Becker's Hospital Review

8 CFO / FINANCE Hospitals charge private insurers more than 2x what Medicare pays: 6 things to know By Alia Paavola H ospitals across the U.S. charge private insurers an average of 247 percent more than what Medicare would pay for the same care, according to a RAND Corp. study published Sept. 18. For the study, researchers at RAND Corp. analyzed 750,000 claims for inpatient hospital stays and 40.2 million claims for outpatient services between 2016 and 2018. e sample included data from 3,112 hospitals across 49 states. Data from Maryland was collected but excluded because of its all-payer rate setting program. Six things to know: 1. If private health plans paid hospitals using Medicare's payment rates, the total payments to hospitals from 2016 to 2018 would be reduced by $19.7 billion. is represents a potential savings of 58 percent. 2. From 2016 to 2018, the overall price for hospital and outpatient care rose by a compounded annual rate of 5.1 percent. 3. ere is variation in hospital care pricing based on state. Private insurers in some states, including Florida, Tennes- see, Alaska, South Carolina and West Virginia, paid three or more times what Medicare did for inpatient stays and outpatient care. 4. In contrast, hospitals in some states like Arkansas, Mich- igan and Rhode Island charged under 200 percent of what Medicare would pay. 5. e RAND study also found a wide variation in prices within the same hospital system. For example, Boston-based Mass General Brigham's Massachusetts General Hospital charged private insurers nearly three times what Medicare paid, while its Newton-Wellesley Hospital charged private insurers about two times what Medicare paid. 6. e American Hospital Association raised concerns about the study. "It is unfortunate that RAND continues to make broad claims about pricing based on a cherry-picked and limited data set. is includes a hand-picked sample of employers and insurers whose claims represent just 0.7 percent of inpatient admissions and 1.8 percent of outpa- tients visits over the study period, as well as measuring quality through Leapfrog data that may be old or impre- cise," said Tom Nickels, executive vice president of the American Hospital Association. n Outlook remains negative for US for-profit hospitals, Moody's says By Alia Paavola M oody's Investors Service in September maintained its neg- ative outlook for U.S. for-profit hospitals due to waning fed- eral aid, shifting payer mixes and varying volume trends. Moody's expects for-profit hospitals earnings before interest tax depreciation and amortization to decline by a low-to-mid sin- gle-digit rate in the next year to year and a half. The credit rating agency maintained the negative outlook for sev- eral reasons, including that government aid to providers is be- ginning to wind down and most providers will see adverse payer mix shifts in the next year due to the high unemployment rate in the U.S. In addition, volume trends and acuity levels are likely to vary sig- nificantly for these for-profit providers across the U.S., and the number of procedures performed outside of the hospital setting will continue to increase, which will weaken hospital earnings, Moody's said. Further, the credit rating agency said that many providers imple- mented rapid and aggressive cost-cutting measures, which en- abled them to exit the second quarter largely unscathed. "Some hospitals have said that for every lost dollar of revenue, they were able to cut about 50 cents in costs. However, we believe that these levels of cost cuts are not sustainable," Moody's said. Overall, Moody's said it expects volumes to gradually return to pre-COVID-19 levels in 2021. n UPMC Lock Haven closed indefinitely after fire By Ayla Ellison U PMC Lock Haven (Pa.) has closed after a fire prompted it to evacuate patients and shut down, according to the Wil- liamsport Sun-Gazette. The 47-bed hospital evacuated its 14 patients Sept. 10 after a fire erupted in a service tunnel that runs under the roadway and con- nects the boiler room to the hospital. No injuries were reported and fire crews contained the fire to the tunnel structure outside the hospital. It is not yet known when services will be restored at the hospital, a spokesperson told the Williamsport Sun-Gazette. The hospital is working with local and state health officials to evaluate the extent of damage to UPMC Lock Haven, the spokesperson said. The fire broke out as maintenance crews were sealing the tunnel, which is no longer needed. The crew was using a chemical sealant to close off the tunnel, and the sealant had a reaction that started the fire, according to the Williamsport Sun-Gazette. n

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