Hospitals Say They Lose Money on Medicare Patients but Make Millions

The VA patient waiting scandal in Phoenix is well documented. What is also well documented is that at least 70% of VA medical centers were engaged in similar schemes. Now a report prepared for the North Carolina State Treasurer’s Office revealed that many state hospitals and lobbyists are also guilty of misrepresentation.  The hospitals did not lose billions of dollars on Medicare patients as they previously claimed, but in fact made large profits from 2015 to 2020 (1).

“What we’re seeing is the biggest transfer of wealth in my lifetime in North Carolina,” North Carolina state Treasurer Dale Folwell said at a press conference on Oct. 25. “It’s a transfer of wealth especially from lower fixed-income people to these big multibillion-dollar corporations who disguise themselves as nonprofits”(2). “North Carolina hospital lobbyists claimed they lost $3.1 billion on Medicare in 2020—the same year hospitals reaped $87 million in Medicare profits,” North Carolina State Health Plan (NCSHP) stated (2). NCHSP said North Carolina hospitals charge privately insured patients 280 percent of Medicare, which forces patients and employers to pay thousands of dollars more for medical care. A range of 55 to 66 percent of more than 100 hospitals profited off Medicare from 2015 through 2020 in North Carolina, the report stated. “While many hospitals’ margins fluctuated, only 15 hospitals consistently lost money on Medicare, and 35 hospitals posted profits over all six years,” the report said (1). North Carolina ranked sixth overall in the states with the most profitable Medicare margins for five of those years, averaging between -0.3 percent and 2.5 percent Medicare margins, the report stated. Arizona ranked 13^th.

“This raises serious concerns over hospitals’ commitment to their patients and their charitable mission, and the steep costs passed on to nearly 740,000 members of the State Health Plan,” the state treasurer’s office said in a press release (2). “The hospital cartel is overcharging you because they can, not because they need to,” Folwell said, adding that hospitals have been hiding behind Medicare, claiming huge losses to justify “kneecapping” their patients (2). “This is the Wild West,” Folwell said. “Nobody’s watching it. Nobody’s holding them accountable. We need a commitment from the cartel to get back to their original mission and to stop putting profits over patients.”

Despite this statement, many researchers have found that billions have poured into hospitals through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES act created the Centers for Medicare and Medicaid reimbursement plan that allowed for hospitals that adhered to protocols for treating COVID-19 to reap up to $500,000 per patient, beginning with a positive COVID-19 test, the use of a National Institutes of Health-approved antiviral drug called remdesivir, putting the patient on a ventilator, and ending with the hospital listing COVID-19 as the cause of death on a death certificate. According to a report from TN Liberty Network, an independent think tank comprising 28 researchers, hospitals have taken lucrative payoffs from the federal government throughout the last several years (3).

In addition to the CARES Act, the Coronavirus Response and Relief Supplemental Appropriations Act provided another $178 billion in relief funds to health care providers and hospitals, with more relief funds siphoned to states from the American Rescue Plan Act beginning in March of 2021, $8.5 billion of which went to health care providers.

The North Carolina Healthcare Association (NCHA) responded to the report, stating that “Instead of bringing transparency and clarity to the public, Treasurer Folwell has created an incomplete and complicated report that fails to address how he will provide more affordable healthcare to state employees and retirees,” NCHA said. “North Carolinians deserve truthful and transparent information. This report fails to deliver it.” (2).

References

1. North Carolina State Health Plan For Teachers And State Employees, Rice University’s Baker Institute For Public Policy, and the University Of Southern California’s Sol Price School Of Public Policy. Overcharged North Carolina Hospitals Profit on Medicare. 2022. Available at: https://www.shpnc.org/media/3011/download?attachment (accessed 10/29/22).
2. McGregor M. North Carolina Treasurer’s Office Says Hospitals Reaping Billions from Medicare Despite Claiming Otherwise. Epoch Times. October 28, 2022. Available at: https://www.theepochtimes.com/north-carolina-treasurers-office-says-hospitals-reaping-billions-from-medicare-despite-claiming-otherwise_4824332.html (accessed 10/29/22).
3. DePriest AJ. Blood Money in U.S. Healthcare. Financial Incentives: The Use of “Covered Countermeasures”. TN Liberty Network. August 8, 2022. Available at: https://acrobat.adobe.com/link/review?uri=urn:aaid:scds:US:a22410b7-3189-4a4a-b59a-50bdfb023de9 (accessed 10/29/22).

