Dive Brief:

• Los Angeles-based Heal, a provider of primary care through house calls, telemedicine visits and remote patient monitoring, said it has partnered with Cigna Medicare Advantage plans in four states as it continues its national expansion.
• The organization is now an in-network provider for Cigna MA enrollees in Illinois, North Carolina, South Carolina and Georgia, effective immediately, it said. Its markets also include Louisiana, New Jersey, New York and Washington.
• Heal works with Humana, WellCare, Aetna and UnitedHealthcare insurance plans, according to its website.

Dive Insight:

The deal highlights the sector’s continued focus on in-home and primary care. 

Humana doubled down on its push into home health by acquiring the remaining stake in Kindred last year. Just this week, Walgreens-backed VillageMD is reportedly exploring a merger with medical practice Summit Health, the parent company of CityMD, as the push into primary care heats up. 

Heal says it helps seniors improve their health from the comfort of their homes. Founded seven years ago, the company said it has made more than 275,000 patient visits to date.

Chronic conditions, sick visits and preventive care are covered under the collaboration with Cigna.

"Cigna aims to improve all aspects of our customer's health and well-being, and providing in-network coverage for quality, affordable, and convenient health care is one way we do this," said J.B. Sobel, chief medical officer of Cigna Medicare.

Heal shifted to a value-based primary care model for seniors last year from on-demand, fee-for-service care, following the appointment of Scott Vertrees as CEO. Vertrees succeeded co-founder Nick Desai in the role.

Heal's in-home primary care model allows the company to observe and act on social determinants of health that affect its patients, including food insecurity, diet, environmental factors, medication management, depression, loneliness and other conditions, Vertrees said.

The company generated $8.6 million in Medicare savings and improved health outcomes for chronically ill patients in 2020 as part of a CMS demonstration project testing the effectiveness of delivering comprehensive primary care at home. The $10,000 in healthcare cost savings per patient was 20% less than Medicare's expected payments, according to Heal.

Heal has raised more than $200 million in funding from investors that include Humana, Breyer Capital, Fidelity Investments and several individuals.

Prices for healthcare services, unlike prices for other services in the U.S. economy, have historically been considered proprietary, and consumers and other stakeholders generally have been denied access to them. In addition, differences in prices for the same service across hospitals and other types of healthcare providers have left many consumers with bills that they don’t understand and/or can’t afford.

Incorporated into the Consolidated Appropriations Act passed by Congress in 2020 and described in detail in subsequent interim final rules, price transparency requirements have been promulgated since 2018. Price transparency in healthcare attempts to identify costs to providers, insurers and consumers, particularly individuals needing specific types of healthcare services. The primary goals of these transparency requirements are to provide consumers more information, allowing for more informed healthcare decisions, and to encourage competition in the healthcare marketplace, ultimately resulting in lower healthcare costs.

Hospital price transparency

Price transparency requirements began with the rules requiring that hospitals publish their chargemasters. CMS’ final rule issued in August 2018 required hospitals “... to establish and make public a list of their standard charges.”

The federal Hospital Price Transparency Rule went into effect on Jan. 1, 2021. The rule requires hospitals to post a machine-readable file containing charges, discounted cash prices and payer negotiated rates/prices, among other things, for all items and services; and a consumer-friendly display of the same information for at least 300 “shoppable” services.

Initially, hospital compliance with the rule was low. Although compliance has improved, a 2022 study found that just two of 361 hospitals owned by the three largest hospital systems in the U.S. were compliant. In an attempt to improve compliance, the CMS increased the penalty to up to $5,500 per day. 

BRG Health Analytics professionals have organized and analyzed the transparency data across the United States and in specific markets over the past year. To evaluate the state of compliance as of March 1, 2022, BRG analyzed 6,710 hospitals for which published rates were available. Fifty-eight percent of these hospitals (3,927) complied with the requirement to publish data on 300 unique services. However, BRG identified only 1.8% of hospitals as being in “true compliance,” defined as a hospital having provided data for both the 70 CMS required shoppable services and at least 300 unique services.

