How Can Congress Optimally Address the Financial Uncertainty Impacting the US Health Industry?

July 8, 2020

There are 3 key issues that, if addressed by Congress, can optimally assist medical groups and health systems dealing with financial struggles amid the pandemic. These include continued funding to the CARES Act Provider Relief Fund, reinstating the Medicare Accelerated and Advanced Payment program, and permanently lifting waivers on telehealth, said Jerry Penso, MD, MBA, president and CEO of the American Medical Group Association.

As care for the coronavirus disease 2019 (COVID-19) continues to strain the health care industry, health systems and medical groups nationwide have reported significant revenue losses. In a recent study by the American Medical Group Association (AMGA), nearly 90% of medical groups and integrated health systems report that their revenue has declined by 25% or more during the pandemic, with nearly 40% of medical groups and 20% of integrated health systems saying monthly revenue losses have exceeded 50%.

To address these issues, Congress has provided financial assistance via the CARES Act and the HEROES Act that have provided approximately $200 billion in relief to health care providers. However, Jerry Penso, MD, MBA, president and CEO of the AMGA, notes that while Congress should be applauded for taking initiative, more financial relief is needed, especially as COVID-19 cases surge across the United States.

“We need to maintain the health care infrastructure in this country to combat not just COVID-19, but all the medical conditions that are in our communities,” said Penso.

In an interview with The American Journal of Managed Care® (AJMC®), Penso outlined 3 key issues that, if addressed by Congress, can optimally assist medical groups and health systems dealing with financial struggles amid the pandemic. These include continued funding to the CARES Act Provider Relief Fund, reinstating the Medicare Accelerated and Advanced Payment program, and permanently lifting waivers on telehealth.

Transcript

AJMC®: Hello, I'm Matthew Gavidia. Today on MJH Life Sciences’ Medical World News, The American Journal of Managed Care® is pleased to welcome Dr Jerry Penso, president and chief executive officer of the American Medical Group Association, or AMGA. Can you just introduce yourself and tell us a little bit about your work?

Penso: Matt, it's great to be here. I'm Jerry Penso, president and CEO of AMGA. AMGA is a trade association, and we have over 400 member groups. Those are medical groups and health systems in actually all 50 states.

AJMC®: While some lost revenue has returned as more non-COVID care is being delivered, health care providers continue to face financial risks. Can you discuss some of these risks?

Penso: Sure. We've surveyed our members, these 400 medical groups and health systems, both in April and in May. What I can tell you is that the financial pain that they're feeling is deep and wide.

Let's talk about revenue—90% of medical groups and health systems reported that they had at least a 25% drop in their monthly revenue. In fact, 40% reported that they had a 50% or greater drop. These are largely due to the cancellation of elective or scheduled procedures, surgeries, and of course, patients staying safe at home per the CDC guidelines.

In addition, our groups have experienced higher expenses during the same time. Of course, taking care of COVID patients in their region, but 95% in our survey said that they had increased expenses due to purchasing personal protective equipment or PPE, and in addition, they've invested in their telehealth infrastructure in order to reach patients conveniently and safely at their homes.

So, this combination of decreased revenues and increased expenses has just been devastating on the medical groups and health systems—90% of independent medical groups in our surveys reported that they've had physician pay cuts [and] staff pay cuts (70%) and staff furloughs (90%). By May, 60% of these independent medical groups reported that they only had 2 months or less of their cash reserves.

AJMC®: Can you speak on how the surveys by AMGA were conducted? And what implications from COVID-19 led to the creation of these studies?

Penso: We have over 400 members, as I mentioned, and 1 of the best values that our members appreciate from AMGA is that they get to benchmark and compare what they're doing against their peers. The same thing happened in COVID-19 response. Our communities, those are our peer-to-peer networks, started acting up quite rapidly, and our groups started sharing information both online and through Zoom conferences of what was going on, how they were responding, and how it was affecting both their operations and their finances.

Our members then asked us to perform surveys of them in order to benchmark themselves against each other and compare how they were doing. So, for example, the CFOs, the chief financial officers, they're meeting at least once a week, and they wanted to know financially how other groups were performing, given the circumstances of COVID-19. So, that's where these surveys came from. We're doing them weekly now. We send a survey out to what we call our key contacts, each of our members will open them up for maybe a week or so, get their responses, tabulate them, and feed them back as quickly as possible to our members who can use that information to better plan and learn what their peers are doing.

Finally, in addition, we use that information to lobby Congress, and advocate on behalf of our members, based on their experiences and especially these financial challenges.

AJMC®: In the study findings, 41% of health care systems and 36% of medical groups predict it would take at least a year before revenues return to pre-COVID levels. What factors may delineate the level of medical cost and subsequent financial risk attributed to these organizations?

Penso: Probably the number 1 factor, and we're seeing that play out even in the recent weeks, is what's going to happen with COVID-19. Are there going to be surges or spikes or what they call mini-epidemics based on the geography or the location?

Once those occur, if the capacity of the hospital fills up, they'll have to stop doing these elective or scheduled procedures in order to handle the surge of the COVID patients. So, probably the most important factor is going to be what happens with COVID, how that affects their ability to resume back to normal operations, and of course, once you have COVID present, you're going to use up your PPE a lot quicker, and then you're going to have additional expenses for that.

In addition, if the surges do keep recurring in different areas that will contribute to patient fear. We saw with the initial spike of COVID-19, patients were afraid to come in, they were afraid to leave their homes, they were afraid even to come in for what may seem like urgent cases to the hospital. For that reason, a lot of patient volume was lost that resulted in decreased revenue for medical groups and health systems.

