CMS Proposes Increased Reimbursement for Hospitals but a Decrease for Physicians in 2025

The Centers for Medicare & Medicaid Services (CMS) released its proposed changes to the fee schedule for 2025 on July 10. Hospital compensation will increase by 2.6% from 2024 for hospital outpatient services and 2.8% for inpatient services (1). In contrast, physician payment will DECREASE 2.8% (2). This continues the trend in CMS reimbursement. Over the past 20 years, physician pay has plummeted by 26% when adjusted for inflation while hospital reimbursement has surged by 70% (3).

The proposal drew quick criticism from the American Medical Association (AMA) and the Medical Group Management Association (MGMA) (3). "With CMS estimating a fifth consecutive year of Medicare payment reductions — this time by 2.8 percent —  it's evident that Congress must solve this problem," AMA President Bruce Scott, MD, said. "In addition to the cut, CMS predicts that the Medicare Economic Index — the measure of practice cost inflation — will increase by 3.6 percent. Facing this widening gap between what Medicare pays physicians and the cost of delivering quality care to patients, physicians are urging Congress to pass a reform package that would permanently strengthen Medicare." MGMA's Senior Vice President of Government Affairs, Anders Gilberg, said the 2.8% reduction to the conversion factor would be alarming in the best circumstances, but to propose doing so at a time when 92% of medical groups report increased operating costs and are otherwise struggling to remain financially viable is critically short-sighted. Gilberg added "Medicare physician reimbursement is on a dire trajectory and these ongoing cuts continue to undermine the ability of medical practices to keep their doors open and function effectively — the need for comprehensive reform is paramount".

Over the time period of decreasing physician reimbursement, there has been a dramatic change in physician employment. Now 77% of physicians are employed, a dramatic increase from 26% only 10 years ago (5). The reason most often cited has been declining reimbursement. Although cost containment is often cited as a reason for the decline in physician payments. It should be apparent that CMS’ “cost containments” have done little to stem the rising costs of healthcare (6).  Some have associated increasing physician employment for decreasing access and quality of care (4,7).

A recent comment from George Parides asserts “what is happening now is what the government, Centers for Medicare and Medicaid Services (CMS) and all hospital systems want to happen. They want full, and I mean FULL control of all physicians …” (8). Nothing has really changed with the proposed changes in fee schedules. The trend of healthcare away from a charitable, not-for-profit 501c to a not-for-profit in name only business focused on revenue and profits continues (7). 

Richard A. Robbins MD

Editor, SWJPCC

References

1. CMS. CY 2025 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule (CMS 1809-P). July 10,2024. Available at: https://www.cms.gov/newsroom/fact-sheets/cy-2025-medicare-hospital-outpatient-prospective-payment-system-and-ambulatory-surgical-center (accessed 7/11/2024).
2. CMS. Calendar Year (CY) 2025 Medicare Physician Fee Schedule Proposed Rule. July 10, 2024. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2025-medicare-physician-fee-schedule-proposed-rule (accessed 7/11/2024).
3. Cass A. CMS pitches 2.8% physician payment cut for 2025. Medscape. July 10, 2024. Available at: https://www.beckershospitalreview.com/finance/cms-pitches-2-8-physician-payment-cut-for-2025.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=6133H6750001J5K (accessed 7/11/24).
4. G Grossi. Dr David Eagle: CMS Reimbursement Cuts Encourage Trend of Independent Physician Exodus. American Journal of Managed Care. Feb 12, 2024. Available at: https://www.ajmc.com/view/dr-david-eagle-cms-reimbursement-cuts-encourage-trend-of-independent-physician-exodus (accessed 7/11/24).
5. Physicians Advocacy Institute. Updated Report: Hospital and Corporate Acquisition of Physician Practices and Physician Employment 2019-2023. April 2024. Available at: https://www.physiciansadvocacyinstitute.org/Portals/0/assets/docs/PAI-Research/PAI-Avalere%20Physician%20Employment%20Trends%20Study%202019-2023%20Final.pdf?ver=uGHF46u1GSeZgYXMKFyYvw%3d%3d (accessed 7/11/24).
6. McGough M, Winger A, Rakshit S, Amin K. How has U.S. spending on healthcare changed over time? Peterson-KFF Health System Tracker. December 15, 2023. Available at: https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#Total%20national%20health%20expenditures,%20US%20$%20Billions,%201970-2022 (accessed 7/11/24).
7. Robbins RA. A Call for Change in Healthcare Governance. Southwest J Pulm Crit Care Sleep. 2024;28(6):91-93. [CrossRef]
8. Parides GC. Only a Snowball’s Chance in Hell: Comment on A Call for Change in Healthcare Governance. Southwest J Pulm Crit Care Sleep. 2024;28(6):94. [CrossRef]

