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Clinical Laboratories and Pathology Groups

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Some Hospitals Under Financial Stress Ask Patients for Payment of Certain Procedures in Advance of Care

Request for money upfront comes at a time when many patients already struggle with medical debt  

In its reporting of healthcare trends gathering momentum, a national newspaper caused quite a stir this spring when it published a story documenting how some hospitals now require patients to pay in advance of specified surgeries and procedures. Hospitals are recognizing what clinical laboratories have long known—a larger proportion of Americans do not have the cash to pay a medical bill.

“It costs [hospitals] time and money to collect after the fact. So, if they can get it upfront, they will” said Wall Street Journal (WSJ) reporter Melanie Evans, during a podcast about her article, “Hospitals Are Refusing to Do Surgeries Unless You Pay in Full First.”

Hospitals and surgery centers are requesting advanced payment for elective procedures such as knee replacements, CT scans, and childbirth procedures, according to an Advisory Board daily briefing.

“In some cases, they may also have a contract with an insurance company. And in that contract are terms that stipulate hospitals need to collect deductibles or co-insurance before a procedure,” Evans added.

According to Bankrate’s 2024 Annual Emergency Savings Report, nearly half of all American’s would be unable to pay cash for an unplanned $1,000 bill. Therefore, one wonders why hospitals would attempt to extract payments from patients in advance of medical visits and clinical laboratory testing. Wouldn’t that just reduce the number of patients electing to undergo needed surgeries and other costly procedures? Nevertheless, it appears that many hospitals struggling financially are doing just that, according to The Wall Street Journal.

Genetic testing laboratories have a similar problem because of high-deductible health plans ($5K/year for individual, $12K/year for family). It means that many patients, even with insurance, struggle to pay a $1,000 to $5,000 bill for a genetic test.

Requesting payment from patients before healthcare visits is not new. However, the practice is on the rise and comes at a time when consumers are already struggling to make ends meet.

“Hospitals collected (in Q1 2024) about 23% of what patients owed them before they set foot in a hospital or doctor’s office. That’s up from about 20% in the same period a year earlier,” said reporter Melanie Evans (above) of The Wall Street Journal, referring to data from 1,850 hospitals analyzed by Kodiak Solutions. Genetic testing laboratories experience similar challenges getting paid due to many people struggling with high deductible health plans. (Photo copyright: LinkedIn.)

Price Transparency Behind Upfront Payments

According to a recent KFF survey of US families, “about half of adults would be unable to pay an unexpected medical bill of $500 in full without going into debt.”

Regardless, asking for payment for nonemergency care has become more common as people increasingly choose health plans with high-deductibles and amid the push for greater price transparency, according to Richard Gundling, Senior Vice President, Content and Professional Practice Guidance at Healthcare Financial Management Association (HFMA), in an interview with Advisory Board.

“It’s very common if not the norm” for hospitals to give patients a cost estimate and ask for advance payment, Gundling stated during the interview.

In fact, healthcare providers and insurers are required to shared charges and estimates as part of newly implemented federal rules. According to the American Hospital Association (AHA) those statutes and rules include:

  • The Hospital Price Transparency Final Rule (effective January 2021) which requires hospitals to publicly post “standard charges” via machine readable files.
  • The No Surprises Act which mandates the sharing of “good faith estimates” with uninsured/self-pay patients for most scheduled services and also requires insurers to provide explanation of benefits to enrollees.

According to Consumer Reports, hospitals are finding consumers less reliable payers than insurance companies. “No one would say, ‘Pay up or we won’t treat you.’ But we’re saying that, ‘You have a large out-of-pocket cost, and we want to know how are you going to pay for it,’” explained Jonathan Wiik, Vice President of Health Insights at FinThrive, a revenue cycle management company.

Razor Thin Hospital Margins

For their part, hospitals, health systems, and medical practices wrote off $17.4 billion in bad debt in 2023, Kodiak Solutions, an Indianapolis-based healthcare consulting and software company, reported in a news release.

