Entries in Riddle, Clive (304)

Friday
Sep142018

Post ACA Operating Margins: Health Systems and Health Plans

By Clive Riddle, September 14, 2018

Navigant this week released an eight-page report: Stiffening Headwinds Challenge Health Systems to Grow Smarter, that provides “an analysis of a three-year sample of the financial disclosures of 104 prominent health systems operating 47% of U.S. hospitals,” in which Navigant  “found broad-based and significant deterioration of operating earnings.”

 

Navigant reports that from 2015 to 2017:

  • The average operating margin decline for analyzed systems was 38.7%. Not-for-profit system margins fell 34%, while for-profit margins fell 39%.
  • 65% of systems experienced operating income declines totaling $6.8 billion, with the most significant reductions occurring in the U.S.’s fastest-growing regions: West/Southwest and South Central.
  • At the root of these declines were multiyear reductions in the rate of topline operating revenue growth, which fell from 7% (2015 to 2016) to only 5.5% (2016 to 2017), and a failure to contain expenses in line with revenue deterioration. 

Navigant cites these drivers of earnings deterioration:

  1. Weakening demand for such core hospital services as surgery and inpatient admissions, due in part to rising patient cost exposure from high-deductible health plans;
  2. Deteriorating collection rates for private accounts in non-ACA expansion states;
  3. Steady erosion in Medicare payment rates due to the ACA and the 2012 federal budget sequester; and
  4. Failure of health system value-based insurance contracts to deliver sufficient patient volume to offset steep upfront payer discounts and significant hospital population health investments.

Meanwhile on the other side of the post-ACA equation, Mark Farrah Associates this week “released an analysis brief providing insights into mid-year profitability for commercial and government lines of health insurance business. MFA compared second quarter, year-over-year profitability for the Individual, Employer-Group, Medicare and managed Medicaid segments.”

They found that:

  • At the end of second quarter 2018, the average medical expense ratio for the Individual segment was 70.8%, as compared to 77.2% the previous year.
  • Growth in premiums pushed the average medical expense ratio for the Employer-Group segment down to 80.9% for 2Q18 from 81.8% in 2Q17.
  • For Medicare Advantage, premium growth outpaced increases in medical expenses pushing the medical expense ratio down to 85.3% from 86.1% in 2Q17.
  • 2.9% increase in premiums per member per month pushed the medical expense ratio for Managed Medicaid down to 88.6% from 91.0% in 2Q17.

Mark Farrah Associates concludes the current outlook is better than the one Navigant finds for health systems: “At the mid-year point, all four health care segments are signifying improved profitability for health insurers over 2017.  The most significant change is once again in the Individual segment showing improvement over 2017, which ended up being a profitable year for the segment overall.  While this analysis of mid-year segment performance sheds light upon profitability trends for 2018, it’s a wait and see proposition until final financial results are revealed in spring of 2019.”

Thursday
Aug232018

Out of Network Services: Not Just Surprise Medical Bills, They Also Erode Care Coordination and Patient Retention

by Clive Riddle, August 23, 2018

Last week, Kaiser Family Foundation released a study of medical bills in large employer plans that found "a significant share of inpatient hospital admissions includes bills from providers not in the health plan’s networks, generally leaving patients subject to higher cost-sharing and potential additional bills from providers." The report stated "almost 18 percent of inpatient admissions result in non-network claims for patients with large employer coverage. Even when enrollees choose in-network facilities, 15 percent of admissions include a bill from an out-of-network provider, such as from a surgeon or an anesthesiologist."

 

The focus of the KFF study of course was surprise medical bills. This week, Kyruus released their 12-page 2018 Referral Trends Report: Positioning for Patient Retention which examines out of network services from a different perspective – when referred by an in-network physician, with the issue focus being on care coordination and patient retention.

The report presents physician survey findings that indicate “one-third of out-of-network referrals would be avoidable with more robust information about in-network colleagues," and "while 77 percent of providers surveyed recognize the importance of keeping patients in-network for care coordination, a notable 79 percent say they refer patients out of network."

The report tells us:

  • Among those who refer out of network, 45 percent say that it’s difficult to determine who is in the network
  • On average, providers that refer out of network send almost 1/4 of patients out-of-network
  • 42 percent of patients leave a provider’s office without a necessary referral appointment booked, despite over 60 percent of providers considering point-of-service scheduling extremely or very important.        
  • Personal networks drive current referral behaviors: 72 percent of providers say they or their staff usually refer to the same provider for a given specialty
  • 40 percent of providers report always knowing whether or not their referral was appropriate for the patient or whether the patient needed to be re-referred, hindering care coordination.       

The report concludes that "providers understand the importance of keeping patients in network to improve care. However, without the right tools to facilitate clinically appropriate and in-network referrals, providers will not necessarily break from familiar patterns."

