Latest / Becker’s Healthcare Podcast / Hospital Price Caps, Medicaid Funding and Healthcare Policy Shifts with Alan Condon

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Hospital Price Caps, Medicaid Funding and Healthcare Policy Shifts with Alan Condon · Becker’s Healthcare Podcast

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  - There's a small circle of people who truly
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  - understand what it takes to lead a health
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  - system right now. The decisions are enormous.
• 0:08
  - The variables are constantly shifting, and the stakes
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  - of getting a call wrong don't stay contained.
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  - That's not a complaint. It's a structural reality.
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  - And it's why the most effective c suite
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  - leaders are deliberate about where they go to
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  - pressure test their thinking.
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  - Becker's fourteenth annual CEO and CFO roundtable
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  - brings together more than 1,500
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  - executive level attendees
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  - and nearly 400 speakers for four days built
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  - around growth, financial sustainability,
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  - workforce strategy, and the leadership questions that don't
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  - have easy answers.
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  - Join us November second through the fifth in
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  - Chicago.
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  - For the agenda and event details,
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  - visit beckershospitalreview.com
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  - and click on the events tab in the
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  - upper right.
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  - This is Scott Becker with the Becker's Healthcare
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  - Podcast. And I'm thrilled today to be joined
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  - by editor in chief, Alan Condon.
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  - Alan is, aside from being editor in chief,
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  - one one of the best human beings I
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  - know, just a terrific
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  - person and leader.
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  - Alan joins us regularly to talk to us
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  - often on the health system financial side
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  - about what he's seeing, what trends he's watching.
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  - And when I'm gonna tee it up and
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  - ask you to tell us what are you
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  - watching currently, what trends are you following most
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  - closely.
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  - Yeah. Absolutely. A pleasure to be back on,
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  - Scott. So I think,
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  - one really interesting story, it's something we've been
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  - covering for quite some time over the last
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  - few quarters
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  - is,
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  - health systems,
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  - really wary about states taking more of a
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  - a a stricter look at hospital price caps.
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  - Now this is something that just yesterday, we
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  - saw Delaware taking a a really new approach
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  - to health care affordability,
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  - signed three big bills yesterday through its governor,
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  - Matt Meyer,
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  - ID which which essentially phase in hospital price
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  - caps, although coming in a little bit later
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  - down the line, while also expanding,
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  - charity care for hospitals and patients and temporarily
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  - blocking
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  - private equity acquisitions
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  - of nonprofit
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  - hospitals. So three health care bills signed yesterday
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  - in Delaware, no doubt a small state, but
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  - certainly indicative of a trend that we're seeing
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  - that are really state by state across the
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  - country, a certain other states following suit in
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  - relation to hospital price caps. So just to
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  - to kinda dive one bit deeper to what
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  - those price caps actually mean,
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  - that biggest change really phases in
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  - Medicare based
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  - hospital price caps. That doesn't begin until 2029
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  - with commercial reimbursement
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  - eventually capped at 250%
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  - of Medicare rates by 2033.
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  - So a little bit of a runway there
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  - until we get there. But the law also
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  - requires
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  - insurers
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  - to devote 11 and a half percent of
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  - medical spending to primary care. So,
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  - hospital leaders, we've been following this one in
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  - Delaware for quite some time with the Delaware
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  - Hospital Association.
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  - Couple months back, it really strongly opposed
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  - the initial legislation,
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  - warning that it could really cut revenue by
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  - more than $400,000,000,
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  - put thousands of hospital hospital jobs at risk
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  - across the states. Similar hospital price cap proposals
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  - are also being considered in several other states
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  - as well.
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  - But it's certainly interesting that Delaware has actually
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  - got this this legislation over the line. Not
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  - coming in yet. There's a little bit of
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  - runway until we get to 2029 and then,
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  - of course, to 2033.
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  - But, really interesting to kind of, just spotlight
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  - what happened yesterday in Delaware
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  - and and then also what's kinda happening,
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  - a little bit across the country at the
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  - state level in terms of legislation as well,
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  - Scott. It it and I think quite frankly,
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  - California and Delaware have been two of the
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  - leaders in trying to go for this price
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  - cap effort. Delaware getting it across the line.
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  - I mean, this is and, again,
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  - I don't want
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  - to steal thunder or take away from the
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  - core story,
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  - but the reality is
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  - this is such dumb legislation
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  - because hospitals
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  - don't have the ability to cap their staffing
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  - and labor costs and other costs. And quite
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  - frankly, nobody wants them to because we want
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  - our nursing and our clinical teams and our
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  - leadership
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  - to be paid well. So the concept of
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  - capping rates, but having no control over the
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  - input or the cost of operating a health
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  - system
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  - is to me incredibly,
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  - shortsighted.
