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In brief: MA reform, Invacare credit, health expenditures 

In brief: MA reform, Invacare credit, health expenditures 

LOS ANGELES – A new analysis by researchers at the University of Southern California warns that overpayments to Medicare Advantage plans now exceed 20%, or $75 billion annually, underscoring the urgent need for reform. 

Researchers with the USC Schaeffer Center for Health Policy & Economics found that the millions of beneficiaries in traditional Medicare who have switched to Medicare Advantage plans have lower spending than those with similar health risks. They report this pattern of “favorable selection” more than doubles prior overpayment estimates made by the Medicare Payment Advisory Commission (MedPAC), which reflected aggressive coding of enrollee health conditions and certain easily-achieved bonus payments related to quality – but not “favorable selection.” 

“The current Medicare Advantage payment structure results in overpayments markedly higher than previously understood,” says Paul Ginsburg, senior fellow at the USC Schaeffer Center and professor of the practice at the USC Price School of Public Policy. “Our analysis highlights how Medicare Advantage currently operates and the need to reform how the plans are paid.” 

Key takeaways from the research

  • Beneficiaries with lower-than-average expenditures than those with similar risk factors were significantly more likely to switch from Fee-for-Service to Medicare Advantage. 
  • As a result, risk-score-adjusted expenditures for the 16.9 million beneficiaries who switched from FFS to MA between 2006-19 were substantially below average. Plans were overpaid because MA rates are intended for beneficiaries with average—not systematically below average—expenditures. 
  • MA plans in 2020 were overpaid by 14.4% due to this “favorable selection” phenomenon; when combined with the 6% overpayment reported by MedPAC for coding intensity and other factors, total MA overpayments were on the order of 20%. 
  • Basing MA payment benchmarks on FFS expenditures is increasingly problematic as FFS enrollment continues to decline – underscoring the need for reforming how MA payments are set, such as by decoupling MA payments from FFS benchmarks or instituting competitive bidding. 

White Oak supports Invacare’s growth 

NEW YORK – White Oak ABL and White Oak Commercial Finance, the asset-based lending affiliates of White Oak Global Advisors, provided a $40 million North America ABL credit facility to Invacare Holdings Corp., it announced today. 

The $40 million ABL Facility was part of Invacare’s larger financial restructuring, which allowed the company to emerge from a voluntary pre-arranged bankruptcy and continue to pursue its goals in its core lifestyle and mobility & seating product categories. 

“We are pleased to have secured the ABL Facility which provides additional flexibility for the North American business, as we focus on executing our global transformation plan,” said Geoffrey P. Purtill, president and CEO. “We believe the company is well-positioned to capitalize on global tailwinds in the markets we serve.” 

Invacare, as well as its two U.S. subsidiaries, Freedom Designs and Adaptive Switch Laboratories, successfully emerged from Chapter 11 bankruptcy on May 5.   

White Oak is excited to partner with Invacare and support the company’s long-term growth plans, says Tom Otte, head of ABL. 

“With this strategic partnership, White Oak has once again demonstrated its ability to develop tailored ABL solutions to support the operations and sustained growth of middle market businesses,” he said.  

Health expenditures set to grow 

WASHINGTON – National health expenditures will grow 5.4%, on average, over the course of 2022-31 and will account for about 20% of the economy by the end of that period, according to the latest projections by the Office of the Actuary at CMS. 

National health expenditures are projected to have grown 4.3% in 2022, slower than nominal gross domestic product (GDP) growth of 9.2%, leading to a decrease in the projected health spending share of GDP from 18.3% in 2021 to 17.4% in 2022, according to the office. However, over the course of the full projection period, 2022–31, health spending is expected to grow, on average, 5.4% per year, outpacing projected average growth in nominal GDP of 4.6% per year and resulting in a health spending share of GDP of 19.6% by 2031, it says. 

Recent legislation is anticipated to affect trends in health insurance enrollment and health care spending over the course of the next decade, according to the office. For instance, the expiration of pandemic legislative provisions is expected to result in: reductions to Medicaid enrollment through 2025 (falling to 81.1 million that year after reaching its peak of 90.4 million in 2022), increases in enrollment in private health insurance from enhanced Marketplace subsidies through 2025, and effects on provider payments for Medicare—most notably the expiration of the add-on payment for COVID-19-related admissions. 

For the major payers, Medicare is expected to grow the fastest over the course of 2022–31, averaging 7.5% per year, according to the office. The growth in Medicare enrollment is partly attributable to the last of the baby boomers enrolling in the program through 2029. 

For the major sectors, hospital spending is expected to grow more rapidly (averaging 5.8% for 2022–31) than spending both for physician and clinical services (5.3%) and for prescription drugs (4.6%), according to the office. Average price growth for hospitals (3.2% over the course of 2022–31) is expected to outpace that of physician and clinical services (2.0%) and prescription drugs (2.2%), reflecting, in part, an expectation that prices associated with the inputs required to provide hospital care will grow more rapidly, as they have over the longer-run history, it says.  

