Halfway through 2024, U.S. hospitals see improvement in operating margins, but not relief.

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The first half of the year has brought major ups and downs to the healthcare industry. Here are four emerging trends that will continue to impact providers over the next six months.?

1. Claims and spending continue to rise.?

The overall volume of medical claims increased by 11% from 2022 to 2023, reaching a record 55.1 billion. At the same time, spending on claim submissions also rose by 67%, hitting $19 billion. Utilization is also on the rise, with the number of emergency department visits back up to pre-2020 highs. Through it all, hospitals and health systems face pressure to handle these increased claims with limited resources, more complex payment models and rising costs.?

Denials and pre-authorizations also continue to be major challenges in today’s revenue cycle, driving increasing friction between payers and providers. This is especially coming to light in the use of innovative technologies like AI by Medicare Advantage plans.?

How we can help?

Through our end-to-end partnerships, we’re helping hospitals and health systems consolidate vendor spend and optimize operations to increase net revenue by 5% annually on average.?

2. Complaints about Medicare Advantage are intensifying.?

With complaints intensifying and lawmakers seeking tougher restrictions around the use of algorithmic software for claim denials by MA plans, some healthcare organizations have even chosen to leave these plans entirely. Collectively, providers have expressed concerns about:?

• Reimbursement issues: Providers are dissatisfied with inadequate reimbursements from Medicare Advantage plans. Scripps Health reported losses of $75 million in treating Medicare Advantage enrollees due to lower reimbursements compared to traditional Medicare fee-for-service arrangements. At the same time, the government will spend $83 billion more on Medicare Advantage beneficiaries in 2024 than it would if they were beneficiaries of fee-for-service Medicare.?

• Administrative burdens: Providers have raised concerns about the administrative burdens imposed by Medicare Advantage plans, including prior authorization requirements. These strict requirements and claims denials have led to disputes between providers and insurers, impacting care delivery efficiency.?

• Increasing disputes: Contract disputes between providers and Medicare Advantage plans are escalating, with providers demanding fairer reimbursement terms to help sustain their operations. The decision to exit these networks can be driven by challenges in fulfilling organizational missions under the current reimbursement structures.?

How we can help?

With increasing payer investment in advanced technology, it’s more critical than ever that providers have access to the same tools. We leverage generative AI to improve the speed and efficacy of clinical denial appeals — ensuring innovation is for everyone.?

3. Payers are throwing their resources into the courts.?

The calendar year started with CMS terminating two Centene Medicare Advantage plans due to poor star ratings. In response, major payers filed a series of lawsuits, questioning the process used to determine payers’ scores in the Medicare Advantage star ratings program. Now, based on the outcome of several of those lawsuits, CMS has recalculated the 2024 Medicare Advantage Star Ratings for quality bonus payment purposes.?

The lawsuits around the Medicare Advantage star ratings program aren’t unique, as healthcare payers continue to flex their lobbying muscles throughout the judicial system. Hospitals and healthcare systems have put resources into similar efforts, but the division isn’t an even one.??

For every handful of major payers who are driving the top lobbying efforts on the insurance provider side, there are thousands of hospitals whose individual concerns are not being heard. With the help of organizations like the AHA, these hospitals are collectively able to speak up for their interests, but in a contest between a single payer pushing for its own concerns versus a combined mass of the many attempting to address every organization’s needs, the playing field isn’t really level.?

In addition, the recent “Chevron deference” decision handed down by the Supreme Court may enable the courts to rule for specific regulatory priorities over reasonable agency interpretations, offering “increasing incentive by litigants to challenge any and all regulations in court.” With federal agencies like CMS afforded less power to enforce regulations, key insurance players will likely put their resources towards even greater lobbying efforts in their own interests, while CMS may favor issuing informal guidance.?

How we can help?

We regularly aggregate insights into payer behavior and payment patterns across the U.S. to support AHA’s advocacy efforts and inform congressional leaders and state legislatures.?

4. Ramifications continue from the Change Healthcare attack.?

It’s been five months since UnitedHealth Group’s Change Healthcare subsidiary fell victim to a cyberattack. The breach was catastrophic in terms of the security of patient data; rough estimates say nearly one-third of Americans could ultimately be affected.??

Providers, too, have felt the impact in a major way, with necessary claim information and payments delayed for many nationwide. Now, CMS is ending the relief funding program set up for provider and suppliers affected by cash flow challenges due to delays from the attack. The ramifications continue, however; the Biden administration is giving affected providers more time to request out-of-network billing arbitration under the No Surprises Act since necessary information from plans was also delayed by the Change attack.?

How we can help?

Our security is your security. We maintain a HITRUST Risk-based 2-year Certification as part of our commitment to information security and privacy and require our vendor partners to have robust business continuity models in place to prevent performance disruption for clients.?