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.
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.
“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
“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
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.
As a result, health system-based clinical laboratories likely saw a decline in test orders as well a decrease in outreach revenue
Bad financial news continues in the hospital industry. According to an August 2023 National Hospital Flash Report from consulting firm Kaufman Hall, hospitals’ financial performance deteriorated in July, partly due to declines in inpatient and outpatient volumes and rising bad debt and charity care.
The implication from these findings is that hospital-based clinical laboratories saw a drop in test volume and any lab revenue associated with inpatient testing.
In an analysis of data from more than 1,300 hospitals, Kaufman Hall noted a dip in hospitals’ median calendar year-to-date operating margin from 1.4% in June down to 1.3% in July. The data also showed “a greater pullback in volume on the outpatient side, which may be attributed to patients choosing not to pursue elective procedures during the summer,” a Kaufman Hall news release stated.
Kaufman Hall’s National Hospital Flash Report by Erik Swanson, Senior Vice President, Data and Analytics, and Brian Pisarsky, Senior Vice President, Strategic and Financial Planning, is an analysis of actual and budget data—sampled from Syntellis Performance Solutions—which is representative of hospitals of various sizes and areas in the US.
“It’s clear that today’s challenging financial environment is here to stay, and hospital leaders must be proactive in seeking out opportunities to refine their operations and remain competitive,” said Erik Swanson, Senior Vice President, Data and Analytics, Kaufman Hall, in a news release. Clinical laboratory leaders would be wise to follow the same advice. (Photo copyright: Kaufman Hall.)
Expenses Declined, Bad Debt and Charity Care Rose
Here are other national data Kaufman Hall reported for July 2023 as compared to June 2023:
Adjusted discharges per calendar day dropped 7%.
Operating room minutes per calendar day declined 13%.
Emergency department visits per calendar day fell 1%.
Bad debt and charity care as a percentage of hospitals’ gross operating revenue was up 7%.
Purchased service expense per adjusted discharge was down 3%.
Labor expense per adjusted discharge also fell 3%.
Even though expenses slightly declined during July, patient volume decreases “pulled down” the margins, Healthcare Innovation reported, which called the report “a gloomy one.”
Also, the uptick in bad debt and charity care while volumes decreased created a “difficult situation for hospitals,” Medical Economics observed.
Here are the report’s “key takeaways,” according to Kaufman Hall:
All volume indicators were down, but operating margins were still better than 2022.
Outpatient volume decreased more than inpatient, possibly due to patients choosing not to have elective procedures during the summer.
The decline in expenses was “not enough to offset revenue losses,” and inflation will continue to take its toll on labor expenses.
Medicaid has been “disenrolling” members in 30 states during June and July, and bad debt and charity care have increased.
The report also called out need for improvement in providers’ discharge of patients to skilled nursing facilities. “Hospitals that prioritize care transitions to skilled nursing facilities are performing better than institutions [that] do not,” Swanson said in the news release.
“Identifying steps that can ensure a smooth transition, such as obtaining pre-authorizations and planning discharge early, will help organizations reduce expenses and improve patients’ experience,” he continued.
For Hospitals, 2023 Not as Bad as 2022
MedCity News pointed out that though July’s operating margin index decline followed four months of growth, hospitals are still way ahead of 2022 performance when median operating margins were -0.98% in July 2022.
Still, it appears hospitals are struggling to secure financial footing after 2022, an overall bad financial year for the hospital industry.
More recently, a 2023 Becker’s Hospital CFO Report compiled a list of 81 hospitals that had cut jobs since the start of the year in response to “financial and operational challenges.”
Included was Tufts Medicine in Burlington, Massachusetts. In August, the hospital “eliminated hundreds of jobs” in an outsourcing of lab outreach services to Labcorp. The Becker’s report noted that “[Tufts] said it will work with Labcorp to have the majority of affected employees transition to a similar position with Labcorp.”
Tips for Clinical Lab Financial Viability
Medical laboratory leaders need to help ensure financial health of their labs as well as quality and efficiency of services. Advice from Kaufman Hall may be applicable.
The report writers advised providers to secure payer authorizations before a “patient comes in the door.” For clinical labs, this is comparable to the need to secure insurance company authorizations for expensive genetic tests before samples are taken and tests performed.
Another tip from Kaufman Hall is to “collect and use data to inform process improvement” and “make change.” Along those lines, medical laboratories could leverage patient data to guide launch of new services, entry to markets, workflow improvement, and costs reduction.
Self-insured and campus health markets are contract opportunities for small and midsize clinical laboratories through investment in data infrastructure and management
Bordenave spoke this week at the Executive War College in San Antonio. During two intriguing presentations, she shared that the self-insured employer and campus health markets are areas of opportunity for small and midsize clinical laboratories. This is because employer groups and college campuses are busy communities of covered individuals, and these population health groups are well-suited for proactive care models.