Cite as: Robbins RA. Hospitals Say They Lose Money on Medicare Patients but Make Millions. Southwest J Pulm Crit Care Sleep. 2022;25(4):59-60. doi: https://doi.org/10.13175/swjpccs050-22 PDF 

Drug Prices Continue to Rise

President Trump asserted in a Tweet that drug prices declined in 2018 for the first time in nearly 50 years. However, President Trump’s assertion does not agree with my personal experience or the facts.

I take dofetilide (Tikosyn®) for atrial fibrillation. However, when I recently ordered the medication, my co-pay for 3 months increased from $95 in October, 2018 to $140, an increase approaching 50%. The amount the drug manufacturer (Pfizer) raised the price is unclear but the amount charged by the on-line pharmacy (AllianceRxWalgreens) that my insurance company (Blue Cross/Blue Shield Arizona) mandates I use, likely reflects a price increase in the drug.

Trump’s claim that drug prices decreased in 2018 is wrong. A recent analysis of brand-name drugs by the Associated Press found 96 price increases for every price cut in the first seven months of 2018 (1). At the start of last year, drug makers hiked prices on 1,800 medicines by a median of 9.1 percent, and many continued to increase prices throughout the year.

Trump met with Ian Read, CEO of Pfizer, in July, 2018 following a scolding via Twitter where Trump condemned Pfizer’s increase in drug prices. Pfizer agreed to delay the increases until early 2019 and now those price increases are apparently occurring.

Trump’s tweet comes just days after the president summoned his top domestic policy advisers, including health secretary Alex Azar, to the White House to discuss the slate of drug price hikes that came Jan. 1. Last week, Trump blasted pharmaceutical companies for those increases, writing on Twitter “drug makers are not living up to their commitments.”

Azar, who has been vocally defending his agency’s work to lower drug prices in television appearances and on Twitter this month, retweeted Trump’s claim of an historic price drop in 2018, but tacked on a comment saying, “President Trump has done more to address high drug prices than any President in history. More to come!”

Clearly, both Trump and Azar are engaging in Washington spin. Just before the November 2018 election, Trump announced a price-reduction plan that ties what Medicare pays for certain drugs to much lower prices paid in other economically advanced countries (1). Congressional Democrats have also introduced legislation to tackle the issue. However, Trump and congressional Democrats are now locked in a stalemate that shutdown the government and it seems unlikely they could come together to take actions on drug prices this year.

Richard A. Robbins, MD

Editor, SWJPCC

Reference

1. Associated Press. Trump hails drug price decline not supported by the evidence. January 11, 2019. Available at: https://www.apnews.com/bce3a214039c4271b3f3337e0e522b2a (accessed 1/14/19).

Cite as: Robbins RA. Drug prices continue to rise. Southwest J Pulm Crit Care. 2019;18(1):20-1. doi: https://doi.org/10.13175/swjpcc002-19 PDF

Healthcare Payments Under the Budget Deal: Mostly Good News for Physicians

In the early morning hours last Friday (2/9/18) Congress passed and President Trump signed a massive budget agreement (1). The spending package will cost about $320 billion over 10 years, according to the Congressional Budget Office. Payments for healthcare substantially increase under the deal. Most praised the agreement. "Congress made the right choice this morning for patients and communities by voting to halt damaging cuts to hospitals that care for low-income working families and others who face financial challenges," said Dr. Bruce Siegel, CEO of America's Essential Hospitals, which represents the nation's safety-net facilities. Marc Goldwein of the Center for a Responsible Federal Budget called the healthcare provisions the one "beacon of light" in what otherwise is an exorbitantly costly budget bill. Goldwein praised its mix of structural reforms with "reasonable policy” and liked that the bill pays for the increased healthcare spending.

The bill extends Medicare physician fee cuts that provide about $38 billion in offsets to the increased spending (2). The bill preserves the planned physician fee cuts at 0.5% in 2018 but would reduce the cut to 0.25% in 2019. Not all were pleased by the continuation of the cuts. Calling it "contrary to Congress' intent” ACP President Jack Ende called on Congress to enact permanent relief from the physician fee cuts.

