ObamaCare plans denied nearly 1 in 5 in-network claims in 2017

• Affordable Care Act marketplace plans denied 19% of claims submitted for in-network service in 2017. Only 0.5% of those denied claims were appealed, according to a new Kaiser Family Foundation report.
• KFF found huge denial rate variations between payers, ranging from 1% to 45%. There were vast differences within states, too.
• Only about 200,000 of the almost 43 million denied claims were appealed. Appeals reversed denied claims in about 14% of cases, though there were wide variations among payers (1% to 88%), according to the analysis.

A byproduct of claim denials is that members wind up with surprise medical bills, which lead to large out-of-pocket costs for patients. Surprise bills can also force providers and hospitals to track down payments from those patients, or face uncompensated care costs themselves.

Denied claims and surprise billing go well beyond the ACA marketplace. Kaiser Family Foundation recently reported that about 40% of Americans said they have received a surprise medical bill. A 2017 report by Change Healthcare found about 9% of claims were initially denied in the previous year. That totaled $262 billion in initially rejected claims.

Payer cost-controlling policies, such as Anthem’s emergency room policy, may exacerbate the issue. Those policies, which are ostensibly put in place to contain costs, can also mean a bigger chance of claim denials.

In its latest research, KFF reviewed almost 230 million claims submitted by 130 payers in the ACA exchanges in 2017. The findings show wide denial variations for payers, though some of the difference might be reporting discrepancies, KFF said.

At this point, researchers can’t pinpoint exactly why a payer denied claims. There’s a big difference between a denial for a redundant claim or one for services being deemed medically unnecessary. That barrier makes it difficult to figure out denial trends.

“Clearer reporting instructions, additional training, and greater use of data verification and validation measures could improve accuracy and consistency of reporting,” KFF said.

Earlier this month, CMS said it will require ACA plans to report denial reasons, including out-of-network, referral or prior authorization needed and services not covered. That will also allow researchers to get a better handle on why payers deny claims.

CMS will also require payers to provide claims data by the plan level and not the insurer level, which will allow for more specificity.

https://www.healthcaredive.com/news/aca-plans-denied-nearly-1-in-5-in-network-claims-in-2017/549312/

Cleveland Clinic treats record number of patients amid expansion efforts

• Cleveland Clinic’s 2018 operating revenues increased by 6.2% to $8.9 billion thanks in part to the health system caring for more than 2 million patients, which was its highest total in the organization’s history. The system also added a hospital and about 30 outpatient facilities and picked up more than 100 inpatient beds during the year.
• However, the nonprofit health system’s operating income dropped 19% from $331 million in 2017 to $266 million in 2018. Operating margin dipped from 3.9% to 3%, according to financial results released Wednesday.
• Cleveland Clinic CEO Tom Mihaljevic said the system expects to double the number of patients served in the next five years.

Cleveland Clinic’s expanding footprint, including four new Florida hospitals this year, an expansion in Ohio and international construction in Abu Dhabi and London, will inflate patient loads. Also, the system plans to invest in telemedicine to increase access “to patients in every corner of the world,” Mihaljevic said.

Cleveland Clinic’s report follows results from Mayo Clinic. The Minnesota-based system similarly reported a 5.1% revenue increase, but lower net operating income.

Nonprofit health systems have gotten the attention of federal and state officials in recent months. Republican Senate Finance Committee Chairman Chuck Grassley recently requested information from the IRS about whether nonprofit hospitals are fulfilling their charitable obligations.

Meanwhile, a legal fight in Pennsylvania pits state Attorney General Josh Shapiro against one of the state’s largest providers, UPMC. Shapiro criticized UPMC for “corporate greed.” The attorney general alleged the health system isn’t following its charitable obligations by rejecting contracts with its rival, Highmark. Instead, UPMC is solely pursuing “commercial success,” Shapiro said.

Both the Pennsylvania case and greater focus on Capitol Hill show that nonprofit health systems’ tax-exempt status has taken center stage. Nonprofit hospitals face headwinds and risks, such as concerns about a recession, Medicaid changes and nontraditional competitors. However, S&P Global expects a stable industry this year.

Mihaljevic said Cleveland Clinic is aware of burnout among healthcare workers. The organization launched the Office of Caregiver Experience and interviewed more than 11,000 Cleveland Clinic caregivers about the issues. Mihaljevic said the system will use “technology, teamwork and improving wellness” to confront burnout.

