#1 Preparing for Health Care Reform


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#1 Preparing for Health Care Reform

  1. 1. The Mississippi Hospital Association Preparing for Healthcare Reform September 30, 2010 Hilton Hotel Jackson, Mississippi
  2. 2. The Mississippi Hospital Association Overview of Healthcare Reform Gregory D. Anderson, CPA/ABV, CVA HORNE LLP September 30, 2010 Hilton Hotel Jackson, Mississippi
  3. 3. What brought us here? <ul><li>Medicare Part A Trust Fund insolvency projections since the 1970’s (Congressional Research Service, 2009) </li></ul><ul><li>Upstart of managed care companies, followed by the relatively dismal success of capitation and HMOs </li></ul><ul><li>Failed Clinton health care reform campaign of the early 1990’s </li></ul><ul><li>Decades of escalating health care costs; projected at 34 percent of GDP by 2040 (Council of Economic Advisers, 2008) </li></ul><ul><li>Growth in medical technology, with physician and consumer demand </li></ul><ul><li>Increasing numbers of uninsured; looming baby boomer influx into Medicare </li></ul><ul><li>Perceived (and in some cases, real) insurance industry abuses, cost-shifting, ineffective risk-pooling, exclusion of costly patients </li></ul><ul><li>Shortcomings of a fee-for-service system, coupled with stories of never events and other quality failures </li></ul>
  4. 4. Insert Title Here
  5. 5. CBO Estimates Source: CBO Report, Table 4: Estimated Effects of the Insurance Coverage Provisions Billions Medicaid and CHIP $434 Exchange subsidies and related spending 464 Small employer tax credits 40 Gross cost of coverage provisions 938 Penalty payments by uninsured individuals -17 Penalty payments by employers -52 Excise tax on high-premium insurance plans -32 Other effects on tax revenues and outlays -49 Net Cost of Coverage Provisions $788
  6. 6. CBO Estimates, cont’d <ul><li>Net reduction in federal deficits by $143 billion over the 2010 to 2019 period as a result of changes in direct spending and revenues </li></ul><ul><li>Reduces number of nonelderly uninsured population by 32 million by 2019 </li></ul><ul><li>Number of nonelderly people remaining uninsured post-policy in 2019 is estimated at 23 million </li></ul><ul><li>Number of nonelderly people with insurance (excluding unauthorized immigrants) in 2019 is estimated at 94 percent, up from 83 percent in 2010 </li></ul><ul><li>May 11, 2010 CBO Letter to update and expand March 13, 2010 CBO report </li></ul><ul><ul><li>Potential expanded discretionary costs: </li></ul></ul><ul><ul><ul><li>Costs incurred by federal agencies to implement the new policies established by PPACA ($10 – 20 billion over 10 years) </li></ul></ul></ul><ul><ul><ul><li>Explicit authorizations for grant and other program spending with specified funding levels ($105 billion over 10 years) </li></ul></ul></ul><ul><ul><ul><li>Explicit authorizations for grant and other program spending without specified funding levels (no cost estimate) </li></ul></ul></ul>
  7. 7. Selected Provisions of PPACA 1 and HCERA 2 <ul><li>Reforms applicable to insurers and group health plans </li></ul><ul><ul><li>Grandfathering of health plans </li></ul></ul><ul><ul><li>Extension of dependent coverage </li></ul></ul><ul><ul><li>Elimination of lifetime and annual limits on dollar value of benefits </li></ul></ul><ul><ul><li>Restrictions on rescissions </li></ul></ul><ul><ul><li>Prohibition on pre-existing condition exclusions </li></ul></ul><ul><ul><li>Prohibition on excessive waiting periods </li></ul></ul><ul><ul><li>Guaranteed issue requirement </li></ul></ul><ul><ul><li>Coverage of preventive health services </li></ul></ul><ul><ul><li>Minimum medical loss ratio requirements </li></ul></ul><ul><ul><li>Premium rating reforms </li></ul></ul><ul><ul><li>Essential health benefits package </li></ul></ul><ul><li>Patient Protection and Affordable Care Act of 2010 </li></ul><ul><li>Health Care and Education Reconciliation Act of 2010 </li></ul>
  8. 8. Selected Provisions of PPACA and HCERA, cont’d <ul><li>Reforms applicable to individuals and employers </li></ul><ul><ul><li>Individuals </li></ul></ul><ul><ul><ul><li>Individual mandate </li></ul></ul></ul><ul><ul><ul><ul><li>Phased-in assessment for failure to obtain coverage by 2014 </li></ul></ul></ul></ul><ul><ul><ul><li>Premium assistance tax credits and cost-sharing subsidies </li></ul></ul></ul><ul><ul><li>Employers </li></ul></ul><ul><ul><ul><li>Large employer mandate </li></ul></ul></ul><ul><ul><ul><ul><li>Assessments for employees receiving premium tax credit </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Free choice vouchers </li></ul></ul></ul></ul><ul><ul><ul><li>Health insurance tax credits to small employers </li></ul></ul></ul>
  9. 9. Selected Provisions of PPACA and HCERA, cont’d <ul><li>Expansion of public programs </li></ul><ul><ul><li>Expansion of Medicaid eligibility </li></ul></ul><ul><ul><ul><li>Up to 133 percent of FPL </li></ul></ul></ul><ul><ul><ul><li>Increased federal matching rate </li></ul></ul></ul><ul><ul><li>Preservation of CHIP program and increase of federal match rates through 2019 </li></ul></ul><ul><li>Health insurance exchanges </li></ul><ul><ul><li>American Health Benefit Exchange </li></ul></ul><ul><ul><ul><li>States must form by 1/1/2014 </li></ul></ul></ul><ul><ul><ul><li>May only offer “qualified health plans” </li></ul></ul></ul><ul><ul><li>Multi-state plans and co-op </li></ul></ul>
  10. 10. Selected Provisions of PPACA and HCERA, cont’d <ul><li>Delivery and payment system reforms </li></ul><ul><ul><li>Medicare DSH payment reduction and additional payment based on uncompensated care </li></ul></ul><ul><ul><li>Escalating Medicaid DSH payment reduction </li></ul></ul><ul><ul><li>Wage index reform </li></ul></ul><ul><ul><li>Medicare market basket updates for hospitals (inpatient and outpatient acute, inpatient-rehab, SNF, psych, LTAC), ASCs, hospice and home health </li></ul></ul><ul><ul><li>Primary care reimbursement </li></ul></ul><ul><ul><ul><li>Medicare </li></ul></ul></ul><ul><ul><ul><li>Medicaid </li></ul></ul></ul>