Payer price transparency

The CMS’ Transparency in Coverage Rule, also within the CAA, will be phased in over the next few years. Most health plans are non-grandfathered. Similar to hospitals, as of July 1, 2022, health plans were required to make available machine-readable files that are updated monthly and contain in-network rates as well as out-of-network allowed amounts.

As of Jan. 1, 2023, plans must provide price comparison information for 500 items and services identified by the CMS through an internet-based self-service tool; and as of Jan. 1, 2024, the tool must include prescription drug prices as well.

Use cases for transparency data

Payers can use hospital transparency data to gain insights regarding the rates hospitals have negotiated with other payers, which potentially can be used during contract negotiations. For example, payers can evaluate the negotiated rates for specific hospitals compared to their competitor health plans to gauge alignment with their proposed rates and discounts. This is illustrated in Figure 2, which shows the average negotiated rates for a CT scan of the abdomen (CPT 74177) for each payer who contracts with Loyola University Medical Center near Chicago, compared to the hospital’s standard billed charge for the procedure. As shown in the graph, the average negotiated rate as a percentage of billed charges (list price) ranges from 3% to 24% (about $200 to $1,800).

Data also can be aggregated for geographic markets, as shown in the graphs, which shows the average negotiated rate across all payers for the same CT scan for all hospitals in the Chicago area. While the billed charge amounts vary dramatically across hospitals (from $567 to $12,690), the negotiated rates also range from $338 to $6,182.

Similar analyses can be conducted for inpatient services. The figure below shows the average negotiated rate for each payer contracted with Rush University Medical Center for a common diagnosis-related group (DRG) (291 – heart failure and shock) compared to the hospital’s billed charge amount for this DRG. The discount obtained from United Healthcare is 58% compared to Blue Cross at 42%.

Analysis of the data for the same DRG again can be aggregated for specific geographic markets, as shown in the figure below, which shows the average negotiated rate across all payers for DRG 291 (heart failure and shock) for all hospitals in the Chicago area. Here, billed charge amounts range from $23,458 to $71,208 across hospitals, while negotiated rates range from $8,675 to $26,468.

Another use of the data, which is in alignment with the rule’s primary intent, is consumer education. Payers have an opportunity to use the data to provide cost estimates to their members prior to accessing care. Because members now can better understand a hospital’s negotiated rates with their specific insurance plans, they have the ability to independently and proactively plan for at least some of their medical expenses, and payers can integrate these costs with their members’ specific claims accumulators to compute the member’s out-of-pocket payments for specific services.

The below figure illustrates how a member can use the data to view the average negotiated rate for different hospitals for their plan (in this case, Aetna) in the San Francisco area, which may help them determine where they would like to receive a specific service. While some individuals may use the hospital where their surgeon has admitting privileges or has recommended, some may find the data useful as they begin the process and potentially identify particular hospitals first.
 

The increased accessibility of this type of data has the potential to drive down operational costs, if members actually use the data. On the one hand, members would not need to rely completely on payer customer service to obtain cost information; on the other hand, payers also may need to provide members with information about how to use the data on their own. If consumer use becomes more widespread, plans may be able to lower their administrative costs — and potentially claims costs if members consistently select lower-cost options.

Finally, as shown in the figure below, researchers also can use the data to compare the costs of healthcare services across different areas of the U.S. An analysis by state and Core Based Statistical Area for an MRI of a lower body extremity (CPT 72721), which is a standard shoppable procedure, can identify the most and least expensive markets in the U.S. for specific services.
 

Both the hospital and payer transparency data have tremendous potential to provide new, previously unavailable information to various stakeholders. The hospital transparency data, while variable in completeness across different markets, provides valuable comparisons of negotiated rates across hospitals and health plans in the same markets, as well as comparisons to billed charges. The payer transparency data will provide new visibility into rates for provider types such as physicians and other professional providers that was not previously available.

These data will prove valuable in contract negotiations and may come into play in disputes and investigations. As analysis of the data becomes more widespread, consumers will be able to take better advantage of the information as well.