Providers collected less than half—47.6%—of what patients owned them for care in 2022 and 2023, down from 54.8% in 2021, according to Kodiak’s report, “Drawing the Line on Patient Responsibility Collection Rates.”

“With the amounts that health plans require patients to pay continuing to grow, provider organizations need a strategy to avoid intensifying pressure on their already thin margins,” said Colleen Hall, Senior Vice President, Revenue Cycle, Kodiak, in the news release.

“Patient collections have become an increasingly difficult challenge for hospitals due primarily to a shift in payer mix. Because of rising deductibles and increased patient responsibility, the percentage of healthcare provider revenue collected directly from patients increased to more than 30% from less than 10% over 10 years,” the HFMA noted.

Thus, the financial tension being experienced by both patients and providers, and the need for patients to prepay for some treatment, are extreme challenges. The situation may call for clinical laboratory leaders to not only focus on quality testing and efficient workflow, but also affordability and access to services.

—Donna Marie Pocius

Related Information:

Why Hospitals Now Require Patients to Prepay for Treatment

Hospitals are Refusing to Do Surgeries Unless You Pay in Full First

Some Hospitals Are Billing Patients in Advance. Here’s Why.

More Hospitals Want Patients to Pay in Advance. Is That Radical Transparency or Unfair to Patients?

Americans’ Challenges with Health Care Costs

Fact Sheet: Hospital Price Transparency

Should You Ever Prepay a Hospital Bill?

Insured Patients Account for More than Half of Bad Debts Written Off by Provider Organizations in 2023, According to Kodiak Solutions Analysis

Drawing the Line on Patient Responsibility Collection Rates

Patients as Payers: Five Ways to Improve the Patient Experience

Healthcare Debt in the U.S.: The Broad Consequences of Medical and Dental Bills  

Patient Rights Group Says Too Many Hospitals Are Not Complying with CMS Price Transparency Rules

Only about a third of the hospitals surveyed are in full compliance with giving public access to prices, the watchdog group contends, but the AHA disputes its methodology

It’s been almost four years since the Centers for Medicare and Medicaid Services (CMS) enacted its Hospital Price Transparency rule which requires hospitals—including their medical laboratories—to make their prices available and easily accessible to the public. But according to a 2024 report from PatientRightsAdvocate.org (PRA), just 34.5% of reviewed hospitals are fully compliant with the transparency rule. That’s a slight decrease from the 36% compliance rate the PRA listed in its 2023 report, the watchdog group stated in a blog post.

Released on Feb. 29, this was the group’s sixth semi-annual hospital price transparency report since the CMS rule took effect in 2021.

The rule “requires hospitals to post all prices online, easily accessible and searchable, in the form of (i) a single machine-readable standard charges file for all items, services, and drugs by all payers and all plans, the de-identified minimum and maximum negotiated rates, and all discounted cash prices, as well as (ii) prices for the 300 most common shoppable services either as a consumer-friendly standard charges display listing actual prices or, alternatively, as a price estimator tool,” the report states.

The required viewable prices are to be for, among others, medical imaging, clinical laboratory testing, and outpatient procedures such as a colonoscopies, etc.

“With full transparency, consumers can benefit from competition to make informed decisions, protect from overcharges, billing errors, and fraud, and lower their costs,” the report states. “Employer and union plans can use pricing and claims data to improve their plan designs and direct members to lower cost, high-quality facilities. However, continued noncompliance impedes this ability.”

At any time, the US Department of Justice (DOJ) could decide to file charges against a hospital or a clinical laboratory for not posting their prices on their websites in compliance with the federal rule. Such an action by DOJ officials would be to specifically put the entire industry on notice that there will be consequences for non-compliance.

The PRA’s report provides hospitals and clinical laboratories with a reminder that consumer watchdogs are also monitoring compliance.

“Our comprehensive study of 2,000 hospitals indicates nearly two-thirds (65.5%) of hospitals reviewed continue failing to fully comply with the rule, yet the Centers for Medicare and Medicaid Services (CMS) has only fined fourteen hospitals for noncompliance out of the thousands found to not be meeting all of the rule’s requirements. When hospitals don’t post their prices, they can charge whatever they want,” wrote PRA Founder and Chairman Cynthia Fisher (above) in a letter to President Biden. Hospital medical laboratories are also required to post their prices for tests. (Photo copyright: PatientRightsAdvocate.org.)

