INSIDE THE ISSUE

> Administrative Burden
> More Cuts Coming
> Mental Health Parity
> Telehealth & Controlled Substances
> Contempt Citation for Steward CEO?
> MAVRIC Rollout Delayed
> AHA’s NOVA Award
> Transition

MONDAY REPORT

Hospitals Are in the Red; Administrative Burden is One Reason

One reason – not the only one, but a significant reason for provider losses – are the administrative burdens choking the system. A new report from the American Hospital Association shows that administrative costs now account for more than 40% of total expenses hospitals incur in delivering care to patients.

One example: health insurances companies – especially the large national Medicare Advantage plans – use machine learning algorithms to automatically deny claims. Providers in turn must expend money on staff and clinical resources to challenge the denials on behalf of patients and the majority of those denials are overturned. According to a 2018 Department of Health and Human Services Office of Inspector General report on Medicare Advantage denials, about 75% of care denials are eventually overturned.

“A study by McKinsey found that hospitals and health systems are conservatively spending an estimated $40 billion annually on costs associated with billing and collections,” the AHA report notes.

MHA conducted its own study of healthcare spending waste in 2023 and found that each year 12% of claims that Massachusetts hospitals and health systems file with commercial insurance companies are routinely denied by the insurers – representing $1.5 billion in reimbursement for care services. More than 80% of those denied claims are eventually overturned. The process of “chasing a claim” for approval is expensive and time-consuming, using precious resources that providers could better allocate toward patient care and managing overall costs.

According to MHA’s “Better Care, Lower Costs” report, “For Massachusetts hospitals and physician practices, billing and insurance-related expenses, including claims processing, total $3.5 billion. While some of those processes are necessary, studies suggest that up to half of that amount – $1.75 billion – could be erased from the system through a series of red-tape-reducing initiatives” that are detailed in the report.

MassHealth to Reduce Hospital Rate in FY2025

Last week, the Executive Office of Health and Human Services (EOHHS) issued updated reimbursement rates for hospital services provided to MassHealth patients that will result in approximately $94 million in payment reductions next year. The rates are incorporated into the MassHealth acute hospital Rate Year (RY) 2025 Request for Applications (RFA), the annual contract between hospitals and the state for hospital services covered and financed by the MassHealth program.

Both inpatient and outpatient acute hospital reimbursement rates were reduced by 3.6%, which the agency estimates will result in $113 million in reimbursement reductions. This decrease is partially offset by a modification to inpatient obstetric payments, which MassHealth increased to address unintended consequences of the previous RFA’s changes to these payments. Reimbursement for complex care, known as outliers, is projected to increase modestly. In total, the acute hospital reimbursement reduction is estimated to be $90 million. Post-acute hospitals are also slated to receive a 2.1% rate reduction, which will result in an estimated decline of $4 million. The reimbursement rates will apply to services provided to MassHealth patients, including those covered by contracted Medicaid managed care organizations (MCOs) and Accountable Care Organizations (ACOs).

Beyond reimbursement rates, the acute hospital RFA contract also includes provisions pertaining to the quality incentive programs in which hospitals participate, including clinical quality incentives and health equity incentives. Both programs, which are funded in part by the new assessment on hospitals, assume significant expectations for hospitals to meet to earn the funding. Hospital quality and health equity leaders are continuing to collaborate with EOHHS to ensure the incentive programs goals are both ambitious and achievable.

The new hospital reimbursement rates will take effect October 1, 2024. Still to be determined are payment assumptions in the MassHealth ACO program, which is anticipated to reflect policies that will reduce reimbursement. The payment reductions are part of the Healey Administration’s budget plan for the FY2025 state budget, which assumed $300 million in MassHealth savings initiatives. Also included in the FY2025 budget plan is the EOHHS-MHA plan to increase the hospital assessment and related payments, which over time will increase the net benefit from that program – especially for safety net hospitals. Hospitals annually will see an additional $417 million, including funding earned through quality incentives.

