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Marshfield Clinic reports $17 million loss in first quarter due to lack of ACA reimbursement

Payer mix shifts and increased supply costs within the care delivery division also hindered earnings, the system says.

Susan Morse, Senior Editor

The Marshfield Clinic Health System in Wisconsin, which operates on slim 2 percent or less margins, reported first quarter losses of $17 million, due to lower reimbursement to its health plan from the lack of Affordable Care Act reinsurance and cost-sharing reduction payments, according to its first quarter report for 2018.

The Trump Administration stopped paying insurers the cost-sharing reduction payments, which payers used to help qualified consumers pay deductible and out-of-pocket costs.

[Also: Provider-sponsored plans carry on despite hefty losses]

"Management attributes the decline in operating performance to a number of factors, the most significant of which is negative revenue impacts and higher utilization at Security Health Plan," Marshfield said in its financial report. "Specifically, Security Health Plan received approximately $9.3 million lower reimbursement due to the suspension of the Affordable Care Act transitional reinsurance and cost sharing reductions."

The negative impact was partially offset by a $2.4 million reduction in ACA health insurance taxes, the report said. 

Payor mix shifts and increased supply costs within the care delivery division also hindered earnings. 

Additionally, the System incurred $2.6 million of costs related to the implementation of a new revenue cycle system. 

For the first quarter, which is the three months ended December 2017, Marshfield had an operating deficit of $17 million, or 3 percent, compared to an operating margin of $2.9 million, or .6 percent for the same time period in the previous year.

Earnings were $8.8 million or 1.5 percent, in comparison to $21.2 million or 4 percent last year.

Yet Marshfield reported total revenues of $576.8 million for the three months ended Dec. 2017, representing an increase of 8.4 percent, or $45 million, compared to the same time period last year, the result of the acquisition of the Marshfield Medical Center on June 30, 2017.

Marshfield operates a multispecialty clinic, four ambulatory surgery centers and three acute care facilities. It ranks in the top 5 percent for Medicare Shared Savings Program quality results, with a score of 98.5 percent, ahead of Baylor Scott & White, Cleveland Clinic, John Hopkins and UCLA.

It operates under a global capitation agreement to align financial incentives between care delivery and the health plan.

Security Health Plan provides insurance, including Medicare Advantage plans, to over 200,000 members, partnering with Mayo Clinic in two markets. It had enrollment growth of 7.1 percent year- over-year, the report said.

Marshfield Clinic Health System has an operating margin of 1.7 percent for 2016 and 1.3 percent for 2017. Revenue has grown steadily since 2013, from $1.8 million to $2.2 million in 2017.

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