RISE summarizes recent regulatory-related headlines.
Inspector General testifies on improper payments to Medicare and Medicaid programs
Risk adjustment is one area that poses significant risk and opportunities to protect Medicare and Medicaid from improper payments, according to Inspector General Christi A. Grimm’s testimony at a hearing this week of the U.S. House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations.
Grimm noted the potential for Medicare Advantage (MA) plans to game risk adjustment by overstating how sick enrollees are so they can receive higher payments. In some cases, plans identify diagnoses through health risk assessments and chart reviews, but those reports are vulnerable to misuse and driving higher risk adjustment payments. Indeed, a 2021 HHS-OIG report found that MA companies received more than $9 billion in risk adjustment payments in one year for serious medical conditions that only appeared on health risk assessments or chart reviews but not any service records. Twenty MA companies accounted for $5 billion of the $9 million. The most common diagnosis driving these payments included vascular disease, serious mental illness, chronic obstructive pulmonary disorder, and congestive heart failure. However, the OIG review of medical records didn’t find treatment indicated these conditions.
“This raised three troubling possibilities: (1) the diagnoses codes and, therefore, payments to plans are inaccurate; (2) plan enrollees have serious unmet health care needs; or (3) Medicare Advantage companies are not reporting all service records as required,” she told the committee.
To address these issues, Grimm recommends restricting the use of diagnoses that appear only on health risk assessments or chart reviews. “HHS-OIG’s work demonstrates an urgent need for CMS to fortify Medicare Advantage risk adjustment. Although CMS has taken important steps to improve the integrity of Medicare Advantage risk adjustment through additional regulation that supports stronger oversight of plans and recovery of misspent taxpayer dollars, more can and should be done to ensure that risk adjustment operates as intended."
Read Grimm’s full testimony here. To watch the entire hearing, click here.
House Health subcommittee takes on cybersecurity in the wake of Change Healthcare crisis
The Health subcommittee of the U.S. House Committee on Energy and Commerce also held a hearing to determine what must be done to secure patients’ personal health information and protect the health care industry from cyberattacks. “From telehealth to electronic health records and beyond, the digital age has unlocked numerous possibilities for improving patient access to quality care. At the same time, it has led to a myriad of challenges and vulnerabilities as evidenced most recently by the cyberattack on Change Healthcare,” said House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-WA) and Subcommittee on Health Chair Brett Guthrie in the hearing announcement.
During the hearing, Greg Garcia, executive director of the Healthcare and Public Health Sector Coordinating Council Cybersecurity Working Group, which serves as advisers to HHS and other government agencies, told the subcommittee that the working group is currently performing a heath infrastructure mapping and risk assessment to provide visibility to critical services and utilities that support essential dependencies across the health care ecosystem.
The risk mapping should help the government assess consolidation proposals for mergers and acquisitions against their potential for increased cyber incident and impact risk. Garcia said it is critical to hold third party product and service providers and business associates to a higher standard of “secure by design and secure by default” for technology services and capabilities used in critical health care infrastructure.
Garcia also said there must be investment in a government-industry rapid response capability as well as a safety net for the nation’s underserved providers, built on accountability and incentives. Otherwise, patient safety is at risk. “This threat is particularly acute for small, rural, critical access and underserved, under-resourced health providers that are operating on razor thin or negative margins and haven’t the capability to make the proper investments in cyber preparedness and response programs,” he said.
In addition, as seen by the Change Healthcare ransomware attack, a cyberattack can create business risks such as disruptions to reimbursement and other financial flows, damaged reputation, lost patient trust, lawsuits, regulatory programs, and reduced stock value.
“We recognize we need to move faster to keep up with the evolving threat," he said. “But through continued and expanded engagement in our collective purpose, broader awareness promotion, and forward-leaning government programs and support, we can move the needle and five years from now upgrade the health care cybersecurity diagnosis from ‘critical’ to ‘stable condition.’”
Click here to read Garcia’s testimony and here to watch the entire hearing.
Feds launch portal for health care anticompetition reporting
The Justice Department, Federal Trade Commission (FTC) and the Department of Health and Human Services (HHS) this week launched an online portal for the public to report health care practices that may harm competition.
The online portal will allow the public to report potentially unfair and anticompetitive health care practices to the Justice Department’s Antitrust Division and FTC. The departments said the portal advances the current administration’s efforts to lower health care and prescription drug costs and help to create more competitive health care markets that are fairer to patients, providers, payers, and workers.
“Competition in health care is crucial to ensuring fair and competitive wages across the health care sector and affordable and quality health care for all Americans,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division in the announcement. “Today’s launch of HealthyCompetition.gov a one-stop shop to report potential violations of our competition laws to the Justice Department and FTC–will allow the agencies to collaborate early and often, helping to promote economic opportunity and fairness for all.”
Complaints will undergo preliminary review by staff at the Justice Department’s Antitrust Division and FTC. If a complaint raises sufficient concern under the antitrust laws or is related to HHS authorities, it will be selected for further investigation by the appropriate agency. This action may lead to the opening of a formal investigation.
KFF brief examines consolidation in health care provider markets
Meanwhile, a new KFF brief examines evidence about consolidation among health care providers as more community hospitals become part of a larger system, and more physicians are in practices owned by hospitals and systems.
The report offers insights into the pace of consolidation among providers, its impact on prices and quality, and policy proposals aimed at reducing consolidation and increasing competition, such as:
- Following a wave of consolidation in the early- and mid-1990s, there were 1,573 hospital mergers from 1998 to 2017 and another 428 hospital and health system mergers announced from 2018 to 2023.
- The share of physicians working for a hospital or in a practice owned at least partially by a hospital or health system increased from 29 percent in 2012 to 41 percent in 2022. In addition, a growing share of physician practices are owned by other corporate entities, including insurance companies.
- While consolidation may allow providers to operate more efficiently, a substantial body of research shows that it leads to higher health care prices. The evidence overall does not show clear gains in access or quality.
- Some studies have found that hospital consolidation can lead to lower wages for some skilled workers, such as nurses. The broader evidence on employment and compensation effects is limited, including the extent to which mergers that prevent closures could preserve jobs.
State and federal policy proposals to address consolidation and increase competition include strengthening antitrust enforcement, reducing financial incentives for provider consolidation, increasing price transparency, and allowing more providers to enter the market. Each of these proposals would involve tradeoffs, and the extent to which they can reduce health costs is unclear since many markets already are highly concentrated.