 

Friday
Aug172018

Healthcare costs – not grandchildren gone wild – the top retiree concern

By Clive Riddle, August 17, 2018

 

What’s the top concern about retirement years voiced by retirees as well as retirement plan sponsors? Its not grandchildren gone wild, keeping up with new technology, staying ahead of future inflation, or even staying in good health. Instead, its paying for that health.

 

Results just released from the 2018 TIAA Plan Sponsor Survey of 1,001 plans sponsors from nonprofit and for-profit organizations found that 91% of plan sponsors believe that healthcare costs are the most significant retirement security issue today. 54% answered very significant and 26% said somewhat significant, while 2% were neutral and – the plan sponsors I’m curious about: 3% said not at all significant.) After health care at 91%, the next highest concern of the top six: Ensuring employees are prepared to retire on a timely basis total 81% saying it was very or somewhat significant.

 

Meanwhile, another new survey tells us even affluent retirees are plenty scared about those retirement costs. A new Nationwide Retirement Institute survey of adults age 50+ with household income exceeding $150k, conducted by the Harris Poll indicates that 73% of affluent, older adults “list out-of-control health care costs as one of their top fears in retirement and 64 percent of future retirees say they are ‘terrified’ of what health care costs may do to their retirement plans.”

 

Here’s more of Nationwide’s survey findings:

  •  72% wish they better understood Medicare coverage
  •  42% admit they would give away all their money to their children so they could be eligible for Medicaid-funded long-term care.
  •  53% do not know that Medicare Part B is not free even if you have worked and paid Social Security taxes for at least 10 years
  •  23% do not know you cannot enroll in Medicare at any time
  •  29% do not know Medicare does not cost the same for everyone
  •  62% do not know that future changes will impact the ability to sign up for Medigap/Medicare supplement   plans
  •  53% are unsure or can't estimate what their annual health care will be
  •  65% are unsure what their long-term care costs will be
  •  27% of even these affluent, older adults say they couldn't cover more than $1,000 in unplanned expenses:   44% couldn't cover more than $4,000 and 60%couldn't cover more than $5,000 of unplanned expenses
  •  50 % have access to a Health Savings Account (HSA) through their employer, with 30% participating in or   contributing to the HSA

 

 

Friday
Aug102018

25 Things to Know About The CMS Medicare ACO Proposed Rule: Pathways to Success

By Clive Riddle, August 10, 2018

Here are 25 major points to note in the CMS Pathways to Success Proposed Rule introduced on August 9th:

  1. The redesigned Medicare Shared Savings program is called “Pathways to Success.
  2. There are five stated goals Pathways to Success is intended to advance: Accountability, Competition, Engagement, Integrity, and Quality.
  3. The CMS projected financial impact of the proposal would be savings to Medicare of $2.2 billion over ten years.
  4. CMS notes that 460 of the 561 or 82% of all ACOs in the Shared Savings Program in 2018 – are not taking on risk for increases in costs.
  5. The amount of time that an ACO can remain in the program with upside-only risk  would be limited to two years (or one year for ACOs identified as having previously participated in MSSP under upside-only risk) instead of the current timetable of up to six years.
  6. A 6-month extension would be provided for current ACOs whose agreements expire at the end of 2018, along with a special one-time July 1, 2019 start date that will have a spring 2019 application period for the new participation options.
  7. The number of tracks would be reduced to two, the “BASIC” track and the “ENHANCED” track, and would allow providers to pick between these two tracks. 
  8. The length of ACO participation agreements would expand from three years to five years.
  9. The BASIC track would feature a glide path for taking risk.  It would begin with up to two years of upside-only risk and then gradually transition in years three, four, and five to increasing levels of performance risk, concluding in year five at a level of risk that meets the standard to qualify as an Advanced Alternative Payment Model (APM) under MACRA. 
  10. Current upside-only ACOs would be limited to one year without risk before being required to transition to the risk level in year three of the glide path.
  11. The ENHANCED track would allow providers to take on risk and qualify as an Advanced APM immediately.  This track would offer the same amount of risk for each of the five years of the agreement period, at a level of risk sharing higher than the maximum amount reached in the BASIC track.
  12. Eligible ACOs (ACOs that are inexperienced with two-sided risk in Medicare) would be able to enter at any level of risk in the BASIC track’s glide path or go straight to the ENHANCED track.
  13. After completing a five-year agreement under the BASIC track, low revenue ACOs would be able to renew for a second agreement period at the highest level of risk in the BASIC track, while high revenue ACOs would be required to move to the ENHANCED track and take on additional risk.
  14. Each ACO would provide a standardized written notice to its Medicare beneficiaries, informing them at their first primary care visit of a performance year that they are in an ACO and what that means for their care.
  15. CMS would allow certain two-sided ACOs to provide an incentive payment of up to $20 to each assigned beneficiary for each qualifying primary care service that the beneficiary receives, as an incentive for taking steps to achieve and maintain good health. 
  16. CMS is seeking comment on an approach that would allow beneficiaries to opt in to an ACO as an alternative to assignment. 
  17. CMS would streamline the measures that ACOs are required to report, to ensure that all measures have a meaningful impact on patient care.
  18. CMS would require a specified percentage of the eligible clinicians participating in an ACO to adopt the 2015 edition of Certified EHR Technology (CEHRT) as part of the Administration’s MyHealthEData initiative promoting interoperability of medical data and patient control of their data.
  19. Physicians in ACOs that take on risk could receive payment for telehealth services provided to patients regardless of the patient’s location.
  20. Regional (county-level) spending would be incorporated into ACO benchmarks starting in their first agreement period.
  21. Methodology for risk adjustment would more accurately account for changes in beneficiaries’ health status.
  22. When calculating and updating benchmarks, CMS would factor in national spending growth rates in addition to regional rates, so ACOs that constitute a large fraction of their local market would not be penalized if they reduce the market growth rate.
  23. ACOs in two-sided models would be accountable for losses even if they exit mid-way through a performance year.
  24. Termination of ACOs with multiple years of poor financial performance would be authorized.
  25. The detailed Medicare Shared Savings Program Notice of Proposed Rulemaking (CMS-1701-P), “Accountable Care Organizations‑‑Pathways to Success,” is available at https://www.federalregister.gov/public-inspection/  and https://www.cms.gov/newsroom/fact-sheets/proposed-pathways-success-medicare-shared-savings-program.

