Legislative and Regulatory Update

1. Legislative and Regulatory Update Andrew Wheeler Vice President of Federal Finance

2. State Medicaid Appropriations • Medicaid budget cuts • Governor ― proposes $40 million in unspecified General Revenue cuts to Medicaid ($115 million with the loss of federal funds) • House ― Revamped the governor’s proposed budget tospecify the cuts rather than let the governor decide them • Senate Appropriations Committee developed own version • House and Senate negotiations begin

3. State Medicaid Appropriations • Medicaid nursing home per diem • Reduction of 3.5 percent to per diem for 2018 • Proposed to restore 1.75 percent for 2019 • Medicaid Management Information System • Department asked for $10 million • House approved less than half • Best case – MMIS system update will take 5 to 10 years • Without system update, pay for performance implementation is problematic

4. Federal Landscape • Congress grappling with funding the government • Call for 340B transparency and policy revisions • Opioid epidemic

5. Federal Opioid Abuse Initiatives • $1.3 trillion omnibus spending package for 2018 • Includes $2.1 billion to fight opioid crisis • Senate Health, Education, Labor and Pensions Committee bill S. 2680. Committee will mark up on April 24. • House Energy and Commerce Health Subcommittee hearing. Reviewed more than 30 bills.

6. State Opioid Abuse Initiatives • Various legislative proposals • Medicaid initiative on opioid prescribing practices • Prescribers contacted to change or justify prescribing that violates state expectations • State mailings could go to 8,000 prescribers • Practitioners referred for licensure or drug regulator review after second notice

7. Federal and State Officials Hear a Drumbeat for Health Care Change • Public and private sector demands for: • Lower and stable premiums • More accountability • Less fragmentation of services • Better value, efficiency and effectiveness

8. Better care, smarter spending, healthier people Source: CMS

9. Future of Medicare ACOs, CMS Innovation Initiatives and Mandated Pay for Performance • Secretary Price reversed some Obama era mandatory pay for performance programs • Secretary Azar seems to be changing directions • Open to mandatory programs “I believe that we need to be able to test hypotheses” … “I want to be transparent and follow appropriate procedures, but, if to test a hypothesis around changing our healthcare system, if it needs to be mandatory as opposed to voluntary to get adequate data, then so be it.” • “Simply put, I don’t intend to spend the next several years tinkering with how to build the very best joint-replacement bundle – we want to look at bold measures that will fundamentally reorient how Medicare and Medicaid pay for care and create true competitive playing field where value is rewarded handsomely.” • “If we are serious about transforming our health care system toward paying for value, Medicare and Medicaid will play a key role. Only Medicare and Medicaid have the heft, the market concentration, to drive this kind of change, to be a first mover.”

10. Medicare Accountable Care Organization Activity in Missouri • 17 ACO’s serving Missouri beneficiaries • 545 track 1 and 60 track 3 participants • 22 hospitals • 7 hospitals in two sided risk CMS Innovation Initiatives • 218 CMMI providers • 66 continue to be reported under the cardiac rehabilitation incentive payment model

11. Medicare Involuntary Pay for Performance Programs • Acute inpatient prospective payment system hospitals • Value based purchasing • Hospital readmissions reduction program • Hospital acquired conditions • CCJR – selected hospitals • Skilled Nursing Facilities • FFY 2019 – value based purchasing • MACRA • Annual payment update

12. Potential Medicare Inpatient PPS Payments at Risk • Free on-demand webinar about the pay for performance programs: https://web.mhanet.com/medicare.aspx

13. SNF Value Based Purchasing • 2 percent of Medicare payments are at risk • Lowest 40 percent nationally receive a payment reduction • 30 day, risk standardized, all cause unplanned hospital inpatient readmission measure https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/NursingHomeQualityInits/Downloads/SNFRM-Technical-Report-3252015.pdf • Final benchmarks (inverted) • Achievement threshold: 0.79590 for 2019 and 0.80218 for 2020 • Benchmark: 0.83601 for 2019 and 0.83721 for 2020

14. Mandatory Pay for PerformanceMissouri’s Performance • 2018 Projection • Hospital value based purchasing • Gain $449,000, ranking 22nd • Hospital acquired conditions program • Lose $3.3 million, ranking 14th • Hospital readmissions reduction program • Lose $14.5 million, ranking 34th • 2019 Projection • Skilled nursing value based purchasing program – 2019 projection • Projected to lose $5.6 million ranking 40th

15. Medicare Beneficiary Identifier • MACRA required the removal of Social Security Numbers from Medicare cards by 2019 • The SSN-based Health Insurance Claim Number will replace the MBI

16. MBI Distribution • New enrollees will be among the first to receive cards • Beginning April 2018, begin sending new cards • Missouri residents should begin receiving cards after June 2018 • CMS New Medicare Card website: https://www.medicare.gov/newcard/

17. Inpatient Clinical Episode Family: Simple Pneumonia and Respiratory Infections

18. Issues to Watch For • Implementation of CHRONIC Care Act • Medicare Advantage – testing of value-based insurance design • Telehealth services (emphasis on ACO participants) • Medicare skilled nursing facility transition to resident classification system • Efforts to shift ACOs into two-sided risk arrangements