Editor’s note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group, LLC or its other employees and affiliates.

Dive Brief:

• Humana expects to pay between $450 million and $550 million to acquire the first group of senior-focused primary care centers that it developed through a joint venture with Welsh, Carson, Anderson & Stowe, Chief Financial Officer Susan Diamond said Friday during the insurer’s investor day.
• The agreement inked with Welsh Carson in 2020 included options for Humana to acquire the private equity firm's interest in the joint venture in stages over the next five to 10 years. The venture was expected to open 67 clinics by early 2023. “We are planning for the full acquisition of centers built in partnership with Welsh Carson through our put and call options beginning in 2025,” Diamond said.
• In mid-May, Humana and Welsh Carson announced a second joint venture that will spend up to $1.2 billion to open about 100 new value-based primary care clinics for Medicare patients between 2023 and 2025 under the CenterWell Senior Primary Care brand.

Dive Insight:

Humana is accelerating into primary care by expanding its chain of clinics serving Medicare patients into more markets.

The payer in May said it expected to operate about 250 clinics, under the CenterWell and Conviva Care Solutions brands, by the end of 2022. The total is up from 214 as of March, including 37 through its partnership with Welsh Carson and 177 wholly owned centers.

Humana expects to boost its total number of clinics by 30 to 50 per year through 2025, with up to 15 to 25 being added through acquisitions, Diamond said. The remaining about 30 per year will be added through joint ventures with Welsh Carson.

“We will continue to be focused and strategic in considering M&A opportunities as we look to extend our CenterWell capabilities with a particular focus on growing our primary care and home businesses,” Diamond said.

Longer term, Humana plans to spend a total of $2.5 billion to $3.5 billion from 2026 to 2030 on clinic expansion as it accelerates its level of annual builds, she said.

Humana currently has CenterWell clinics in Georgia, South Carolina, Florida, North Carolina, Texas, Kansas, Missouri, Nevada and Louisiana, according to the company's website.

Like the first joint venture, Humana’s second collaboration with Welsh Carson includes a series of put and call options through which Humana may acquire the PE firm's interest in the partnership. Under the agreement, Humana could acquire Welsh Carson’s stake in the second joint venture beginning in 2028, or five years after the opening of each set of clinics, or the firm could require Humana to buy its interest beginning in 2030, or seven years after each group of clinics opens.

In addition to the primary care centers, the CenterWell brand includes Humana’s home health and pharmacy businesses.

UnitedHealthcare, one of the nation’s largest insurers, filed a lawsuit against Envision Healthcare alleging it overpaid the physician staffing firm millions of dollars after Envision exaggerated the complexity of illness and care provided to thousands of patients in emergency rooms.

UnitedHealthcare alleged Envision, one of the largest physician staffing firms in the U.S., has “systematically deceived” the insurer into overpaying through a practice known in the industry as “upcoding,” according to a lawsuit filed in a federal court in Tennessee on Friday.

Envision declined to comment as it evaluates UnitedHealthcare’s claims, a spokesperson told Healthcare Dive.

However, Envision filed a lawsuit of its own last week in the same federal court, alleging UnitedHealthcare wrongly denied payment for emergency room services provided by Envision’s clinicians.

In one instance, UnitedHealthcare denied payment for a 31-year-old man’s emergency appendectomy and care for a baby with unexplained episodes of choking, vomiting and turning blue, Envision alleged.

UnitedHealthcare and Envision have not had an in-network contract since January 2021. Since the termination of that contract, Envision has upcoded claims, resulting in UnitedHealthcare overpaying, according to the lawsuit.

“The upcoded claims falsely stated that Envision’s physicians rendered the most extensive treatment ... when they in reality had in fact treated routine health problems, such as food poisoning, anxiety, or the flu,” UnitedHealthcare alleged in its lawsuit.

UnitedHealthcare is also facing a separate lawsuit from a different physician staffing firm.

In July, TeamHealth filed suit alleging the insurer wrongly denied and underpaid for services its emergency physicians provided to patients in Nevada.