“Hospital finances are in an especially fragile state right now, with 73% of hospital health systems operating in the negative and pressures continue to mount due to the changing MassHealth healthcare landscape,” said MHA’s Dan McHale, senior vice president, healthcare finance & policy. “The MassHealth reimbursement reductions are difficult to absorb given growing cost pressures on hospitals, including those due to the tight labor market and pharmaceutical prices. And there’s significant financial risk associated with many of the new Medicaid payments. We remain grateful for the strong collaboration with EOHHS in formulating Medicaid payment policies that also supports hospitals, including our partnership on the hospital assessment that provides much needed relief for safety net hospitals.”

Administration Advances Mental Health Parity; Insurers Object

The Biden Administration last Monday released a final rule that attempts to ensure that individuals with health insurance coverage who seek treatment for covered mental health conditions or substance use disorders do not face greater burdens on access to benefits than they would face when seeking coverage for the treatment of a physical condition.

The final rule revises the implementation of the Mental Health Parity and Addiction Equity Act that was enacted in 2008. The new rule was needed because in the more than 15 years since the law’s enactment, people still encounter barriers to accessing mental health and substance use disorder care as compared to medical and surgical care under their health plan.

The final rule offers more protections against so-called “non-quantitative treatment limitations” for mental health and SUD benefits, such as prior authorization requirements, step therapy, and restrictive standards for provider participation in a network.

“The newly issued rules also require plans and issuers to collect and evaluate data related to the non-quantitative treatment limitations they place on mental health and substance use disorder care and make changes if the data shows they are providing insufficient access,” according to a summary of the rule. “This change will help pinpoint harmful limitations in individuals’ health coverage and remove barriers to access.”

While advocates hailed the rulemaking as the most significant step forward in decades for mental health parity, the health insurance industry immediately slammed it. America’s Health Insurance Plans (AHIP), the Association for Behavioral Health and Wellness, the Blue Cross Blue Shield Association, and the ERISA Industry Committee said the rule “will have severe unintended consequences that will raise costs and jeopardize patients’ access to safe, effective, and medically necessary mental health support.” The insurers said the main problem with the mental health system is the lack of behavioral health workers needed to provide quality care. Faced with new requirements and the lack of workers to fulfill them, insurers and employers may choose to drop mental healthcare coverage entirely, the opponents said.

Massachusetts has taken steps in recent years to build the behavioral health workforce, most recently through the MA Repay program that awards loan repayment funds to eligible professionals who commit to providing behavioral health services for four years in settings such as acute care hospitals, community health centers, community mental health centers, inpatient psychiatric hospitals, outpatient treatment facilities, schools, substance use disorder treatment centers, and more. The application deadline for the current round of awards ends September 25.

“Improving behavioral health parity can go hand in hand with improving the healthcare workforce,” said MHA’s Senior Director of Healthcare Policy Leigh Simons. “In fact, the main reasons for the behavioral health workforce shortage is the longstanding lack of parity in insurer reimbursements for mental health and substance use disorder, as well as caregiver burnout related to administrative burdens. MHA applauds President’s Biden’s move to expand mental health and substance use parity. Mental health and substance use care is healthcare and this extension will ensure millions of Americans get the behavioral healthcare they need and are entitled to under the law.”

Flexibilities Needed for Telehealth Prescribing of Controlled Substances

The Massachusetts Telemedicine Coalition (tMED) has joined with more than 330 other groups in urging President Biden, as well as U.S. House and Senate leadership, to extend by two years the current flexibilities that allow prescribing controlled substances through telehealth.

During the pandemic, the Drug Enforcement Administration (DEA) allowed DEA-registered practitioners to issue prescriptions for certain controlled substances to patients via telemedicine without requiring an in-person medical evaluation.

In letters to the national leaders last week, the coalition of groups wrote, “These flexibilities have been a lifeline for countless individuals across the country, ensuring uninterrupted access to essential mental health care, substance use treatment, end-of life care, and many other crucial treatments during a time when in-person visits were impossible or unsafe.”

Post pandemic, the treatment challenges remain, the groups wrote, mainly due to provider shortages across medical professions and specialties. They asked that the flexibility, which is due to expire December 31, be extended two years.