  11. 11. Selected Provisions of PPACA and HCERA, cont’d <ul><li>Pay-for-performance programs </li></ul><ul><ul><li>Medicare hospital value-based purchasing </li></ul></ul><ul><ul><ul><li>Budget-neutral </li></ul></ul></ul><ul><ul><ul><li>Expansion to SNF, home health, ASCs </li></ul></ul></ul><ul><ul><li>Penalties for excessive readmissions </li></ul></ul><ul><ul><li>Penalties for hospital acquired conditions </li></ul></ul><ul><ul><li>Bundled payment pilot program </li></ul></ul><ul><ul><ul><li>Medicare, 10 conditions </li></ul></ul></ul><ul><ul><ul><li>Medicaid, 8 states </li></ul></ul></ul><ul><ul><li>ACOs </li></ul></ul><ul><ul><ul><li>Medicare shared savings program </li></ul></ul></ul><ul><ul><ul><li>Medicaid pediatric demonstration </li></ul></ul></ul>
  12. 12. Selected Provisions of PPACA and HCERA, cont’d <ul><li>Revenue provisions </li></ul><ul><ul><li>Industry fees </li></ul></ul><ul><ul><ul><li>Pharmaceutical industry </li></ul></ul></ul><ul><ul><ul><li>Medical device industry </li></ul></ul></ul><ul><ul><ul><li>Insurance industry </li></ul></ul></ul><ul><ul><li>Cadillac plan tax </li></ul></ul><ul><ul><li>Tax on high-income individuals </li></ul></ul><ul><ul><ul><li>Hospital insurance tax </li></ul></ul></ul><ul><ul><ul><li>Surtax on net investment income </li></ul></ul></ul><ul><ul><ul><li>Increase in threshold for medical expense deduction </li></ul></ul></ul>
  13. 13. Selected Provisions of PPACA and HCERA, cont’d <ul><li>Compliance, transparency and program integrity provisions </li></ul><ul><ul><li>Additional fraud and abuse enforcement funding </li></ul></ul><ul><ul><li>Amendment of intent standard in the Federal anti-kickback statute </li></ul></ul><ul><ul><li>Sunshine provisions </li></ul></ul><ul><ul><ul><li>Drug and device manufacturer reporting of physician payments and ownership/investment </li></ul></ul></ul><ul><ul><li>Stark law changes </li></ul></ul><ul><ul><ul><li>Whole hospital exception changes </li></ul></ul></ul><ul><ul><ul><li>Self-disclosure protocol </li></ul></ul></ul><ul><ul><ul><li>In-office ancillary service exception disclosure requirements </li></ul></ul></ul><ul><ul><li>Mandatory compliance programs </li></ul></ul><ul><ul><li>RAC Program expansion to Parts C, D and Medicaid </li></ul></ul>
  14. 14. <ul><li>Other provisions </li></ul><ul><ul><li>340B expansion </li></ul></ul><ul><ul><li>GME redistribution </li></ul></ul><ul><ul><li>Requirements for tax-exempt hospitals </li></ul></ul><ul><ul><li>Part D donut hole </li></ul></ul><ul><ul><li>Prevention and wellness </li></ul></ul>Selected Provisions of PPACA and HCERA, cont’d
  15. 15. The Mississippi Hospital Association Insurance Reforms And Mandates Russell Turner Balch & Bingham LLP September 30, 2010 Hilton Hotel Jackson, Mississippi
  16. 16. Restrictions on Insurers’ Ability to Limit Benefits <ul><li>Health Insurers May No Longer Have: </li></ul><ul><ul><li>Lifetime limits on the dollar value of benefits </li></ul></ul><ul><ul><li>Annual limits on the value of benefits, except that: </li></ul></ul><ul><ul><ul><li>Prior to January 1, 2014, insurers may establish a “restricted” annual limit determined by HHS on “essential benefits” </li></ul></ul></ul><ul><li>Health Insurers May Place Annual/Lifetime Limits on Non-Essential Benefits </li></ul><ul><li>Health Insurers May Not Exclude Children Under 19 With Pre-Existing Conditions </li></ul>
  17. 17. INSURER GUARANTEES <ul><li>On January 1, 2014, Health Insurers Must Automatically Renew Coverage for all Enrollees Except if Enrollee Fails to Pay Premium or Obtained Coverage Through Intentional Fraud. </li></ul><ul><li>On January 1, 2014, all health insurers must sell a policy to any person who requests coverage. </li></ul>
  18. 18. Medical Loss Ratio Requirements <ul><li>By January 1, 2011, insurers must maintain a medical loss ratio of 85% (large group market) and 80% (individual/small group market) </li></ul><ul><li>Medical Loss Radio Is Determined by the percentage of health insurance premiums the insurer spends on health care services, clinical services and other quality of care activities </li></ul><ul><li>NAIC MLR “BLANKS” PROPOSAL SUBMITTED TO HHS IN AUGUST 2010 </li></ul><ul><li>Insurer must rebate amounts to policyholders if it does not spend at least 80-85% of premium dollar on health care services. </li></ul><ul><li>Large Insurers Have Hovered Around 80% MLR So They Will Have to Cut 5% </li></ul>
  19. 19. CLAIM DENIAL APPEALS <ul><li>Health Insurers Must Now Implement Internal and External Review Process </li></ul><ul><ul><li>Internal Review Requires: </li></ul></ul><ul><ul><li>a. Enrollee’s access to his file </li></ul></ul><ul><ul><li>b. opportunity to present evidence/testimony during appeal </li></ul></ul><ul><ul><li>c. continuation of coverage until appeal is decided </li></ul></ul><ul><ul><li>d. notice to enrollees of all available appeals processes in a “culturally and linguistically appropriate manner,” including notice of access to health insurance consumer assistants or ombudsmen. </li></ul></ul><ul><ul><li>External review requires </li></ul></ul><ul><ul><li>a. compliance with consumer protection standards in NAIC Uniform External Review Model Act </li></ul></ul>
  20. 20. Insurance Industry Fees <ul><li>Insurance Industry Fees </li></ul><ul><ul><li>In 2014, health insurers must pay an aggregate annual fee of $8 billion. </li></ul></ul><ul><ul><li>Complex Pro-Rata Formula Determines Insurer’s Contribution </li></ul></ul><ul><ul><li>Self-Funded Plans are Excluded </li></ul></ul><ul><ul><li>Annual Fees Increase Incrementally Each Year Thereafter </li></ul></ul><ul><ul><li>By 2018, health insurers must pay an annual fee of over $14 billion based on this same formula. </li></ul></ul>
