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The funny business of reporting charity care
The concept of charity care is simple: It’s the free and discounted care that hospitals provide to low-income people. You’d think reporting charity care would be a straightforward endeavor, but oh, dear reader, it’s far from it.
Take HCA Healthcare, the country’s biggest hospital chain. HCA told the federal government it doled out almost $1 billion more in charity care to needy patients than it reported on its financial statement in 2022, helping the enormously profitable company extract billions of dollars from taxpayer-funded programs, my colleague Tara Bannow reports in a new story out this morning.
It’s normal for hospital systems to report more charity care in their annual filings with the government than on their financial statements. That’s because the government lets them classify more types of transactions as charitable. But HCA puts that on hyperdrive, Tara writes — packing its charity care bucket with several categories of financial assistance, including discounts provided to patients who weren’t eligible for charity care. This appears to be allowed under Medicare’s rules, but some argue it’s not true charity care.
“I wouldn’t say the numbers are fraudulent, but are they suspicious? Yes,” Gerard Anderson, a health policy professor at Johns Hopkins University, told Tara.
Read more from Tara, who explains how these charity care reporting discrepancies appear within the other large publicly traded hospital chains and why these charity care numbers are so important to begin with (hint: they influence how federal and state governments funnel billions in extra add-on payments).
A forthcoming glimpse of the Change hack costs?
UnitedHealth Group will report its first-quarter earnings next week, on April 16, and it’s likely we’ll get the first public estimate for how much the Change Healthcare cyberattack cost.
Wall Street is at least expecting sizable one-time costs, which would cover the cybersecurity consultants and labor to get Change’s claims processing systems back online. UnitedHealth “threw the kitchen sink at this problem,” John Ransom, a health care equity analyst at Raymond James, wrote to investors last week. “These costs will not be small, but we have no basis to size the charge.”
Rain on the parade
We now have a clearer idea of how Medicare Advantage plans will operate next year, and the industry is not particularly happy about it.
Even though health insurance companies demanded, and expected, the Biden administration would raise final payment rates for 2025, that didn’t come to pass. Companies were livid. Wall Street sold off their stocks. Last week was a relative bloodbath for an industry that has built immense wealth from this taxpayer-funded program.
Medicare’s actuaries said health care spending in traditional Medicare did not increase that much beyond pre-pandemic estimates, and that Medicare Advantage plans are reaping what they sowed when they attracted more high-cost people who are dually eligible for both Medicare and Medicaid. Read the story on the final payment regulations.
The Biden administration also finalized a rule last week capping the commissions that brokers receive for enrolling older adults into a Medicare Advantage plan. But the administration sympathized with brokers who said the government’s proposal was way too punitive. “We may not have adequately accounted for the array of services that agents and brokers may provide when we calculated our proposed payment increase,” Medicare officials said in the rule. “It was not our intention to make the MA compensation rate so low that agents and brokers would be driven out of the industry or would be unable to enter it in the first place.”
Starting next year, brokers and agents who sign up a new Medicare Advantage enrollee will get an extra $100 (putting their total compensation above $700 per person enrolled) instead of the proposed $31.
Time to go into nursing?
Over the past year, health care added more jobs than any other industry, and its ranks grew at more than twice the rate of the overall U.S. economy, Tara reports from new Bureau of Labor Statistics data released on Friday.
As of last month, health care added 748,300 jobs over the trailing 12 months, a 4.5% increase compared with less than 2% economy-wide. Home health and hospitals have benefited the most, dentists the least.
But those numbers gloss over how hospitals, nursing homes, and other providers can’t find enough people to meet the surging demand for services. Sometimes that means they can’t operate at full capacity. For every hire health care employers made in January, they still had 2.6 openings left to fill.
Stephen McCall, a senior analyst with the research group Altarum, told Tara that health care is recovering from two distinct setbacks: the recession prompted by Covid-19, and the exodus of burned out nurses and other clinicians. “This is kind of a special moment for health sector employment growth because providers are both striving to meet that new demand and making up for the ground that they lost during those economic conditions,” McCall told Tara.
Hoosiers doin’ merger review things
Last month, Indiana enacted a new law that will require a lot more oversight of health care deals — and it officially goes into effect July 1.
Any deal involving a health care company that has at least $10 million of assets has to go through a review from Indiana’s office of the attorney general. Hospitals, insurers, pharmacy benefit managers, and other companies are subject to this new law — as well as private equity firms, “regardless of where the private equity partnership is located,” the law says.
States like Oregon have made it a goal to bring more transparency to health care mergers, and this Indiana policy takes that goal even further by explicitly including private equity deals.
The Meme Ward
Chris Hamby of the New York Times has a great new piece investigating MultiPlan, and the health insurers that use it. Make sure to read it, and if you want more context, read our coverage of a big court battle MultiPlan is currently facing against hospitals.