Advis leaders provide their top predictions for the future of healthcare in 2024.

Ryan Bailey, J.D. | Vice President

Impact on Hospital Outpatient Departments and Strategies for Health Systems

In early 2024, Advis anticipates that Congress will continue to discuss legislation that, in part, will significantly impact off-campus hospital outpatient departments (“HOPDs”). The House passed the Lower Costs, More Transparency Act on 12/11/23, signaling a bipartisan willingness to engage in discussions of a larger healthcare package with the Senate prior to the 1/19/23 government funding deadline. At this point, it seems likely that this package will include some site neutral payment cuts to off-campus HOPDs, and also mandatory provider-based attestation filings and separate NPIs for each HOPD by January 2026. If this comes to pass, Advis predicts that numerous health systems across the country will be faced again with the determination of whether to continue to support off-campus hospital outpatient services, or transition these to physician-based. This decision also closely interplays with any 340B strategy, as these HOPDs are often eligible child sites under the program. Any hospitals that chose to continue to provide off-campus HOPD services will need to thoroughly review compliance, remedy gaps, and get prepared to file the attestation documentation for each site. For those that chose to transition services to freestanding, a financial impact analysis will be key, as well as strategic discussions to identify options to help mitigate the impact. As an industry leader in Medicare “provider-based” compliance and strategy, Advis is prepared to assist with all of these considerations!

Ryan Yokley, J.D. | Vice President

Expansion of Mental Health Services

During the COVID-19 pandemic, CMS expanded Medicare telehealth coverage for mental health services. Some of these efforts were limited to waivers applicable only during the public health emergency, while others have been implemented on a permanent basis; or alternatively, remain under CMS review for potential permanent implementation. As demand for mental health services continue to dramatically increase across the county, finding additional ways to increase access to mental health services, as well as providing such services in the most efficient and economical means available is paramount. Advis recently assisted one of its clients with establishing the first dedicated psychiatric emergency department in the Commonwealth of Virginia. This has significantly streamlined the hospital admission process for a specialized patient population and is aimed at reducing costs while enhancing the patient’s overall experience. Advis predicts we will continue to see implementation of such innovative endeavors with increased frequency over the next year and beyond in the area of mental health services.

Monica Hon, J.D. | Vice President

AI Revolution: Transforming Efficiency, Compliance, and Innovation

AI will be everywhere in 2024. During a time of staff shortages, belt-tightening and price savvy consumers…efficiency, cost-effectiveness and accuracy are at the top of the healthcare administration wish list. We will see more in AI compliance, boundary setting and oversight as AI and robotics continue to be in the forefront of healthcare innovation. This innovation will include advancement and more prolific use of generative AI and AI assistants.

Preston Sisler, J.D. | Vice President & Asst. General Counsel

Congressional Focus on Hospital Outpatient Departments and the Impact of Pending Legislation

Recently, Congress renewed its attention on hospital outpatient departments, including site-neutral payments.  At the time of these comments (mid-December 2023), the House of Representatives just passed H.R.5378, the Lower Costs, More Transparency Act, which includes elements in this regard.  Additionally, there are similar proposals pending in Congress.  Due to the political process, particularly the presidential election, government funding, etc., the ultimate outcome on this topic is far from certain.  That said, expect one of these proposals to fully make it through Congress in 2024.  This could lead to future reduced reimbursement for and additional scrutiny on various hospital outpatient departments.  Hospitals should be prepared to meet the resulting financial and regulatory impacts.

Robert Monroe, J.D. | Vice President & General Counsel  

Hospitals Disengaging from Medicare Advantage Organizations

Hospitals will continue to end contractual relationships with Medicare Advantage Organizations (MAOs) during 2024.  Despite Medicare Advantage Plans being popular among Medicare beneficiaries, hospitals and other health care providers have not experienced the same enthusiasm for them. Hospitals have experienced growing frustration with MAO prior authorization denials, the application of coverage criteria that are stricter than original Medicare and drawn out reimbursement processes and timelines. These provider concerns led CMS to issue policy changes seeking to remedy them in the Calendar Year 2024 Medicare Advantage final rule.