Increasing Penalties for Non-compliance

In a March 18 Health Affairs blog post on price transparency, two healthcare policy experts—David Muhlestein, PhD, JD, Chief Research Officer at Leavitt Partners, Washington, DC, and Adjunct Assistant Professor of The Dartmouth Institute (TDI) at the Geisel School of Medicine at Dartmouth College; and Yuvraj Pathak, PhD, Associate Director at West Health—argued that CMS should increase penalties for non-compliance, so the dollar amounts are greater than the cost of compliance.

To compile their report, PRA analysts examined the websites of 2,000 US hospitals between September 3, 2023, and January 13, 2023, and found that 1,311, or 65.5%, were not in full compliance, mostly due to “missing or significantly incomplete pricing data,” the report states.

More than 6,000 licensed hospitals operate in the US, the report notes. The group said it focused on hospitals owned by the largest US health systems.

Among the notable findings:

  • The 2023 report found that 98% of Kaiser Permanente’s 42 hospitals were in full compliance with the rule, but in the 2024 study, none were compliant because the hospitals began posting multiple files instead of a single file.
  • In total, 103 hospitals rated as noncompliant in the previous report were found to be compliant in the new analysis. Conversely, 135 hospitals previously rated as compliant were listed as noncompliant in the 2024 report.

The report lauded three hospitals for posting “exemplary files” that were “easily accessible, downloadable, machine-readable, and including all negotiated rates by payer and plan.” Those were Cape Cod Hospital in Hyannis, Mass.; Christus Santa Rosa Medical Center in San Antonio; and UW Health University Hospital in Madison, Wis.

In its discussion of the findings, PRA called on CMS to step up enforcement of the pricing transparency rule. The group also wants the government to close what it describes as the “estimator tool loophole,” which allows hospitals to list non-binding price estimates and price ranges instead of concrete prices.

“Price estimator tools do not achieve the goals of price transparency policy and fundamentally undermine the intent of the regulations,” the PRA’s report contends.

AHA Pushes Back on PRA Assessment

The American Hospital Association (AHA) took issue with PRA’s methodology, as Dark Daily reported in “CMS Proposes New Amendments to Federal Hospital Price Transparency Rule That May Affect Clinical Laboratories and Pathology Groups.”

In response to the 2023 PRA report, AHA Group Vice President for Public Policy Molly Smith issued the following statement, “Once again, Patient Rights Advocate has put out a report that blatantly misconstrues, ignores, and mischaracterizes hospitals’ compliance with federal price transparency regulations. The AHA has repeatedly debunked point-by-point Patient Rights Advocate’s intentionally misleading ‘reports’ on price transparency.”

Citing CMS data, Smith said that as of 2022, 70% of US hospitals had complied with two key federal rules:

  • One requiring hospitals to post machine-readable files with pricing information.
  • The other mandating a list of prices for at least 300 “shoppable” services.

More than 80% of hospitals had complied with at least one of the rules, she contended in an AHA press release.

Speaking to the New Orleans Times-Picayune, PRA Founder and Chairman Cynthia Fisher said her group performs a more in-depth study of pricing data compared with CMS.

“They did not do a comprehensive review,” she told the publication. “We do a deep dive for full compliance.”

The PRA study came on the heels of a January report from Turquoise Health that offered a rosier assessment of hospital compliance, albeit with different criteria. According to the Turquoise report, as of Dec. 15, 2023:

  • 90.7% of 6,357 US hospitals had posted machine-readable files,
  • 83.1% posted information about negotiated rates, and
  • 77.3% posted cash rates.

The Turquoise Health end-to-end price transparency platform uses a 5-point system to rate the quality of hospitals’ machine-readable files and said that more than 50% scored five stars. Clinical laboratory managers and pathologists may find it timely to review their lab organization’s compliance with this federal price transparency rule.

