Healthcare Business Trends
News Briefs: Reports quantify how cost increases will affect the healthcare industry in 2024
September 30, 2023
1:31 pm
The cost to treat patients will accelerate in the upcoming year, according to newly published projections. PwC’s Health Research Institute reported that the cost of providing care will increase by 7%, up from a 6% increase this year and 5.5% in 2022. A 7% increase would tie 2021 for the highest annual change in the past decade.
“The higher medical cost trend in 2024 reflects health plans’ modeling for inflationary unit cost impacts with their contracted healthcare providers, as well as persistent double-digit pharmacy trends driven by specialty drugs and the increasing use of certain medications used to treat Type 2 Diabetes or weight loss,” the report states.
The outlook described in the report mirrors an estimate of the 2024 cost increase as gauged by an employers’ group. The International Foundation of Employee Benefit Plans released survey results previewing U.S. employers’ healthcare costs. Those costs are expected to rise by 7% next year, according to survey findings.
Among about 170 surveyed employers, utilization arising from chronic conditions was the most frequently cited cost driver, at 22%
of responses.
Pricing and billing transparency legislation moves forward in the House
A slew of provisions on healthcare transparency came closer to becoming federal law as three House committees merged separate bills into a single draft that was released Sept. 8.
The resulting bill — titled the Lower Costs, More Transparency Act — still was subject to fine-tuning when hfm went to press. But the legislation mostly was ready for a floor vote in the House, where bipartisan support for the major provisions was apparent in prior committee votes.
Most of the 230 pages in the bill are devoted to establishing or expanding price transparency standards in various healthcare settings. For hospitals, the provisions echo the CMS rules that have been on the books since 2021, although noncompliance by larger facilities would draw steeper fines.
The legislation’s most direct impact on hospital payments would be to require site-neutral Medicare payments for drug administration services furnished at off-campus outpatient departments. Such services would be paid at the physician fee schedule rate instead of the hospital outpatient department rate.
Another provision would obligate each off-campus outpatient department to bill under a unique national provider identifier as a condition of receiving Medicare payment.
New bill offers relief from a massive Medicaid DSH payment cut
In a potential reprieve for hospitals, the Lower Costs, More Transparency Act (see the previous news brief) includes a two-year delay to the looming start of a $32 billion reduction to Medicaid disproportionate share hospital (DSH) payments. The cut is scheduled to span four years, with the first $8 billion decrease set to begin as federal FY24 gets underway Oct. 1.
Whether the larger bill or stand-alone language would be passed in time to stave off the cuts was unclear when hfm went to press. Visit hfma.org/news for the latest coverage.
The bill would push the first cuts to FY26. If the cuts begin in FY24, they would amount to 54% of scheduled Medicaid DSH payments, according to an estimate by the Medicaid and CHIP Payment and Access Commission (MACPAC).
Such a decrease could “disrupt the financial viability of some safety-net hospitals,” MACPAC wrote.
The Medicaid DSH cut would coincide with a $943 million reduction in Medicare uncompensated care payments as finalized in the FY24 rule for hospital inpatient payments.
In comments to CMS, HFMA urges changes to the 340B remedy plan for hospitals
HFMA was among nearly 150 healthcare stakeholders to submit comments on CMS’s proposal to compensate hospitals for what the Supreme Court ruled were underpayments for drugs acquired through the 340B Drug Pricing Program from 2018 through late-September 2022.
HFMA’s Sept. 5 comment letter, signed by Richard L. Gundling, FHFMA, CMA, senior vice president for professional practice, urges CMS and the U.S. Department of Health and Human Services (HHS) to review their interpretation that the $9 billion in remedy payments must be budget-neutral. Such an approach is projected to result in a 0.5% annual reduction in hospital outpatient payments for 16 years starting in 2025.
In support of the stated position of the American Hospital Association, HFMA wrote in the letter that “neither legal nor policy frameworks currently endorse the suggested ‘budget neutrality adjustment.’”
HFMA also said the remedy plan overlooks the need to account for substantial 340B-related payment shortfalls in Medicare Advantage.
QPA methodology deemed illegal as providers win another No Surprises Act court case
The fourth victory in four cases brought by the Texas Medical Association (TMA) has implications for how insurers calculate the qualifying payment amount (QPA) that’s used to arbitrate out-of-network payment sums under the No Surprises Act.
An Aug. 24 ruling in the Eastern District of Texas federal court stemmed from a case about the methodology used to determine the QPA, defined as the insurer’s median in-network rate for an item or service in a given market.
The TMA and co-plaintiffs argued that the methodology as described in published rules contradicted the No Surprises Act legislation and resulted in artificially low QPAs, which then skewed arbitration decisions in favor of insurers. After the ruling vacated the provisions at issue, the U.S. Departments of Health and Human Services, Labor and Treasury had to publish new guidance.
While working on new regulations, the departments froze all activity in the arbitration portal as a result of a court decision for the second time in three weeks. The portal remained closed to new cases when hfm went to press, with no indication of when it would reopen.
Prices of 10 drugs will be up for negotiation in Medicare next year
The U.S. Department of Health and Human Services on Aug. 29 announced the first 10 Medicare Part D drugs that will be subject to price negotiations, the headlining healthcare-related provision of the Inflation Reduction Act. The agreed-upon prices will be announced by Sept. 1, 2024, and will take effect in 2026.
The 10 drugs are Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara and NovoLog. The negotiation process is scheduled to encompass more drugs in future years, including Part B drugs.