“We have hired scribes and deployed voice recognition to make documentation more seamless. We expanded the care team by doubling the number of advanced practice providers in the last four years,” he said.

https://www.healthcaredive.com/news/cleveland-clinic-treats-record-number-of-patients-amid-expansion-efforts/549373/

UHS beats expectations amid behavioral health, DOJ costs

• Universal Health Services reported a 28% drop in net income to $158.1 million in the fourth quarter of 2018 compared to the same period the year prior. Net revenues increased 4.2% to $2.75 billion during the same period.
• The King of Prussia, Pennsylvania-based hospital chain put $31.9 million toward a growing settlement fund related to the Department of Justice’s investigation into its behavioral health facilities, according to financials released Wednesday. The fund now totals $102.3 million. CFO Steve Filton told investors Thursday that the investigation is nearing settlement.
• The company reported $10.8 billion in net revenue for the full year, and anticipates revenue growth as high as 5% in 2019. Though revenue continues to rise for the company, investors on the call questioned regulatory and leadership troubles with UHS’ behavioral health arm.

Some analysts praised the revenue trend while others sought clarity on the hospital operator’s behavioral health headwinds, including regulatory challenges around shorter lengths of stay and leadership loss, in questions on the company’s Thursday call. Shares rose about 5% in late morning trade.

Income was hampered by costs associated with the ongoing DOJ investigation into false claims allegedly submitted by its behavioral health facilities and permanent closure of one such facility that was severely damaged in the California wildfires during the fourth quarter, according to earnings documents issued by the hospital chain.

Filton forecast the DOJ investigation would soon reach settlement.

“We’ve adjusted our reserves periodically, lately every quarter, to reflect whatever our latest offer is,” Filton said. “I also think it’s worth noting that the gap in between our offer and the government’s demand has narrowed quite considerably.”

UHS acute care facilities experienced a 2.2% bump in adjusted admissions and a 4.8% increase in adjusted patient days for the fourth quarter, both compared to the same period in 2017.

The full year saw net revenues jump 3.5% compared to 2017, with full-year adjusted admissions and patient days increasing 2.1% and 4.8% respectively compared to the year prior. Operating income dropped to $1.2 billion from $1.3 billion in 2017, while net income increased to $779.7 million in 2018 compared to $752.3 million over the same period.

The company also reported a $12.5 million loss as a result of decreased market value in shares. The UHS board of directors in December signed off on a $500 million increase to the company’s stock buyback program. The authorization was followed by a $149 million reacquisition of about 1.22 million shares before the year’s end.

Filton said share repurchasing can be expected to accelerate as a result of the DOJ case.

https://www.healthcaredive.com/news/uhs-beats-expectations-amid-behavioral-health-doj-costs/549421/

Medicare trims payments to 800 hospitals, citing patient-safety incidents

This year, 800 hospitals will be paid less by Medicare because of high rates of infections and patient injuries, federal records show.

The number is the highest since the federal government five years ago launched the Hospital Acquired Conditions (HAC) Reduction Program, created by the Affordable Care Act. Under the program, 1,756 hospitals have been penalized at least once, a Kaiser Health News analysis found.

This year, 110 hospitals are being punished for the fifth straight time.

The penalties pit hospitals against one another in a race to prevent the most infections, blood clots, cases of sepsis, bedsores, hip fractures and other complications. Each year, the quarter of general hospitals with the highest rates are punished, even if their records have improved from the previous year.

Under the latest round of sanctions, each hospital will lose 1% of its Medicare payments for patients discharged between last October and this September. That comes on top of other penalties created by the health care law, such as annual payment reductions for hospitals with too many patients being readmitted.

The hospital industry has protested the HAC penalties, saying the program’s design creates an arbitrary cutoff for which institutions get punished and which don’t. The American Hospital Association calculated that only about 41% of the 768 hospitals penalized in 2017 had HAC scores that were statistically significantly higher than hospitals not being penalized.

“There are not statistical differences that would warrant a quarter of the hospitals in America getting a penalty,” said Nancy Foster, the association’s vice president for quality and patient safety.

Hospitals also complain that the ones that do the best job testing for infections and other threats to patients appear to be among the worst based on statistics, while their more lackadaisical peers look better than they might be.

Supporters of the punishments argue that the penalties are warranted in prodding hospitals to improve quality. The threat of losing money elevates the issue in many hospitals to the attention of directors and owners, said Missy Danforth, the vice president of health care ratings at the Leapfrog Group, a nonprofit devoted to patient safety.

“The fact that everyone’s talking about it, from front-line nurses to boards of directors, is positioning patient safety where it should be, which is at the forefront of everyone’s minds,” Danforth said.