  21. 21. <ul><li>On January 1, 2014, individuals without insurance for themselves and their dependents must pay: </li></ul><ul><ul><li>greater of $95 or 1% taxpayer’s modified adjusted gross income. </li></ul></ul><ul><li>On January 1, 2015, individuals without insurance for themselves and their dependents must pay: </li></ul><ul><ul><li>greater of $325 or 2% of taxpayer’s modified adjusted gross income </li></ul></ul><ul><li>On January 1, 2016, individuals without insurance for themselves and their dependents must pay: </li></ul><ul><ul><li>greater of $695 or 2.5% of taxpayer’s modified adjusted gross income </li></ul></ul><ul><li>Those individuals whose household income does not meet the threshold for filing a federal tax return or those who would pay 8% of their household income for coverage are exempt from mandate. </li></ul>
  22. 22. EXCHANGES <ul><li>They Are State or Federally Operated Marketplaces For Major Medical Insurance </li></ul><ul><li>By January 1, 2013, HHS Will Determine Whether Mississippi Has “An Effective Mechanism” in Place to Run An Exchange </li></ul><ul><li>Mississippi Insurance Commission Has Begun Initial Research and Planning For Exchange </li></ul><ul><li>If HHS Determines that Mississippi Has Not Met Its Duty by January 1, 2014, HHS Will Take Over and Run Exchange Through Non-Profit Contractor </li></ul><ul><li>By January 1, 2014, the Public Can Buy Individual and Small Group Major Medical Insurance Policies Through Exchange </li></ul><ul><li>Exchanges Will Extend Access Only to Policies Offering Essential Benefits and are Certified by Exchange </li></ul>
  23. 23. LEVELS OF EXCHANGE BASED COVERAGE <ul><li>Bronze - covers 60% of actuarial value of benefits </li></ul><ul><li>Silver - covers 70% of actuarial value of benefits </li></ul><ul><li>Gold - covers 80% of actuarial value of benefits </li></ul><ul><li>Platinum - covers 90% of actuarial value of benefits </li></ul>
  24. 24. EXCHANGE DUTIES <ul><li>Certify/Decertify Qualified Plans </li></ul><ul><li>Assign Rating to Each Plan </li></ul><ul><li>Determine Eligibility for Medicaid, CHIP or other applicable state/local programs </li></ul><ul><li>Provide Calculation of Actual Costs of Coverage After Subsidies </li></ul><ul><li>Determine If Individual Is Exempt from Individual Mandate </li></ul><ul><li>Provide Treasury with List of Exempt Individuals and Employees Eligible for Tax Credit </li></ul><ul><li>Provide Employer with List of Its Employees Eligible for Tax Credit </li></ul>
  25. 25. EXCHANGE BASED TAX CREDIT <ul><li>Individual Taxpayer Whose Household Income Falls Between 100% and 400% of Federal Poverty Level Receives Federally Paid Subsidy Equal to the Difference Between % of Household Income and Silver Plan </li></ul><ul><li>NOTE: 400% of FPL for family of four is $88,000 </li></ul><ul><li>Federal Government Will Pay Subsidies Directly to Insurers </li></ul>
  26. 26. The Mississippi Hospital Association Public Programs Wise Carter Child & Caraway, P.A. September 30, 2010 Hilton Hotel Jackson, Mississippi
  27. 27. The Mississippi Hospital Association MEDICAID CHANGES UNDER PPACA George H. Ritter Wise Carter Child & Caraway, P.A. September 30, 2010 Hilton Hotel Jackson, Mississippi
  28. 28. Major Components <ul><li>Medicaid expansion </li></ul><ul><li>CHIP-related provisions </li></ul><ul><li>DSH contraction </li></ul><ul><li>Outreach and enrollment provisions </li></ul>
  29. 29. Medicaid Expansion <ul><li>Newly Eligibles </li></ul><ul><ul><li>Non-elderly (under 65), non-pregnant individuals </li></ul></ul><ul><ul><ul><li>Not enrolled or entitled to be enrolled in Medicare Part A or enrolled in Medicare Part B </li></ul></ul></ul><ul><ul><ul><li>Income is 133% or less of FPL </li></ul></ul></ul><ul><ul><ul><li>Not otherwise eligible for Medicaid </li></ul></ul></ul><ul><ul><li>Poverty-related children </li></ul></ul><ul><ul><ul><li>Raises income eligibility level from 100% of FPL to 133% FPL </li></ul></ul></ul><ul><ul><li>Certain individuals with disabilities not currently eligible because— </li></ul></ul><ul><ul><ul><li>Do not meet SSI definition of disabled, or </li></ul></ul></ul><ul><ul><ul><li>Have income or asset levels greater than state’s threshold </li></ul></ul></ul>
  30. 30. <ul><li>Funding for Newly Eligibles </li></ul><ul><ul><li>Optional Phase-in Period </li></ul></ul><ul><ul><ul><li>4/1/2010 thru 1/1/2014 </li></ul></ul></ul><ul><ul><ul><li>State option </li></ul></ul></ul><ul><ul><ul><li>No federal funding </li></ul></ul></ul><ul><ul><li>Mandatory Period </li></ul></ul><ul><ul><ul><li>Beginning 1/1/2014 </li></ul></ul></ul><ul><ul><ul><ul><li>100% federal funding </li></ul></ul></ul></ul><ul><ul><ul><li>Beginning 2020 </li></ul></ul></ul><ul><ul><ul><ul><li>Decreases to 90% federal funding </li></ul></ul></ul></ul>
  31. 31. <ul><li>State Maintenance of Effort Requirements </li></ul><ul><ul><li>Loss of FFP if eligibility standards, methodologies, or procedures are made more restrictive than they were as of 3/23/2010 </li></ul></ul><ul><ul><ul><li>Can’t balance budget by tightening eligibility standards </li></ul></ul></ul><ul><ul><li>Exception for non-pregnant, non-disabled adults with AGI greater than 133% FPL </li></ul></ul><ul><ul><ul><li>Available between 1/1/2011 and 12/31/2013 </li></ul></ul></ul><ul><ul><ul><li>Federal waiver required </li></ul></ul></ul>