 

Friday
Aug032018

Medicare Part D Premiums and Enrollment by the Numbers

By Clive Riddle, August 9, 2018

CMS this week announced that Part D premiums are expected to fall from $33.59 this year to $32.50 in 2019. Of course it’s not that simple. First of all, $32.50 is the “basic” premium rate. What Medicare beneficiaries actually pay is income adjusted on a sliding scale. Here are the 2019 “income-related monthly adjustment amounts” just released by CMS:

 

CMS informs us that:

  • “the base beneficiary premium is equal to the product of the beneficiary premium percentage and the national average monthly bid amount”
  • "the national average monthly bid amount is a weighted average of the standardized bid amounts for each stand-alone prescription drug plan and MA-PD plan.. The weights are based on the number of enrollees in each plan."
  • “The national average monthly bid amount for 2019 is $51.28.”
  • “The beneficiary premium percentage (“applicable percentage”) is a fraction, with a numerator of 25.5 percent and a denominator equal to 100 percent minus a percentage equal to (i) the total reinsurance payments that CMS estimates will be paid for the coverage year, divided by (ii) that amount plus the total payments that CMS estimates will be paid to Part D plans based on the standardized bid amount during the year, taking into account amounts paid by both CMS and plan enrollees.”
  • Using the above calculations “the Part D base beneficiary premium for 2019 is $33.19”
  • Then the Income-Related Monthly Adjustment Amounts “are determined by multiplying the standard base beneficiary premium by the following ratios: (35% − 25.5%)/25.5%, (50% − 25.5%)/25.5%, (65% − 25.5%)/25.5%, (80% − 25.5%)/25.5%, or (85 – 25.5%)/25.5%.

Clear as mud?

On the enrollment side of PDP world, here’s a look compiled from July 2018 CMS data:

Here are Medicare national drug plan enrollment totals:

  • Total PDP Contracts: 63
  • PDP Drug Plan Enrollment: 25,459,900
  • MA Drug Plan Enrollment: 18,004,980
  • PACE/Cost/Dual Drug Plan Enrollment: 689,113
  • Total Drug Plan Enrollment: 44,153,993

The top five states for PDP enrollment penetration are:

  • North Dakota – 63.9%
  • Vermont – 62.6%
  • Delaware – 62.6%
  • Iowa – 60.5%
  • Wyoming – 58.9%

This compares to a national average of 41.2% penetration. As one might expect, the high PDP penetration states have correspondingly lower Medicare Advantage penetration. For example, North Dakota has 2.7% MA penetration. Conversely, Puerto Rico has only 2.1% PDP penetration, but has the highest MA penetration at 71.1%. (national average MA penetration is 33.8%)

There are 114 counties with PDP penetration rates above 70.0%, mostly concentrated in the above states. Leading the pack is Dubuque County, Iowa at 72.3%. The bottom 77 of the 3,218 counties listed are all in Puerto Rico, as mentioned above. The first mainland county just above them is Clackamas County, Oregon with 17.6% penetration.