While CMS has taken steps via the final rule to improve and standardize MAO coverage policies and align them with original Medicare, it is doubtful that these changes will result in improvements during Calendar Year 2024. CMS provided few specifics on the scope and intensity of policy enforcement on MAOs and MAOs do not appear concerned that CMS’s policies will impact their bottom lines. With over half of Medicare beneficiaries in MA Plans, the means of enforcing CMS’s reimbursement policies are unclear at best. Thus, the movement of many hospitals away from contracting with MAOs will continue through 2024.

Valerie Ford |Vice President

Andrea Graham| Vice President

Anticipate Delays: Impact of PECOS 2.0 and Provider Type Eligibility on MAC Processing Timeframes

As all are aware, PECOS 2.0 has been delayed and there is not a definite date for implementation as of yet.  Due to the new portal release as well as new provider type eligibility (effective January 1, 2024), we predict that Medicare Administrative Contractor (MAC) processing timeframes will exceed the norm. All providers should make allowances for excessive processing timeframes and additional unnecessary requests for corrected information as the MACs work through their increased workloads.

Susan Maupin, J.D. | Vice President  

Continued Staff Shortages and Financial Pressures Post-COVID

Healthcare operations will continue to be challenged by staff shortages and/or more frequent staff turnover as facilities attempt to return to pre-COVID operations with staff leaving positions seeking the best salary possible.   These past years have seen continued demand for pre-pandemic compensation rates while facilities no longer receive additional funds to have balanced budgets.   Unfortunately, healthcare facilities will continue to struggle with meeting financial demands of staff while dealing with incommensurate reimbursement rates.   Expense reduction efforts will continue to be at the forefront of discussions to ensure safe and quality patient care while maintaining a workforce to meet patient care demands.

Jake Beechy, J.D. | Vice President

340B Disrupters

In recent years there have many disrupters within the 340B space: manufacturers, the court system, HRSA, and local State governments. However, one outstanding stakeholder remains which I believe, this year, is ready to throw its hat in the ring.

The manufacturers have done their best to disrupt the availability of 340B pricing at contract pharmacies and have largely succeeded in limiting savings available to covered entities.

The court system has entered the fray, by force, and offered opinions related to the manufacturer restrictions, with the one federal court approving the manufacturers disruptive actions. The courts also took on HRSA and opined on the underlying guidelines related to ‘what is an eligible 340B patient’. While the U.S. District Court of South Carolina ruled HRSA’s patient definition was too narrow, the ruling failed to apply to covered entities nationally. As a result, much remains unresolved, and the judiciary will continue to be a disruptive leader in the outcomes of the 340B landscape.

HRSA, in response the litigation, doubled down on its patient definition, relying once again on the ambiguous and outdated 1994 and 1996 federal register guidelines. HRSA also caused a major disruption when it reestablished its ‘old’ child site eligibility policy, noting that an eligible location must be listed on the most recently filed cost report and approved on OPAIS; a complete reversal from its pandemic policies that it once said would be permanent.

The State governments have also been actively engaged in causing disruptions to 340B space, with 28 states now restricting PBMs from establishing reimbursement on whether a 340B priced drug was dispensed. Additionally, two states, Arkansas and Louisiana have created laws prohibiting manufacturers from restricting 340B pricing to contract pharmacies. However, most of the manufacturers have refused to comply with the state laws, arguing the 340B program requires Federal oversight.

This leaves one last key stakeholder, Congress, left out of the fight. While transparency bills have been proposed and investigations have been levied, they have largely failed to act. Yet, in 2024, Congress will, much like its sister judicial branch, be forced to execute guidance. The shear volume of unresolved ambiguities, constituent outreach, struggling hospitals, and PhRMA lobbyist will put enough pressure to force them into action; to clarify the 340B guidelines and allow covered entities to redefine and improve the compliance of its 340B programs.

Bryan Niehaus , J.D. | Vice President

Economic and Political Challenges in Hospital Operations

Hospitals and health systems will need to re-examine their strategic plans to account for the economic and political headwinds they will face in 2024 and beyond.  Exposure to government funded healthcare under Medicare and Medicaid is only increasing for most hospitals, as an aging population brings with it higher acuity needs.  The post-pandemic political climate has turned against the hospital industry, with economic considerations (Medicare & Social Security face projected shortfalls within the next decade) driving policy makers to push site neutral payments, consider other payment reductions or price caps, and re-examine relevant subsidies such as property tax exemptions and commercial insurance premium deductions.  Staffing shortages, competition from new market entrants, and changing care delivery preferences complicate the picture for hospitals.  Health systems must understand these realities, and develop an adaptable and future focus plan to pivot operations and financials around these factors to find continued success.

