Cherry-pick­ing pa­tients? Mayo Clinic aims to ‘pri­or­i­tize’ pri­vately in­sured

Modern Healthcare - - NEWS - By El­iz­a­beth Whit­man

Late last year, CEO John Nose­wor­thy had a mes­sage for the staff of the Mayo Clinic: We want pa­tients with com­mer­cial in­sur­ance over Medi­care or Med­i­caid.

What was rev­e­la­tory about his state­ment was not what he said, but the mere fact that he said it. The Min­neapo­lis Star Tri­bune first re­ported the news after ob­tain­ing a tran­script of the speech and ver­i­fy­ing it with the Mayo Clinic. Now, it’s rais­ing con­cerns about med­i­cal ethics and the broader reper­cus­sions of a highly re­garded health sys­tem’s will­ing­ness to boldly spell out its pref­er­ence for wealth­ier pa­tients.

“We’re ask­ing ... if the pa­tient has com­mer­cial in­sur­ance, or they’re Med­i­caid or Medi­care pa­tients and they’re equal, that we pri­or­i­tize the com­mer­cial in­sured pa­tients enough so ... we can be fi­nan­cially strong at the end of the year to con­tinue to ad­vance, ad­vance our mis­sion,” Nose­wor­thy told staff.

For the Mayo Clinic health sys­tem to ar­tic­u­late its pref­er­ence for pa­tients with com­mer­cial in­sur­ance, which pays bet­ter than gov­ern­ment in­sur­ance, was dis­ap­point­ing and sur­pris­ing, said Arthur Ca­plan, head of the bioethics di­vi­sion at NYU Lan­gone Med­i­cal Cen­ter.

More than 1.3 mil­lion pa­tients a year visit the Mayo Clinic. The Rochester, Minn.-based health sys­tem op­er­ates in five states, in­clud­ing cam­puses in Ari­zona and Florida. In 2016, it re­ported $11 bil­lion in rev­enue and $475 mil­lion in in­come. That year, U.S. News & World Re­port ranked it as the top hospi­tal in the coun­try.

“A cor­ner­stone of our eth­i­cal think­ing is you get the same care whether you’re rich or you’re poor, and we don’t triage by the size of your wal­let,” Ca­plan said. “A wealthy leader like Mayo is send­ing a grim mes­sage not

The Mayo Clinic health sys­tem op­er­ates in five states, in­clud­ing cam­puses in Ari­zona and Florida. In 2016, it re­ported $11 bil­lion in rev­enue and $475 mil­lion in in­come.

only to other hos­pi­tals but to those who rely on Medi­care and Med­i­caid.”

While it may be un­seemly or un­eth­i­cal, it is not il­le­gal for Mayo Clinic, a pri­vate en­tity, to pre­fer pa­tients on the ba­sis of their in­sur­ance cov­er­age. Dis­crim­i­nat­ing against pa­tients is il­le­gal only in the emer­gency room. Some physi­cians al­ready choose not to ac­cept Medi­care or Med­i­caid, Ca­plan pointed out.

Mayo Clinic’s nondis­crim­i­na­tion pol­icy state­ment states, “As a re­cip­i­ent of fed­eral fi­nan­cial as­sis­tance, Mayo Clinic does not ex­clude, deny ben­e­fits to, or oth­er­wise dis­crim­i­nate against any per­son” based on race, gen­der, re­li­gion and other char­ac­ter­is­tics, in­clud­ing “sta­tus with re­gard to pub­lic as­sis­tance.” This state­ment ap­plies to “ad­mis­sion to, par­tic­i­pa­tion in, or re­ceipt of the ser­vices and ben­e­fits un­der any of its pro­grams and ac­tiv­i­ties,” through Mayo it­self or any con­trac­tors.

The sys­tem also states on its web­site that it “ap­pro­pri­ately serves pa­tients in dif­fi­cult fi­nan­cial cir­cum­stances and of­fers fi­nan­cial as­sis­tance to those who have an es­tab­lished need to re­ceive med­i­cally nec­es­sary ser­vices and meet cri­te­ria for as­sis­tance.”

In 2016, the Mayo Clinic pro­vided $629.7 mil­lion in char­ity care, in­clud­ing $548 mil­lion in un­paid care for pa­tients who were on Med­i­caid or were indi­gent. It also put more than $600 mil­lion to­ward cap­i­tal ex­pen­di­tures, as part of its mul­ti­year plan to in­vest in new equip­ment, fa­cil­i­ties and tech­nol­ogy.