—Stephen Beale

Related Information:

Just 34.5% of Reviewed Hospitals Fully Compliant with Federally-Mandated Price Transparency Rule

Sixth Semi-Annual Hospital Price Transparency Compliance Report

Improving Hospital Compliance with Price Transparency Rules

Only Half of LA Hospitals Publish Prices as Required by Law, Hindering Patient Choice

34.5% of Hospitals Complying with Price Transparency Rule, Report Says

Little Progress Made with Hospital Price Transparency Compliance

CMS Releases Tool to Validate Price Transparency File Compliance

Hospital Price Transparency Compliance Dips: Report

Hospitals Backslide on Price Transparency Test

Moving into 2024: State of Price Transparency

Hospitals Finally Reached Widespread Price Transparency Compliance in 2023

More Hospitals, Payers Compliant with Price Transparency Laws

Boston Children’s Hospital Hires a Prompt Engineer to Help the Healthcare Organization Deploy and Use Artificial Intelligence Applications

This may be a new ‘sign of the times’ as hospitals, clinical laboratories, and other healthcare providers working with AI find they also need to hire their own prompt engineers

Boston Children’s Hospital last year hired a “prompt engineer” to propel the hospital forward in using Artificial intelligence (AI) as part of its business model. But what is AI prompting? It’s a relatively new term and may not be familiar to clinical laboratory and pathology leaders.

AI “prompting,” according to Florida State University, “refers to the process of interacting with an AI system by providing specific instructions or queries to achieve a desired outcome.”

According to workable.com, prompt engineers specialize “in developing, refining, and optimizing AI-generated text prompts to ensure they are accurate, engaging, and relevant for various applications. They also collaborate with different teams to improve the prompt generation process and overall AI system performance.” 

Healthcare institutions are getting more serious about using AI to improve daily workflows and clinical care, including in the clinical laboratory and pathology departments. But adopting the new technology can be disruptive. To ensure the implementation goes smoothly, hospitals are now seeking prompt engineers to guide the organization’s strategy for using AI. 

When Boston Children’s Hospital leaders set out to find such a person, they looked for an individual who had “a clinical background [and] who knows how to use these tools. Someone who had experience coding for large language models and natural language processing, but who could also understand clinical language,” according to MedPage Today.

“We got many, many applications, some really impressive people, but we were looking for a specific set of skills and background,” John Brownstein, PhD, Chief Innovation Officer at Boston Children’s Hospital and Professor of Biomedical Informatics at Harvard Medical School, told MedPage Today.

“It was not easy to find [someone]—a bit of a unicorn-type candidate,” noted Brownstein, who is also a medical contributor to ABC News.

After a four-month search, the hospital hired Dinesh Rai, MD, emergency room physician and AI engineer, for the position. According to Brownstein, Rai had “actually practiced medicine, lived in a clinical environment,” and had “successfully launched many [AI] applications on top of large language models,” MedPage Today reported.

“Some of the nuances I bring to the table in terms of being a physician and having worked clinically and understanding really deeply the clinical workflows and how we can implement the [AI] technology—where its limits are, where it can excel, and the quickest way to get things [done],” Dinesh Rai, MD (above), told MedPage Today. “I’m happy to be able to help with all of that.” Hospital clinical laboratory and pathology managers may soon by engaging with prompt engineers to ensure the smooth use of AI in their departments. (Photo copyright: LinkedIn.)

Prompt Engineers are like F1 Drivers

“It’s kind of like driving a car, where basically anyone can drive an automatic car, and anyone can go onto ChatGPT, write some text, and get a pretty solid response,” said Rai, describing the act of AI prompting to MedPage today.

Then, there are “people who know how to drive manual, and there are people who will know different prompting techniques, like chain-of-thought or zero-shot prompting,” he added. “Then you have those F1 drivers who are very intimate with the mechanics of their car, and how to use it most optimally.”

The American Hospital Association (AHA) believes that AI “holds great promise in helping healthcare providers gain insights and improve health outcomes.” In an article titled, “How AI Is Improving Diagnostics, Decision-Making and Care,” the AHA noted that, “Although many questions remain regarding its safety, regulation, and impact, the use of AI in clinical care is no longer in its infancy and is expected to experience exponential growth in the coming years.

