News briefs: December-January 2020-21: Recent trends shaping healthcare finance

How a lame-duck Congress could affect hospital finances

A short-term funding bill to avert a government shutdown is considered “must-pass” legislation, according to a post-
election report from Manatt. Current federal government funding expires Dec. 11, the same date a hold expires on cuts to Medicaid Disproportionate Share Hospital (DSH) payments.

“It is likely that the two priorities could be merged into one legislative package given the tight congressional calendar,” the Manatt report states.

Vince Ventimiglia, president of Leavitt Partners Collaborative Advocates, said that Congress could extend the funding package containing the pause in Medicaid DSH cuts through March or April.

Alternatively, a series of Senate Republican bills introduced in November could result in a negotiated agreement to extend federal funding to October 2021.

Such a bill also could include funding for a package of Medicare and Medicaid policies known as extenders, he said. 

Employers again are planning to expand their use of narrow networks, survey finds

Although large employers long have promised to move to narrow networks, a recent survey indicates they may finally do just that.

Nearly one-fifth (18%) of large employers offer a high-performance network (HPN) or narrow network in at least one location in their employee health plans, according to the latest Willis Towers Watson 2020 Health Care Delivery Survey. And 40% of employees with access to narrow-network plans were enrolled.

Such networks have been hailed as a powerful tool to control cost increases and improve quality if providers are selected on that basis.

The latest responses echo narrow network rates found in previous surveys, including a 2017 Willis Towers Watson survey of other large employers, which found 15% used such networks and another 36% were planning to implement them or considering doing so by 2019.

However, a historic pandemic, maxed-out employee finances and a new focus on local and regional narrow networks may bring about changes.

“I really do believe the pandemic is going to change things,” said Drew Hodgson, national practice leader for healthcare delivery at Willis Towers Watson. “Affordability is becoming so important for employers. And the only way for them to be able to offer plans that won’t bankrupt their employees is to potentially use high-performing networks.”

Among large employers that offer or plan to offer an HPN, 72% prefer a regional or local HPN plan to a national plan, per the survey. Employers’ interest in HPNs based on accountable care organizations and other provider arrangements has increased, he said, especially in the form of local pilots.

Readmissions programs to cut hospitals’ Medicare pay by $553 million in FY21

The latest CMS data showed 2,545 hospitals will face FY21 Hospital Readmissions Reduction Program (HRRP) penalties, with 41 facing the maximum 3% cut in Medicare payments.

The HRRP will produce $553 million in hospital cuts for FY21, CMS estimated. That was a slight decrease from FY20, when 2,583 hospitals incurred $563 million in penalties and 56 hospitals had the maximum cut.

The HRRP has undergone several changes since penalties first were assessed in 2012, including an effort to account for socioeconomic differences among hospitals with larger shares of low-income patients.

But a growing body of research has been critical of the program.

For instance, a January 2019 study in Health Affairs found the HRRP either had no effect on readmissions or led to an industrywide reduction in readmissions that was roughly half as large as prior estimates suggested.

The use of readmission measures also drew significant focus when a study of the high-profile Camden Coalition of Healthcare Providers, which focused on coordinating outpatient care and social services for patients with complex medical and social needs after hospital discharge, found it did not significantly reduce readmission rates.

At least one study even found an increase in mortality since HRRP penalties took effect, but a separate analysis by the Medicare Payment Advisory Commission found no such link. 

Hospitals lead October job gains in healthcare sector

Hospital job creation led the overall healthcare sector in October with 16,200 new positions, according to preliminary federal reporting.

Healthcare employment increased by 58,000 for the month, according to the Nov. 6 report by the U.S. Bureau of Labor Statistics.

Other October job gains included:

• 14,000 in physician offices
• 11,000 in dentist offices
• 10,000 in outpatient care centers

However, those gains were somewhat offset by 9,000 job losses in nursing and residential care facilities. Other ambulatory healthcare services also lost 1,900 positions. 

Requirements for drug price information added to final rule on health plan price transparency

Health plans will be required to reveal negotiated drug prices as part of information on all prices paid to providers, according to a transparency final rule released Oct. 29.

The health plan price transparency final rule, pitched as an alternative to price controls, echoed a similar requirement for hospitals to begin posting negotiated prices starting Jan. 1. The health plan requirement will go into effect in stages over the next three years.

The rule for most commercial health plans, including group plans and individual-insurance market plans, will require:

• Releasing publicly standardized and updated data files (Jan. 1, 2022)
• Offering an online consumer shopping tool featuring rates negotiated with providers for 500 shoppable services (Jan. 1, 2023)
• Estimating out-of-pocket cost of 500 shoppable services (Jan. 1, 2023)