Health Plan Weekly

While there are signs that ultra-high inflation rates are retreating, health care cost pressures are likely to stick around for some time and have a major impact on payers, industry experts say. 

The Bureau of Labor Statistics (BLS) reported on April 12 that the consumer price index (CPI) rose by 5% in March from a year earlier, the smallest increase since May 2021 and the ninth consecutive month that annual inflation has declined. Meanwhile, the CPI for medical care services increased by just 1% year-over-year, including a 0.5% increase in physicians’ services and a 2.7% increase in hospital services. 

The use of remote patient monitoring skyrocketed during the COVID-19 public health emergency, with RPM claims volume jumping by 1,294% from January 2019 to November 2022, according to a report released by Definitive Healthcare.

Since 2018, CMS added five new reimbursement codes for RPM services, and introduced five codes related to remote therapeutic monitoring in 2022. By November 2022, RPM claims volumes were already 27% higher than they were during 2021.

Internal medicine physicians were more likely to use RPM, with 28.7% of their procedure claims related to RPM. Cardiological and family practice providers ranked second and third at 21.3% and 19.4%. An analysis of diagnosis categories suggested similar trends. Essential hypertension saw the highest share of RPM-related claims at 51.0%, followed by diabetes mellitus with complications (10.4%) and diabetes mellitus without complications (6.4%).

Many of the largest U.S. hospital systems reported negative net income from 2022, a list that includes Kaiser Permanente, Mass General Brigham, and the Cleveland Clinic, each of which lost at least $1 billion. Although some prominent hospital systems’ red ink is due to negative investment income, the latest available data suggest that inpatient volumes are down from their pre-pandemic baseline and are likely to stay that way. As a result, experts tell AIS Health, a division of MMIT, hospitals are likely to be even more aggressive with payers than they have been in recent rate negotiation rounds to replace some of that lost revenue and expired federal pandemic relief funds. 

Consulting firm Kaufman Hall & Associates, which compiles monthly indices of hospital finances, found in a March 28 report that the median hospital operating margin was -1.1% in February, a slight decrease from January’s -0.8%. The report added that “due to external economic factors, relatively flat margins are likely to continue in the near term.”