Dive Brief:

• Advocate Aurora Health is facing allegations of unlawfully using its market power in Wisconsin to raise healthcare prices, according to a federal lawsuit filed Tuesday.
• Uriel Pharmacy Health, a Wisconsin business with a self-funded health plan, filed suit Tuesday in the Eastern District of Wisconsin, alleging the Midwest system overcharged for services and forced employers into "all-or-nothing" contracting, requiring all of Advocate Aurora's facilities to be included in-network.
• Advocate Aurora said in a statement it is "mounting what will be a vigorous defense as all of our decisions are guided by a relentless pursuit to provide the highest quality, affordable care for our patients."

Dive Insight:

The lawsuit alleges Advocate Aurora Health has used a number of anticompetitive practices to inflate healthcare prices at a cost to Wisconsin businesses.

Restrictive contracting terms have prevented employers from curbing costs, the lawsuit, which is seeking class action status, claims.

Advocate Aurora has allegedly gone to "extraordinary lengths" to limit insurance products that seek to exclude certain Advocate Aurora Health facilities that could save employers money. Instead, Advocate Aurora requires all-or-nothing contracting, meaning if one facility is in-network, all Advocate Aurora facilities must be included in an employer's insurance network.

As a result, these anticompetitive contracts allow Advocate Aurora to charge higher prices than competitors, according to the lawsuit.

The price for a hip or knee replacement at an Advocate Aurora facility in Milwaukee is $62,538, more than $21,000 above a competitor's price five minutes away, the lawsuit alleges.

Advocate Aurora's outsized presence in local markets in turn leads to a "systemwide power that gives it market power over its entire service area," according to the lawsuit. Advocate Aurora operates hospitals across Illinois and Wisconsin.

“Our complaint alleges that Advocate Aurora’s anticompetitive conduct has unlawfully taken huge sums of money from the pockets of Wisconsin employers to fund the hospital system’s never-ending expansion across the country,” said Jamie Crooks, managing partner of Fairmark Partners, LLP, which represents the plaintiffs.

The lawsuit comes on the heels of Advocate Aurora's announcement that it is merging with Atrium Health to create one of the nation's largest health systems with $27 billion in revenue.

The deal would create a 67-hospital system that spans six states across parts of the Midwest and the South.

All-or-nothing contracting caught the attention of the former California attorney general after Sutter Health faced a similar suit brought by a grocer's union in 2014.

HHS Secretary Xavier Becerra, then California AG, reached a $575 million antitrust settlement in 2019 with Sutter that barred the system from engaging in the all-or-nothing contracting among other conditions.

Dive Brief:

• The American Hospital Association is urging the Justice Department to use its authority under the False Claims Act to create a fraud task force to investigate commercial insurers that routinely deny patients access to services.
• The hospital lobby cited what it called an "alarming" and "distressing" report from the HHS Office of the Inspector General showing that 13% of prior authorization denials and 18% of payment denials met Medicare coverage rules and should have been granted. According to the OIG report, the CMS' annual audits of Medicare Advantage organizations have uncovered "widespread and persistent problems" involving inappropriate denials of services and payment.
• "This problem has grown so large — and has lasted for so long — that only the prospect of civil and criminal penalties can adequately prevent the widespread fraud certain MAOs are perpetrating against sick and elderly patients across the country, as well as against the public," the AHA said in a letter to Acting Assistant Attorney General Brian Boynton.

Dive Insight:

The AHA wants the Justice Department to take more aggressive action to remedy a pattern of improper coverage denials that the OIG highlighted in its new report. With Medicare facing potential insolvency in just a few years, lawmakers are looking into increasing oversight of the privately administered Medicare Advantage plans.

As enrollment in the plans continues to grow, so too has fraud associated with the program, costing Medicare billions of dollars, noted Sen. Elizabeth Warren, D-Mass., who addressed a Senate finance subcommittee hearing on Medicare in February. More than 26 million Medicare beneficiaries were enrolled in MA plans last year, or about 42% of the total Medicare population.