  32. 32. <ul><li>New Benefits </li></ul><ul><ul><li>Premium assistance (optional) </li></ul></ul><ul><ul><li>Birthing centers (mandatory) </li></ul></ul><ul><ul><li>Adult preventive care (mandatory and optional components) </li></ul></ul><ul><ul><li>Smoking cessation for pregnant women (mandatory) </li></ul></ul><ul><ul><li>Home and community based attendant care (optional) </li></ul></ul><ul><ul><li>Health homes for patients with certain chronic conditions (optional) </li></ul></ul>
  33. 33. CHIP-Related Provisions <ul><li>Thru FY2015 </li></ul><ul><ul><li>Current CHIP structure maintained </li></ul></ul><ul><li>FY2016 – FY2019 </li></ul><ul><ul><li>25% increase in federal CHIP match </li></ul></ul><ul><ul><li>Currently not appropriated </li></ul></ul><ul><ul><li>If not appropriated, coverage will be available through health insurance exchanges </li></ul></ul><ul><li>Childhood Obesity Demonstration Project </li></ul><ul><ul><li>$25 billion for FY2010-FY2014 </li></ul></ul><ul><li>Many other details </li></ul>
  34. 34. DSH Contraction <ul><li>Beginning FY2014 </li></ul><ul><ul><li>Medicare DSH payments </li></ul></ul><ul><ul><ul><li>reduced by approximately 75% ($22B over 10 years) </li></ul></ul></ul><ul><ul><li>Medicaid DSH payments </li></ul></ul><ul><ul><ul><li>reduced from by approximately 50% ($14.1B over 10 years) </li></ul></ul></ul><ul><ul><li>Hospitals may qualify for additional DSH payments based on several complex factors </li></ul></ul><ul><ul><li>Exact amounts cannot be determined, but reimbursements will decrease substantially if expanded coverage does not offset the DSH cuts </li></ul></ul><ul><ul><li>Additional limitations on judicial review </li></ul></ul>
  35. 35. Outreach and Enrollment Provisions <ul><li>Internet website enrollment </li></ul><ul><ul><li>No face to face meetings </li></ul></ul><ul><li>Coordination with health insurance exchanges </li></ul><ul><ul><li>Exchanges screen applicants for Medicaid and CHIP eligibility </li></ul></ul><ul><ul><li>Medicaid screens applicants determined ineligible for eligibility in qualified plans through exchanges </li></ul></ul><ul><li>Required outreach for vulnerable populations </li></ul><ul><ul><li>Unaccompanied homeless youth </li></ul></ul><ul><ul><li>Racial and ethnic minorities </li></ul></ul><ul><ul><li>Individuals with HIV/AIDS </li></ul></ul><ul><li>Presumptive eligibility determinations by hospitals </li></ul><ul><ul><li>Extended to all Medicaid eligible populations (previously limited to certain groups) </li></ul></ul><ul><ul><li>During presumptive eligibility period, claims will not be reviewed for errors in the state’s eligibility determinations </li></ul></ul>
  36. 36. Projected Impact <ul><li>Additional 16 million Medicaid beneficiaries </li></ul><ul><ul><li>27.4% increase </li></ul></ul><ul><li>Federal government will pay 95.4% of the increased cost </li></ul><ul><li>UPL expected to increase based on increased enrollment </li></ul><ul><li>Federal matching rate will be a combination of— </li></ul><ul><ul><li>Current matching rates on current eligibles </li></ul></ul><ul><ul><li>Expansion state maximum rate for certain childless adults </li></ul></ul><ul><ul><li>Higher matching rates on newly eligibles </li></ul></ul>
  37. 37. For more information <ul><li>Congressional Research Service, Medicaid and the State Children’s Health Insurance Program (CHIP) Provisions in PPACA, April 28, 2010 </li></ul><ul><li>www.crs.gov </li></ul>
  38. 38. The Mississippi Hospital Association Prescription Drugs Under PPACA Eugene R. Naylor Wise Carter Child & Caraway, P.A. September 30, 2010 Hilton Hotel Jackson, Mississippi
  39. 39. Medicaid Prescription Drugs <ul><li>Revised definition of Average Manufacturer Price (AMP) (Effective 10/1/10 ) </li></ul><ul><ul><li>Brand Name Drugs - Currently, lower of AWP minus 12% or WAC plus 9%, plus dispensing fee ($3.91) </li></ul></ul><ul><ul><li>Generic Drugs – Currently, AWP minus 25%, plus dispensing fee ($5.50) </li></ul></ul><ul><ul><li>Co-payment $3.00 </li></ul></ul><ul><li>New formula for calculating Federal Upper Payment Limit </li></ul><ul><li>Increased rebate percentages for covered outpatient drugs dispensed to Medicaid patients and including the rebate offset associated with the increased rebate percentages </li></ul>
  40. 40. Changes to Prescription Drug Plans <ul><li>Elimination of exclusions for certain drugs (e.g. No longer excludes smoking cessation, barbituates and bezodiazapines) </li></ul><ul><li>Closing the Medicare prescription drug “Donut Hole” </li></ul><ul><ul><li>2010 - $250 rebate for participants reaching the Part D coverage gap </li></ul></ul><ul><ul><li>Gradually phasing down amounts paid for generic drugs (2011) </li></ul></ul><ul><ul><li>Requiring drug manufacturers to offer discount for brand name drugs filled in the donut hole </li></ul></ul><ul><ul><li>Reducing out-of-pocket amount to reach catastrophic coverage </li></ul></ul><ul><li>Improving formulary requirement for plans </li></ul><ul><ul><li>2011 – Cover all Part D drugs in a class or category identified by HHS </li></ul></ul><ul><ul><li>Allow exceptions for exclusions or utilization management requirements for drugs within a protected class or category </li></ul></ul>
  41. 41. Changes to Prescription Drug Plans <ul><li>Reducing Part D premium subsidy for high-income beneficiaries </li></ul><ul><ul><li>Income-related, increased premiums as determined annually </li></ul></ul><ul><ul><li>Collected through withholding from Social Security checks </li></ul></ul><ul><li>Reducing wasteful dispensing of out-patient drugs at long term care facilities </li></ul><ul><ul><li>Enact uniform dispensing techniques for Part D covered drugs </li></ul></ul><ul><ul><li>(e.g. weekly, daily or automated dose dispensing) </li></ul></ul><ul><ul><li>_ Techniques to be determined by the Secretary through consultation with relevant stakeholders, including residents and representatives </li></ul></ul>
