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FAIR Health Analysis: COVID-19 Hits Health System Revenues Harder in Northeast

Robin Gelburd, JD, is the President of FAIR Health, a national, independent nonprofit organization with the mission of bringing transparency to healthcare costs and health insurance information. FAIR Health possesses the nation’s largest collection of private healthcare claims data, which includes over 31 billion claim records contributed by payers and administrators who insure or process claims for private insurance plans covering more than 150 million individuals. Certified by CMS as a national Qualified Entity, FAIR Health also receives data representing the experience of all individuals enrolled in traditional Medicare Parts A, B and D; FAIR Health houses data on Medicare Advantage enrollees in its private claims data repository. Gelburd is a nationally recognized expert on healthcare policy, data and transparency.
In the third week of March 2020, as the pandemic caused by coronavirus disease 2019 (COVID-19) pandemic escalated, large hospitals (over 250 beds) in the Northeast experienced a 26% decline in average per-facility revenues based on estimated in-network amounts as compared to the same period in 2019 (Figure 1). Nationwide, the decrease in revenue for large hospitals was 16% (Figure 2). These are among the findings of FAIR Health’s second COVID-19 study, Illuminating the Impact of COVID-19 on Hospitals and Health Systems: A Comparative Study of Revenue and Utilization.

FIGURE 1. March Weekly Percent Change in Average Per-Facility Revenues Based on Estimated Allowed Amounts from CPI-Adjusted 2019 to 2020, by Bed Size, Northeast



Source: FAIR Health

FIGURE 2. March Weekly Percent Change in Average Per-Facility Revenues Based on Estimated Allowed Amounts from CPI-Adjusted 2019 to 2020, by Bed Size, Nationwide



Source: FAIR Health

During the third week of March 2020, thousands of new COVID-19 cases emerged in certain parts of the United States, particularly in the Northeast. Hospitals and health systems underwent financial strain as many elective procedures were deferred. FAIR Health’s new brief illuminates the financial impact on hospitals by comparing revenues based on estimated in-network amounts on private insurance claims submitted by facilities in the first quarter (January to March) of 2020 with the first quarter of 2019, adjusted by Consumer Price Index (CPI). The first quarter is analyzed month by month, and March is analyzed week by week. Also studied are discharge volume, settings, and diagnoses and procedures. 

The study was based on claims data received by April 30, 2020, which meant some claims for services during the period examined were incurred but not reported (IBNR)—valid claims for covered services that had been performed but not yet reported to the insurer. For that reason, the 2019 claims used for the study were limited to those received by April 30, 2019, to produce an “apples to apples” comparison.  Notwithstanding the IBNR issue, FAIR Health found that the impact of COVID-19 on hospitals was already substantial and of such public health relevance that it deemed it worthwhile to issue this report. FAIR Health will continue to monitor the data volume in the coming weeks.

Findings include:

In general, there was an association between larger hospital size and greater impact from COVID-19. Nationally, in large facilities, average per-facility revenues based on estimated in-network amounts declined from $4.5 million in the first quarter of 2019 to $4.2 million in the first quarter of 2020. The gap was less pronounced in midsize facilities (101 to 250 beds) and not evident in small facilities (100 beds or fewer).

March was the month when COVID-19 had its greatest impact in the first quarter of 2020. Nationally, in that month, in midsize facilities, the decrease in average per-facility revenues based on estimated in-network amounts in 2020 from 2019 was 4%; in large facilities, 5%.

Facilities in the Northeast experienced a greater impact from COVID-19 than those in the nation as a whole. For example, in the Northeast, the decline in average per-facility revenues based on estimated in-network amounts in March 2020 from March 2019 was 5% for midsize facilities and 9% for large ones.

Both nationally and in the Northeast, the decrease in facility discharge volume (i.e., patient discharges) from March 2019 to March 2020 was greater on a percentage basis than the decrease in revenues based on estimated in-network amounts. For example, in large facilities nationally, the drop in volume was 32%  (Figure 3); in the Northeast, 40% (Figure 4).

FIGURE 3. Monthly Percent Change in Facility Discharge Volume from 2019 to 2020, by Bed Size, Nationally



Source: FAIR Health

FIGURE 4. Monthly Percent Change in Facility Discharge Volume from 2019 to 2020, by Bed Size, Northeast



Source: FAIR Health

Nationally, the decrease in facility discharge volume in the third week of March 2020 from the corresponding week in 2019 grew significantly compared to the first 2 weeks; it also appears greater than the decrease in the fourth week. But in the Northeast, in midsize facilities, the fourth week of March had a greater drop (34%) than the third week (30%).

From March 2019 to March 2020, the outpatient share of the distribution of estimated in-network amounts by settings decreased relative to the inpatient share. The effect was more pronounced in the Northeast than nationally.

The third and fourth weeks of March 2020, compared to the corresponding period in 2019, saw several changes in the most common diagnostic categories in the inpatient and emergency department (ED) settings. Nationally and in the Northeast, in the inpatient setting, diseases and disorders of the respiratory system rose in share of distribution by volume and estimated in-network dollars, while in the ED setting, acute respiratory diseases and infections rose.

With this second study, we again use our data repository to shed light on the impact of COVID-19. As the pandemic continues to test the entire healthcare system, FAIR Health seeks to provide data and analysis to support all the system’s participants.

For the new FAIR Health brief on COVID-19, Illuminating the Impact of COVID-19 on Hospitals and Health Systems: A Comparative Study of Revenue and Utilization, click here.

For the first FAIR Health brief on COVID-19, COVID-19: The Projected Economic Impact of the COVID-19 Pandemic on the US Healthcare System, click here.

Author Information

Robin Gelburd, JD, is the President of FAIR Health, a national, independent nonprofit organization with the mission of bringing transparency to healthcare costs and health insurance information. FAIR Health possesses the nation’s largest collection of private healthcare claims data, which includes over 31 billion claim records contributed by payors and administrators who insure or process claims for private insurance plans covering more than 150 million individuals. Certified by the Centers for Medicare & Medicaid Services (CMS) as a national Qualified Entity, FAIR Health also receives data representing the experience of all individuals enrolled in traditional Medicare Parts A, B and D; FAIR Health houses data on Medicare Advantage enrollees in its private claims data repository. Ms. Gelburd is a nationally recognized expert on healthcare policy, data and transparency.

 
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