AMA calls for AI oversight 

CHICAGO – The American Medical Association has adopted a new policy calling for greater regulatory oversight of health insurers using artificial intelligence (AI) to review patient claims and prior authorization requests. The newly adopted policy calls for health insurers using AI to implement a thorough and fair process that is based on clinical criteria and reviews by physicians and other health care professionals with expertise for services under review, and that has no incentive to deny care. "The use of AI in prior authorization can be a positive step toward reducing the use of valuable practice resources to conduct these manual, time-consuming processes, but AI is not a silver bullet,” said AMA Board Member Marilyn Heine, MD. “As health insurance companies increasingly rely on AI as a more economical way to conduct prior authorization reviews, the sheer volume of prior authorization requirements continues to be a massive burden for physicians and creates significant barriers to care for patients. The bottom line remains the same: We must reduce the number of things that are subject to prior authorization.” The AMA highlighted data from ProPublica showing that, over a period of two months in 2022, Cigna doctors denied more than 300,000 claims as part of a review process that used AI, with Cigna doctors spending an average of 1.2 seconds on each case.  

HME Home Health wins award for exclusive product 

RICHMOND, British Columbia – HME Home Health has won the BC Care Provider Association’s Safety Product Innovation Award for its exclusive HME Signature Series Dove Mattress. “HME is thrilled to have won the BC Care Provider’s Safety Product Innovation Award, which recognized excellence in new and innovative products that promote patient safety,” said Robert Boscacci, the company's co-founder and CEO. The mattress was clinically designed in Canada, exclusively for HME Home Health, to prevent and manage skin injuries using alternating pressure and micro, low-air loss technologies. Michelle Harvey, the company’s vice president of sales and product, spearheaded the clinical design and testing of the Dove Mattress. “The Dove showcases the strong talent within our staff team,” she said. “From our Marketing Manager Shirley Le, who designed the Dove’s control box and worked with our IT Analyst, Aashray Garg, to develop the subsequent QR codes for client troubleshooting and setup guides, to our Long-Term Care Team of Gavin Dhanoi, assistant manager, and Brian Quach, senior sales team member, who have provided essential industry feedback and who have been integral in marketing the HME Dove to our LTC partners, it really has been a team effort.” 

Ottobock partners with Eurovision to empower people with disabilities 

BURLINGTON, Ontario – Ottobock on June 13 launched #IAmAMountain, a global initiative to unite and empower people with disabilities across the world through the life-celebrating anthem “Mountain,” which was written specifically for the initiative by Eurovision’s Sam Ryder. Presented for the first time at the grand finale of this year's Eurovision Song Contest on May 13 in Liverpool, Ryder's "Mountain" honors the fearlessness it takes to get to the other side of adversity. Ryder performed alongside Queen drummer Roger Taylor, as performers with disabilities took the stage and made Eurovision history in front of more than 160 million viewers. “Sam Ryder is the perfect voice and partner for our campaign,” said Martin Böhm, CEO. “His involvement will help our community overcome so many barriers, just as his Eurovision performance was a moment of real visibility and representation for people with disabilities in front of an audience of millions. We will be taking this approach to the next level with our #IAmAMountain campaign. By inviting people with disabilities to share their stories, we hope to change society's perception and instead, celebrate all the things that are possible in life. This is exactly what Ottobock is all about." The #IAmAMountain campaign brings together stories from 26 Ottobock users from 14 countries. As part of the initiative, they are sharing their personal moments on social media – the highs and lows. Alongside Ryder, they will be inviting everyone to join in the conversation by asking, "What have you overcome?" And calling for others to share their personal experiences under the hashtag #IAmAMountain. 

Philips announces share repurchase 

AMSTERDAM – Royal Philips announced on June 14 that it will repurchase up to 7.1 million shares to cover certain of its obligations arising from its long-term incentive plans. At the current share price, the shares represent an amount of up to about EUR 132 million. The repurchases will be executed through one or more individual forward transactions, expected to be entered into in the second or third quarter of 2023, in accordance with the Market Abuse Regulation and within the limits of the authorization granted by the company’s general meeting of shareholders on May 9, 2023. Philips expects to take delivery of the shares in 2024 and 2025. Further details are available here.  

OPGA seeks Woman of the Year 

WATERLOO, Iowa – The Orthotic and Prosthetic Group of America has opened the nomination period for the 2023 O&P Woman of the Year Award. Nominators are encouraged to provide examples of how the nominee has made significant contributions throughout her career to serve her patients, the community, business and the O&P profession. “Now in the seventh year, we are thrilled to continue recognizing the outstanding women in the O&P profession with the O&P Woman of the Year Award,” said Adam Miller, president of OPGA, a division of VGM & Associates. “We hope this award not only shines a light on women who contribute significantly to the O&P profession but helps promote the overall importance of the profession and the patients we serve every day.” Nina Bondre, CPO, education specialist with Ottobock Healthcare, was selected as the 2022 O&P Woman of the Year. OPGA, which organizes the award, is a nationwide member service organization comprised of O&P patient care facilities and numerous product and service suppliers. Submit a nomination here.


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