  42. 42. Elimination of Retiree Drug Subsidy Deduction <ul><li>RDS was established by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 for employers providing prescription drug benefits to retirees </li></ul><ul><li>Employers received a subsidy of 28% of prescription costs and an income tax deduction including the subsidy payment </li></ul><ul><li>PPACA retains the subsidy, but eliminates the employer’s ability to deduct the amount of the subsidy </li></ul><ul><li>Employers may still deduct the costs of the benefits, and the amount of increased tax liability depends upon the amount of the subsidy and the tax rate of the provider </li></ul>
  43. 43. Resources <ul><li>http://www.cms.gov/Reimbursement/20_StateMedicaidRxReimb . </li></ul><ul><li>http://www.cms.gov/Reimbursement/08_MedicaidPrescriptionDrugsundertheAffordableCare Act </li></ul><ul><li>https://www.cms.gov/ </li></ul>
  44. 44. The Mississippi Hospital Association Delivery System Reforms And Healthcare Workforce Barney B. Hebert, J.D. HORNE LLP September 30, 2010 Hilton Hotel Jackson, Mississippi
  45. 45. What’s it all about? <ul><li>Vision for healthcare reform in America can be summarized into 5 essential elements: </li></ul><ul><ul><li>coverage for all (paid for by all) </li></ul></ul><ul><ul><li>a focus on wellness </li></ul></ul><ul><ul><li>the most efficient and affordable care </li></ul></ul><ul><ul><li>the highest quality care, and </li></ul></ul><ul><ul><li>the best information </li></ul></ul>
  46. 46. Quality, Disparities and Comparative Effectiveness <ul><li>Takes steps toward paying for quality rather than volume of services by implementing </li></ul><ul><ul><li>“ Pay-for-reporting” systems across all providers and </li></ul></ul><ul><ul><li>Moving many providers toward “value-based purchasing” systems in the future </li></ul></ul><ul><li>Applies financial penalties to hospitals with “high” rates of hospital-acquired conditions </li></ul><ul><li>Establishes national quality improvement strategy </li></ul><ul><li>Creates public-private institute to analyze comparative effectiveness of treatments </li></ul><ul><li>Creates patient safety research center to promote adoption of best practices </li></ul><ul><li>Law contains number of provisions to improve the delivery of health care services, particularly to low-income underserved, uninsured minority and rural populations </li></ul>
  47. 47. Key Delivery System Reforms <ul><li>The law adopts several key delivery system “reforms” to better align provider incentives to improve care coordination & quality and reduce costs . </li></ul><ul><ul><li>Value-based purchasing system for hospitals </li></ul></ul><ul><ul><li>Voluntary pilot projects to test bundled Medicare payments </li></ul></ul><ul><ul><li>Voluntary pilot programs where qualifying providers – including hospitals – can form Accountable Care Organizations (ACOs) and share in Medicare cost savings </li></ul></ul><ul><ul><li>Establish financial penalties for hospitals with “excessive” readmissions </li></ul></ul><ul><ul><li>Creates a center for Medicare and Medicaid innovation to test innovative payment and service delivery models </li></ul></ul>
  48. 48. Health Care Delivery System Reform <ul><li>PPACA Legislation Includes Payment Reforms Aimed at Improving the Delivery System </li></ul>
  49. 49. Medicare Shared Savings Program – “ACOs” <ul><li>What CMS wants it to be? </li></ul><ul><li>A locally created and owned health care organization that is responsible for 100% of expenditures and care of a defined population of patients. </li></ul><ul><li>Industry’s reaction? </li></ul><ul><li>A wolf in sheep’s clothing </li></ul><ul><li>There will not be one monolithic model </li></ul><ul><li>Some believe their organization is already there, e.g. Kaiser Permanente </li></ul><ul><li>All will struggle to make it happen, whether to even attempt to make it happen </li></ul><ul><li>One certainty – the task will be “Herculean”, with so many unknowns to be decided including but not limited to cost, galvanizing providers, metrics, savings, etc. </li></ul>
  50. 50. <ul><li>“ If you look at the history of healthcare over the last 25 years, you’ll see an evolution of ideas that involve containing costs, improving quality, and improving health outcomes. The ACO concept is in a way, a natural step for some of those things. Every development from HMOs, IPAs, and PHOs had supporters who thought this, whatever it was, is going to totally change healthcare. That didn’t happen, although each had an effect , and ACOs will, too .” </li></ul><ul><li>- Gil Dupre` (President of Louisiana Association of Health Plans) </li></ul>
  51. 51. <ul><li>“ We hear from some people that the ACO idea is such a leap, such a quantum leap, that probably 95% of hospitals in the country haven’t even really begun efforts to attain it.” </li></ul><ul><li>- Mitch Wasden, CEO, Ochsner Medical Center, Baton Rouge, LA </li></ul>
  52. 52. The Basics of an ACO <ul><li>Definition: An ACO is an integrated health care delivery system that relies on a network of primary care physicians, one or more hospitals and specialists to provide care to a defined patient population. Under this model, the ACO receives bonuses for providing high-quality, low-cost care. </li></ul><ul><li>Time Line: By January 2012, HHS must establish a shared savings program that promotes accountability for a patient population and coordinates physician and hospital care. The program also must encourage investment in infrastructure and redesigned care processes for high quality and efficient service delivery. Under the program, a group of providers must have a mechanism for shared governance, and work together to manage and coordinate care for Medicare fee-for-service beneficiaries. </li></ul><ul><li>The Goal: Government and private sector payers are trying to break “eat what you kill” link with new payment models that reward providers for efficiently delivered, coordinated and high-quality care. </li></ul>
