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Legislative Briefing. Bruce R. Rieker, J.D. Vice President, Advocacy April 24, 2014. Nebraska’s Hospitals. Below the surface 90 hospitals 41,000 employees 11,000 patients daily $4.9 billion in net patient revenues $1.1 billion in community benefits and bad debt 1.8 million Nebraskans

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bruce r rieker j d vice president advocacy april 24 2014

Legislative Briefing

Bruce R. Rieker, J.D.

Vice President, Advocacy

April 24, 2014

nebraska s hospitals
Nebraska’s Hospitals
  • Below the surface
    • 90 hospitals
    • 41,000 employees
    • 11,000 patients daily
    • $4.9 billion in net patient revenues
    • $1.1 billion in community benefits and bad debt
    • 1.8 million Nebraskans
    • 220,000 uninsured

3

nebraska s hospitals1
Nebraska’s Hospitals
  • 2012 Community Benefits $1.1 B
    • Charity care $109 M
    • Unpaid cost of Medicare $341 M
    • Unpaid cost of Medicaid $167 M
    • Bad debt $247 M
    • Subsidized care, cash, in-kind $204 M
legislation
Legislation
  • State
    • Medicaid expansion
    • Telemedicine
    • Prescription drug monitoring
    • Integrated practice agreements for NPs
    • Medical liability
    • Taxes

5

medicaid expansion
Medicaid Expansion
  • LB 887 – Wellness in Nebraska (WIN) Act
    • Failed to overcome filibuster
    • Economy depends on system that works for all
    • Individuals and families earning lowest incomes cannot get help in Marketplace
    • Only opportunity for those 19-64 who earn less than 133% of FPL
      • $14,856/individual and $30,675/family of four

6

nebraskans by fpl
Nebraskans by FPL

Source: Kaiser Family Foundation. Note: Nebraska Total Population 1,809,700

wellness in nebraska
Wellness in Nebraska
  • Fiscal sense
    • $2.3 billion of federal funds to improve health of Nebraskans through 2020
      • $360 million per year
      • $990,000 per day
    • State’s costs for next six years is $16 million
      • Economic activity of $2.3 billion would more than offset costs
        • General Fund revenue estimated at $107 million

9

wellness in nebraska1
Wellness in Nebraska
  • Direct spending offsets
    • Disability programs -- $53 M
    • Prescription drugs for low-income individuals who are HIV positive or have AIDS -- $5.25 M
    • Behavioral health services -- $14 M
    • Comprehensive Health Insurance Program (CHIP) --$46 M
    • Inmates of correctional facilities -- $4 M

10

wellness in nebraska2
Wellness in Nebraska
  • Utilizes private insurance marketplace
    • 100-133% of FPL
      • $11,170 to $14,856 for individuals
      • $23,050 to $30,576 for families of four
    • Private insurance through Marketplace or employer sponsored coverage
    • Private coverage could result in broader provider network

11

wellness in nebraska3
Wellness in Nebraska
  • Personal responsibility
    • Requires contribution of two percent of income
      • May be waived if engaged in wellness activities such as yearly exams, screenings and immunizations
      • Helps individuals engage in own health care decisions that can lead to better health care outcomes
    • Copays for inappropriate use of ER

12

wellness in nebraska4
Wellness in Nebraska
  • Innovation improves health and health system
    • Ensures connection to primary care physician and patient-centered medical home
      • Provides necessary preventive care, manages chronic conditions and reduces trips to ER and admissions
    • Utilizes new payment design strategies that reward use of efficient and effective treatment models that decrease costs and improve health

13

wellness in nebraska5
Wellness in Nebraska
  • Bridges coverage gap
    • Currently no avenue to health insurance for those with incomes below 100% of FPL who are not eligible for existing Medicaid program
      • Not eligible for tax credits through the Marketplace
    • More than 54,000 uninsured adults would gain coverage

14

wellness in nebraska6
Wellness in Nebraska
  • Saves lives
    • New England Journal of Medicine study comparing mortality rates for insured and uninsured
    • For every 176 adults covered by expanded Medicaid, one death per year would be prevented
    • At least 500 deaths per year in Nebraska would be prevented

