Becker's Hospital Review

20 Financial Management 4 Key Recommendations for Improving Healthcare Price Transparency By Helen Adamopoulos A task force led by the Healthcare Financial Management Associa- tion has developed guiding principles for improving healthcare price transparency. The task force included members from America's Health Insurance Plans, the American Hospital Association, Catalyst for Payment Reform and Com- munity Health Advisors, as well as a patient representative. The transpar- ency guidelines build on a report HFMA released last fall detailing best practices for provider communication with patients about financial re- sponsibilities. The task force's key recommendations including the following: 1. Health plans should help their enrollees obtain estimates for health- care services, including expected out-of-pocket costs. 2. Hospitals should provide price information to uninsured patients and help them explore their health insurance coverage options. Ad- ditionally, hospitals should ensure all patients are aware of their po- tential eligibility for financial assistance provided by the hospital. 3. Consumers should receive price information in a way that's easy to understand. HFMA has developed a consumer guide to help patients obtain and comprehend healthcare prices. 4. Employers should promote transparency by encouraging their work- ers to be engaged in their care decisions. n Moody's: Nonprofit Hospital Expenses Still Growing Faster Than Revenues By Bob Herman F or the second straight year, expenses at nonprofit hospitals and health systems are growing faster than revenues, a trend that is negatively impacting margins and cash flows, according to a report from Moody's Investors Service. Moody's analysts released the preliminary medians for fiscal year 2013, bas- ing its analysis on 45 percent of its rated portfolio. Moody's rates 448 total healthcare organizations. In 2013, the median operating margin (2.2 percent) and operating cash flow margin (9.3 percent) were both down from the published 2012 medi- ans. Those declines reflect the second consecutive year in which hospitals' expense growth rate outpaced the revenue growth rate. In 2013, expenses grew 4.6 percent, while revenue only increased 4.1 percent. Those figures are both down from 2012, when the expense growth rate was 5.5 percent and the revenue growth rate was 5.2 percent. In 2002, the median annual expense and revenue growth rates were both around 9 percent. Moody's attributed the decline in profitability to several factors, including low rate increases from commercial payers, Medicare and Medicaid cuts, the shift- ing payer mix, more high-deductible health plans and higher rates of outpatient visits and observations stays, which pay less than inpatient admissions. However, it's not all bad news for the nonprofit hospital sector. Despite the reduced margins, hospitals were still able to maintain stable balance sheets, as unrestricted cash and investments increased in FY 2013 compared with FY 2012. Median days cash on hand soared from 185.3 to 204.3. "This growth is consistent across all rating categories and comes as equity market returns were strong and capital spending levels declined," Jennifer Ewing, a Moody's analyst, wrote in the report. n I f Medicare lowered its reimbursement rates to hospital outpatient departments to what it pays ambulatory surgery centers, the pro- gram and beneficiaries could save tens of billions of dollars, according to a report from the HHS Office of Inspector General. Medicare reimbursement for HOPDs and ASCs has been hotly contested from different sides of the healthcare industry for years. The Medicare Payment Advisory Commission has consistently called for site-neutral Medicare payments, citing the fact Medicare paid HOPDs 78 percent more on average than ASCs for the same procedure in 2013. A report from consulting firm Alvarez & Marsal has even said the higher payments to HOPDs are "not sustainable." That has led some within the ASC industry to call for higher Medicare pay. However, hospitals have argued the increased reimbursements are justified because they are needed to subsidize a hospital's less profitable, but necessary, service lines like emergency departments and trauma care. The OIG's report supports MedPAC's view and recommends CMS reduce hospital outpatient prospective payment system rates for ASC- approved procedures to ASC levels for low-risk patients. The OIG said such a measure could save Medicare as much as $15 billion from 2012 through 2017 in expenses, and it would also save beneficiaries between $2 billion and $4 billion in copays and coinsurance charges. Despite the OIG's case, CMS Administrator Mari- lyn Tavenner disagreed with the recommenda- tions, saying a change of that scope would require legislative approval. She also said most ASC pay- ment rates are based on hospital outpatient rates, and therefore paying hospitals based on ASC rates would be challenging. n OIG: Medicare Should Reduce HOPD Surgery Payments to ASC Rates By Bob Herman

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