  53. 53. Parameters <ul><li>Under the Act, an ACO must: </li></ul><ul><ul><li>Be willing to become accountable for the quality, cost and overall care of the Medicare fee-for-service Medicare beneficiaries assigned to it; </li></ul></ul><ul><ul><li>Enter into an agreement with HHS to participate in the program for at least three years; </li></ul></ul><ul><ul><li>Have a formal legal structure that would allow it to receive and distribute payments for shared savings to participating providers; </li></ul></ul><ul><ul><li>Include primary care professionals that are sufficient for the number of Medicare beneficiaries assigned to the ACO. At a minimum, an ACO will have at least 5,000 such beneficiaries assigned to it; </li></ul></ul><ul><ul><li>Provide HHS with certain information regarding its providers; </li></ul></ul><ul><ul><li>Have a leadership and management structure that includes clinical and administrative systems; </li></ul></ul><ul><ul><li>Define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care (such as through the use of telehealth, remote patient monitoring and other such enabling technologies); and </li></ul></ul><ul><ul><li>Demonstrate to HHS that it meets patient-centeredness criteria specified by HHS. </li></ul></ul>
  54. 54. How do health care leaders position their organizations to respond to these new payment models? <ul><li>In summary, they must adopt and develop a culture of more clinical integration and more accountability, and build an infrastructure that can support this new paradigm. </li></ul><ul><li>Some initial steps to consider are: </li></ul><ul><ul><li>Hospitals and physicians should create an entity (such as a PHO) with shared governance and a formal legal structure. </li></ul></ul><ul><ul><li>Hospitals must analyze their relationships with physicians and ancillary providers to determine how to effectively align their interests in providing high quality care while controlling costs. It is important to identify physician leaders who can agree on quality metrics and evidence-based standards of care. Providers must also address how to tie physician compensation to quality and efficiency goals. </li></ul></ul><ul><ul><li>Hospitals must assess their IT systems to ensure that they can collect, analyze and report appropriate utilization, quality and cost data. </li></ul></ul><ul><ul><li>Hospitals should have electronic health records. </li></ul></ul><ul><ul><li>Health care providers must understand and address the legal issues that are raised by this integration. </li></ul></ul>
  55. 55. Overriding Legal Issue: Will the ACO be a dominant new model for healthcare or a blatant attempt to corner the market? <ul><li>The Carilion Clinic Model </li></ul><ul><li>Background </li></ul><ul><li>Roanoke, VA – a region of >250k folks, 12,300 of whom depend on Carilion for employment but all worry health care costs are out of proportion to the area’s cost of living </li></ul><ul><li>2 hospitals merged in 1989 under the Carilion name. In 2006, Carilion converted to a nonprofit multi-specialty clinic, modeled on the Mayo Clinic </li></ul><ul><li>Carilion Clinic owns 2 hospitals in Roanoke and 6 others in the region; employs 550 docs </li></ul><ul><li>To integrate care, Carilion spent $100 million on EMR. Nurses provide immediate follow-up when patients released from hospital in an effort to prevent costly readmissions </li></ul><ul><li>Carilion also turned its 37 primary care practices toward “medical home” model: Care coordinators reach out to people with diabetes, hypertension, and other chronic conditions who have gone too long without a checkup </li></ul><ul><li>Physicians meet nightly with nurses to review next day’s appointments to ensure visits will be productive </li></ul>
  56. 56. What’s the Beef? <ul><li>In Favor </li></ul><ul><ul><li>Carilion – ACO model is ideal embodiment of our nation’s new health care law, i.e., a network that increases efficiency by bringing more doctors and hospitals onto one team, integrating care from the doctor’s office to the operating room </li></ul></ul><ul><ul><li>Primary Care Practitioners praise new approach for being more organized and patient centered </li></ul></ul><ul><li>Against </li></ul><ul><ul><li>Specialists who are concerned that this new method will result in healthier patients who require fewer lucrative procedures later </li></ul></ul><ul><ul><li>Hospitals – “The better primary care gets, the less money for the hospitals. And for a system with 8 hospitals, that’s some concern.” - John Wendland, former Toyota Mgr hired by Carilion to lead shift toward ACO model. </li></ul></ul>
  57. 57. On the Immediate ACO Horizon <ul><li>October 5, 2010 – FTC, HHS’ Office of Inspector General, and CMS will host workshop (CMS Headquarters, Baltimore) - Free and open to the public; workshop will address and solicit public comments on legal issues, including the antitrust, physician self-referral, anti-kickback, and civil monetary penalty laws related to ACOs‘ </li></ul><ul><li>October 25 – 27, 2010 – The National Accountable Care Organization Congress (Los Angeles, CA) – “What does PPACA legislation related to ACO’s really mean for hospitals and physician organizations?” </li></ul>
  58. 58. Workforce and Graduate Medical Education <ul><li>Provides grants and loans to enhance workforce education and training, to support and strengthen existing workforce and to help ease health care workforce shortages </li></ul><ul><li>Creates The National Health Care Workforce Commission – to analyze the supply, distribution, diversity and skill needs of the health care workforce of the future </li></ul><ul><li>Allows for redistribution of unused residency positions as a way to encourage increased training of PCP and general surgeons </li></ul>
