CMS and MedPAC Guidelines and Trends

News Briefs: Latest patient volume data reveals some of the challenges facing hospitals in the COVID-19 era

February 22, 2021 5:31 pm

Recent industry reports have quantified the impact of the COVID-19 pandemic on hospital patient volume.

In 2020, “Hospital margins fell significantly with declining volumes and outpatient revenues, and escalating expenses compared to 2019,” according to Kaufman Hall’s National Hospital Flash Report for January.

A spike in COVID-19 hospitalizations helped make December the second consecutive month in which inpatient volumes surpassed 2019 levels year-over-year, with patient days up 4.5%. But discharges were down 4.3%, “reflecting a continued increase in higher-acuity patients.”

“We’ve seen a general trend of improvement, with a few exceptions,” said Erik Swanson, vice president of data and analytics with Kaufman Hall.

Among those exceptions, emergency department (ED) volumes remained a drag on hospital performance. ED visits were down 16.2% in 2020 compared with 2019 and 22.6% year-over-year in December, although December marked a 1% uptick from November.

In a separate report, TransUnion found that, as of the week of Dec. 13, ED volumes were down 30% and inpatient volumes were down 8% compared with pre-COVID-19 levels.

“There is a definite ‘new normal’ of ED patients that used to come to the hospital [and] are no longer coming,” said Jonathan Wiik, principal with TransUnion, noting the trend has implications for various service lines.

MedPAC policy meeting offers preview of future hospital payment rates

During a presentation at the first 2021 meeting of the Medicare Payment Advisory Commission (MedPAC), staff analysts recommended against accounting for the financial impact of the COVID-19 pandemic when setting inpatient payment rates in FY22 and beyond.

“We find no evidence of widespread financial struggles at hospitals in 2020; however, the circumstances of individual hospitals may vary substantially,” the report states.

Federal support totaling $70 billion bolstered hospitals’ financial standing, the analysts said.

“We do not anticipate any long-term changes to the hospital landscape that will persist past the end of the public health emergency and therefore warrant inclusion in the annual update to hospital payment rates,” the report states.

For FY22, Congress should increase the base Medicare payment rate for acute care hospitals by 2%, according to MedPAC’s recommendation. Along with a 0.5% statutory increase and 0.8% boost from the removal of quality-program penalties, the total inpatient payment increase would be 3.3%.

“Recall that there was a lower increase in 2019, and hospitals maintained their patient care margins,” said Alison Binkowski, MedPAC senior analyst. “Therefore, we believe that hospitals will be able to maintain or increase their margins in 2022 with the draft update.” 

GAO report highlights the far-reaching impact of rural hospital closures

A recent report from the U.S. Government Accountability Office (GAO) highlighted some of the ramifications of rural hospital closures.

Publicly released in January, the report found that 101 rural hospitals closed between January 2013 and February 2020.

“While this number may seem small, it’s having a big impact on the communities that those hospitals served,” GAO wrote in a blog post about the report.

In rural markets where a hospital closed, for example, the distances that residents had to travel increased from 3.4 miles to 23.9 miles for inpatient care and from 5.5 miles to 44.6 miles for alcohol or drug abuse treatment.

Major increases in distance also were found for care in the emergency department (3.3 miles to 24.2 miles) and in a coronary care unit (4.5 miles to 35.1 miles).

“It’s easy to imagine how these closures could affect residents who need treatment for COVID-19,” the GAO blog post states.

The blog post also notes that the pandemic may intensify the financial burden on rural hospitals, meaning it’s not hard to envision the pace of closures accelerating in the months and years ahead.

“Specifically, rural hospitals had enough cash on hand to operate a median of less than 80 days without additional revenue,” the post states. 

Panel discusses how the healthcare industry can achieve a higher-value and more equitable system

Even amid an all-encompassing focus on controlling the COVID-19 pandemic, the Biden administration should be considering broader policy changes that can enhance the value and equity of healthcare, a panel of industry experts said recently.

At a Jan. 26 event that explored ways for the new administration to improve the healthcare payment and delivery system, much of the discussion centered on making the system more effective both generally and for underserved demographics specifically. The discussion was based in part on a task force report released in late 2020.

David Blumenthal, MD, president of The Commonwealth Fund, which hosted the discussion and convened the task force, noted the fee-for-service system has faltered as a reliable revenue source during the pandemic, when patients have been reluctant to visit healthcare facilities and elective procedures have been periodically prohibited.

Mark McClellan, MD, PhD, who was FDA commissioner and later CMS administrator during the George W. Bush administration, described COVID-19 as “a wake-up call” for healthcare financing.

Specifically, the pandemic has underscored the need “to move to a different mechanism of financing our healthcare …. rather than trying to just keep your doors open because utilization is down, and having to lay off staff,” said McClellan, a professor and the director of the Robert J. Margolis Center for Health Policy at Duke University.

A revamped healthcare payment and delivery model would have allowed the U.S. to better respond to the pandemic and would boost population health more broadly, panelists said.

Such a model would look to “move care upstream with community health workers, with assistance from apps and digital technologies to help identify people who have risk factors and meet them where they are and figuring out what’s the best way to address them — moving beyond traditional medical services to address social needs,” McClellan said. 


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