Category Archives: Health Care

Medicaid spending set to consume a greater share of the US economy, despite flat enrollment

Source: Genevieve Nolan, Nicholas Samuels, Emily Raimes, Timothy Blake, Moody’s, Sector Comment, April 3, 2019
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Over the coming decade, demographic trends will play a role in driving up Medicaid costs as the US population both ages and lives longer, while growing healthcare costs and changing state policies will also contribute to rising expenditures.

Opioid settlement to benefit Oklahoma State University, local governments

Source: Adebola Kushimo, Susan I Fitzgerald, Leonard Jones, Moody’s, Sector Comment, April 5, 2019
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The agreement will bolster research funding in a growing area and position the university to enhance its brand and boost philanthropic support. In addition, it will benefit Oklahoma cities and counties, which will split $12.5 million as they grapple with a growing social risk.

Tracking Federal Funding to Combat the Opioid Crisis

Source: Bipartisan Policy Center, March 2019

From the summary:
In 2017, more than 70,000 people in the United States died from a drug overdose, with almost 50,000 of these deaths involving an opioid. The United States is facing a devastating opioid epidemic, and the federal government has responded by investing billions of dollars into prevention, treatment, and recovery efforts over the past two years. This includes efforts to curb the supply of both illicit opioids and unnecessary prescription opioids and to improve access to evidence-based treatment for opioid use disorder. Despite these actions, addiction policy experts believe that the end of the epidemic is not yet in sight.

Considerable attention has focused on the drivers of the opioid epidemic. However, less attention has been paid to whether the federal investments to address the issue are being effectively targeted to the communities most affected and to those with the highest overdose deaths. An effective response requires policymakers to know how resources are allocated and to use that information to minimize duplication and maximize the efficiency of limited resources. The federal government has not previously produced or made available a document that provides this information to the public or policymakers.

OPEB Brief: The Credit Impacts Of OPEB Obligation Bonds

Source: S&P Global Ratings, March 11, 2019
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Other postemployment benefit (OPEB) underfunding of obligations is pervasive across U.S. state and local governments, and costs are likely to continue to rise rapidly. Although, compared with pensions, these obligations may have some more flexibility in how they’re provided, we recognize that funded levels are almost universally lower than those of pensions and could quickly become a challenge to budgets if not addressed. With the implementation of Governmental Accounting Standards Board (GASB) Statements Nos. 74 and 75, many governments are seeing large new OPEB liabilities on their balance sheets that are growing due to insufficient contributions (see “Credit FAQ: New GASB Statements 74 And 75 Provide Transparency For Assessing Budgetary Stress On U.S. State & Local Government OPEBs,” published March 14, 2018, on RatingsDirect). In response, governments are looking to OPEB obligation bonds (OOBs) as a way to address funding concerns. Depending on the circumstances surrounding the OOB, issuance could have rating implications.

Rise in uninsured population is negative for consumers, hospitals and governments

Source: Rebecca Karnovitz, Shahdiya Kureshi, Atsi Sheth, Daniel Steingart, Nicholas Samuels, Jessica Gladstone, Lisa Goldstein, Dean Ungar, Moody’s, Sector In-Depth, March 5, 2019
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The number of uninsured individuals in the US has been rising since 2017, and we expect it to continue to increase due to rising insurance premiums and recent federal and state policy changes. The trend is negative for consumers, healthcare providers and governments because uninsured households are less likely to seek medical care and are particularly vulnerable to healthcare-related financial shocks. Healthcare providers may therefore face reduced volumes and greater levels of bad debt and charity care. The federal government and states may also take on some of the costs of uncompensated care through transfer mechanisms to hospitals.

Hundreds of hospitals punished for lax safety. Here’s how to see if yours is one

Source: Beth Mole, Ars Technica, March 1, 2019

Hospital group argues the penalties are misguided and calculated unfairly.

Medicare is cutting payments to 800 hospitals around the country for having relatively high rates of infections and injuries among their patients, according to an analysis by Kaiser Health News. That’s the highest number of penalties in the five years that the federal government has handed them out.

