Employers can look at pushing their health plans to engage in contract arrangements with hospitals that better align prices with care rendered, according to a new study.
Thursday, May 9, 2019

Wait, Private Health Plans Paid Hospitals What?

A new RAND study found that private insurers paid hospitals 241% of what Medicare would have in 2017. Had hospital prices been reduced to Medicare rates, employers would have recouped $7.7 billion in savings between 2015 to 2017. Researchers told me that this data provides employers with the opportunity to push their health plans to engage in contract arrangements with hospitals that better align prices with care rendered. 

Important reminder: Our 2019 CFO Exchange held at the American Club in Kohler, Wisconsin from August 7 - 9, is on the horizon! 

If you're the CFO of a health system and interested in attending, follow the link here for an invitation. 
 
lead story
Private Insurers Paid Hospitals 241% of What Medicare Would Have
Employers can look at pushing their health plans to engage in contract arrangements with hospitals that better align prices with care rendered, according to a new study.
 
 
analysis
Aetna to Pay HCA Hospitals $86M Following Arbitrator Ruling
  • According to an SEC filing, the CVS Health subsidiary surrendered much less than the $150 million HCA had originally sought.
     
  • HCA claimed Aetna paid too little to its members as well as providers for services rendered while also failing to "timely or appropriately" administer claims or benefits.
     
  • While the trial arbitrator awarded the HCA hospitals the requested $150 million in October 2018, Aetna appealed the decision and the appellate arbitrator reduced the award to $86 million in late March.
analysis
Judge Rules 340B Cuts Unlawful, Decision Applauded by Industry Stakeholders
  • In a joint statement, three hospital plaintiffs urged HHS to follow the judge's directive.
     
  • 340B Health added their approval in a statement, asking the agency to "act quickly."
     
  • A status report regarding HHS' progress remedying the situation must be submitted to U.S. District Court Judge Rudolph Contreras by August 5.
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analysis
Partners Posts $623M Gain in Q2
  • One quarter after recording a $463 million loss, the Boston-based health system rebounded mightily.
     
  • The system notched $131 million in operating income, nearly doubling its operating income from Q2 2018, led by $136 million in provider activity.
     
  • Partners CFO Peter K. Markell said: "Additionally this quarter, favorable market conditions enabled us to recover the non-operating losses we experienced during the first quarter."
analysis
Employers Leaning Toward High-Performance Networks, ACOs to Improve Care Access
  • By 2020, almost 40% of employers are looking at opening a health center at their offices, while more than 25% plan to offer one near their facilities.
     
  • The survey indicates that employers are increasingly more concerned with quality of care provided than cost savings as the "most important feature" when considering an HPN.
     
  • Sandy Ageloff, a Willis Tower Watson managing director, said employers are also embracing local healthcare delivery systems to provide solutions.
analysis
HHS Unveils Final Rule on Drug Cost Disclosures in TV Ads
  • The rule will only apply to TV ads because that's where drug makers concentrate their advertising spend.
     
  • According to HHS, the 10 most commonly advertised drugs have list prices ranging from $488 to $16,938 per month or usual course of therapy.
     
  • HHS received 147 comments about the proposed rule, but no big changes were made to the final rule.
analysis
Net Income Falls $30M for DaVita During Difficult Q1
  • DaVita Inc. produced a net income of $149 million in Q1 2019, down $30 million year-over-year.
     
  • The company did produce total revenues of $2.7 billion during the quarter, though those were also down just over $100 million compared to Q1 2018.
     
  • The dialysis provider also saw its cash flows reduced across the board, with a negative free cash flow from continuing operations of $52 million.
 
 

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Final Notes

If you have any tips, story ideas, thoughts, calendar items, press releases, criticisms, corrections, or general advice, send them my way at jobrien@healthleadersmedia.com.

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I will see all of you on May 16, enjoy Mother's Day!

That's all, folks.

Jack O'Brien
Finance Editor