Other major healthcare provisions include (1,2):

• Continued funding for community health centers for two years.
• A two-year delay to the already-in-effect payment cuts to Medicaid disproportionate-share hospitals (DSH) which predominately represent safety net hospitals.
• A two-year delay in the low-volume adjustment program which predominately affects rural hospitals.
• An additional 4-year extension of the Children's Health Insurance Program (CHIP), which had received a 6-year extension in the continuing resolution that was approved in January.
• Forcing pharmaceutical companies to pay 75 percent of the cost of drugs for seniors in Medicare’s coverage gap a year earlier than planned.
• Repeal of the "therapy cap”, a move long pushed by therapy provider groups and the American Association of Retired Persons. This would permanently repeal Medicare's coverage limit on physical therapy, speech-language pathology, and outpatient treatment.
• $6 billion for the opioid epidemic, which will go toward state grants, public prevention programs, and law enforcement.
• Funding for the Maternal, Infant, and Early Childhood Home Visiting Program, which helps at-risk pregnant women and families navigate the social safety net.
• A reduction in Medicare payments to Home health agencies. They're expected to lose $3.5 billion in Medicare payments starting in 2020 due to a change in the way Medicare calculates annual payment updates.
• Funding the Chronic Care Act, which opens up new flexibilities for Medicare Advantage and care for chronically ill Medicare beneficiaries.
• A 2-year delay in implementing The Affordable Care Act's high-cost plan tax, popularly known as the “Cadillac tax”. This was a 40 percent excise tax on employer plans exceeding $10,200 in premiums per year for individuals and $27,500 for families. The tax is now scheduled to take effect in 2020.
• Repeal of Independent Payment Advisory Board (IPAB). Provider groups from the American Medical Association to the American Hospital Association applauded the move, even though Congress has never triggered the panel, which was charged to find and implement Medicare savings.

However, not all were pleased by the repeal of cost containments. IPAB repeal doesn't cost much in the grand scheme of things, said Mark Goldwein from the Center for a Responsible Federal Budget but “the long-term policy implications are huge, and a big mistake” (2). Kaiser Family Foundation Senior Vice President Larry Levitt chided that the bill demonstrates “…healthcare cost containment generally seems better in theory than in practice” (2).

Richard A. Robbins, MD

Editor, SWJPCC

References

1. Luthi S. Beacon of light: Healthcare additions in budget law pleasantly surprise providers. Modern Healthcare. February 9, 2018. Available at: http://www.modernhealthcare.com/article/20180209/NEWS/180209895 (accessed 2/12/18).
2. Ault A. Trump signs budget deal, cuts Medicare fee in 2019. Medscape. February 9, 2018. Available at: https://www.medscape.com/viewarticle/892491 (accessed 2/12/18).

Cite as: Robbins RA. Healthcare payments under the budget deal: mostly good news for physicians. Southwest J Pulm Crit Care. 2018;16(2):88-9. doi: https://doi.org/10.13175/swjpcc032-18 PDF 

Tax Cuts Could Threaten Physicians

Today (December 13) members of the House and Senate will meet to reconcile differences between their two tax reform proposals. Congress is expected to complete work on the bill before the Christmas recess. Although many are overjoyed by a tax cut, there are potential pitfalls to the tax cut that might adversely affect physicians.

Under a rule in the Senate known as Pay as You Go (PAYGO), legislation that increases the deficit results in automatic spending cuts. The Congressional Budget Office (CBO) estimates that tax cuts could lead to automatic cuts of $136 billion in fiscal 2018, $25 billion of which would come from Medicare. PAYGO cuts would reduce Medicare payments to physicians by 4% in 2018 according to the American College of Physicians (ACP) (1). PAYGO would also lead to cuts to graduate medical education, lab fees, and hospital payments and would cut or entirely eliminate hundreds of other federal programs, including programs within the Centers for Disease Control and Prevention, the Health Resources and Services Administration, and the Prevention and Public Health Fund, according to the ACP.

Senate Republicans want to essentially repeal the penalty that accompanies the mandate that all Americans buy health insurance. It seems likely that House Republicans will go along. The CBO estimates that this would decrease the number of people with health insurance by 4 million by 2019 and premiums in the nongroup market by about 10% in almost each year for the next 10 years. The American Association of Retired Persons (AARP) says that 64-year-olds could see their premiums increase by an average of $1490 a year (2).

The medical expense tax deduction has been targeted for elimination by the House. The Senate version, however, would keep the deduction. The AARP says that in 2015, 8.8 million Americans used the deduction and that more than half were older than 65 (2). Nearly three quarters are 50 years old or older and live with a chronic condition or illness, and 70% of those who claimed the medical expense deduction have income below $75,000, according to the AARP. However, the tax deduction seems likely to survive. Rep. Kevin Brady (R-TX) who heads the reconciliation said he's willing to consider scrapping the proposal to eliminate the deduction (3).

The House is proposing to eliminate a tax credit that has been used as an incentive for pharmaceutical companies to develop therapies for orphan diseases. The Senate is reducing that credit. Not surprisingly, the National Organization for Rare Disorders and 160 other organizations representing patients with rare conditions oppose any reduction (4). They argue that eliminating the tax cut would deincentivize pharmaceutical companies to develop therapies for orphan diseases where the market is usually small.