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  - The private equity ban on buying hospitals again.
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  - Here's the reality of private equity. Private equity,
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  - I think, represents about five to 700 hospitals
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  - in the country. It's less than that. It's
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  - six to 7% of hospitals,
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  - six to 7% of physicians. And I know
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  - people are just anti private equity.
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  - But you have to remember, even with the
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  - Stewart Health Care, about half the hospitals that
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  - Stewart Health Care had bought or some of
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  - these other private equity chains by
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  - sponsor chains by
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  - are hospitals that were going broke in closing
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  - if not for private equity or for profit
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  - entrant.
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  - So the the the sort of, like,
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  - the broad scale legislation that sounds good on
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  - its face, we're capping hospital prices, we're keeping
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  - private equity out,
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  - to me is so bad for the actual
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  - health care community and taking care of patients,
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  - but it makes politicians
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  - happy. But, again, that's a rant. Those are
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  - my thoughts. And we'll let me turn it
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  - back to you.
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  - Yeah. I I I think that's that's that's
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  - bang on the money. It's such an interesting
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  - point, Scott, as well. I know Connecticut
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  - similarly is moving towards some some similar legislation
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  - in terms of private equity ban and hop
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  - hospital acquisitions or whatnot.
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  - I think, to your point, Scott,
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  - 500 plus hospitals that are private equity owned.
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  - Is it a case where we have these
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  - one or two bad apples who really make
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  - national headlines and, unfortunately, kind of really spin
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  - the tail in terms of how states, how
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  - hospital leaders are looking at private equity backing,
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  - of course, Stuart Healthcare that you've mentioned there,
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  - Prospect Medical Holdings, I believe, had had its
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  - own problems as well. Is that kinda you're
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  - taking it in terms of one or two
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  - unfortunate big circumstances leads to some hospital closures,
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  - lay offs, cuts, but that's not the case
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  - for every private equity backed hospital.
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  - It's really not. And some really good operators
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  - were or are private equity owned. LifePoint is
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  - an example. At least traditionally, Argent Health is
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  - an example. Those are really well run systems.
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  - And then you have systems
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  - that end up not being well run or
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  - you have bad examples where they overdid the
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  - dividend thing with Stewart at least apparently and
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  - overdid the recap.
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  - You know, it's it's it's like anything else.
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  - It's a spectrum of operators.
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  - There's lots of for profit systems that are
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  - run well,
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  - some that are run poorly. There's lots of
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  - not for profit systems that are run well,
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  - some that are run poorly.
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  - Many of those, we've had a ton of
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  - hospital closures over the last ten years. We
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  - tracked them at Becker's Health Care. A huge
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  - amount of those were not private equity funded,
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  - but it's it's all over the board. But
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  - it's an easy scapegoat because no one stands
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  - up and says, oh, private equity is great.
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  - Then, honestly, it's great. It's good. It's bad.
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  - It's all over the place just like not
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  - for profit leadership is, just like for profit
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  - leadership is. It's all over the board. And
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  - so the the the the sort of dramatic,
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  - like, we're banning private equity.
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  - A good deal of the hospitals of private
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  - equity like Prospect and Stewart had bought were
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  - bankrupt and closing to begin with. At least
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  - it gave them a chance and and didn't
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  - go well. But it's it's a now we're
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  - being on it is completely
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  - politics and not thoughtful problem solving, which is
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  - so
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  - reflective of our politics in our country currently
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  - on both sides of the aisle. Alan, let
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  - me turn it back to you.
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  - Yeah. And I think to your point, just
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  - the last point, I think that's kind of
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  - the important note in the story and maybe
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  - the the less talked about issue that, that
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  - that is important to include in our reporting
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  - and our conversations as we talk about private
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  - equity ownership and hospitals and whatnot as well.
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  - So really appreciate your perspectives on that as
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  - well, Scott.
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  - The the last point I'll make as it
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  - relates to hospital price price caps before I
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  - jump to next story, it's just that I've
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  - been in conversation with CEOs,
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  - health system CEOs, CFOs over the last couple
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  - months,
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  - talking about advocacy.
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  - And and really time and time again, when
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  - we talk about health care affordability,
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  - leaders in several states really really concerned about
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  - hospitals and health systems being painted as the
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  - bad guys in this health care affordability
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  - race. And this state level hospital price cap
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  - legislation that we talked about in Delaware, we're
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  - also seeing that, similar legislation,
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  - moving forward in Michigan,
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  - in Maine, New Jersey, Colorado, I believe, also
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  - New York.