“AI is improving data processing, identifying patterns, and generating insights that otherwise might elude discovery from a physician’s manual effort. The next five years will be critical for hospitals and health systems to build the infrastructure needed to support AI technology, according to the recently released Futurescan 2023,” the AHA wrote.

The graphic above is taken from the American Hospital Association’s article about Futurescan’s 2023 survey results on AI in healthcare. “Healthcare executives from across the nation were asked how likely it is that by 2028 a federal regulatory body will determine that Al for clinical care delivery augmentation (e.g., assisted diagnosis and prescription, personalized medication and care) is safe for use by our hospital or health systems,” AHA stated. This would include the use of AI in clinical laboratories and pathology group practices. (Graphic copyright: American Hospital Association.)

The AHA listed the top three opportunities for AI in clinical care as:

  • Clinical Decision Tools: “AI algorithms analyze a vast amount of patient data to assist medical professionals in making more informed decisions about care.”
  • Diagnostic and Imaging: The use of AI “allows healthcare professionals to structure, index, and leverage diagnostic and imaging data for more accurate diagnoses.”
  • Patient Safety: The use of AI improves decision making and optimizes health outcomes by evaluating patient data. “Systems that incorporate AI can improve error detection, stratify patients, and manage drug delivery.”

The hiring of a prompt engineer by Boston Children’s Hospital is another example of how AI is gaining traction in clinical healthcare. According to the Futurescan 2023 survey, nearly half of hospital CEOs and strategy leaders believe that health systems will have the infrastructure in place by 2028 to successfully utilize AI in clinical decision making. 

“I’m lucky to [be] in an organization that has recognized the importance of AI as part of the future practice of medicine,” Rai told MedPage Today.

Pathologists and managers of clinical laboratories and genetic testing companies will want to track further advancements in artificial intelligence. At some point, the capabilities of future generations of AI solutions may encourage labs to hire their own prompt engineers.

—JP Schlingman

Related Information:

Why One Hospital Hired an AI Prompt Engineer

This Children’s Hospital is Integrating AI with Healthcare

How Five Healthcare Organizations Are Investing in AI for Patient Care

What is a Large Language Model (LLM)?

How AI is Improving Diagnostics, Decision-making and Care

Prompt Engineer Job Description

Chain-of-Thought Prompting

Zero-Shot Prompting

Futurescan 2023: Health Care Trends and Implications

Artificial Intelligence in the Operating Room: Dutch Scientists Develop AI Application That Informs Surgical Decision Making during Cancer Surgery

UK Study Claims AI Reading of CT Scans Almost Twice as Accurate at Grading Some Cancers as Clinical Laboratory Testing of Sarcoma Biopsies

Stanford Researchers Use Text and Images from Pathologists’ Twitter Accounts to Train New Pathology AI Model

Change Healthcare Cyberattack Disrupts Pharmacy Order Processing for Healthcare Providers Nationwide

Initially thought to be an attack by a nation-state, actual culprit turned out to be a known ransomware group and each day brings new revelations about the cyberattack

Fallout continues from cyberattack on Change Healthcare, the revenue cycle management (RCM) company that is a business unit of Optum, itself a division of UnitedHealth Group. Recent news accounts say providers are losing an estimated $100 million per day because they cannot submit claims to Change Healthcare nor receive reimbursement for these claims. 

The cyberattack took place on February 21. The following day, UnitedHealth Group filed a Material Cybersecurity Incidents report (form 8-K) with the US Securities and Exchange Commission (SEC) in which it stated it had “identified a suspected nation-state associated cybersecurity threat actor [that] had gained access to some of the Change Healthcare information technology systems.”

A few days later the real identity of the threat actor was revealed to be a ransomware group known as “BlackCat” or “ALPHV,” according to Reuters.

Change Healthcare of Nashville, Tenn., is “one of the largest commercial prescription processors in the US,” Healthcare Dive reported, adding that hospitals, pharmacies, and military facilities had difficulty transmitting prescriptions “as a result of the outage.”

