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Health Care Prices Continue to Grow Slowly

U.S. health care prices continue to grow at a low rate, according to a recent report from the Altarum Institute. Prices grew 1.1 percent in July 2013 relative to July 2012. That was the same rate as June 2013 and only a tenth of a percent above the May 2013 rate, which was the lowest in Altarum’s data series going back to January 1990.

The 12-month moving average of 1.6 percent is a new low in Altarum’s data series. Additionally, health spending growth averaged 4.1 percent for the first half of 2013, barely above the record low levels seen annually since 2009.

Lower hospital price growth (1.7 percent year-over-year), a 0.3 percent price growth for physicians, historically low growth for prescription drugs (-0.1 percent), and continued low readings for all other categories except for dental care (3.9 percent increase) contributed to the overall low growth rates.

The report indicates that weak economic growth will continue to exert downward pressure on medical prices. “We see very little likelihood of significantly higher health care prices in the near term,” the study’s authors wrote.

The full report is available at http://bit.ly/186zhCJ.

Hospital Mergers Could Squeeze Collection Agencies

Hospitals across the nation are merging at a rapid pace these days—a trend that will impact the health care collections industry in numerous ways. Mergers are occurring at the fastest rate since the 1990s, the New York Times reported in a recent article (http://nyti.ms/16S1nqe). Various factors are driving the trend, including implementation of many parts of the Affordable Care Act over the next two years.

In particular, hospitals find themselves being paid less on volume under the health care law and more on the quality of care they provide, the Times noted. That means there is less of an incentive to keep beds full, and more incentive to keep patients healthy and out of the hospital. This encourages providers to merge, reduce overhead costs, and focus instead on implementing expensive electronic medical records systems that allow them to more effectively track and evaluate patients.

Consulting firm Booz & Company predicts that 1,000 of the nation’s roughly 5,000 hospitals could seek out mergers in the next five to seven years, according to the Times. ACA International member Chris Becraft—who is president of Collection Service Bureau, Inc. in Phoenix, which specializes in health care receivables management—said the industry is going through its “biggest roll-up ever.”

“Large systems are needing to either grow organically, through opening up new facilities or services, or purchase others,” he said. “Independent facilities are unable to make a profit with the current state of government reimbursement so they either need to merge or go out of business. The independent regional hospitals are an endangered species and I predict there will be very few left in five to seven years.”

Becraft added that he sees some problems for collection agencies as a result of these mergers. “What this means is there are fewer clients for collection agencies to do business with today and there will be far fewer in the future,” he said. “There is very little hope for the smaller agency to remain viable exclusively in health care unless they are content with the ever-shrinking margin and market they will be getting from small providers.”

Becraft said the mergers topic is frequently discussed among staff at his agency. “It’s a very big topic with staff,” he said. “When a change happens, that is when we can either gain business or lose it. More agencies will be losing business because of this than gaining, I can guarantee you that. We intend to be on the gaining side and are growing aggressively to be able to continue servicing these larger providers.”

Becraft added that it’s not just hospitals that are merging—many collection agencies are merging as well, in an effort to stay viable in the health care collections field.

“Larger health care providers will eventually only want to do business with other large entities because that is what will make sense to them,” he said. “The future of high volume health care RCM will be the exclusive domain of large companies because that is all that will exist eventually in both industries.”

Employer-Provided Medical Care Availability Varies

Employer-provided medical care was available to 85 percent of full-time private industry workers in the U.S., according to the U.S. Bureau of Labor Statistics’ latest data. By contrast, only 24 percent of part-time workers had medical care benefits available. The data comes from the National Compensation Survey, which was released on July 17 and analyzed March data.

Availability also varied by employment size: 57 percent for all workers in small businesses (those with fewer than 100 employees), compared with 85 percent in medium and large establishments (those with 100 employees or more).

Additional findings include:

• In private industry, 64 percent of employees had access to retirement benefits, significantly less than the 89 percent of state and local government employees with access. Additionally, only 49 percent of private industry employees actually participated in a retirement plan (had current coverage), significantly less than the 85 percent participation rate of state and local government employees.

• Full-time workers in state and local government had greater access to employer-provided benefits than private industry workers. For example, retirement and medical care benefits were offered to 99 percent of full-time state and local government workers while only 74 percent of full-time employees in private industry had access to retirement benefits and 85 percent to medical care coverage.

• For private industry employees in the lowest 10 percent of average earnings, employers paid 71 percent of the single coverage medical plan premium. For employees in the highest 10 percent of average earnings, the employer share of the premium was 81 percent. For family coverage, the employer share of the premium was 56 percent for employees in the lowest 10 percent of earnings, significantly less than the 73 percent for employees in the highest 10 percent of earnings. The full survey is available at http://1.usa.gov/2lX9qW.

CMS Charge-Comparison Data Might Confuse Consumers

Hospital charge-comparison data released in May by the Centers for Medicare and Medicaid Services might end up confusing consumers more than it helps them, according to a recent analysis.

An article posted July 10 in the Journal of the American Medical Association states: “In releasing its data on hospital prices and charges, the US Department of Health and Human Services (HHS) suggests such information will assist consumers and patients in making better, economically informed choices when deciding on where to go for health care. But some observers are skeptical that the data are detailed enough to truly benefit individuals shopping for care.”

The data released May 8 by the CMS showed the average hospital charges for the 100 most common Medicare claims. It also showed wide variations in cost for the same services—even within one geographic area.

“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” Health and Human Services Secretary Kathleen Sebelius said at the time. “This data and new data centers will help fill that gap.”

But the July 10 JAMA article claims that the numbers “barely tell the story surrounding charges and payments.” For one, hospitals may charge more because they must also pay for residency training or because the patients they treat are not as healthy as those at another facility.

The data also doesn’t help consumers trying to figure out their costs beyond what their insurance pays. Several medical professionals told the JAMA that a look at actual out-of-pocket costs would be more useful than the charge-comparison data.

“This won’t be particularly important to the public,” said Caroline Steinberg, vice president of trends analysis for the American Hospital Association. “Charge data is not really what people pay, so it doesn’t give consumers any information on cost differences or what their payment obligations will be.” View the full JAMA article at http://bit.ly/1dseLzx.

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