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> IV Shortages
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> AHA-FBI Violence Initiative
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MONDAY REPORT

More Insurer Shenanigans: Algorithms to Deny Care, Bogus Billing

Two blockbuster reports last week continued to call into question the actions of a fundamental part of the nation’s healthcare system – large, national, commercial health insurance companies.

A report from the Office of Inspector General for U.S. Health & Human Services found that health insurance companies extracted $7.5 billion from Medicare last year in excess payments. Because Medicare pays Medicare Advantage (MA) insurers more for patients that are expected to incur higher health costs, there are “financial incentives for MA companies to misrepresent enrollees’ health statuses by submitting unsupported diagnoses to CMS for additional conditions that inappropriately inflate their risk-adjusted payments.”

That’s just what OIG says some large national insurers did; they allegedly added diagnoses to patients’ health risk assessments (HRAs) that did not show up on any other part of the patient’s medical record. The practices of 20 insurers accounted for 80% ($6 billion) of the $7.5 billion extracted from Medicare. UnitedHealth Group “stood out from its peers” according to the OIG report, accounting for $3.72 billion of the total, followed by Humana ($1.7 billion), The Cigna Group ($236 million), and Scan Group ($128 million).

In another blow to the national health insurance industry, the investigative news group ProPublica reported on how health insurance companies often outsource medical reviews to third-party arbiters who profit by turning down providers’ request for prior authorizations.

ProPublica focused on EviCore, owned by the large insurer Cigna, that uses an algorithm known as “the dial” to increase prior auth denials. EviCore’s algorithm allows it to adjust the chances that company doctors will screen prior authorization requests, increasing the possibility of denials. ProPublica found that some EviCore contracts are based on how deeply the company can reduce spending on medical procedures. It tells insurers that it can provide a 3-to-1 return on investment, meaning for every $1 spent on EviCore, the insurer would pay out $3 less on medical care and other costs.

When insurance companies reject a physician’s recommended care for a patient, not only does the insurer save money but the patient is endangered and care teams are sent scrambling for solutions.

IV Concerns in Massachusetts Continue

In a conference call MHA hosted last Friday morning, more than 50 hospital clinical, operational, and preparedness leaders reported that they are not receiving the IV solution allocations that the nation’s main manufacturer of the product, Baxter International, promised to them in recent weeks, leading to further disruption in their operations and planning.

Baxter’s plant in North Carolina, and access to it, were damaged by Hurricane Helene in late September. That plant produces 60% of the nation’s IV supply. Since then, Baxter has worked to get the plant up and running and had announced an allocation schedule to providers based on past usage. The federal government also announced stepped-up importation of IV products.

Last Friday, MHA members shared their conservation strategies and expressed frustration that the rosy picture Baxter had been sharing about getting back to normal has not matched the company’s ability to supply hospitals with actual IV solutions. At the same time, efforts to obtain relief supplies from other manufacturers have largely been futile. Last week Baxter announced heightened output at the North Carolina plant but said the results of those improvements would not be felt until “mid-to-late November.”

“As our state and federal partners continue their response to this situation, it is essential that they are armed with the facts from the ground,” said MHA Executive Vice President and General Counsel Michael Sroczynski. “Given the resounding feedback from Massachusetts hospitals, it is clear that despite some positivity we are hearing around Baxter’s operations, we cannot take our foot off the gas in sourcing new IV product and making sure providers have the basic resources they need to care for patients.”

On Monday, October 28 at 1 p.m., U.S. Health and Human Services is hosting a briefing on IV solution conservation strategies. Register for the briefing here.

ARPA-H Recognizes Massachusetts Advances in Women’s Healthcare

ARPA-H, the entity within U.S. Health & Human Services that brings together different parts of the economy to advance healthcare outcomes, has announced grant funding for a number of Massachusetts interests.

ARPA-H’s goal is to create “moonshot” solutions to address diseases such as Alzheimer’s and cancer. One such initiative is the “Sprint for Women’s Health” that champions “transformative innovations” to address “unmet challenges in women’s health across all demographics, geographies, and socioeconomic statuses.”

