Well, we'll link to it in the show notes, but what were noteworthy points that you saw?

Right, Nick, so the focus of the report is that nearly sixty percent of hospital patient days are attributable to Medicare, Medicaid, and Medicare Advantage patients, and that the hospitals being acquired have higher governmental payer mix and are operating under greater financial and operational pressure.

So that the focus of the transaction may not be just on negotiating higher commercial rates, but rather on health systems that are looking for a partner so that they can have access to the capital and continue to provide the services that are needed in that community, because they may be in a situation where they're under kind of financial constraint.

And the report mentions that when one of these pending mergers falls through, the target hospital can be in for some financial distress, including, they cite a fifty percent decline in operating profit margin and a thirty-eight percent reduction in days' cash on hand.

Right.

And you know, I think it doesn't necessarily mean that the canceled merger caused these hospitals.

Um, obviously these hospitals were already struggling, and, you know, this was why they were seeking a partner in the first place.

But it does kind of raise an important strategic question that when evaluating a merger, should the FTC not only look at what happens if the transaction occurs? So, you know, yes, is it a larger system who can negotiate better commercial prices? But should they also look that, you know, what is likely to happen to that hospital and the community if this merger doesn't happen? Is that hospital gonna continue to be financially sustainable and continue to be able to, to provide the services needed in that community?

What are some of the latest insights you can share about what healthcare providers should know in these final few months going into 2027?

Thanks, Nick.

Yeah, I think this is going to be an important issue for health care finance leaders starting January 1st, 2027.

So there's four areas they should be paying attention to.

The first is identifying who's at risk of losing their Medicaid coverage.

So health systems know which patients have Medicaid.

But what they may not know is which of those patients are subject to these work requirements and when those patients' next redetermination date occurs.

So

So let's bring in Katie to shed some light on that.

Right, Nick.

So yeah, this is a little groundbreaking.

It's the first nationwide mandatory episode-based payment model being rolled out by CMS that will affect nearly all hospitals as part of this mandate, and it begins January 1st, 2028.

So that gives health systems about 16 months to prepare.

So this, uh, model is based on, um, CJR, Comprehensive Care for Joint Replacement model.

It's been expanded.

How is that gonna manifest in CJRX?

But it has really evolved to more of an operating model, right? Where you need to have the infrastructure in place in order to drive the success around a contract, but also then to identify the new contract parameters What were some of the key themes or the key discussion points that some of the leaders who attended, what did they bring to the table around that topic?

Yeah, I think a lot of what was talked about is that success really depends on redesigning clinical operations, redesigning physician incentives, care coordination, and then finance, being involved in all that so they can better support better outcomes and lower total cost of care.

So moving away from a contract by contract sort of mindset and thinking about their full portfolio of value-based care and then really building the operating model so that it supports that.

So thinking about, you know, hospital at home programs, care management, their post-acute care, networks, their ambulatory strategy, access points within their system, ensuring that physicians are aligned and building a culture in a workforce that supports overall an operating model that would be successful in value-based care.

I think about an example from one organization where they had multiple contracts with multiple payers and each requiring different quality metrics.

And rather than asking their physicians to kind of navigate all these different measures with every payer, they standardized their clinical dashboards and their workflows across these contracts.

So that instead of allowing each payer then to kind of have their own unique reporting structure, their own metrics, they developed these standard set of metrics.

What were a couple of the key points that came out of that concept of care affordability?

And to start with the basics, there isn't necessarily great news for physicians in this rule regarding the payment rates for 2027, is there?

Not really.

So, first of all, if you look at the conversion factor update, there's going to be a decrease for both qualifying APM participants and non-qualifying APM participants.

So, 1.19% lower for APM.

the qualifying APM participants, and then 1.68% lower for non-qualifying APM participants.

So if you remember, they have the two different conversion factors, which started last year.

And the reason, the primary reason for this decrease is the expiration of the one-year 2.5% statutory increase that was provided.

So what are some standout components of that section of the proposed rule?

But it has really evolved to more of an operating model, right? Where you need to have the infrastructure in place in order to drive the success around a contract, but also then to identify the new contract parameters What were some of the key themes or the key discussion points that some of the leaders who attended, what did they bring to the table around that topic?

Yeah, I think a lot of what was talked about is that success really depends on redesigning clinical operations, redesigning physician incentives, care coordination, and then finance, being involved in all that so they can better support better outcomes and lower total cost of care.

So moving away from a contract by contract sort of mindset and thinking about their full portfolio of value-based care and then really building the operating model so that it supports that.

So thinking about, you know, hospital at home programs, care management, their post-acute care, networks, their ambulatory strategy, access points within their system, ensuring that physicians are aligned and building a culture in a workforce that supports overall an operating model that would be successful in value-based care.

I think about an example from one organization where they had multiple contracts with multiple payers and each requiring different quality metrics.

And rather than asking their physicians to kind of navigate all these different measures with every payer, they standardized their clinical dashboards and their workflows across these contracts.

So that instead of allowing each payer then to kind of have their own unique reporting structure, their own metrics, they developed these standard set of metrics.

What were a couple of the key points that came out of that concept of care affordability?

What can you tell our listeners about that?

This is the Provider Reimbursement Stability Act, which seems to be getting a lot of support and moving forward, and this would be legislation that would help build a more rational, predictable Medicare physician payment system.

So this bill would update Medicare budget neutrality threshold from twenty million dollars to fifty-four point three million dollars in twenty-twenty-seven.

It would also introduce periodic increases tied to the MEI index every five years.

This would also introduce periodic increases tied to the Medicare Economic Index every five years, starting in twenty-thirty-two, which would allow adjustments if actual expenditures significantly differ from estimates for certain services.

So this would help to reduce the frequency and magnitude of fee schedule adjustments, allowing for greater predictability for provider organizations or physicians.

The bill would also mandate timely updates to direct cost using and calculating practice expenses, um, at least once every five years, um, and include the opportunity for stakeholders, like different physicians and specialties, to provide input to that, so that creates an opportunity to ensure that the cost data reflects the current realities of physician practices.

So what is on your radar as far as fraud, waste, and abuse and enforcement of program integrity in, in these programs?

What are some insights there?

Yeah.

So the Accountable Health Communities model is a model that ran for three years, and they just published a report on the model that showed that addressing upstream drivers of health could really impact cost and utilization at scale.

So what this model did was it screened over a million Medicare and Medicaid beneficiaries for five core needs, so food, housing, transportation, utilities, and then safety.

And when they did this screening, thirty-seven percent of patients had at least one unmet need.

So what they did was they provided navigation support, meaning someone helped those patients connect to community resources.

And in doing so, they saw that there was a lower total healthcare expenditures for these patients, fewer inpatient admissions, and fewer emergency department visits, translating into more than two hundred million dollars in net savings.

What are you hearing there?