In fact, she said, some clinical laboratories may already be well-positioned to serve these customers.
Self-Insured Employer Groups and Campus Health Markets as New Clinical Laboratory Customers
According to CMS national health expenditure data, in 2020, a whopping $4 trillion was spent on healthcare in the US. In the middle of all that are people living, going to school, and working who have high blood pressure, rising lipid levels, lower-back pain, migraines, and other health conditions waiting to be diagnosed and flagged for follow-up.
And as pathologists and clinical laboratory managers know, 80% of those healthcare encounters result in lab test data.
Clinical laboratories, therefore, can gain customers among self-insured employer groups and similarly functioning campus health markets that serve students.
During her presentations at the 2021 Executive War College in San Antonio, Kristine Bordenave, MD, FACP (above), a strategic consultant in precision medicine, population health, Medicare compliance, and cost management, noted that “just about all paths forward post-COVID will require the data infrastructure of clinical laboratories to achieve an advanced level of functionality.” (Photo copyright: The Dark Intelligence Group.)
In one example she gave during her presentation, Bordenave noted that self-insured employer groups “were more than willing to contract directly, and they were contracting for care that directly relates to lab. Anything that would help reduce presenteeism and absenteeism with their employees.”
Presenteeism and Absenteeism
For years, presenteeism and absenteeism have plagued employee productivity in organizations large and small. Both have been attributed to numerous individual health and wellness factors among individuals. At some point, these issues culminate into various forms of reactive healthcare services and safety issues, she added.
The cost of presenteeism is estimated at between $150 billion and $225 billion. Meanwhile, at least 60% of employees are now covered in fully-funded or partially-funded self-insured plans, Healthcare Finance reported.
The way a campus health system operates is similar to a self-insured model but more of an integrated delivery system, Bordenave said. Among the priorities are controlling the spread of infectious diseases, such as COVID-19 and measles.
Clinical Laboratory Data Valuable in Treating-to-Goal and Closing Care Gaps
During two featured Executive War College general session discussions, Bordenave explained the focus of her work: aligning primary care with the clinical laboratory to treat-to-goal and close care gaps.
“There was a lot of focus on us taking laboratory information and treating people to goal, and that was with respect to diabetes, cholesterol, and hypertension, because those are three common diseases that exist within their [employee] populations. [Primary care doctors] know [that] if they [can] maximize the care in those patients—so that the patient is maximally treated—that patient performs. There’s a lot of literature around this.”
In the state of New Mexico where Bordenave’s project evolved, a culture of innovation prevails, where like-minded people have an opportunity to “do the unique,” she explained. The state’s population is spread out, there is a shortage of healthcare providers, and people generally lack access to health services and other social determinants of health. The liberty to think outside the box—to ensure care in creative ways—was essential to the success of Bordenave’s project.
“Blue Cross Blue Shield paid handsomely for improving healthcare outcomes in diabetes,” she said, adding, “and we never did a standard visit with any of those patients, ever. Then we got paid by a big employer group to do the same thing for them.”
Future of Clinical Laboratory Functionality
Bordenave noted that just about all paths forward post-COVID will require the data infrastructure of clinical laboratories to achieve an advanced level of functionality. Dark Daily will cover more opportunities for labs to capitalize on their structured data in future ebriefings.
Executive War College is scheduled to reconvene April 27-28, 2022, in New Orleans. In the meantime, recordings of this year’s presentations will be available for download, including:
A Roundtable Discussion on Current Activity Involving Clinical Laboratory and Pathology Mergers and Acquisitions.
Taking a Deeper Dive into How Artificial Intelligence Analyzes a Digital Pathology Image: What Current Technology Can and Cannot Do, Steps to Implement, and Understanding How the FDA Views AI in Digital Pathology.
Open Conversation About the Healthcare Data Aggregation Hub Model.
And more.
To learn about Executive War College’s complete program package, send an email request to info@darkreport.com.
Clinical laboratories that service both settings could be impacted as new CMS proposed rule attempts to align Medicare’s payment policies for outpatient and in-patient settings
Hospital outpatient revenue is catching up to inpatient
revenue, according to data released from the American
Hospital Association (AHA). This increase is part of a growing trend to
reduce healthcare costs by treating patients outside of hospital settings. It’s
a trend that is supported by the White House and Medicare and continues to
impact clinical
laboratories, which serve both hospital inpatient and outpatient customers.
The AHA published this study data in its annual Hospital Statistics, 2019Edition. The data comes from a 2017 survey of 5,262
US hospitals. The report includes data about utilization, revenue, expenses,
and other indicators for 2017, as well as historical data.
The AHA statistics on outpatient revenue suggest providers
nationwide are working to keep people out of more expensive hospital settings. Hospitals,
like medical
laboratories, appear to be succeeding at developing outpatient and outreach
services that generate needed operating revenue.
