 as providers, as payers begin to analyze the standardized files that Turquoise Health has gathered and continues to make sense of because as you know, those health plan contract rates are published monthly and refreshed monthly, so Turquoise is tracking these month to month and can see trending. So I think price transparency conversations, contracting conversations are going to be top of mind mid to late 2023 and hospitals are going to need to get a strategic plan together on how to address the costs that are being published.
Hut: Yeah, so that’s something certainly to keep an eye on. Ideally, if HHS really wanted to give stakeholders a break, maybe the health plan transparency files can kind of remove the need for this advanced explanation of benefits that is being mandated through the No Surprises Act because there seems to be some potential crossover there, but that certainly remains to be seen.
Stack: Agreed, Nick, and a lot of confusion for the consumer because there’s so many tools out there giving conflicting information.
Hut: Yeah, no doubt. It would be great to be able to streamline some of these information sources. So all of that is a big development on the regulatory side. Legislatively, we have the Inflation Reduction Act, which covered a lot of legislative stuff for cross sectors, but in healthcare specifically, it ensures continuation of the current insurance premium subsidies in the Affordable Care Act exchanges and also gives Medicare the right to negotiate the price of some prescription drugs starting in 2026. Before then, it caps annual out-of-pocket cost for Part D drugs and Medicare beneficiaries on insulin products. That all seems very worthwhile and consumer friendly, but we’ll need to see how it shakes out and whether there are any unintended consequences. So as we move on to the judicial side of things, there was a major development at the Supreme Court for the 340B program this year. Shawn, for anyone who doesn’t know, please tell us about that.
Stack: The courts ruled in favor of providers in the lawsuit and now CMS in the outpatient rule, the OPPS rule for calendar year ’23 have reinstated the ASP plus 6% moving forward and the courts decided that the 2018 and 2019 reductions to the 340B program and reimbursement were ruled unlawful, and those will be reinstated and reprocessed in the near future. We’re thinking right around the time the proposed rules for 2024 will come out so will the solution to paying back those two years of underpayments on 340B. But more to come on deciding whether that will be done in a budget-neutral manner or a non-budget-neutral manner. If it’s in a budget-neutral manner, it would mean that outpatient claims that benefited from that budget neutrality would need to be reprocessed and money taken back on the hospital outpatient claim side. So more to come on that, but I agree with experts in the field in saying the ASP plus 6% will probably be short lived because as most folks know, last year the recommendation that was held up due to the lawsuit was to cut 340B rates even more, and I think that proposal was ASP minus 30-some percent, maybe 34% percent—I don’t know if you know, Nick, but it was mid-30s—so I think that is coming down the pike in the next couple of years, so you know, a chance for hospitals. I know AHA was requesting a community benefits report on 340B to be done about five years ago. I’m wondering if that will resurface to try to tell the narrative of all the good things that hospitals really do do with those 340B funds that come through them for the community.
Hut: Yes, so as you said, stay tuned for that. There’s a lot of issues that need to be sorted out.
Hut: Real quick, in the same month as the 340B decision, the Supreme Court said HHS can continue using the current formula for determining disproportionate share hospital payments. Provider plaintiffs had said since that formula was implemented in 2004, hospitals have lose out on billions of dollars that they should have had a right to. So you could say that 2022 was a mixed bag for healthcare related decisions from the high court. I think that should do it for this segment and for the year in Beyond the News. Shawn, it’s been terrific talking with you on all these episodes over the last 12 months. So Happy Holidays to you, to yours, and to the rest of our podcast team, Erika and Linda and certainly to all of you listeners. To everybody in healthcare, thank you for all you’ve done through a really challenging year to help provide care to your patients and communities.
Stack: Thank you, Nick, and thank you for all of your expert blogs. I think everyone appreciates your knowledge of the industry and your current watch and oversight.
Hut: So thanks, everybody. Talk to you next year.
Grotto: Voices in Healthcare Finance is a production of the Healthcare Financial Management Association and written and hosted by me, Erika Grotto. Sound editing is by Linda Chandler. Brad Dennison is the director of content. Our president and CEO is Joe Fifer. Thanks again for listening this year, and to echo what Nick said, thanks to everyone working in healthcare for what you do. It’s been challenging few years, and we see and appreciate you. Happy Holidays.