Cite as: Robbins RA. CMS Proposes Increased Reimbursement for Hospitals but a Decrease for Physicians in 2025. Southwest J Pulm Crit Care Sleep. 2024;29(1):8-9. doi: https://doi.org/10.13175/swjpccs033-24 PDF

California Bill Would Tighten Oversight on Private Equity Hospital Purchases

According to Medscape California lawmakers are considering a bill that would tighten oversight of private equity and hedge fund buyers of hospitals and healthcare facilities (1). Private equity investment in hospitals and physician groups has been under scrutiny in recent months after a slew of high-profile failures, including bankruptcies and hospital closures. California lawmakers have drafted a bill that would require private equity firms and hedge funds to give the state attorney general written notice before purchasing a healthcare facility or provider group. The attorney general would have to approve the transaction. Buyers would also be required to submit written notice to any federal or state agency as required by law within 90 days of the transaction, and the attorney general could extend that period. The bill gives the attorney general the power to halt an acquisition if there is a "substantial likelihood of anticompetitive effects" or if it would affect access of healthcare services delivered to the community.

Physician groups would also be affected by the bill; private equity groups or hedge funds would be prohibited from controlling the practice and the practice physicians would not be able to sign a deal with an entity partially or wholly directed by a private equity group or hedge fund if those firms provide other services to the physicians for a fee.

Richard A. Robbins MD

Editor, SWJPCCS

Reference

1. Dyrda L. California Bill Would Tighten Oversight on Private Equity Hospital Purchases. Medscape. June 10, 2024. Available at: https://www.beckershospitalreview.com/finance/california-bill-would-tighten-oversight-on-private-equity-hospital-purchases.html#:~:text=California%20lawmakers%20have%20drafted%20a,have%20to%20approve%20the%20transaction (accessed 6/10/24).

Cite as: Robbins RA. California Bill Would Tighten Oversight on Private Equity Hospital Purchases. Southwest J Pulm Crit Care Sleep. 2024;28(6):90. doi: https://doi.org/10.13175/swjpccs026-24 PDF

Private Equity-Backed Steward Healthcare Files for Bankruptcy

Arizona Attorney General Kris Mayes (1) has launched an investigation into what led to Dallas-based Steward Health Care filing for Chapter 11 bankruptcy protection on May 6. The health system also recently shared that it is $9 billion in debt and has plans to sell all 31 of its hospitals, four of which are in Arizona and have a proposed auction date of June 28, according to a May 10 news release from Ms. Mayes (1). 

Steward relied on backing from private equity investors to quickly acquire dozens of community hospitals, including facilities in Massachusetts, Texas, Florida, and Arizona. Steward has been the focus of a year-and-a-half-long CBS News investigation revealing how private equity investors have siphoned hundreds of millions of dollars from community hospitals with devastating public health consequences (2). Records reviewed by CBS News showed Steward hospitals around the country left a trail of unpaid bills, at times risking a shortage of potentially lifesaving supplies.

Steward's Arizona hospitals include: Florence (Ariz.) Hospital, Mountain Vista Medical Center in Mesa, Ariz., St. Luke's Behavioral Health Center in Phoenix, and Tempe (Ariz.) St. Luke's Hospital. Along with the hospitals, Steward also operates multiple medical practices across the state. 

“Arizonans deserve to know more about the circumstances that led to Steward's bankruptcy filing," Ms. Mayes said in the release (1). "I am deeply concerned about the potential impact this could have on Arizona patients and medical providers. No matter who ultimately ends up owning and operating these facilities, I am committed to ensuring that no Arizonan is harmed by this bankruptcy, and I will fight to ensure that these hospitals remain open at all times to care for patients without any degradation of service."

