Week in review: 8 biggest healthcare stories this week


Stay in the know with Becker's Hospital Review's weekly roundup of the nation's biggest healthcare news. Here's what you need to know this week.

1. Study lists 50 hospitals with biggest markups
Two researchers used Medicare cost reports to identify the 50 U.S. hospitals with the largest difference between charges and Medicare-allowable cost in 2012. The study, which is published in Health Affairs, found hospital charges at these 50 hospitals were on average 3.4 times the Medicare-allowable cost in 2012. The 10 percent lowest-charging hospitals had ratios below 1.5, and hospitals in Maryland had markups of less than 1.5, the lowest of any state. The upper 10 percent had ratios above 5.7. Of the 50 hospitals, 49 are for-profit and 46 are owned by for-profit hospital systems. The researchers also noted that hospital executives suggest high charge-to-cost ratios are particularly attributable to the slow growth rate in Medicare and Medicaid spending and the need to have operating surpluses to remain in business. The study authors attributed the high markups to a lack of price transparency and negotiating power by uninsured patients, out-of-network patients, casualty and workers' compensation insurers and in-network insurers.

2. Epic's Judy Faulkner pledges 99% of her wealth to philanthropy
Judy Faulkner, founder and CEO of Verona, Wis.-based Epic Systems, joined Giving Pledge, a platform for some of the world's wealthiest people to dedicate a majority of their wealth to philanthropy. Warren Buffett and Bill and Melinda Gates launched Giving Pledge in 2010. Ms. Faulkner joins 136 other individuals and families who have pledged to donate at least half of their wealth to charity. In her formal pledge letter, Ms. Faulkner said she plans to donate 99 percent of her assets. Forbes named Ms. Faulkner among the "Wealthiest Female Techies in America" this past May, noting her net worth of $2.6 billion.

3. Medicaid payments at risk as Illinois nears budget deadline with no agreement
If Illinois does not have a budget plan in place when the 2016 fiscal year begins July 1, new vendor and Medicaid provider payments will stop, along with state worker paychecks and money owed to school districts, according to Reuters. Comptroller Leslie Geissler Munger said Wednesday that if the FY 2016 budget is not enacted by July 1, she cannot issue payments for fiscal 2016 bills. However, bills incurred in the current fiscal year will be paid, as well as payments on Illinois' $30 billion of outstanding bonds, retired worker pensions, revenue-sharing to local governments and certain financial assistance programs for the poor and disabled. Maryjane A. Wurth, president and CEO of the Illinois Hospital Association, said in a statement that if the budget impasse is not resolved by the end of the month, adoption of a temporary one-month budget should be considered until a final budget agreement is reached.

4. Ex-president of Texas hospital sentenced to 45 years in prison
Earnest Gibson III, former president of Riverside General Hospital in Houston, was sentenced to 45 years in prison and ordered to pay nearly $46.8 million in restitution for his role in a $158 million Medicare fraud scheme, according to the Department of Justice. From 2005 to 2012, Mr. Gibson, his son and Regina Askew — a group home owner — were involved in a scheme to defraud Medicare in which they submitted false claims for partial hospitalization program services through RGH. PHP services involve intensive outpatient treatment for severe cases of mental illness. According to evidence presented at trial, RGH and its satellite locations billed Medicare for PHP services for Medicare beneficiaries who did not qualify or need the treatment. Roughly $158 million in claims for medically unnecessary PHP services or services that were never even provided were submitted to Medicare.

5. WellStar calls off merger talks with Emory
Marietta, Ga.-based WellStar Health System, the largest nonprofit system in Georgia, scrapped plans to merge with Atlanta-based Emory Healthcare, according to an Atlanta Business Chronicle report. The two systems began discussing a merger in February. Gary Miller, chair of the WellStar board of trustees, said in a statement released to the Atlanta Business Chronicle, "After a few months of discussion and review with Emory University, the WellStar board of trustees has determined a new strategic direction. WellStar has declined to enter the next stage of discussions with Emory University." Emory University released a statement indicating disappointment at WellStar's decision. WellStar is still exploring integration opportunities with other potential partners.

6. Obama: King v. Burwell is an "easy case"
In response to a question from a reporter following the G7 Summit in Krun, Germany, President Barack Obama explained why his administration has not bothered with a contingency plan in preparation for a potential ruling in favor of the plaintiffs in the King v. Burwell Supreme Court case. President Obama said it is an "easy case" and "it's important for us to go ahead and assume that the Supreme Court is going to do what most legal scholars who've looked at this would expect them to do." He also said the high court "probably shouldn't even have… taken up [the case]," according to the Washington Post. President Obama argued it is the intent of the law that should determine the judge's ruling on the case, point out that liberal Democratic judges as well as conservative judges repeatedly employ this approach to statuary interpretation.

7. American Well files patent infringement suit against Teladoc
Telemedicine provider American Well filed a lawsuit June 8 seeking relief from the infringement of intellectual property rights against Teladoc, another telemedicine provider. The suit, filed in the United States District Court for the District of Massachusetts, alleges Teladoc "unfairly disregarded" American Well's intellectual property related to its technology in the telemedicine business. According to a report from the Boston Business Journal, the patented technology in question uses specific algorithms to connect consumers with providers. American Well alleges Teladoc is aware of the patents, yet continues to ignore them. According to the lawsuit, "American Well's patented technologies power the most downloaded mobile telehealth application of its kind in the United States, and the company's service was the first ever to receive accreditation by the American Telemedicine Association."

8. Assurant to exit health insurance market
Assurant announced it will exit the health insurance market by the end of 2016, and it will "begin to wind down its major medical operations" immediately. Assurant began exploring the sale of its employee benefits and health insurance business in April. The company said it was looking to sell its health insurance division to narrow its focus and generate higher returns. Assurant has decided to leave the insurance market even though it does not have a buyer. The insurance company estimates exiting the health insurance market will cost between $175 million and $250 million. The costsinclude premium deficiency reserves, severance and retention, contract and lease terminations and other transaction costs.

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