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Pulse Magazine

Pulse Magazine

Are Health Care Costs Affordable to Most Americans?

Old Man's Hospital Bill Gives Him A Heart Attack

Many Americans are struggling to cope with the rising cost of health care.  Recent findings by The Commonwealth Fund show that Americans’ confidence in their ability to afford their health care continues to deteriorate as the cost of health care escalates.

This year, 62 percent of adults told The Commonwealth Fund they were confident they could afford their health care if they became ill or injured, down from 70 percent in 2015. Nearly one in four Americans said health care had become harder to afford.

“Uninsured adults are the least confident in their ability to pay medical bills,” the report found. “But the risk of high out-of-pocket health care costs doesn’t end when someone enrolls in a health plan. The proliferation and growth of high-deductible health plans in both the individual and employer insurance markets is leaving people with unaffordable health care costs.”

The group with the most confidence about their health insurance and the ability to pay for an unexpected medical bill are people with employment-based health plans; the least confident group included those enrolled in Medicare and people with preexisting medical conditions.

Unexpected medical bills can take a toll on both uninsured and insured Americans. The percentage of consumers not paying their hospital bills in full has increased in recent years, according to an analysis from TransUnion Healthcare.  Since last year, approximately 68 percent of consumers with medical bills of $500 or less did not pay the total balance, an increase from 53 percent of consumers in 2015 and 49 percent in 2014.

“There are many reasons why more patients are struggling to make their health care payments in full, the most prominent of which are higher deductibles and the increase in patient responsibility from 10 percent to 30 percent over the last few years,” said Jonathan Wiik, principal for health care revenue cycle management at TransUnion.

TransUnion health care also projects these challenges could continue in the future, speculating that the percentage of consumers not paying their total hospital bills will increase to 95 percent by 2020.  “With millions of dollars in unpaid medical debt, hospitals have begun implementing new processes to prevent revenue leakage while also providing a better patient experience,” said John Yount, vice president for health care products.

More information: https://bit.ly/2MxTxxy

 

Data Breach Risks Continue in the Health Care Industry

Data breaches in health care are becoming “routine” with millions of patient records affected in the second quarter this year, according to the quarterly Breach Barometer report from Protenus, a data analytics firm specializing in patient privacy.   

From April to June 2018, there were 143 data breach incidents reported to the U.S. Department of Health and Human Services (HHS) or the media. Details provided for 116 of the 143 incidents show they impacted more than 3.1 million patient records, according to the Protenus report.

This is almost triple the patient records impacted in the first quarter (1.13 million.)  Protenus also finds that 29.71 percent of privacy violations resulting in a data breach were repeat offenses.  “On average, if an individual health care employee breaches patient privacy once, there is a greater than 30 percent chance that they will do so again in three months’ time, and a greater than 66 percent chance they will do so again in a year’s time. 

In other words, even minor privacy violations that are not promptly detected and mitigated have the potential to compound risk over time,” according to the report.  Investigators also have a difficult time keeping up with the volume of “insider threats” when it comes to patient data.  In fact, due to the volume of electronic access to health care data at hospitals and other providers on a daily basis, one investigator monitors an average of nearly 4,000 employees.

The average number of employees with privacy violations increased from 5.08 per 1,000 in the first quarter to 9.21 in the second quarter.  Whether inadvertent or intentional, these internal violations are a big risk to patients’ privacy. And, employees in the health care industry are often looking for information on people they know when they commit a violation.

Approximately 71 percent of insider related breaches in the second quarter included employees accessing records on their family members, according to the Protenus report.  Outside of internal risks, hacking continues to lead to data breaches.  Hacking incidents nearly doubled in the second quarter with 52 reported between June and April.

Health care providers and their business associates, including third-party debt collectors, need to know the privacy rules and take care when accessing patient data, whether medical or financial, to avoid violation of the Health Insurance Portability and Accountability Act (HIPAA.)  Twenty-six incidents reported in the second quarter involved business associates or third-party vendors working with health care providers, affecting nearly 800,000 patient records, Protenus reports.

As data security risks in health care increase, consumers are increasingly anxious about their privacy as well. A recent survey shows almost half of U.S. adults participating are “extremely or very concerned about their health care data security, such as diagnoses, health history and test results,” according to healthsecurity.com.

So, what can providers and their business associates do to get ahead of data security risks and protect their systems, patients and consumers?  Protenus reports best practices are critical for organizations that allow an audit of every employee’s access to patient data. “Full visibility into how their data [are] being accessed and used will help organizations secure patient trust while preventing data breaches from having costly consequences for their organization.”

Read the complete Breach Barometer report from Protenus here: https://bit.ly/2OYOmmW. See Data Watch for a graph from this report.