This aligns with Medicare’s push to make healthcare more accessible through outpatient settings, such as urgent care clinics and physician’s offices. A growing trend Dark Daily has covered extensively.
Outpatient Revenue
Climbs
In its coverage of
the AHA’s study, Modern Healthcare reported that 2017
hospital net inpatient revenue was $498 billion and net outpatient revenue was
$472 billion.
The Becker’s Hospital CFO Report notes that
gross inpatient revenue in 2017 was $92.7 billion higher than gross outpatient
revenue. But in 2016, gross inpatient revenue was much further ahead—$129.5
billion more than gross outpatient revenue. The “divide” between inpatient and
outpatient revenue is narrowing, Becker’s reports.
The graphic above illustrates the shrinking gap between hospital inpatient and outpatient revenues. “Outpatient revenue will ultimately eclipse inpatient revenue,” Chuck Alsdurf, Director of Healthcare Finance Policy and Operational Initiatives at the Healthcare Financial Management Association (HFMA), told Modern Healthcare. (Graphic copyright: Modern Healthcare/AHA.)
The Becker’s
report also stated:
Admissions increased by less than 1% to 34.3
million in 2017, up from 34 million in 2016;
Inpatient days were flat at 186.2 million;
Outpatient visits rose by 1.2% to 766 million in
2017; and,
Outpatient revenue increased 5.7% between 2016
and 2017.
Similar Study Offers Additional
Insight into 2018 Outpatient Revenue
A benchmarking report by Crowe,
a public accounting, consulting, and technology firm, which analyzed data from
622 hospitals for the period January through September of 2017 and 2018, showed
the following, as reported by RevCycleIntelligence:
Inpatient volume was up 0.6% in 2018 and gross
revenue per case grew by 5.3%;
Outpatient services rose 2.4% in 2018 and gross
revenue per case was up 7.1%.
Physicians’ Offices
Have Lower Prices for Some Hospital Outpatient Services
Everything, however, is relative. When certain healthcare
services traditionally rendered in physician’s offices are rendered, instead,
in hospital outpatient settings, the numbers tell a different story.
In fact, according to the Health
Care Cost Institute (HCCI), the price for services was “always higher” when
performed in an outpatient setting, as compared to doctor’s offices.
HCCI analyzed services at outpatient facilities as well as
those appropriate to freestanding physician offices. They found the following
differences in 2017 prices:
Diagnostic and screening ultrasound: $241 in
physician’s office—$650 in hospital outpatient setting;
Level 5 drug administration: $254 in office—$664
in hospital outpatient setting;
Upper airway endoscopy: $527 in office—$2,679 in
hospital outpatient setting.
One example where hospital outpatient settings provide similar services at increased costs is in drug administration, as the graphic above illustrates. “The difference was higher than I expected. With some services, the price is two or three times higher when rendered in the outpatient setting,” Julie Reiff, HCCI researcher and report author, told Fierce Healthcare. (Graphic copyright: HCCI.)
Medicare Proposed
Rule Would Change How Hospital Outpatient Clinics Get Paid
Meanwhile, the Centers for
Medicare and Medicaid Services (CMS) has released its final rule (CMS-1695-FC),
which make changes to Medicare’s hospital outpatient prospective payment and
ambulatory surgical center payment systems and quality reporting programs.
In a news
release, CMS stated that it “is moving toward site neutral payments for
clinic visits (which are essentially check-ups with a clinician). Clinic visits
are the most common service billed under the OPPS [Medicare’s Hospital
Outpatient Prospective Payment System). Currently, CMS often pays more for
the same type of clinic visit in the hospital outpatient setting than in the
physician office setting.”
“CMS is also proposing to close a potential loophole through
which providers are billing patients more for visits in hospital outpatient
departments when they create new service lines,” the news release states.
Hospitals are fighting the policy change through a lawsuit, Fierce Healthcare reported.
In summary, clinical laboratories based in hospitals and
health systems are in the outpatient as well as inpatient business. Medical laboratory
tests contribute to growth in outpatient revenue, and physician offices compete
with clinical laboratories for some outpatient tests and procedures. Thus, a new
site-neutral CMS payment policy could affect the payments hospitals receive for
clinic visits by Medicare patients.
Even this premier academic center is experiencing a reduced volume of inpatient discharges, signaling to pathologists that efforts to keep people out of hospitals are succeeding
What does it mean when a prominent healthcare system like Partners HealthCare of Boston, Massachusetts, reports a decline in revenue and operating profit? After all, as one of the nation’s premier academic health centers, it is reasonable to expect that it would enjoy strong demand for its inpatient and outpatient services.
That is why pathologists and clinical laboratory managers will find it interesting that Partners experienced a decline in patient volumes during its second quarter ending March 31, 2014. Similar to other hospitals throughout the nation, fewer inpatients are showing up at hospitals operated by Partners HealthCare. (more…)
