– Hospitals and health systems nationwide saw a sizable increase in delayed or missing payments in the first quarter, due in part to a recent, large-scale disruption to payment processing services, according to a new report from Strata Decision Technology.
– The report, leveraging data from Strata’s extensive healthcare databases, unveils trends impacting hospitals, insurers, and patients alike.
Delayed Payments Disrupt Revenue Streams
A significant finding concerns a surge in delayed or missing payments to hospitals. This can be attributed in part to a recent large-scale disruption in payment processing services. The financial impact is substantial, with estimated gaps in expected revenue ranging from 16.5% to 17.9% for the first three months of the year. The report highlights that both the largest and smallest hospitals were most affected.
Two-Midnight Rule Expansion: Potential for Higher Inpatient Admissions
The report also examines the potential effects of the recently expanded Two-Midnight Rule. This rule requires Medicare Advantage patients to be admitted as inpatients if their care extends beyond two midnights. Analysis suggests this expansion could impact over 20% of Medicare Advantage encounters in 2024. Data from 2023 indicates that a significant portion of encounters (22.3%) already fell into this category. The initial effects of the rule expansion are reflected in a 3.9% year-over-year increase in inpatient admissions for Q1, alongside a 5.1% decrease in outpatient admissions.
Outpatient Surgeries on the Rise
Another key trend identified in the report is the continuous shift towards outpatient surgeries. Since 2019, policy changes by CMS have allowed certain procedures to be performed in outpatient settings. This has resulted in a dramatic increase in the share of surgeries performed outpatient, rising from 33.6% in January 2019 to 45% in March 2024. The shift is particularly pronounced for high-volume procedures like knee replacements, with outpatient cases jumping to 80.7% in March 2024, compared to just 20.1% in January 2019.
“Our data show that hospitals across the country experienced significant shortfalls in payment volumes in the first quarter that could have ripple effects throughout the year,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “The long-term impacts of this disruption remain to be seen, but we will continue to monitor and report on hospitals’ financial performance in the months ahead.”
Report Background/Methodology
The report uses data from Strata’s StrataSphere® and Comparative Analytics database. Comparative Analytics offers access to near real-time data drawn from more than 135,000 physicians from over 10,000 practices and 139 specialty categories, and from 500+ unique departments across more than 1,600 hospitals. Comparative Analytics also provides data and comparisons specific to a single organization for visibility into how their market is evolving. StrataSphere is a unique and comprehensive data-sharing platform that helps providers leverage the power of a network that represents approximately 25% of all provider spend in U.S. healthcare. This report incorporates data from more than 600 hospitals with StrataJazz® Decision Support.
Read the Q1 2024 Strata Performance Trends report to learn more.