Danforth dismissed hospital complaints that the penalties are not always fairly applied. “There’s a lot of really strong, good best practices to getting to zero on these infections,” she said.

Hospital patients suffered an avoidable injury in 9 of every 100 patient stays in 2016, about 2.7 million times, according to a June report from the federal Agency for Healthcare Research and Quality. Those included a bad reaction to medication, an injury from a procedure, a fall or an infection.

The frequency of complications has been dropping in hospitals. The report found an overall 8% decrease from 2014 to 2016. However, the report also found a jump in the numbers of bedsores and urinary tract infections in patients with catheters during that time.

The Hospital Acquired Conditions Reduction Program assesses penalties based on a subsection of the injuries examined in the AHRQ report. For each hospital, Medicare judges infection rates related to colon surgeries, hysterectomies, urinary tract catheters and central lines inserted into veins. Medicare also counts the number of infections of methicillin-resistant Staphylococcus aureus, or MRSA, and Clostridium difficile, known as C. diff.

Finally, the government tracks the rate of blood clots, sepsis, post-surgical wounds, bedsores, hip fractures and five other types of in-hospital injuries. Because the penalties will be applied as hospitals submit claims for reimbursement, the total dollar amount of penalties for each hospital will not be known until the federal fiscal year ends in September.

Medicare excludes from consideration a number of specialized hospitals: those serving children, veterans and psychiatric patients. Maryland hospitals are also exempted because the federal government gives that state leeway in how it pays hospitals. And more than 1,000 “critical access” hospitals, which are the only institutions in their area, are also excluded.

For the remaining hospitals, penalties are assigned to the quarter of institutions with the highest HAC rates. That threshold varies slightly from year to year, and is a major reason that the number of hospitals being punished fluctuates annually. Before this, the largest number of hospitals punished was 769, two years ago.

https://www.modernhealthcare.com/safety-quality/medicare-trims-payments-800-hospitals-citing-patient-safety-incidents

Beth Israel Deaconess-Lahey merger may be price-cap model

Beth Israel Deaconess Medical Center and Lahey Health officially combined to form Beth Israel Lahey Health, the second-largest health system in Massachusetts, the organizations announced Friday.

In November, Massachusetts’ attorney general approved the deal with conditions including a seven-year price cap; participation in MassHealth, the state’s combined Medicaid and Children’s Health Insurance Program; and $71.6 million in investments supporting healthcare services for low-income and underserved communities in Massachusetts.

The price cap guarantees Beth Israel Lahey Health’s price increases will remain below the state’s annual healthcare cost growth benchmark of 3.1% for seven years. That will prevent more than $1 billion of the potential cost increases over a seven-year span projected by the Massachusetts Health Policy Commission, according to Attorney General Maura Healey.

Healey’s assurance of discontinuance does offer some flexibility amid “significant change in market conditions,” including significant swings in the consumer price index or new laws that significantly raise the cost of care.

The Massachusetts Health Policy Commission, which has produced critical reports of the merger citing a potential to increase healthcare costs by up to $251 million per year, said it commends the conditions the attorney general placed on the deal that would help mitigate its concerns. They will have a real impact on access to treatment for mental health and substance-use disorders for patients across eastern Massachusetts, the commission said.

These types of regulations could become the new normal for hospital merger and pricing policy in the U.S., policy experts said.

Between the Massachusetts Health Policy Commission and strong attorney general, Massachusetts has been fairly far out in front in terms of healthcare policy, said Zack Cooper, associate professor of health policy and economics at Yale University.

“What they are signaling with this settlement is that they will allow these sort of entities, conditional upon enforcing price regulation,” he said. “This is the de facto price and spending cap may become the norm in the next decade or so. Frankly, we face a choice of using a public option to put pressure on providers and insurers or simply regulate directly.”

The industry is moving toward these types of monopolies that require price regulation, Cooper said. The challenge will be whether to regulate prices over the entire systems or only the overlapping sites. With the latter, the evidence shows that systems tend to shift the price increases to other sites in the system, he said.

“Capping prices for the entire system is a notable outcome of this ruling,” Cooper said.

The merger includes Beth Israel in Boston and Lahey in Burlington, as well as Boston’s New England Baptist Hospital, Mount Auburn Hospital in Cambridge and Anna Jaques Hospital in Newburyport.

Beth Israel Lahey Health operates a total of 10 hospitals as well as three affiliate hospitals in Cambridge Health Alliance, Lawrence General Hospital and Metrowest Medical Center.