 Change Healthcare handles about 15 billion payments each year.

According to a Change Healthcare statement, the company “became aware of the outside threat” and “took immediate action to disconnect Change Healthcare’s systems to prevent further impact.”

Change Healthcare has provided a website where parties that have been affected by the cyberattack can find assistance and updated information on Change’s response to the intrusion and theft of its data.

“The fallout is only starting to happen now. It will get worse for consumers,” Andrew Newman (above), founder and Chief Technology Officer, ReasonLabs, told FOX Business, adding, “We know that the likely destination for [the Change Healthcare] data is the Dark Web, where BlackCat will auction it all off to the highest bidder. From there, consumers could expect to suffer from things like identity theft, credit score downgrades, and more.” Clinical laboratories are also targets of cyberattacks due to the large amount of private patient data stored on their laboratory information systems. (Photo copyright: ReasonLabs.)

Millions of Records May be in Wrong Hands

Reuters reported that ALPHV/BlackCat admitted it “stole millions of sensitive records, including medical insurance and health data from the company.” 

The ransomware group has been focusing its attacks on healthcare with 70 incidents since December, according to federal agencies. 

“The healthcare sector has been the most commonly victimized. This is likely in response to the ALPHV BlackCat administrator’s post encouraging its affiliates to target hospitals after operational action against the group and its infrastructure in early December 2023,” noted a joint statement from the federal Cybersecurity and Infrastructure Security Agency (CISA), Federal Bureau of Investigation (FBI), and the Department of Health and Human Services (HHS).

AHA Urges Disrupted Hospitals to Disconnect from Optum

In an AHA Cybersecurity Advisory, the American Hospital Association recommended that affected providers “consider disconnection from Optum until it is independently deemed safe to reconnect to Optum.”

In a letter to HHS, AHA warned, “Change Healthcare’s downed systems will have an immediate adverse impact on hospital finances. … Their interrupted technology controls providers’ ability to process claims for payment, patient billing, and patient cost estimation services.”

“My understanding is Change/Optum touches almost every hospital in the US in one way or another,” John Riggi, AHA’s National Advisor for Cybersecurity and Risk, told Chief Healthcare Executive. “It has sector wide impact in potential risk. So, really, this is an attack on the entire sector.” Riggi spent nearly 30 years with the FBI.

Some physician practices may also have been impacted by the Change Healthcare cyberattack, according to the Medical Group Management Association (MGMA). In a letter to HHS, MGMA described negative changes in processes at doctors’ offices. They include delays in paper and electronic statements “for the duration of the outage.”

In addition, “prescriptions are being called into pharmacies instead of being electronically sent, so patients’ insurance information cannot be verified by pharmacies, and [the patients] are forced to self-pay or go without necessary medication.”

Here are “just a few of the consequences medical groups have felt” since the Change Healthcare cyberattack, according to the MGMA:

  • Substantial billing and cash flow disruptions, such as a lack of electronic claims processing. Both paper and electronic statements have been delayed. Some groups have been without any outgoing charges or incoming payments for the duration of the outage.
  • Limited or no electronic remittance advice from health plans. Groups are having to manually pull and post from payer portals.
  • Prior authorization submissions have been rejected or have not been transmittable at all. This further exacerbates what is routinely ranked the number one regulatory burden by medical groups and jeopardizes patient care.
  • Groups have been unable to perform eligibility checks for patients.
  • Many electronic prescriptions have not been transmitted, resulting in call-in prescriptions to pharmacies or paper prescriptions for patients. Subsequently, patients’ insurance information cannot be verified by pharmacies, and they are forced to self-pay or go without necessary medication.
  • Lack of connectivity to important data infrastructure needed for success in value-based care arrangements, and other health information technology disruptions.

Medical laboratory leaders and pathologists are advised to consult with their colleagues in IT and cybersecurity on how to best prevent ransomware attacks. Labs hold vast amount of private patient information. Recent incidents suggest more steps and strategies may be needed to protect laboratory information systems and patient data.