  59. 59. <ul><li>September 17, 2010 – DHHS awarded $130.8 million to strengthen nation’s healthcare workforce. </li></ul><ul><ul><li>Funds target 6 key areas: Here’s the breakdown: </li></ul></ul><ul><ul><li>Training Programs in Primary Care : $42.1 million to support family medicine, general internal medicine and general pediatrics programs; </li></ul></ul><ul><ul><li>Oral Health : $23.9 million for workforce development programs for pre-and post-doctoral training for dental residents; dental faculty; loan repayment for faculty who teach primary care dentistry; and training for practicing dentists, or other approved dental trainees in general, pediatric, and public health dentistry and dental hygiene programs. </li></ul></ul><ul><ul><li>Equipment to Enhance Training for Health Professionals : $50.5 million to assist with purchasing equipment for training current and future health professionals; </li></ul></ul>
  60. 60. <ul><li>Funds target 6 key areas (cont’d) </li></ul><ul><ul><li>Loan Repayment : $8.3 million to states that provide matching funds to assist health professionals in repaying their educational loans. In return, these individuals agree to provide full-time primary health services in federal health professional shortage areas for a minimum of two years. </li></ul></ul><ul><ul><li>Health Careers Opportunity Program : $2.1 million to increase diversity in the health professions by developing an educational pipeline to enhance the academic performance of economically and educationally disadvantaged students, and prepare them for careers in the health professions; </li></ul></ul><ul><ul><li>Patient Navigator : $3.8 million to develop and operate patient navigator services that improve health care outcomes for individuals with cancer or other chronic diseases, with specific emphasis on health disparity populations. </li></ul></ul>
  61. 61. <ul><li>“ An adequate health care workforce is the linchpin for reforming our health care system to ensure greater access, improve the quality of health care and cut overall costs in the long term. Today’s awards not only will provide more training opportunities for people interested in a health professions career, but also will support equipment purchases and faculty development to expand and enhance the quality of training.” </li></ul><ul><li>HHS Secretary, Kathleen Sebelius </li></ul>
  62. 62. The Mississippi Hospital Association Transparency and Program Integrity R. Mark Hodges, Esq. Wise Carter Child & Caraway September 30, 2010 Hilton Hotel Jackson, Mississippi
  63. 63. What We Won’t Be Discussing <ul><li>Significant reform to the Fraud & Abuse and Stark laws that allow for the type of provider/supplier integration that lies at the heart of PPACA. (See comments of Sen. Ron Wyden, D-OR) </li></ul><ul><li>Amnesty or grace periods for providers and other industry stakeholders while everyone figures this out—including those in charge of writing the regulations. </li></ul><ul><li>Regulations that “flesh out” the PPACA provisions we will be discussing, most of which are drafted in general terms and supply none of the guidance we have come to expect from the publication, review and comment process that accompanies healthcare regulatory schemes. </li></ul>
  64. 64. Will this be on the Exam? PPACA provides additional funding “to fight fraud and abuse” as follows: • $10,000,000 from the Medicare Trust Fund each year (2011 - 2020) • Additional funding of: $95,000,000 for 2011; $55,000,000 for 2012; $30,000,000 for each 2013 and 2014; and $20,000,000 for each 2015 and 2016. PLUS $75,000,000 yearly for Medicaid Integrity Program (All indexed for inflation)
  65. 65. Shine a Little Sunshine: A Brief Visit to the PPSP Stark In Office Ancillary Services Disclosure Requirement – ( Not Effective 1/1/2010) For MRI, CT, PET and such other services as the Secretary shall determine . Referring physician must inform beneficiary in writing at the time of the referral that they may obtain services elsewhere. Must provide beneficiary with a written list of suppliers in the area. Why this is not a big deal : unlikely to affect hospitals or alter physician referral patterns
  66. 66. Shine a Little Sunshine: A Brief Visit to the PPSP (Cont’d) <ul><li>Drug and Device Manufacturers, Suppliers, etc must report: </li></ul><ul><li>Payments or transfers of value greater than $10 each or $100 in aggregate per year to a physician, practice group or teaching hospital; covers consulting fees, comp for services, honoraria, gifts, food, charitable contributions, royalties, and grants. </li></ul><ul><li>Ownership interest held by physician or </li></ul><ul><li>immediate family member. </li></ul><ul><li>HHS searchable website (Sept. ’13) and penalties up to $10k, $100k if knowing, per violation. </li></ul><ul><li>Record 1-1-12; Report 3-31-13. </li></ul><ul><li>Drug samples requested (4-1-12) </li></ul><ul><li>PBPs to report RX pricing and rebate info. </li></ul>
  67. 67. Anti-kickback Statute Changes <ul><li>Uniform Intent Standard for Anti-kickback Statute Violations Overrules Hanlester on intent </li></ul><ul><li>No need for actual knowledge of violation </li></ul><ul><li>No need for specific intent </li></ul><ul><li> Violation of anti-kickback is a false claim and violates the FCA. </li></ul>