A permanent answer to telehealth prescribing is available but has never been acted upon. The Ryan Haight Online Pharmacy Consumer Protection Act of 2008 requires the DEA, in conjunction with the Secretary of Health & Human Services, to promulgate permanent rules to allow practitioners to prescribe certain controlled medications via telehealth through a special registration pathway. tMed and the other groups that signed the letters said the two-year extension of the flexibility hopefully will allow the DEA time “to meet its congressional mandate to create a special registration pathway that continues access to care.”

This week, September 15 to 21, is Telehealth Awareness Week.

U.S. Senate Vows Action Against Steward CEO

The final details of the purchase agreements between Steward Health Care and the three buyers of its hospitals in Massachusetts were filed with the bankruptcy court in Texas last week, and the process now turns to securing approvals from state and federal regulators. Interim state funding for hospital operations before the new owners take over – which totals $72 million to date – runs through September 30, necessitating a quick turnaround for approvals before the operating funds run out.

Last Thursday, the U.S. Senate’s Health, Education, Labor & Pensions (HELP) Committee, chaired by Sen. Bernie Sanders (I-Vt.) held its long-scheduled hearing that was supposed to include testimony from Steward CEO Ralph de la Torre, who had been subpoenaed to appear. But de la Torre’s lawyers informed the committee two weeks ago that he would not testify and the hearing began with an empty chair behind de la Torre’s nameplate.

“A witness cannot disregard and evade a duly authorized subpoena,” said Sen. Bill Cassidy (R-La.). “Therefore today the chair and I will be asking the committee to report a resolution to authorize civil enforcement and criminal contempt proceedings against Dr. de la Torre, requiring compliance with the subpoena.” The contempt process in the Senate, which entails hearings, a referral to the U.S. Department of Justice, and more could result in fines for de la Torre or even imprisonment.

Before the hearing, Sen. Ed Markey (D-Mass.) who sits on the HELP Committee issued a 28-page Steward Health Care Report: How Corporate Greed Hurt Patients, Health Workers, and Communities.

Closing the meeting on Thursday, Sen. Sanders said, “This is not the last discussion of this, and if Dr. de la Torre thinks that he is comfortable by not being here today – Dr. de la Torre if you’re watching, you’re wrong. This will be pursued.”

Rollout of New Death Registration System Delayed

The state’s planned September rollout of the digitally based Massachusetts Vital Records Information Collaborative (MAVRIC) to replace the current Vitals Information Partnership (VIP) system to record death certificates has been delayed until November 18.

The delay is simply because major players in the death registration system – city and town clerks – will be occupied with local and federal elections through the beginning of November.

Since the switch to MAVRIC was announced months ago, the state has been providing training to healthcare employees, who are often the other main players in the death registration process. Those trainings will continue through the rollout delay. More information is here.

The Registry of Vital Records and Statistics urges those involved in death registrations to use the extra time to close all outstanding records. “While all completed death records will be migrated to MAVRIC, December 15 is the last day to complete a record in the old legacy system, VIP,” the registry wrote last week. “Please note that VIP for deaths will be turned off at 12 a.m. on December 16 and any unfinished records will not be available for modification. They would need to be re-entered into the new system.”

Apply for AHA’s 2025 Dick Davidson NOVA Award

The American Hospital Association’s Dick Davidson NOVA Award honors outstanding collaborations among hospitals, health systems, and local stakeholders for healthier communities through health, social, or economic initiatives. Five organizations will be recognized with awards at the Accelerating Health Equity Conference, May 20-22, 2025, in Atlanta. The AHA is accepting applications now through October 14.

This year, the application is online, enabling a smoother submission process. and enhancing the user experience. Request a customized link to access the application. More information, including stories about recent winners, is available here. If you have questions, please e-mail nova@aha.org.

Transition

Point32Health, which consists of Harvard Pilgrim Health Care and Tufts Health Plan, announced on Friday that its CEO since July 2021, Cain Hayes, is leaving his post, effective immediately. Point32’s current Board Chair Eileen Auen will serve as interim executive chair until a replacement is chosen to lead the insurance company.

John LoDico, Editor