Becker's Spine Review

21 21 HEALTHCARE NEWS Will employers put the squeeze on hospitals? By Molly Gamble C ommercial reimbursement is poised for a fade-out and corporate giants may ramp up their demands and scrutiny. Are hospitals and health systems ready? Hospitals and health systems rely on commercial reimbursement to supplement the money they lose from governmental payers. Private insurers paid nearly double Medicare rates for all hospital services, on average, according to a KFF analysis of 19 studies comparing Medicare and commercial payment rates. Medicaid fee- for-service payments for physician services are even lower — nearly 30 percent — than those from Medicare. is isn't to say that working with commercial payers is anything close to utopia. eir reimbursement rates to providers may be higher than those of their governmental counterparts, but the cost- control tactics they deploy when making payments are disruptive. roughout the first three months of 2023, about one-third of inpatient and outpatient claims submitted by providers to commercial payers went unpaid for more than 90 days, according to an analysis from Crowe. e provider-commercial payer relationship, albeit flawed, allows for the cross-subsidization that determines the financial sustainability of most hospitals and health systems. It is essential. And now, as employers brace for rising healthcare costs, the provider-commercial relationship is also increasingly volatile. "e strong U.S. economy and a general labor shortage have collectively served as a great buffer for payers and providers, but in recent conversations with employers and their advisors, we hear that employers' ability to continue to invest in rising healthcare costs is fraying (one advisor described employers as approaching a 'benefits cliff ') and they are willing to consider healthcare cost management options they had not seriously considered in the past," Joyjit Saha Choudhury, managing director with Kaufman Hall, wrote in an Oct. 10 analysis. Nearly half of Americans receive health insurance through an employer. Average costs for U.S. employers that pay for employees' healthcare will increase 8.5 percent in 2024 to more than $15,000 per employee, according to a projection from Aon. e increase is nearly double the 4.5 percent bump to healthcare budgets that employers experienced from 2022 to 2023. is forecast builds on recent cost increases: e annual premium for family coverage in 2022 averaged $22,463, with the worker contributing $6,106 annually — an increase of 20% over the previous five years and 43% over the previous 10 years. ere are a few ways commercial reimbursement could weaken, some familiar and some intensified by employers' growing cost burden, according to Mr. Choudhury. Employers may shi more costs to employees via premiums, deductibles, copays and coinsurance or turn to narrow networks. Health plans may ramp up reference based pricing, in which the payment amount for a service is capped regardless of the provider's usual unit cost for that service. Or employers may negotiate "best price" clauses into their contracts with insurers. Most extreme, employers could drop coverage altogether, which has been playing out over the past decade with small businesses with 47% of companies with three-49 employees offering health insurance in 2022, according to KFF. Although employers have a menu of cost containment strategies for healthcare costs, they have been slow to use them so far due to fierce competition for talent. Shiing healthcare costs to employees doesn't make for the most alluring benefits package when competing to attract and retain top talent. But if and when employers turn up the dial on healthcare cost containment or quality control, providers will feel a variety of impacts either directly or indirectly. Spillover effects include: increased competition and rate concessions if payers narrow network participation; shis in revenue and volumes if enrollees move from commercial group markets to individual or exchange markets; more cash price-seeking patients; and increased scrutiny or measurement toward quality of care, which varies widely for covered employees. An analysis from JP Morgan released in August shared specific examples of the variation in care delivery for employees, finding that in a sample of 809 Ohio cardiologists, among the top 10% of providers, an average of 73% of their patients are taking statins regularly. Among the bottom 10% of providers, about half as many patients adhere to statins. Among 3,121 Texas obstetricians, the instance of a woman with an uncomplicated pregnancy undergoing a C-section ranges from 14% for 10th percentile to 61% for the 90th percentile, depending on the obstetrician who delivers the baby. Although the clinical variation is stark, When Judy Faulkner has to tell customers 'no' By Giles Bruce E pic founder and CEO Judy Faulkner said she sometimes has to tell customers "no" when she feels her products aren't quite ready. Epic develops its EHR software in conjunction with customers then gets feedback from those early adopters to make improvements, Ms. Faulkner wrote in a Nov. 6 blog post. But sometimes other health systems hear about the new programs and want to use them too. She relayed the story of a time that happened with an Epic module. "We said, 'If you are on paper, then our new system will help you, but if you use (name of another product), then that's better than ours is now, so don't switch,'" she recalled in the post. "'Someday, in the not-too-distant future, ours should be just as good or perhaps better, and then if you want it, we will sell it to you.'" She wrote that her programming rule of thumb is that you "rewrite a product 50% for the second user, 25% for the third, 12.5% for the fourth, and so on." n

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