  68. 68. Anti-kickback Statute Changes <ul><li>Expanding the definition of what does not constitute remuneration: </li></ul><ul><li>– remuneration which promotes access to care and poses a low risk of harm </li></ul><ul><li>to patients and programs. </li></ul><ul><li>– the offer/transfer of items or services for free or less than free if: </li></ul><ul><li>(1) coupons, rebates or rewards from retailer; </li></ul><ul><li>(2) available to general public regardless of health insurance status; </li></ul><ul><li>and </li></ul><ul><li>(3) offer/provision is not tied to provision of other service paid for by </li></ul><ul><li>Medicare or Medicaid. </li></ul><ul><li>– the offer/transfer of items or services for free or less than free if: </li></ul><ul><li>(1) not part of an advertisement or solicitation; </li></ul><ul><li>(2) not tied to provision of service paid by the Medicare or Medicaid programs; </li></ul><ul><li>(3) reasonable connection between item/service and medical care of </li></ul><ul><li>individual; and </li></ul><ul><li>(4) item/service is provided after good faith determination of financial need. </li></ul><ul><li>– Effective date: as determined by Secretary but no earlier than January 1, </li></ul><ul><li>2011. </li></ul><ul><li>MAY NOT HELP UNDER THE CMP ACT! </li></ul>
  69. 69. CMP Act Additions 1. False statements, omissions, or misrepresentations on applications, agreements, bids or contracts to participate in Medicare Advantage, Part D prescription drug and Medicaid programs are false claims subject to permissive exclusions and $50,000 CMPs, plus triple the charges. 2. False records in support of statements made for claims or contracts are false claims, subject to $50,000 CMPs, plus triple the charges. 3. Failing to grant timely access to HHS OIG for audits, investigations or other reasons is punishable by a $15,000 CMP Permissive exclusion for obstructing an audit or investigation 4. Permissive exclusion for obstructing an audit or investigation
  70. 70. Mandatory Compliance Programs <ul><li>“ OIG recommends that providers and suppliers should be required to adopt compliance programs as a condition of participating in the Medicare and Medicaid programs.” </li></ul><ul><li>Testimony of Daniel R. Levinson, Inspector General, U.S. Department of Health & Human Services before House Appropriation Committee, Subcommittee on Labor, Health and Human Services, Education, and Related Agencies on March 4, 2010 </li></ul>
  71. 71. Mandatory Compliance Programs <ul><li>Requires establishment of a compliance program for providers as a condition of enrollment in Medicare or Medicaid. </li></ul><ul><li>HHS Secretary to determine required compliance program elements for specific types of providers. </li></ul><ul><li>Implementation date also to be determined </li></ul>
  72. 72. Stark Changes <ul><li>Whole Hospital Exception Limited to Grandfathered Hospitals: </li></ul><ul><li>1. Physician investment existed before Feb 1, 2010 and hospital had a Medicare participation agreement. </li></ul><ul><li>a. May not change the ratio of physician ownership to other owners </li></ul><ul><li>b. Hospital can’t lend money to new physicians to invest </li></ul><ul><li>2. Such hospitals may not increase number of operating rooms, procedure rooms and beds without going through a major appeals process to request an exemption; process to be available by Aug 1, 2011 (Still subject to absolute limits). </li></ul><ul><li>3. Hospital must report to Secretary annually detailed description of the owners, their identities and the nature and extent of all ownership interests. </li></ul>
  73. 73. Stark Changes <ul><li>Whole Hospital Exception Limited Only to Grandfathered Hospitals (Cont’d) </li></ul><ul><li>4. Hospital must assure that physician investors disclose their interests to patients they refer “by a time that permits the patient to make a meaningful decision regarding the receipt of care.” </li></ul><ul><li>5. Physician ownership must be disclosed on hospital website and in all hospital advertising. </li></ul><ul><li>6. If hospital does not have a physician on site at all times, that must be disclosed to the patient and a written acknowledgement must be obtained from patient. </li></ul>
  74. 74. Stark Changes <ul><li>Self- Referral Disclosure Protocol </li></ul><ul><li>Gap filler for AKS and CMP </li></ul><ul><li>Use with extreme caution </li></ul><ul><li>For Stark only </li></ul><ul><li>Do not use without attorney supervision </li></ul><ul><li>See paper handout for details </li></ul>
  75. 75. Miscellaneous Fun <ul><li>Failure to repay overpayments within 60 days of identifying the overpayment is a false claim, which means a violation of the FCA. </li></ul><ul><li>Permissive exclusion for obstructing an audit or investigation </li></ul><ul><li>Public disclosure bar limited to federal cases in FCA </li></ul><ul><li>Original source exception broadened to include persons who lack direct knowledge. </li></ul><ul><li>Summary payment suspensions during “credible fraud” investigation. </li></ul><ul><li>Expanded subpoena power </li></ul><ul><li>One year maximum period to submit Medicare claims </li></ul><ul><li>RAC, MIC, ZPIC expansion </li></ul>
  76. 76. Thank You!!! Gregory D. Anderson, CPA/ABV, CVA HORNE LLP 101 Madison Plaza Hattiesburg, MS 39403 [email_address] 601.620.5101 E. Russell (Rusty) Turner Balch & Bingham LLP 401 East Capitol Street Suite 200 Jackson, MS 39201 [email_address] 601.965.8159 Eugene (Gene) R. Naylor Wise Carter Child & Caraway, P.A. 401 East Capitol Street Heritage Building, Suite 600 Jackson, MS 39201 [email_address] 601.968.5564 R. Mark Hodges Wise Carter Child & Caraway, P.A. 401 East Capitol Street Heritage Building, Suite 600 Jackson, MS 39201 r [email_address] 601.968.5529 George H. Ritter Wise Carter Child & Caraway, P.A. 401 East Capitol Street Heritage Building, Suite 600 Jackson, MS 39201 [email_address] 601.968.5526 Barney B. Hebert, JDC HORNE LLP 101 Madison Plaza Hattiesburg, MS 39402 [email_address] 601.620.5110
  77. 77. The Mississippi Hospital Association Preparing for Healthcare Reform September 30, 2010 Hilton Hotel Jackson, Mississippi
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