Richard A. Robbins MD

Editor, SWJPCCS

References

1. Arizona Attorney General. Attorney General Mayes Announces Investigation into Steward Health Care’s Bankruptcy. May 10, 2024. Available at: https://www.azag.gov/press-release/attorney-general-mayes-announces-investigation-steward-health-cares-bankruptcy (accessed May 11, 2024).
2. Schooley M, Hager C, Kaplan M. Steward Health Care files for Chapter 11 bankruptcy. CBS Boston. May 7, 2024. Available at: https://www.cbsnews.com/boston/news/steward-health-care-bankruptcy/ (accessed May 11, 2024).

Cite as: Robbins RA. Private Equity-Backed Steward Healthcare Files for Bankruptcy. Southwest J Pulm Crit Care Sleep. 2024;28(5):71. doi: https://doi.org/10.13175/swjpccs021-24 PDF

Former US Surgeon General Criticizing $5,000 Emergency Room Bill

Business Insider is reporting that Dr. Jerome Adams, US surgeon general from 2017-2021, is complaining about the $5,000 bill after treatment at the Mayo Clinic Arizona emergency room (ER) for dehydration (1).

Figure 1. Dr. Jerome Adams former surgeon general of the United States and currently Director of Health Equity Initiatives at Purdue University.

Local media has been slow to pick up on this story with none of the local television, radio, or newspaper sources reporting on the former surgeon general’s ER visit. Adams first shared his experience on X (formerly Twitter) in a post that went viral. In an interview conducted February 26 with Business Insider, Adams said he was taken by ambulance to the ER in January after becoming lightheaded while hiking. He had labs drawn, received 3 bags of intravenous fluid and was discharged. The shock came when he received the bill. He decided to fight and has been spending hours on the phone with hospital billing reps to get a clearer picture of why he was charged so much. The bill likely will climb higher since Adams has not been billed for the ambulance that took him to the ER. Adams said the experience has been "mentally taxing".

It's unclear why Adams' bill was so high since he said he had not received a breakdown of the charges. ER bills are notoriously expensive and can vary drastically from hospital to hospital. Adams said he was billed for a Level 5 visit, which is a code used for patients with the most complex and highest level of severity, such as chest pain or stroke symptoms. Level 5 visits fetch higher payments because they require more resources and time. Adams said he was fighting the bill because he believed his visit should have been coded at a lower level.

Another issue is that Adams is enrolled in a $7,500 deductible health plan. High-deductible plans have become more common as employers have shifted the cost of medical care to their workers. A survey by Kaiser Family Foundation (KFF) found the average annual deductible for individuals in one of these plans attached to a health savings account was $2,518 in 2023.

Adams said that with all these obstacles, it was no wonder many Americans ended up with medical debt. "If I'm in this situation with my knowledge and with my financial resources and with my bully pulpit, then the average Joe doesn't stand a chance. The system is just broken", Adams said. Medical debt is a widespread problem. An analysis by KFF and the Peterson Center on Healthcare reveals that 20 million people in the US owe medical debt, and 14 million people owe $1,000 or more. Research has shown that medical debt is a leading cause of personal bankruptcy (2).

Congress has provided some relief from unexpected medical bills. The No Surprises Act, which went into effect in 2022, is supposed to keep patients from getting stuck with a surprise bill if they inadvertently receive care from an out-of-network doctor but does not cover a situation similar to Adams’. Adams said patients should have a better sense of what they'd be required to pay ahead of getting care and more clarity about their options when they get a big bill. He also said, “patients shouldn't face drastically different costs for the same care at different facilities. People are so scared of these bills due to lack of transparency. They actually just don't go in at all until it truly does become an emergency. There are many flaws in the system that would've caused other individuals to have gone into debt, have their credit ruined, or have to make choices about things they needed to do. I've got three high schoolers, two kids heading to college. If I wasn't in my income bracket, I might be making a choice as to whether or not to pay my medical bill or to pay my kid's tuition”.