Its network includes four academic and teaching hospitals with affiliations with Harvard Medical School and Tufts University School of Medicine, eight community hospitals, specialty hospitals for orthopedics and behavioral health, and ambulatory and urgent care centers. It has a population health enterprise and a centralized network of administrative and operational services, executives said.

“Through local and system partnerships, as well as the enthusiasm and talent of all our employees and providers, we will invest in and strengthen community-based care, informed by innovation and discovery,” Dr. Kevin Tabb, president and CEO of Beth Israel Lahey Health, said in prepared remarks.

The combined entity would have around $6 billion of revenue, more than 4,000 physicians and 35,000 employees.

Beth Israel and Lahey executives argued that their combination is necessary to heal a dysfunctional Massachusetts healthcare market that continues to overuse hospitals and academic medical centers. It’s the only way to check Partners, they said. Executives said they plan to expand the state’s now-limited behavioral health service network, helping divert patients from costly emergency departments. They pledged to use their combined purchasing power and expertise to lower costs, which they say will outpace any potential price increases.

Lahey Health narrowed its operating loss in 2018, but its expenses related to salaries and wages and supplies continued to rise. It reported a $29.6 million operating loss on revenue of $2.15 billion in 2018, compared to a $65.6 million operating loss on $2.03 billion in revenue in 2017.

CareGroup, which is the corporate parent of Beth Israel Deaconess, New England Baptist Hospital and Mount Auburn Hospital, reported $38.7 million of operating income on revenue of $3.53 billion in 2018, a significant increase from a $3.1 million operating loss on $3.33 billion of revenue in 2017.

https://www.modernhealthcare.com/mergers-acquisitions/beth-israel-deaconess-and-lahey-health-complete-merger

Lupus Therapeutics Partners with Takeda on Phase 1 Trial

The Lupus Research Alliance and its affiliate, Lupus Therapeutics announced a collaboration with Takeda Pharmaceutical Company Limited, to evaluate the investigational biologic TAK-079 as a potential new therapy for lupus in a Phase 1 trial (NCT03724916). The national study will be conducted in 20 research centers throughout the country, many of which are members of Lupus Therapeutics` Lupus Clinical Investigators Network (LuCIN).

TAK-079 is a fully human monoclonal antibody, meaning that it is produced in the laboratory using human DNA sequences. In preclinical studies, TAK-079 attached to and inhibited CD38, a protein found on many immune cells that are involved in producing autoantibodies. Data from a study with healthy volunteers suggested that TAK-079 is generally well-tolerated and showed a decrease in the number of immune cells that expressed CD38.

The Phase 1 study will enroll patients with moderate to severe lupus and aims to evaluate the safety of TAK-079 as well as its pharmacokinetics (how it is absorbed, distributed, metabolized and excreted from the body) and its pharmacodynamics (how it works and affects the body). To join the trial, patients must have moderate to severe disease activity that has not responded well enough to standard lupus treatment. Participants will receive up to four doses of either TAK-079 or placebo, in combination with their ongoing standard lupus treatment.

https://www.marketscreener.com/TAKEDA-PHARMACEUTICAL-CO-6491073/news/Takeda-Pharmaceutical-Lupus-Therapeutics-Partners-with-Takeda-on-Phase-1-Trial-28102080/

TG Therapeutics in $85M Equity and Debt Financing

TG Therapeutics, Inc. (NASDAQ: TGTX), a biopharmaceutical company developing medicines for patients with B-cell mediated diseases, today announced approximately $85 million in equity and debt financing.

The Company priced a public offering of its common stock for gross proceeds of approximately $25.2 million, before deducting underwriting discounts and commissions and offering expenses payable by the Company. In addition, the Company granted the underwriters a 30-day option to purchase $3.8 million of additional shares of common stock. All of the shares in the offering are being sold by the Company. The Company anticipates using the net proceeds from the offering to fund the ongoing development of ublituximab and umbralisib, for research and development activities and for general corporate purposes. The offering is expected to close on March 5, 2019 subject to customary closing conditions.

Cantor Fitzgerald & Co. acted as the sole book-running manager for the offering. The underwriter may offer the shares from time to time for sale in one or more transactions on The NASDAQ Capital Market, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. On February 28, 2019, the last sale price of the shares as reported on The NASDAQ Capital Market was $6.80 per share.

In addition to the above equity financing, the Company also announced yesterday that it has secured a $60 million venture debt facility with Hercules Capital, a leader in customizing debt financing for companies in the life sciences and technology-related markets.

https://www.marketscreener.com/TG-THERAPEUTICS-INC-13314736/news/TG-Therapeutics-Announces-Approximately-85-million-in-Equity-and-Debt-Financings-28101814/