15

wellness in nebraska7
Wellness in Nebraska
  • Proponents
    • Maximizes 100% federal funding
    • Strengthens private marketplace
    • Supports employer provided insurance participants
    • Delivery reform and innovation
    • Legislative action required if federal funding drops below 90%

16

wellness in nebraska8
Wellness in Nebraska
  • Opponents
    • Money better used elsewhere
    • Lack capacity
    • Feds cannot meet obligation
    • Other states experienced higher ER utilization
    • Removes incentives for change
    • Better to direct them to marketplace
    • Philosophically opposed

17

transparency
Transparency
  • LB 76 - Health Care Transparency Act
    • Signed into law
    • Requires Director of Insurance to appoint Health Care Data Base Advisory Committee
      • Make recommendations regarding the creation and implementation of Health Care Data Base
      • Provide tool for objective analysis of costs and quality, promote transparency

18

medicaid managed ltc
Medicaid Managed LTC
  • LB 854 – Prohibits issuance of a LTC Request For Proposal before Sept. 1, 2015
    • Signed into law
    • Health care professionals affected by proposed Medicaid Managed Long Term Services and Supports (MLTSS) project concerned with unreasonable timeline
    • Proposed May 2014 deadline for RFP did not allow sufficient time to clearly understand plan and provide meaningful input

19

medical liability
Medical Liability
  • LB 893 – Changes amount recoverable under Nebraska Hospital-Medical Liability Act
    • Signed into law
    • Current limit is $1.75 million per occurrence
    • Increased amount to $2 million after Dec. 31, 2014
    • Another bill, LB 862, proposed increase to $2.5 million
    • Judiciary Committee advanced LB 893 to General File with amendment to increase cap to $2.25 million
    • Amended into LB 961

20

psychology interns
Psychology Interns
  • LB 901 – Psychology internships through Behavioral Health Education Center
    • Signed into law
    • Funding for five doctoral-level psychology internships in first year with increase to ten by third year
    • Placed in communities where presence will improve access in rural and underserved areas

21

appropriations
Appropriations
  • LB 905 – Mid-biennium budget adjustments
    • Law notwithstanding governor’s veto
      • $150,000 to Rural Health Provider Incentive Program
      • $1.5 million for six FQHCs
      • $212,000 for tuition for EMS responder training
      • $1.8 million for pediatric cancer research at UNMC
      • $10 million for behavioral health aid

22

nurse practitioners
Nurse Practitioners
  • LB 916 – Eliminate integrated practice agreements for nurse practitioners
    • Signed into law
    • Requires all NPs to submit a transition-to-practice agreement (TPA) or evidence of 2,000 hours of practice completed under TPA or similar agreement
    • NPs intending to be supervising providers must submit evidence of 10,000 hours of practice completed under TPA or similar arrangement

23

prescription monitoring
Prescription Monitoring
  • LB 1072 – Prescription Drug Monitoring
    • Signed into law
    • Requires Board of Pharmacy to establish program to monitor prescribing and dispensing of substances that demonstrate potential for abuse

24

telemedicine
Telemedicine
  • LB 1078 – Amend Nebraska Telehealth Act
    • On General File
    • Clarifies that physician, PA, NP and pharmacist may establish patient relationship in person or with real-time, two-way electronic video conference
    • Reimbursement shall, at a minimum, be same rate as Medicaid rate for comparable in person consultation and shall not depend on distance between patient and practitioner

25

interim studies
Interim Studies
  • LR 422 – Develop recommendations towards transformation of state’s health care system
  • LR 559 – Examine issues surrounding Medicaid Reform Council
  • LR 565 – Evaluate benefits of adding antidepressant, antipsychotic, and anticonvulsant drugs to Medicaid PDL
  • LR 575 – Examine issues relative to in-home personal services

26

interim studies1
Interim Studies
  • LR 576 – Evaluate status of EHRs and HIEs
  • LR 580 – Examine reforms of behavioral health  
  • LR 592 – Behavioral health workforce development
  • LR 596 – Evaluate “Physician Orders for Life-Sustaining Treatment” and “Out-of-Hospital DNR” protocols
  • LR 601 – Examine impacts of implementing, and failing to implement, Medicaid expansion