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  - Big, big concern here for for hospital health
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  - system. We were spending a ton of time
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  - of advocacy in this area,
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  - just to just to kinda tie a bow
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  - on the hospital price cuts, which we're seeing,
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  - certainly pick up steam, but to your point,
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  - not legislation that, will be best fit for
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  - anybody, it seems like, going forward.
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  - Scott, I need to Right. No. I'll just
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  - I'll turn it on a foot a footnote
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  - on that because it's it's absolutely horrible legislation.
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  - You have a situation where something that 60%
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  - of hospitals that operate at some margin, 40%
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  - margin,
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  - you know, and and it's not that you
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  - you might have a situation. I have no
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  - idea what the financials are of ChristianaCare, which
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  - dominates part of the health care landscape in
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  - Delaware.
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  - I have no idea if they're picked on
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  - for this because their margins are better. But
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  - you you need great care in your state,
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  - and anything that makes it harder for physician
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  - is ultimately bad for the long term community
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  - in those states. So it sounds good on
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  - its face, but it's horrible, horrible policy. Let
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  - me turn it back to you.
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  - Yeah. No. Absolutely. I think great footnote as
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  - well to tie the ball on that one.
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  - So I think just jumping right now. I
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  - think this is kinda breaking news that we
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  - just covered
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  - right before hopping on this this podcast, Scott.
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  - So kind of current HHS have teased this
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  - news yesterday and just kinda had got the
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  - back of a press release, press conference online.
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  - So some the news coming out of HHS
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  - and CMS is that they are deferring
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  - more than $1,000,000,000
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  - in federal Medicaid payments to California
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  - and to Minnesota
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  - while those two states provide additional documentation
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  - to support certain high risk Medicaid claims. So
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  - this payment deferrals,
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  - no no secret to any of our listeners,
• 10:06
  - yourself, or audience, to spotlight that that HHS,
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  - the administration has kinda shine on Medicaid fraud
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  - in certain in certain blue states and whatnot.
• 10:14
  - California and Minnesota bearing the brunt of this.
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  - California,
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  - around about $867,000,000
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  - in fed federal Medicaid payments are being deferred.
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  - It's around about $200,000,000
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  - to Minnesota.
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  - HHS has really said that those deferrals, they're
• 10:30
  - not permanent funding cuts. Both states will have
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  - an opportunity to provide documentation
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  - demonstrating that these claims meet federal Medicaid requirements.
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  - But according to HHS, CMS reviewed
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  - California's claims for certain in home
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  - care programs after identifying
• 10:49
  - spending growth that really exceeded national trends and
• 10:52
  - other claims requiring additional documentation as well. In
• 10:55
  - relation to Minnesota,
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  - CMS said it it reviewed Medicaid Medicaid claims
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  - across 14 or so high risk service areas.
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  - So it it certainly an interesting tease. They've
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  - kinda put a big spin on this, a
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  - big press release and press conference. CMS said
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  - it's ultimately taking a more proactive
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  - approach
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  - to Medicaid program integrity.
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  - Also said that it will expand its exclusion
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  - authority,
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  - to to potentially other states, potentially individuals, under
• 11:24
  - providers,
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  - who may not be
• 11:27
  - living up to par under the recommendations, submitting
• 11:29
  - their required documentation or whatnot. No doubt there's
• 11:33
  - maybe some political grant grants to I think
• 11:35
  - in this as well. A hot topic, but,
• 11:37
  - CMS, HHS, the the Medicaid
• 11:40
  - everything on the spotlight of Medicaid is just
• 11:42
  - one, latest drop and another, pool of bad
• 11:45
  - news for for providers and especially states operating
• 11:47
  - that Medicaid program as well, Scott.
• 11:50
  - So, Alan, thank you so much. You and
• 11:52
  - your team do an incredible job of following
• 11:55
  - the financial landscape in health care. You know?
• 11:58
  - And I know my name's on the door,
• 12:00
  - but it is my best source for knowing
• 12:02
  - what's going on in health care. And I
• 12:04
  - look at the website and what's being covered
• 12:06
  - every single day to get a feel for
• 12:08
  - what's going on. So bravo to you and
• 12:10
  - the work that you're doing. The editorial team,
• 12:12
  - 33 full time. Writers and journalists
• 12:15
  - are right about there. An incredible job by
• 12:18
  - you and your team. Thank you so much
• 12:19
  - for all you do, and thank you for
• 12:20
  - sharing your thoughts on the podcast today. Thank
• 12:22
  - you.
• 12:23
  - Thank you, Scott. Always a pleasure.