Richard A. Robbins MD

Editor, SWJPCCS

References

1. Shelby Livingston S. A former US surgeon general says he went to the ER for dehydration and ended up with a $5,000 bill. He called the healthcare system 'broken.’ Business Insider. Feb 27, 2024. Available at: https://www.businessinsider.com/former-surgeon-general-medical-bill-shows-broken-healthcare-system-2024-2 (accessed 3/4/24).
2. Himmelstein DU, Warren E, Thorne D, Woolhandler S. Illness and injury as contributors to bankruptcy. Health Aff (Millwood). 2005 Jan-Jun;Suppl Web Exclusives:W5-63-W5-73. [CrossRef] [PubMed]

Cite as: Robbins RA. Former US Surgeon General Criticizing $5,000 Emergency Room Bill. Southwest J Pulm Crit Care Sleep. 2024;28(3):34-35. doi: https://doi.org/10.13175/swjpccs014-24 PDF 

Nurses Launch Billboard Campaign Against Renewal of Desert Regional Medical Center Lease

The California Nurses Association and National Nurses United have launched  a billboard campaign against the lease renewal of public-owned, Palm-Springs-based Desert Regional Medical Center to Dallas-based Tenet Healthcare (Figure 1) (1).

Figure 1. National Nurses Union billboard off Highway 111 West of Palm Springs near the I-10.

The billboard campaign is in response to the posting of two videos that showed a water leak in Desert Regional's neurological intensive care unit and an infestation  of cockroaches in the emergency department break room (2,3). Desert Regional is a public hospital governed by an elected district board. Tenet Healthcare is a private company that leases and runs the hospital. The nurses’ union said Tenet has a long-standing practice of short-staffing Desert Regional, which they said has caused patient safety issues (1). Tenet is currently in the process of renegotiating another 30-year lease with the hospital, which would include the option to purchase the hospital from the Desert Healthcare District at the end of the new lease (1).

Desert Care Network — composed of Tenet-operated hospitals Desert Regional, JFK Memorial in Indio, CA, and Hi-Desert Medical Center in Joshua Tree, CA — provided the following statement: "The California Nurses Association continues to spread misleading information about Desert Regional. These claims are unwarranted, and these tactics will not change Desert Regional's unwavering commitment to the Coachella Valley. Our hospital takes maintenance and cleanliness standards seriously. This includes addressing repairs needed due to people flushing non-flushable cleaning wipes or issues after heavy rains such as pest control. Consistent with sound operational protocols, we proactively closed areas for a short time to remediate issues. These unrelated occurrences were addressed immediately and disclosed promptly to the staff and the Desert Healthcare District" (4).

Desert Regional’s governing Board of Directors are elected to four-year terms by Palm Springs voters. No statement has been made to date by the Board or have any statements been made by state healthcare inspectors such as the California Department of Health  or national healthcare inspectors such as the Joint Commission and Centers for Medicare & Medicaid Services. Although lack of cleanliness does not necessarily equate with lack of quality, cleanliness if often used as a substitute measure for safe healthcare, much like restaurant cleanliness is used as a measure for safe food.

Richard A. Robbins MD

Editor, SWJPCCS

References

1. Tayor M. California nurses use billboard to voice opposition to hospital sale. Becker’s Hospital Review. February 29, 2024. Available at: https://www.beckershospitalreview.com/nursing/california-nThe urses-use-billboard-to-voice-opposition-to-hospital-sale.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=6133H6750001J5K (accessed 3/2/24).
2. National Nurses United. Ceiling Leaks in Neurological ICU at Desert Regional Medical Center. February 24, 2024. Available at: https://vimeo.com/914927727?share=copy (accessed 3/2/24).
3. National Nurses United. Cockroaches at Desert Regional Medical Center. February 24, 2024. Available at: https://vimeo.com/914925049/f9d46c5890?share=copy (accessed 3/2/24).
4. Sasic E. Desert Regional nurses launch billboards to spotlight concerns; hospital pushes back. Palm Springs Desert Sun. February 27, 2024. Available at: https://www.desertsun.com/story/news/health/2024/02/27/desert-regional-nurses-launch-billboard-campaign-palm-springs-area-hospital-news/72752162007/ (accessed 3/2/24).

Cite as: Robbins RA. Nurses Launch Billboard Campaign Against Renewal of Desert Regional Medical Center Lease. Southwest J Pulm Crit Care Sleep. 2024;28(3):32-33. doi: https://doi.org/10.13175/swjpccs013-24 PDF