News | Healthcare Business Trends

News briefs October 2020: Trends in hospital volumes and margins, and other forces shaping healthcare finance

News | Healthcare Business Trends

News briefs October 2020: Trends in hospital volumes and margins, and other forces shaping healthcare finance

CMS finalizes requirement for hospitals to report MA plan rates

CMS has finalized a proposal to require hospitals to report median payer-specific negotiated charges for Medicare Advantage (MA) health plans and will use those reported charges in three years to determine Medicare rates.

Issued Sept. 2, the FY21 hospital Inpatient Prospective Payment System (IPPS) final rule finalizes controversial new transparency requirements, which include:

  • Requiring hospitals to report median payer-specific negotiated charges for MA health plans
  • Requiring the negotiated charge data to be included on Medicare cost reports beginning with cost reporting periods ending Jan. 1, 2021
  • Using the data in FY24 to set the MS-DRG relative weights used to determine Medicare inpatient hospital rates

Overall, IPPS payments will increase by 2.9% for hospitals that successfully participate in the Inpatient Quality Reporting (IQR) program and meet electronic health record requirements.

CMS will continue changes to the hospital wage index that were incorporated in FY20. The budget-neutral changes increased the wage index values for certain hospitals with low values and are planned to continue through FY23.

CMS tweaked its calculation for Disproportionate Share Hospital payments to include recent unemployment data and will use FY17 data on uncompensated care costs from Worksheet S-10 of Medicare cost reports. For FY22, Medicare will use the most recent available single year of audited Worksheet S-10 data. CMS estimated the change will reduce FY21 uncompensated care payments by $60 million compared with FY20.

Site-neutral payment changes will cut FY21 long-term care hospital prospective payment system payments by about $40 million. 

Telehealth helped chronically ill during pandemic, but their access to care worsened: CDC

Although one-third of people with chronic health conditions were able to access telehealth in recent months, 43% said the pandemic had reduced their access to care, according to recent federal survey data.

Thirty-two percent of people with at least one chronic health condition used telehealth during the pandemic, the Centers for Disease Control and Prevention (CDC) reported in August.

Telehealth use for specific chronic health conditions included:

  • 44% of those with diabetes
  • 37% of those with asthma
  • 33% of those with hypertension

However, access to care still suffered — especially for patients with chronic disease. Among all adults, 39% missed one or more types of care in July and August due to the
coronavirus pandemic, while 43% of chronically ill reported such obstacles. 

As states tweak Medicaid programs, enrollment increases fall far short of job losses

Medicaid enrollments have lagged far behind job losses during the COVID-19 pandemic. But even the smaller-than-expected increase has left states scrambling for funding.

Although the national employment picture has improved since the depths of the pandemic-
related state lockdowns in late spring and early summer, 13.6 million remained unemployed as of August, according to the latest report of the U.S. Bureau of Labor Statistics. But enrollment in Medicaid, which is designed to provide healthcare coverage for those in dire financial situations, had increased by only 2.3 million as of May, according to a Kaiser Family Foundation report.

The 3.2% national increase in Medicaid enrollment obscured wide variations among states. For instance, citing July data, state healthcare executives identified enrollment increases of:

  • 15.5% in Utah (compared with July 2019)
  • 10% in Virginia (since the start of the pandemic)
  • 1% in California (compared with July 2019)

All three states expanded Medicaid eligibility under the Affordable Care Act to all legal residents with incomes below 138% of the federal poverty level.

“Surprisingly enough …. we have not seen the impacts of the COVID response on our enrollment numbers,” said René Mollow, deputy director of healthcare benefits and eligibility for the California Department of Health Care Services, about the state’s enrollment increase of roughly 100,000. 

Transparency push won’t increase prices, Verma tells HFMA

CMS will continue moving ahead with price transparency initiatives and is not concerned such efforts will increase healthcare prices, Administrator Seema Verma said in August.

The Trump administration has faced industry pushback, including lawsuits, on its various price transparency efforts.

But Verma said such concerns will not sway the administration’s transparency push.

“We’re on the side of patients; we’re going to be fighting those court cases,” Verma said during a Q&A as part of HFMA’s Digital Annual Conference.

Medicare moved to build on the negotiated-chargerequirement with recently issued additional requirementsas part of the FY21 Inpatient Prospective Payment System (IPPS) rule.

Verma also pushed back on concerns that suchinitiatives would increase prices when hospitals find out competitors receive larger health plan payments.

“At  the end of the day, people have the right to know what they’re being charged for,” Verma said. “And so, we may see some changes in prices. I think prices will go down.” 

CMS Administrator Seema Verma chats with HFMA CEO Joe Fifer during HFMA’s Digital Annual Conference.

For Biden's potential HHS pick, priorities include public option, hospital M&A, cost control

A longstanding Washington, D.C., healthcare policy adviser whom some see as a likely pick to lead the U.S. Department of Health and Human Services (HHS) identified leading healthcare priorities of a Biden administration, including pursuit of a national, government-run health plan option.

Chris Jennings, an adviser to Democratic candidate Joe Biden’s campaign and a former healthcare official in the Obama and Clinton administrations, is seen by some healthcare policy advisers as a leading contender to be HHS secretary if Biden is elected.

Jennings recently underscored healthcare policy priorities that a Biden administration is likely to pursue, including a so-called public option, increased antitrust enforcement of hospital mergers and acquisitions (M&A) and price negotiations with hospitals.

Jennings highlighted Biden’s proposal to add a government-run public option to all individual health insurance markets, which would offer a lower-cost coverage plan with more generous benefits than the standard silver-tier plans. Eligibility also would be expanded to more uninsured and to those with employer-sponsored health plans.

Widely opposed by health plan and hospital advocates, the public option would be funded through higher federal subsidies and reductions in payment rates to providers.

It remains unclear how a Biden administration would negotiate rates with hospitals and other providers, as called for in the plan.

Jennings said he did not think the high-profile role of hospitals in combating the COVID-19 pandemic would undermine a Biden administration’s efforts to target payment rates.

“At some point, it becomes unsustainable when you look at the differences the group marketplace is paying and everyone else in Medicare and Medicaid,” Jennings said. “And you’re seeing states react to that already.” 

Coming coronavirus surges will hit hospitals harder than earlier spikes did, disease expert says

A prominent epidemiologist expects the coronavirus to resurge and send greater numbers of patients to U.S. hospitals than have been seen to date.

Michael Osterholm, PhD, an epidemiologist at the University of Minnesota, has garnered national attention for his contrarian analysis of the SARS-CoV-2 virus, which he anticipated would reach pandemic levels, would not come in waves and would remain active in the world for decades.

“This is going to continue on substantially,” Osterholm said in an interview. “This will be with us into the future.”

He worried that vaccines will not provide “durable immunity” for the population but stressed that many key questions remain unanswered.

Asked by HFMA about Osterholm’s expectation of a long-term pandemic, Anthony Fauci, MD, director of the National Institute of Allergy and Infectious Diseases and a member of the Trump administration’s coronavirus taskforce, said he is hopeful the combination of vaccines and mitigation measures will prevent such a scenario.

“You can very well control and essentially eliminate from any given country the virus,” Fauci said. “We hope that we can do that, mainly very adequately control it with a combination of public health measures and a safe and effective vaccine.”

Fauci downplayed concerns that vaccines will protect as little as half the population and said a vaccine likely will be widely available in early 2021.

If a longer-term pandemic occurs, Osterholm expects hospitals will see COVID-19 patient surges larger than those they already have experienced. 

About the Author

Rich Daly, HFMA Senior Writer and Editor,

is based in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare.  

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