—Donna Marie Pocius

Related Information:

UnitedHealth Suspects “Nation-state” Behind Change Cyberattack

UnitedHealth Says ‘Blackcat’ Ransomware Group Behind Hack At Tech Unit

UnitedHealth Hackers Say They Stole ‘Millions’ of Records, then Delete Statement

US SEC Form 8-K

Change Healthcare Incident Status

Information on the Change Healthcare Cyber Response

UnitedHealth Confirms BlackCat Group Behind Recent Cybersecurity Attack

CISA Cybersecurity Advisory

Hackers Behind UnitedHealth Unit Cyberattack Reportedly Identified

Hospitals Affected by Cyberattack of UnitedHealth Subsidiary

UnitedHealth Group’s Change Healthcare Experiencing Cyberattack Could Impact Healthcare Providers

AHA Letter to HHS: Implications Change Healthcare Cyberattack

MGMA Letter to HHS

The Change Healthcare Cyberattack Is Still Impacting Pharmacies. It’s a Bigger Deal Than You Think

New Federal Rules on Sepsis Treatment Could Cost Hospitals Millions of Dollars in Medicare Reimbursements

Some hospital organizations are pushing back, stating that the new regulations are ‘too rigid’ and interfere with doctors’ treatment of patients

In August, the Biden administration finalized provisions for hospitals to meet specific treatment metrics for all patients with suspected sepsis. Hospitals that fail to meet these requirements risk the potential loss of millions of dollars in Medicare reimbursements annually. This new federal rule did not go over well with some in the hospital industry.

Sepsis kills about 350,000 people every year. One in three people who contract the deadly blood infection in hospitals die, according to the Centers for Disease Control and Prevention (CDC). Thus, the federal government has once again implemented a final rule that requires hospitals, clinical laboratories, and medical providers to take immediate actions to diagnose and treat sepsis patients.

The effort has elicited pushback from several healthcare organizations that say the measure is “too rigid” and “does not allow clinicians flexibility to determine how recommendations should apply to their specific patients,” according to Becker’s Hospital Review.

The quality measures are known as the Severe Sepsis/Septic Shock Early Management Bundle (SEP-1). The regulation compels doctors and clinical laboratories to:

  • Perform blood tests within a specific period of time to look for biomarkers in patients that may indicate sepsis, and to
  • Administer antibiotics within three hours after a possible case is identified.

It also mandates that certain other tests are performed, and intravenous fluids administered, to prevent blood pressure from dipping to dangerously low levels. 

“These are core things that everyone should do every time they see a septic patient,” said Steven Simpson, MD, Professor of medicine at the University of Kansas told Fierce Healthcare. Simpson is also the chairman of the Sepsis Alliance, an advocacy group that works to battle sepsis. 

Simpson believes there is enough evidence to prove that the SEP-1 guidelines result in improved patient care and outcomes and should be enforced.

“It is quite clear that this works better than what was present before, which was nothing,” he said. “If the current sepsis mortality rate could be cut by even 5%, we could save a lot of lives. Before, even if you were reporting 0% compliance, you didn’t lose your money. Now you actually have to do it,” Simpson noted.

Chanu Rhee, MD

“We are encouraged by the increased attention to sepsis and support CMS’ creation of a sepsis mortality measure that will encourage hospitals to pay more attention to the full breadth of sepsis care,” Chanu Rhee, MD (above), Infectious Disease/Critical Care Physician and Associate Hospital Epidemiologist at Brigham and Women’s Hospital told Healthcare Finance. The new rule, however, requires doctors and medical laboratories to conduct tests and administer antibiotic treatment sooner than many healthcare providers deem wise. (Photo copyright: Brigham and Women’s Hospital.)

Healthcare Organizations Pushback against Final Rule

The recent final rule builds on previous federal efforts to combat sepsis. In 2015, the Centers for Medicare and Medicaid Services (CMS) first began attempting to reduce sepsis deaths with the implementation of SEP-1. That final rule updated the Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospitals Prospective Payment System (LTCH PPS).

