Massachusetts Health & Hospital Association Shared Responsibility for the Uninsured
INSIDE THE ISSUE
> Insurers and the Uninsured
> Capacity Crisis Cost
> Prior Auths Criticized
> Heywood Healthcare
MONDAY REPORT
MHA Issues Call for Shared Responsibility in Caring for Uninsured
As the House and Senate gear up for conference committee negotiations on the state’s 2025 fiscal year budget, MHA says one issue that will not be part of those negotiations this year must be addressed in the near future to avoid destabilizing the Massachusetts healthcare system.
The Health Safety Net – funded by hospitals and health insurance companies equally at $165 million per year – is expected to run a $220 million deficit in 2025. The safety net is used to pay for care to patients who have low incomes and are uninsured. That massive 2025 shortfall, along with the recently re-calculated FY23 and FY24 shortfalls of $380 million, means the Health Safety Net will experience a $600 million funding gap over three consecutive fiscal years.
While health insurance companies make a $165 million annual contribution to the safety net, they bear no responsibility at all for any shortfall. Hospitals are solely on the hook for covering any deficits in the fund. That responsibility translates to great financial losses for providers and further challenges their ability to maintain care services.
In the recently concluded State Senate budget, MHA had proposed an amendment to force health insurance companies to share equally in covering any shortfalls that occur when the cost of caring for low-income, uninsured patients exceeds the money in the safety net. That amendment, one of 1,100 the Senate debated over three days, failed to pass, with the insurance industry terming it “counterproductive.”
“Ultimately, this is about maintaining high-quality healthcare for everyone who needs it,” said MHA Senior Vice President, Government Advocacy & General Counsel Mike Sroczynski. “Although we ended up facing some pushback on this, it is an urgent issue that we cannot wait much longer to address. MHA and the hospital community stand by the goal of bringing together providers, insurers, and the state to fulfill our shared responsibility of caring for all patients – regardless of their financial standing or whether they have insurance coverage.”
Sroczynski said MHA’s recent proposed amendment to the senate budget served to amplify the mounting funding problem with the safety net, and he appreciated key senators’ acknowledgement of the issue.
“The patients that are served by the health safety net are some of the state’s sickest and poorest, who receive care in historically under-reimbursed communities,” Sroczynski continued. “Collaboration among all stakeholders to fulfill this commitment is both the right and equitable thing to do.” By MHA’s estimates, the shortfalls will reach levels unseen in more than two decades, when uninsured costs peaked and spurred the state to enact the historic universal coverage law.
A Price Tag on the Stuck Patient Crisis: $400 Million Annually
As the healthcare sector, assisted by the state, continues to address the capacity crisis, one of the factors driving the improvement effort involves the enormous costs associated with delays in transferring patients from one care setting to another.
As has been well documented through MHA as well as state data, on any given day in Massachusetts 1,000 or more people are unable to transition to the next level of care, leaving them stuck in hospital beds when they no longer need to be there. More than a third of these stuck patients have been waiting in hospital beds for a month or more.
In addition, an average of 568 additional patients are “boarding” around the clock in emergency departments or hospital units as they await a specialized behavioral health bed.
The effect on patients and their families is profound. And according to new MHA findings, Massachusetts hospitals are devoting more than $400 million in services annually to care for patients who are occupying beds while awaiting placement at the next level of care. The hospitals receive little to no additional insurance payment for accommodating these patients, leading to enormous financial losses. Of even greater concern, this figure does not include the lost revenue that accumulates when hospitals cannot accept new patients for the occupied beds.
This trend adds yet another layer to the precarious state of hospital finances in Massachusetts. According to the Center for Health Information & Analysis, as of December 2023, 37% of hospitals reported negative operating margins, meaning they were spending more than they took in for daily operations. Seventy-five percent of “hospital health systems,” which include affiliated physician groups, experienced negative operating margins during this same time period.
MHA details the reasons behind, and the solutions for, the capacity crisis, as well as other factors contributing to the current precarious state of the Massachusetts care delivery system in its May report – Causes & Consequences: Inside the Healthcare Crisis.
MHA to CMS: Get Tougher With Medicare Advantage Plans
In response to a request from the Centers for Medicare and Medicaid Services (CMS) on Medicare Advantage (MA) plan data, MHA crafted a five-page letter succinctly detailing the ongoing issues providers encounter with the seemingly arbitrary prior authorization denials that would generally not have happened with traditional Medicare.
CMS has been tightening up its oversight of the MA plans, requesting more data from them and speeding up the prior authorization process – but the changes don’t go far enough, MHA wrote in its May 29 letter.
For instance, beginning in 2026, CMS will begin collecting aggregate data on prior authorization decisions. But unless CMS gets more granular, collecting data on what specific treatments and medications require prior auth, how long the authorization decisions take, and what the acceptance and denial rates are, for example, the data will not be useful for patients, providers, or policy makers, MHA wrote.
MHA was also critical of CMS’s new prior auth timelines, which beginning in 2026, require a decision within seven days for a standard request and 72 hours for an expedited request.
“Seven calendar days is a long time to wait for a determination on a medically necessary service or medication, particularly when the MA insurer has all the data it needs to make a decision and many plans are moving towards electronic prior authorization or will be required to by 2027,” MHA wrote. “Massachusetts state law requires a response to a prior authorization request within two business days of receiving all necessary information; if the determination is not made within that time frame, the request is deemed approved.”
The 72-hour timeframe for an expedited request is especially detrimental when a provider is awaiting a decision to transfer a patient from an acute care bed to a post-acute facility – a major cause of the capacity problems afflicting the nation’s healthcare system. MHA also noted that many insurer denials relating to transitions of the care are formulaic in nature, merely stating “you do not meet Medicare guidelines for inpatient rehabilitation,” leading providers to wonder if the review was AI generated. Although CMS rules state that the service must be covered if it would have been covered under traditional Medicare, MA plans often are not following that requirement.
“Another significant gap in the CMS rule is that while it requires a plan to conduct reviews using a clinician who practices in the relevant specialty, it does not require plans to identify the reviewer by name or to share their credentials,” MHA wrote. “… If MA plans are truly reviewing the details of each and every case and making determinations in good faith, there is no reason why the reviewer’s name and credentials should not be shared with the patient and provider making the request. Anonymous decision-making must be prohibited.” The American Hospital Association drafted this 42-page letter in response to CMS’s request for information on Medicare Advantage plans. And last week, the New York Times wrote about national concerns with Medicare Advantage plans in an article entitled “When Prior Authorization Becomes a Medical Roadblock” (subscription may be required).
Heywood Healthcare Emerging from Chapter 11
In a period of tough finances for providers, some good news emerged last week from Heywood Healthcare, which announced it was emerging from the Chapter 11 protections it had filed last October.
The system operates the 134-bed Heywood Hospital in Gardner, the 25-bed Athol Hospital in Athol, and the Heywood Medical Group physician practice.
“In the nearly eight months since the filing, the system has optimized multiple service lines, re-opened its inpatient mental health unit, and experienced growth in inpatient, surgical, and ambulatory volume, including a 16% increase in labor and delivery,” Heywood wrote. “Equally critical to its success, the system retained and expanded the medical staff.”
President and CEO Rozanna Penney, a member of MHA’s Board of Trustees, said, “Heywood Healthcare’s progress is attributed to its dedicated medical staff and employees, along with strong financial and operational prudence. We will proceed thoughtfully and planfully, maintain focus on patient care, and continue to forecast potential risks.”