The financial structure of the group is probably an important factor as well. As I mentioned, independent groups—these are usually smaller or midsize medical groups in their communities—often those do not have the same reserves as a health system or a hospital-based system that may have deeper pockets and are able to withstand the financial challenges.

Two other factors. The economy. We don't know what's going to happen with the finances of the overall economy, especially with unemployment. With that, people may lose their health insurance and the bad debt that goes to medical groups and health systems could increase.

The final factor is telehealth. Telehealth has been, if you will, a silver lining for this entire epidemic for our medical groups and health systems. Telehealth has replaced some of the revenue because the visits that would have been done in the office can now be done safely in the patient's home via telehealth. Going forward, we're hopeful that the telehealth waivers that have made this all possible will continue.

AJMC®: How can these organizations continue to provide effective and timely care amidst these financial disruptions? I know you just alluded to telehealth, but are there any other interventions they could implement?

Penso: Sure. Our medical groups and health systems, they're embedded in their communities. They have long-term commitments to the health, to the safety of their communities. They've often been there for decades taking care of their entire communities, and they're going to continue to do so even given the challenges of finances and challenges of COVID-19.

A couple of things, as I mentioned, first of all, their focus is primarily on the patience of the communities that they serve. They're going to figure out how best to serve them, be it in person, in the emergency room, in their urgent centers, or via telehealth. So, probably the most important thing is to remain flexible and to take care of the patients as they need and want to be taken care of.

The second factor, I think, is going to be information technology. Information technology, including electronic health records are going to be critical in order to make sure that the patients have continuity of care, and that when they reach their doctor or their care provider, that they have the full history and can take care of them according to their current medical needs.

In addition, groups have used information technology in order to understand their patients needs and proactively reach out to those patients. For example, patients with chronic conditions whose care could worsen if they were ignored. So, using the registries and artificial intelligence, they can find patients that are perhaps at high risk if they don't take care of themselves, and really reach out to those patients.

Then finally, our groups really have developed a strong financial management. This crisis is really going to test them, but they're going to really monitor their physician productivity, they're going to monitor the work, RVUs [relative value units] that they're generating, they're going to carefully look at all sorts of things in their financial picture, including revenue cycle, staffing needs, and perhaps even moving towards new model of care.

So, again, I think overall, our groups are well positioned to weather the storm, but it may mean some flexibility and how they take care of their patients and their communities.

AJMC®: Congress has provided prior financial relief to health care providers via the CARES act and the HEROES act. However, the study by AMGA presents a significant decline in revenue for a majority of respondents by 25% or more. How can Congress optimally address this financial uncertainty impacting the US health industry?

Penso: Yeah, we've been working closely with Congress, and of course, Health and Human Services, HHS, in order to meet the needs of our medical groups and health systems, and of course help them take care of the patients and communities they take care of.

We have 3 main issues that we want to work with Congress. The first is the Provider Relief Fund. We applaud Congress for the prior financial support that they provided to provider groups. They provided through 2 different bills 175 billion of relief that's helped providers weather the storm. However, some groups are still at risk of closure. As I mentioned, some have very small amounts of reserves, and if this condition continues, there are risks that these groups will go under.

So, we need to maintain the health care infrastructure in this country in order to combat not just COVID-19, but all the medical conditions that are in our communities. So, we ask that Congress continue to fund the Provider Relief Fund. Similar to this, in the HEROES bill that you mentioned, an extra 100 billion dollars is needed, at least at this time to help groups continue to survive and thrive during these times.

The second issue is what's called the Medicare Accelerated and Advanced Payment program, or the AAP. This has been a short-term loan program that CMS put together that so far has provided 100 billion dollars of short term loans at high interest rates to the medical groups and health systems. We welcome that, but on April 26, unfortunately, CMS abruptly ended the program and we're not sure exactly why. We actually support this program and some of the provisions in the HEROES act that would reinstate the program, but also would rejuvenate the program perhaps with lower interest rates and longer repayment terms.

Then finally, we strongly urge Congress to permanently lift the waivers on telehealth. Telehealth, as I mentioned, has been a silver lining and it's been a financial lifeline for medical groups and health systems. Probably most important, it's really helped patients. Patients have taken to telehealth quite rapidly. Some of our medical groups reported that they were doing 50 telehealth visits a month prior to COVID, but now are doing up to 3000 a day. So, they've rapidly increased their telehealth and this of course has been great for patients who don't have to come to the office. It's convenient, and it gives them access and it keeps them safe at their home.

So, we want that to continue. We believe it's part of the new normal. Congress has already approved extending the waivers for the duration of the emergency. What we'd like to see is a permanent relaxation of those waivers so that patients, their physicians, and their caregivers can continue to telehealth even after COVID has gone.

AJMC®: Lastly, what further studies or actions are being considered by the AMGA in reference to the financial state of health systems and medical groups nationwide?

Penso: Yeah, our medical groups and health systems really appreciate the information. So, we're doing these pulse surveys every week, and we have plans to continue them because they provide such great value for our members. We're looking at issues like provider compensation related to the volume shifts. We're looking at the barriers that our groups are experiencing related to the financial recovery. We're going to continue to monitor PPE or protective equipment and how they're doing on that.

We're looking at the effects of COVID-19 on routine services like vaccinations, and other chronic conditions. We're looking at telehealth utilization and how that's changing over time. In addition, AMGA’s consulting is providing webinars and these are special webinars to help our members deal with the financial challenges. One coming up in mid-July will be a webinar on expense reduction that will help our groups deal with the financial challenges.

Then finally, very important to our medical groups is how are they going to manage expenses and keep their expenses low given the new financial realities.

AJMC®: To learn more, visit our website at ajmc.com. I’m Matthew Gavidia, thanks for joining us!