The federal government has been cracking down on MA fraud. The DOJ said in February that a growing number of its fraud and false claims settlements in 2021 involved the program.

The OIG report found MAOs, in denying prior authorization and payment requests, used clinical criteria not contained in Medicare coverage rules, requested unnecessary documentation and made manual and system errors. For its report, the OIG reviewed case files for a random sample of 250 prior authorization denials and 250 payment denials issued by 15 of the largest MAOs during one week in June 2019.

The watchdog agency said denying requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care, such as advanced imaging services or stays in post-acute facilities. MAOs sometimes reversed prior authorization requests that met Medicare coverage rules and MAO billing rules, often prompted by an appeal from a beneficiary or provider.

To address the problem of improper denials, the OIG recommended the CMS issue new guidance on the appropriate use of clinical criteria in medical necessity reviews, update its audit protocols and direct MAOs to identify vulnerabilities that can lead to errors. The CMS agreed with the recommendations.

But the AHA argued those actions don't go far enough, noting the OIG identified similar problems with improper MAO denials in September 2018, yet the CMS had not acted on all of the recommendations in that report as of this March.

The government pays MAOs a capitation rate of about $1,000 per beneficiary, giving the organizations "every incentive to deny services to patients or payments to providers in order to boost their own profits," the AHA said in its letter to Boynton.

"It is time for the Department of Justice to exercise its False Claims Act authority to both punish those MAOs that have denied Medicare beneficiaries and their providers their rightful coverage and to deter future misdeeds," the AHA stated.

Dive Brief:

• Employers and private insurers paid 224% of what Medicare would pay for the same services at the same facilities across all hospital inpatient and outpatient services on average in 2020, according to a Rand study funded by the Robert Wood Johnson Foundation.
• Researchers found significant variations in those prices across states. For instance, Hawaii, Arkansas and Washington had relative prices below 175% of Medicare prices, while other states like Florida, West Virginia and South Carolina had relative prices at or above 310% of Medicare.
• Price variations by state are more attributable to hospital market power than each hospital's share of patients covered by Medicare or Medicaid, according to the report released Tuesday.

Dive Insight:

The findings illustrate just how broadly prices for healthcare services can vary based on a patients’ insurance coverage and which state they receive care in.

Despite recent price transparency regulations designed to help consumers shop around for services, employers that provide most private insurance often don't have usable information on prices negotiated with hospitals on their behalf, researchers wrote.

About 157 million Americans got health coverage through an employer or union in 2020, according to data from the Kaiser Family Foundation.

The latest figures are a slight improvement from Rand’s previous 2018 study, when employers and private insurers paid 247% more on average than Medicare for the same services and the same facilities, according to the report. That’s mostly attributable to a boost in the volume of claims from states with prices below the previous mean price, the researchers said.

For COVID-19 hospitalizations, employers and private insurers paid on average 241% more than what Medicare would pay in 2020, the report, based on claims data from over 4,000 hospitals and over 4,000 ambulatory surgery centers in every state except Maryland, found.

Researchers also found variations between different sites of care.

Looking at five common procedures done in both ambulatory surgical centers and hospital outpatient departments, the average price in the outpatient department was $6,169 while the average ASC price was $2,404.

While commercial prices for ASC services rose slightly faster than Medicare prices over the study period, they remained well below relative prices for the same services in hospital outpatient departments.

Employers and private insurers paid about 162% more than Medicare for common outpatient services done in ambulatory surgery centers.

But if ASCs were paid the same as hospital outpatient departments in Medicare, the prices for those services would have averaged 117% of Medicare payments, the study found.

The American Hospital Association pushed back on the findings, saying “researchers should expect variation in the cost of delivering services across the wide range of U.S. hospitals — from rural critical access hospitals to large academic medical centers,” according to a statement from CEO Rick Pollack.

The AHA also said the report looks at 2.2% of overall hospital spending, and the average price for hospital services declined as Rand added more claims in the latest report compared to past reports. Pollack said in the statement “you simply cannot draw credible conclusions from such a limited and biased set of claims.”