State Health Care Mandates Would Lower Uninsured Rate 

Millions of U.S. consumers would gain access to health insurance while their premium expenses would decline if all states implemented their own health care mandates, according to a study from The Commonwealth Fund and Urban Institute. Massachusetts and New Jersey have mandates and, if every state followed their lead, nearly four million consumers would have health insurance and premium costs would decline by an average of almost 12 percent, according to a news release from The Commonwealth Fund. 

“These mandates would replace the Affordable Care Act’s penalty for not having health insurance, a fee that Congress eliminated, effective 2019,” it states. Currently, the Affordable Care Act requires most Americans to have an insurance plan or face a financial penalty in an effort to “stabilize insurance markets by encouraging healthy people to purchase and stay enrolled in a health plan,” The Commonwealth Fund reports.  

The Congressional Budget Office expects premiums will rise and more consumers will lose their health insurance when the penalty is eliminated in January 2019. However, according to The Commonwealth Fund and Urban Institute Study, if states take the reins and create their own mandates:  

Millions more consumers would have health insurance. In fact, enacting state individual mandates across the country in 2019, when the federal penalties are lifted, would lower the number of uninsured by 3.9 million—or 11.4 percent.  

If all states enacted their own mandate, health care premiums would decline an average of 11.8 percent. The impact on premium rates would differ across states, for example, premiums would decline by more than 20 percent and Colorado, the District of Columbia, Kentucky, Nevada, North Dakota, Washington, and West Virginia would see declines of more than 15 percent.  

The study also shows uncompensated care costs for health care providers would significantly decline. “When patients are uninsured and can’t pay their medical bills, state and federal governments, as well as physicians, hospitals and community health centers, absorb the costs of this uncompensated care,” according to the news release. “As more people gain coverage mandates, demand for uncompensated care would fall by $11.4 billion nationally.  

States can also enact comparable mandate penalties to those at the federal level to mitigate any negative effects of eliminating the penalties under the Affordable Care Act. The study’s authors, Linda Blumberg, Matthew Buettgens and John Holahan from the Urban Institute note that there are significant challenges to getting state-level mandates off the ground.  

“Some states, for example, do not have state income taxes, and new financial structures would have to be developed to collect individual mandate penalties,” they report. “Other state political environments are not conducive to enacting individual mandate legislation, even in states where governors and state policymakers generally support the [Affordable Care Act.]”  

More information: More information: https://bit.ly/2mKefe5

Health Care Merger and Acquisition Activity Builds Momentum 

Merger and acquisition activity in the health care sector remains strong this year, particularly for not-for-profit hospitals and health systems, according to an analysis by Kaufman Hall. The number of total transactions reached 50 in the first half of this year. In the second quarter alone, 16 of 21 transactions occurred among not-for-profit hospitals and health systems compared to five transactions among for-profit health care providers, according to the analysis (https://bit.ly/2LDRvKV).  

“When combined with first quarter results, more than 76 percent of deals announced in the first half of 2018 involve not-for-profit acquirers, while less than 24 percent involve for-profit acquirers.” “Not-for-profit hospital and health system leaders nationwide are moving aggressively to broaden their organizations’ base and expand their presence, extending capabilities across larger geographies in order to address continued uncertainty in the industry,” Anu Singh, managing director at Kaufman Hall, said in a news release.  

Revenue cycle management vendors for the health care industry should take note of these trends, according to Corporate Advisory Solutions (CAS), which recently published its second quarter report on merger and acquisition activity (https://bit.ly/2mMr1ZO

“This consolidation is positive for patients, increasing the quality of care to a larger population, but vendors will need to be larger and offer a wide breadth of service offerings to remain competitive,” according to the report. Overall, CAS reports the revenue cycle management (RCM) services sector bounced back to a “normal” volume of mergers and acquisitions after a quiet first quarter. There were five deals totaling a combined enterprise value of $987 million in the second quarter.  

“The RCM industry continues to experience robust growth, which is expected to persist moving forward,” CAS reports. Hospital merger and acquisition activity also continues at a fast pace which, according to data from the Healthcare Financial Management Association, included 25 transactions in the first half of this year, CAS reports. The industry is benefiting from growing health care expenditures which, CAS and the Altarum Institute report, are surpassing growth in the GDP.  

Year-over-year spending increased from 4.5 percent in December 2017 to 4.9 percent in February this year, according to the Altarum Institute. “Within the industry, a push from local governments and advocacy groups for increased price transparency may positively re-shape how consumers make decisions about their health care [expenditures.] A less opaque structure will surely cause prices to drop across the board, strongly benefiting individuals,” CAS reports.  

Finally, advances in telehealth bolster consolidation of health care systems as patients have access to personalized care at home and break away from the traditional care model. Among other trends to watch, according to CAS, providers continue their move toward value-based care payment structures. See Data Watch for a graph depicting the CAS findings on RCM mergers and acquisitions in the second quarter.

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