Last week, ARPA-H announced $110 million in “Sprint for Women’s Health” grants to 23 recipients. In Massachusetts, the recipients are:

• Beth Israel Deaconess Medical Center, which aims to develop a non-invasive imaging biomarker to evaluate brain disorders in women.
• Massachusetts General Hospital, which is working on a non-invasive wearable headband for at-home use to detect precursors of Alzheimer’s disease.
• The Charles Stark Draper Laboratory, in Cambridge that aims to build a model to assess medication safety in pregnancy without putting women or babies at risk.
• Tufts University, which is developing non-invasive wearable sensors to measure biomarkers in interstitial fluid related to pain.
• Wyss Institute in Cambridge, which is developing an implantable lymphoid organ as a cancer therapy to treat late-stage and metastasized ovarian cancer.

Massachusetts is the site of the ARPA-H Investor Catalyst Hub, which unites federal funding, private investment, and medical knowledge in innovative, fast-tracked ways to address healthcare challenges.

Valerie Fleishman, MHA’s executive vice president and chief innovation officer, was part of a core team that coalesced in the commonwealth shortly after President Biden announced the ARPA-H initiative in 2022. That Bay State group, led by the Healey-Driscoll Administration, was successful in crafting the winning proposal to get the Investor Catalyst Hub located in Massachusetts.

“These ARPA-H awards are a powerful testament to the groundbreaking innovations to advance women’s health that Massachusetts hospitals and health systems, as well as the life sciences sector built around them, are making possible,” Fleishman said. “This is exactly the sort of world-renowned innovation we all must be working to protect – and grow – through increasingly challenging times for the local healthcare sector.”

AHA and FBI Team Up on Healthcare Violence

The American Hospital Association (AHA) has joined with the FBI to address the growing incidences of targeted violence in healthcare sentence.

Such targeted violence, as noted in this AHA issues brief, refers to “intentional and harmful acts where healthcare professionals, patients and healthcare facilities are specifically singled out as targets. Such acts of violence can take many forms, including physical assaults, verbal threats, harassment, and even large-scale attacks. Targeted violence compromises access and delivery of care, creates hostile work environments, and impacts the overall safety and quality of healthcare delivery.”

Through its work with the FBI’s Behavioral Analysis Unit, the AHA will offer a suite of resources for hospitals and health systems to implement threat assessment and threat management principles or enhance their existing efforts. The AHA has also created this dedicated webpage to the issue.

Studies have shown that before targeted attacks, according to the AHA, “someone observed concerning behaviors that were signs that the person was on a pathway to violence.”

Across Massachusetts hospitals, a worker is subject to an act of violence or a threat every 36 minutes. MHA and its members have mounted numerous efforts over the years to address the growing issue and spread awareness about its urgency, including through the association’s Board of Trustees and Healthcare Safety and Violence Prevention group. Local healthcare providers have signed onto a united code of conduct for patients and visitors, produced extensive violence prevention guidance that all facilities can implement, and are meeting frequently to share their best practices.

MHA’s priority legislation focusing on curbing workplace violence and supporting caregivers who are victims of violent acts advanced during the past year but the House and Senate have not yet reached consensus on competing bills.

CMS Creates New Appeals Process for Observation Status

A patient seeking treatment in a hospital whose status is changed from “inpatient” to “observation” status now has a well-defined process to appeal that decision, according to a final rule released this month from the Centers for Medicare and Medicaid Services (CMS).

CMS’ rule is in response to Alexander v. Azar, a class-action suit brought by patients seeking a process to appeal their placement as outpatients receiving observation services. A court rejected that argument but said that U.S. Health and Human Services would have to create additional appeals processes for a specified class of people with Medicare who were initially admitted as hospital inpatients but were subsequently reclassified by the hospital as outpatients receiving observation services.

Beneficiaries included in the class are those who either had, or will have, Part A benefits denied for hospital inpatient services and Skilled Nursing Facility (SNF) care as a result of the hospital’s reclassification.

CMS’s new rule is retrospective, meaning that patients whose status was reclassified to observation going back to January 1, 2009, are eligible for appeal.

Inpatient versus observation status is important because it determines how much a patient will pay for his or her care. For instance, traditional Medicare only pays for care in a SNF if it’s preceded by at least a three-day inpatient hospital stay. If a patient is in the hospital under observation status rather than inpatient status, it doesn’t count towards their three days. In that case, once they are released, a patient won’t be able to get Medicare coverage for a stay in a skilled nursing facility and will have to pay out of pocket.

The new CMS final rule on appeals applies to traditional Medicare, and not Medicare Advantage.

John LoDico, Editor