That pro­por­tion of un­com­pen­sated care rep­re­sented an in­crease of nearly 71% from the $321 mil­lion in un­re­im­bursed care that Mayo Clinic pro­vided in 2012.

Pri­vate in­sur­ers re­im­burse health­care providers at higher rates than Medi­care and Med­i­caid. But the num­ber of pa­tients on pub­lic in­sur­ance has

“If we don’t grow the com­mer­cially in­sured pa­tients, we won’t have in­come at the end of the year to pay our staff, pay the pen­sions, and so on. So we’re look­ing for a re­ally mild or mod­est change of a cou­ple per­cent­age points to shift that bal­ance.”

DR. JOHN NOSE­WOR­THY CEO, Mayo Clinic

grown in re­cent years. The 2010 Af­ford­able Care Act gave states the op­tion of ex­pand­ing Med­i­caid, lead­ing to some 15.7 mil­lion gain­ing cov­er­age through the in­sur­ance pro­gram for low-in­come peo­ple.

Mean­while, more and more baby boomers are turn­ing 65 and sign­ing up for Medi­care. In 2016, hos­pi­tals in ag­gre­gate were ex­pected to post losses of 9% on Medi­care pa­tients, the Medi­care Pay­ment Ad­vi­sory Com­mis­sion said in a re­port that year. By com­par­i­son, in 2014, hos­pi­tals lost 5.8% on Medi­care pa­tients.

Nose­wor­thy said in his speech that Mayo’s pro­por­tion of Med­i­caid pa­tients had re­cently risen 3.7%, the Star Tri­bune re­ported. “If we don’t grow the com­mer­cially in­sured pa­tients, we won’t have in­come at the end of the year to pay our staff, pay the pen­sions, and so on,” Nose­wor­thy said. “So we’re look­ing for a re­ally mild or mod­est change of a cou­ple per­cent­age points to shift that bal­ance.”

What that shift will con­sti­tute in con­crete terms re­mains un­clear. If two pa­tients had com­pa­ra­ble con­di­tions, with one pri­vately in­sured and the other on Med­i­caid, would the Med­i­caid pa­tient re­ceive treat­ment later than the pri­vately in­sured pa­tient or not at all?

In a state­ment pro­vided to Mod­ern Health­care, the Mayo Clinic said that Medi­care and Med­i­caid ben­e­fi­cia­ries ac­counted for half of their ser­vices. “Med­i­cal need is the top fac­tor in the de­ci­sion­mak­ing process for ap­point­ment sched­ul­ing. After med­i­cal need, we con­sider if the pa­tient can ac­cess the care they need closer to home and of­ten work with their lo­cal provider to pro­vide the high­est level of care lo­cally,” it ex­plained.

“To fund its re­search and ed­u­ca­tion mis­sion, Mayo needs to sup­port its com­mer­cial in­sur­ance pa­tient num­bers in or­der to con­tinue to sub­si­dize the care of pa­tients whose in­sur­ance does not cover the cost of their care,” it added. “Bal­anc­ing payer mix is com­plex and isn’t unique to Mayo Clinic. It af­fects much of the in­dus­try, but it’s of­ten not talked about.”

Nose­wor­thy’s state­ment was a rare ar­tic­u­la­tion of a broader trend—try­ing to make up for losses from Medi­care or Med­i­caid pa­tients with com­mer­cially in­sured pa­tients—that the in­dus­try tends to try to con­ceal.

“I’ve heard of hos­pi­tals try­ing to do this be­hind the scenes, but I’ve never heard any­body say it up front,” Ca­plan said. “This state­ment is tak­ing that dirty se­cret and bring­ing it into the open.”

How hospi­tal and health­care sys­tems’ fi­nances would be af­fected in a post-ACA world, given Repub­li­cans’ on­go­ing ef­forts to re­peal the law, re­mains un­clear. The Con­gres­sional Bud­get Of­fice has cal­cu­lated that if the re­place­ment bill be­comes law, 24 mil­lion peo­ple would lose health in­sur­ance over the next 10 years. Due to the in­crease in the unin­sured pop­u­la­tion, Medi­care and Med­i­caid spend­ing on dis­pro­por­tion­ate-share pay­ments to hos­pi­tals would in­crease by $74 bil­lion over the com­ing decade, while fed­eral pay­ments to states for Med­i­caid would drop by $880 bil­lion by 2026.

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