Natasha Shukla, J.D. | Senior Consultant

Outpatient and Virtual Care Amid Rising Costs and Patient Preferences

Rising costs for both hospitals and patients coupled with post-pandemic preferences for home-based and non-acute care will prompt patients to seek care in outpatient and virtual care settings. Inpatient providers continue to contend with rising staffing costs, staffing shortages and an inflation-driven rise in the cost for providing healthcare. Outpatient and virtual care settings, however, continue seeing decreased costs. While CMS and Congress have not extended telehealth flexibilities to support patient preferences for virtual care, environmental pressures will prompt payers to reexamine coverage criteria for services provided in virtual settings.

Frank Banfer, J.D. | Senior Consultant

Artificial Intelligence and Impact on Healthcare

Healthcare disruption and innovation is at an all-time high! Is your organization keeping up with the latest trends in business intelligence and artificial intelligence? Artificial intelligence (AI) is essentially the use of various hardware and software technologies that “teach” a computer to think. Machine learning (ML) is a type of AI where that hardware and software “learns” via algorithms. For example, AI and ML can be used to extract and abstract EMR components to help diagnose patients faster, which could help improve patient movement in the ED. From a patient safety perspective, AI and ML can be used to determine higher risk areas or departments. It can also be used to predict trends in patient demographics, conditions, and payor status, helping to answer questions on predicted reimbursement trends. So, it’ll be a vital tool to understand when developing new service lines and facilities. But, before diving in, it’s important to know team members understand these tools. And, that there are appropriate software/safeguards in place to keep your PHI safe. In any event, we’ll definitely being seeing more of this in the year to come!

Medicare Advantage

More and more Medicare Advantage claims are being denied. Just this week a class action lawsuit was filed against Humana over the astronomical rate of denials. Many payors know that first – and even third round – denials dissuade beneficiaries and providers from pursuing payment. It was estimated that less than 1% of denied claims will be appealed! So, we’re definitely going to see more on this topic moving forward. In the meantime, what’s a facility to do? First, expect denials! Prepare your staff, workflows, and AR for delays. Second, coach up staff on navigating the denial process. Work with them and subject matter experts to develop standard appeal documents and persuasive statements to overturn the appeal. Third, analyze your data. Start to track everything you can on the denial. For example, the beneficiary enrollment date, the condition, the reason for denial, time for denial, and any successful appeals. By tracking this information, you’ll be able to see trends and potential success strategies. Fourth, pursue the appeal as far as you can. The appeals process is timely, filled with paperwork, and requires adherence to strict procedures. Payors are expecting you to get frustrated and give up. But it’s critically important to advocate for your patients.

Streamlining Operations and Lean Management Structures

Whether we like it or not, COVID is still around. And so are the impacts from the pandemic. Many hospitals and healthcare facilities are still in the red – their operating margins are still negative. And those that aren’t continue to face uphill battles to recover. Essentially, hospitals need money to operate. And the money coming in (revenue) needs to be greater than the money going out (expenses). We know revenue is often hit and miss, given low Medicare and Medicaid reimbursement rates, and the astronomical amount of denials from Medicare Advantage plans. And we know 2024 expenses are going to increase related to staffing shortages, supply chain issues, and international recruiting efforts. So, what can leadership do? Two general options include increasing revenue and decreasing expenses. To increase revenue, the two primary options are: (1) increase the number of patients seen and treated and (2) negotiate higher rates with commercial payors. And to decrease expenses, the primary option is to streamline operations. Streamlining starts with a process workflow assessment. That assessment can then lead to standardizing the work. And standard work decreases variation and waste factors. Sometimes this entire process is called operational excellence. But the goal is to provide maximized efficiency and efficacy related to safe patient care practices. In the long run, a cost-to-benefit analysis should occur as to whether it’s more effective to expand or construct, or to have a workforce and operational excellence assessment. But, an assessment has a higher benefit and effort ratio than an expansion or construction. So, we’ll probably see a lot more interest in operational excellence projects.

Published: January 10, 2024