Even then the rule elicited a response from the American Hospital Association (AHA), the Infectious Disease Society of America (IDSA), American College of Emergency Physicians (ACEP), the Society of Critical Care Medicine (SCCM), and the Society of Hospital Medicine (SHM). The organizations were concerned that the measure “encourages the overuse of broad-spectrum antibiotics,” according to a letter the AHA sent to then Acting Administrator of CMS Andrew Slavitt.

“By encouraging the use of broad spectrum antibiotics when more targeted ones will suffice, this measure promotes the overuse of the antibiotics that are our last line of defense against drug-resistant bacteria,” the AHA’s letter states.

In its recent coverage of the healthcare organizations’ pushback to CMS’ final rule, Healthcare Finance News explained, “The SEP-1 measure requires clinicians to provide a bundle of care to all patients with possible sepsis within three hours of recognition. … But the SEP-1 measure doesn’t take into account that many serious conditions present in a similar fashion to sepsis … Pushing clinicians to treat all these patients as if they have sepsis … leads to overuse of broad-spectrum antibiotics, which can be harmful to patients who are not infected, those who are infected with viruses rather than bacteria, and those who could safely be treated with narrower-spectrum antibiotics.”

CMS’ latest rule follows the same evolutionary path as previous federal guidelines. In August 2007, CMS announced that Medicare would no longer pay for additional costs associated with preventable errors, including situations known as Never Events. These are “adverse events that are serious, largely preventable, and of concern to both the public and healthcare providers for the purpose of public accountability,” according to the Leapfrog Group.

In 2014, the CDC suggested that all US hospitals have an antibiotic stewardship program (ASP) to measure and improve how antibiotics are prescribed by clinicians and utilized by patients.

Research Does Not Show Federal Sepsis Programs Work

In a paper published in the Journal of the American Medical Association (JAMA) titled, “The Importance of Shifting Sepsis Quality Measures from Processes to Outcomes,” Chanu Rhee, MD, Infectious Disease/Critical Care Physician and Associate Hospital Epidemiologist at Brigham and Women’s Hospital and Associate Professor of Population Medicine at Harvard Medical School, stressed his concerns about the new regulations.

He points to analysis which showed that though use of broad-spectrum antibiotics increased after the original 2015 SEP-1 regulations were introduced, there has been little change to patient outcomes.  

“Unfortunately, we do not have good evidence that implementation of the sepsis policy has led to an improvement in sepsis mortality rates,” Rhee told Fierce Healthcare.

Rhee believes that the latest regulations are a step in the right direction, but that more needs to be done for sepsis care. “Retiring past measures and refining future ones will help stimulate new innovations in diagnosis and treatment and ultimately improve outcomes for the many patients affected by sepsis,” he told Healthcare Finance.

Sepsis is very difficult to diagnose quickly and accurately. Delaying treatment could result in serious consequences. But clinical laboratory blood tests for blood infections can take up to three days to produce a result. During that time, a patient could be receiving the wrong antibiotic for the infection, which could lead to worse problems.

The new federal regulation is designed to ensure that patients receive the best care possible when dealing with sepsis and to lower mortality rates in those patients. It remains to be seen if it will have the desired effect.  

Jillia Schlingman

Related Information:

Feds Hope to Cut Sepsis Deaths by Hitching Medicare Payments to Treatment Stats

Healthcare Associations Push Back on CMS’ Sepsis Rule, Advocate Tweaks

Value-Based Purchasing (VBP) and SEP-1: What You Should Know

NIGMS: Sepsis Fact Sheet

CDC: What is Sepsis?

CDC: Core Elements of Antibiotic Stewardship

The Importance of Shifting Sepsis Quality Measures from Processes to Outcomes

Association Between Implementation of the Severe Sepsis and Septic Shock Early Management Bundle Performance Measure and Outcomes in Patients with Suspected Sepsis in US Hospitals

Infectious Diseases Society of America Position Paper: Recommended Revisions to the National Severe Sepsis and Septic Shock Early Management Bundle (SEP-1) Sepsis Quality Measure

CMS to Improve Quality of Care during Hospital Inpatient Stays – 2014

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