Penalized hospitals will see a one-percent cut to payments for Medicare patients discharged between October 2018 and September 2019. The penalties are the result of an annual assessment set up by the 2014 Hospital-Acquired Condition Reduction Program, which was created under the Affordable Care Act. The program ranks all hospitals based on their rates of specific infections and in-hospital injuries. From there, Medicare penalizes the bottom quarter or subsection—the threshold varies from year to year based on the data. So far, 800 is the highest number penalized, seconded by 769 two years ago…..

“Mom, When They Look at Me, They See Dollar Signs” How rehab recruiters are luring recovering opioid addicts into a deadly cycle.

Source: Julia Lurie, Mother Jones, March/April 2019

….The addiction community has a name for what happened to Brianne. It’s called the “Florida shuffle,” a cycle wherein recovering users are wooed aggressively by rehabs and freelance “patient brokers” in an effort to fill beds and collect insurance money. The brokers, often current or former drug users, troll for customers on social media, at Narcotics Anonymous meetings, and on the streets of treatment hubs such as the Florida coast and Southern California’s “Rehab Riviera.” The rehabs themselves exist in a quasi-medical realm where evidence-based care is rare, licensed medical staffers are optional, conflicts of interest are rampant, and regulation is stunningly lax.

While experts say the practices described in this story are widespread, it is important to note that there are plenty of responsible treatment providers, and not all the facilities named engage in all the practices described. Recovery Villas, which was raided by Florida authorities last summer on suspicion of insurance fraud and is now under investigation by the state, did not respond to my questions. A Compass Detox spokesman said that paying clients for treatment and giving them drugs between rehab stints “is illegal and we don’t do that.” Compass obeys all relevant laws and regulations, he emphasized…..

The Union That Roars

Source: Graham Vyse, Governing, February 2019

In an anti-union era, nurses are proving that organized labor can still be powerful. ….

…. NNU isn’t new to this fight. Breaking up the for-profit health-care system has been a defining mission of the union since its founding a decade ago. But now the group faces a new challenge. NNU is embarking on a revamped Medicare for All campaign not only at the federal level — where the prospects of success are bleak, at least in the short term — but in states across the country, especially those with Democratic governors, most notably California, Minnesota and New York. ….

Hospital Prices Grew Substantially Faster Than Physician Prices For Hospital-Based Care In 2007–14

Source: Zack Cooper, Stuart Craig, Martin Gaynor, Nir J. Harish, Harlan M. Krumholz, and John Van Reenen, Health Affairs, Vol. 38 no. 2, February 2019
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From the abstract:
Evidence suggests that growth in providers’ prices drives growth in health care spending on the privately insured. However, existing work has not systematically differentiated between the growth rate of hospital prices and that of physician prices. We analyzed growth in both types of prices for inpatient and hospital-based outpatient services using actual negotiated prices paid by insurers. We found that in the period 2007–14 hospital prices grew substantially faster than physician prices. For inpatient care, hospital prices grew 42 percent, while physician prices grew 18 percent. Similarly, for hospital-based outpatient care, hospital prices grew 25 percent, while physician prices grew 6 percent. A majority of the growth in payments for inpatient and hospital-based outpatient care was driven by growth in hospital prices, not physician prices. Our work suggests that efforts to reduce health care spending should be primarily focused on addressing growth in hospital rather than physician prices. Policy makers should consider a range of options to address hospital price growth, including antitrust enforcement, administered pricing, the use of reference pricing, and incentivizing referring physicians to make more cost-efficient referrals.

Not-for-profit healthcare and higher education – US – New accounting standard for operating leases is credit neutral

Source: Rita Sverdlik, Lisa Martin, Lisa Goldstein, Diane F. Viacava, Susan I Fitzgerald, Kendra M. Smith, Moody’s, Sector Comment, January 23, 2019
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New guidance from the Financial Accounting Standards Board (FASB) related to operating leases took effect January 1. Under the new standard, issuers will include the net present value (NPV) of operating leases on the balance sheet. This change does not affect issuers’ credit quality because our assessments already consider operating leases in a manner similar to the new FASB standard. However, in a few limited circumstances, the accounting change will affect issuers’ compliance with financial covenants in bond and bank agreements and temporarily elevate credit risk.