Hospitals are alarmed about the House proposal to eliminate tax-exempt private activity bonds used by nonprofit hospitals and academic medical centers. The Senate bill would continue to allow that tax-exempt financing. This is opposed by both the Association of American Medical Colleges and the American Hospital Association (5,6).  The AHA’s Thomas P. Nickels states, "The ability to obtain tax-exempt financing is a key benefit of hospital tax-exemption that works to make access to vital hospital services available in communities large and small across America." (6).  Locally several medical centers have large bonds and loss of the exemption might have significant consequences.

Richard A. Robbins, MD

Editor, SWJPCC

References

1. Ende J. Letter to Mitch McConnell and Charles Schumer. November 30,2017. Available at: https://www.acponline.org/acp_policy/letters/senate_tax_cuts_and_jobs_act_2017.pdf (accessed 12/13/17).
2. Strauss G. AARP opposes senate tax bill. November 30, 2017. Available at: https://www.aarp.org/politics-society/advocacy/info-2017/senate-letter-tax-fd.html?intcmp=AE-HP-FLXSLDR-SLIDE1?intcmp=AE-HP-FLXSLDR-SLIDE1-RL1 (accessed 12/13/17).
3. Ault A. Five things in the GOP tax plan that threaten medicine. Medscape. December 12, 2017. Available at: https://www.medscape.com/viewarticle/889947?nlid=119526_4502&src=wnl_dne_171213_mscpedit&uac=9273DT&impID=1507630&faf=1#vp_2 (accessed 12/13/17).
4. Letter to Congress. December 7, 2017. Available at: https://rarediseases.org/wp-content/uploads/2017/12/Orphan-Drug-Tax-Credit-Conferee-Letter-Final.pdf (accessed 12/13/17).
5. AAMC. AAMC statement on house tax reform legislation. https://news.aamc.org/press-releases/article/house_tax_reform_11092017/ (accessed 12/13/17).
6. Nickels TP. Letter to Rep. Kevin Brady. December 8, 2017. Available at: http://www.aha.org/advocacy-issues/letter/2017/171208-letter-taxbill-conferees.pdf (accessed 12/13/17).

Cite as: Robbins RA. Tax cuts could threaten physicians. Southwest J Pulm Crit Care. 2017;15(6):280-1. doi: https://doi.org/10.13175/swjpcc153-17 PDF 

Medicare Bundled Payment Initiative Did Not Reduce COPD Readmissions

Implementation of the Medicare bundled payments for care improvement initiative has failed to cut readmission rates following hospitalization for acute exacerbation of chronic obstructive pulmonary disease (COPD), according to a study published in the Annals of the American Thoracic Society (1).

Bhatt and colleagues (1) from the University of Alabama at Birmingham enrolled 78 consecutive Medicare patients in 2014 compared to 109 patients in the historic group from 2012. They found that patients from 2014 were more likely to have compliance with the bundled care payment requirements. However, there was no difference in all-cause readmission rates at 30 days (15.4% vs.17.4%; p=.711), and 90 days (26.9% vs 33.9%; p=.306).

The bundled care requirements include regular follow-up phone calls, pneumococcal and influenza vaccines, home health care, durable medical equipment, pulmonary rehabilitation, and to attend pulmonary clinic which were significantly increased after implementation of the bundled care requirements. However, these COPD interventions were implemented despite having not been shown to decrease COPD readmissions (2). Furthermore, Shah et al. (3) have reported that only 27.6% of COPD hospital readmissions are for COPD making these COPD interventions even less likely to reduce readmissions.

References

1. Bhatt SP, Wells JM, Iyer AS, et al. Results of a Medicare Bundled Payments for Care Improvement Initiative for COPD Readmissions. Ann Am Thorac Soc. 2016 Dec 22 [Epub ahead of print]. [CrossRef] [PubMed]
2. Robbins RA, Wesselius LJ. Reducing readmissions after a COPD exacerbation: a brief review. Southwest J Pulm Crit Care. 2015;11(1):19-24. [CrossRef]
3. Shah T, Churpek MM, Coca Perraillon M, Konetzka RT. Understanding why patients with COPD get readmitted: a large national study to delineate the medicare population for the readmissions penalty expansion. Chest. 2015;147(5):1219-26. [CrossRef] [PubMed]

Cite as: Robbins RA. Medicare bundled payment initiative did not reduce COPD readmissions. Southwest J Pulm Crit Care. 2016;14(1):26. doi: https://doi.org/10.13175/swjpcc104-17 PDF