27

fiscal landscape
Fiscal Landscape
  • National Debt
    • $16.7 trillion
      • Nearly $53,000 per citizen
  • Nation’s Budget
    • Income $2.17 T
    • Spending $3.82 T

($1.65 T)

political landscape
Political Landscape
  • Congress
    • Senate
      • 53 Democrats
      • 45 Republicans
      • 2 Independents
    • House of Representatives
      • 232 Republicans
      • 201 Democrats
      • 2 vacancies
affordable care act
Affordable Care Act
  • Delivery System Changes
    • Health information technology requirements
    • Insurance exchanges
    • Value-based purchasing programs
    • Bundled payments
    • Accountable care organizations
    • Population health
    • Reimbursement reductions and penalties
congress and cms
Congress and CMS
  • Medicare reductions
    • Nebraska hospitals
      • Negative 11.9 percent margin for Medicare
      • Incurring cuts over $1.3 B through 2022
      • Additional cuts of $1.6 B over ten years under consideration
      • Profound impact on access and subsidized care
medicare cuts
Medicare Cuts
  • Existing legislative cuts
    • ACA: $856 million
      • Update factor cuts
      • Quality-based payment reforms (VBP, readmissions & HACs)
      • Medicare DSH cuts
    • Sequestration: $271 million
      • 2% reduction authorized by Budget Control Act
medicare cuts1
Medicare Cuts
  • Existing legislative cuts
    • Bad debt: $2.8 million
      • Reduced to 65%
      • Middle Class Tax Relief and Job Creation Act
    • Coding adjustments: $65 million
      • Retrospective adjustments over four years
      • American Taxpayer Relief Act
medicare cuts2
Medicare Cuts
  • Existing regulatory cuts
    • Coding adjustments $114 million
      • Inpatient: 1.9% in 2013
      • Home health: 1.32% in 2013
medicare cuts3
Medicare Cuts
  • Under consideration
    • Outpatient/physician E/M services
      • $38 million (H.R. 3630)
    • Outpatient/physician outpatient services
      • 66 Ambulatory Payment Classifications (APCs)
      • $81 million (MedPAC)
    • Outpatient/ASC outpatient services
      • 12 APCs
      • $46 million (MedPAC)
medicare cuts4
Medicare Cuts
  • Under consideration
    • Indirect medical education: $193 million
      • Cuts payments by more than 50% by reducing reimbursement from 5.47% to 2.2% (Simpson-Bowles)
    • Direct medical education: $36 million
      • Limits reimbursement to 120% of average salary paid to residents in 2010, updated annually (Simpson-Bowles)
medicare cuts5
Medicare Cuts
  • Under consideration
    • Bad debt payments: $17 million
      • Eliminate bad debt payments (Simpson-Bowles)
    • SCH program: $284 million
      • Eliminate sole community hospital program (CBO)
    • CAH payments: $918 million
      • Eliminate permanent exemption from distance requirement for hospitals with “necessary provider” designation (OIG)
federal legislation
Federal Legislation
  • H.R. 3698: Two Midnight Rule Delay Act
    • Delays enforcement of two-midnight rule until October 1, 2014
  • S. 183 / H.R. 2053: Hospital Payment Fairness Act
    • Addresses wage index manipulation in Massachusetts
  • S. 1012 / H.R. 1250: Medicare Audit Improvement Act
    • Improves Medicare RAC program
federal legislation1
Federal Legislation
  • S. 1143 / H.R. 2801: Protecting Access to Rural Therapy Services Act
    • Improves physician supervision requirements
      • Adopts default standard of general supervision
      • Defines direct supervision for CAHs consistent with CAH conditions of participation (30 minutes)
      • Holds hospitals harmless retroactively back to 2001
  • H.R. 3769: Delays enforcement of physician supervision requirements for CAHs
    • Representative Smith
current trends
Current Trends
  • Physicians
    • Accepting fewer publicly insured patients
      • Fewer than 75% accept new patients with Medicare and Medicaid
      • 8% aged 18-64 were told within last 12 months that physician was no longer accepting their coverage
      • 6% were told physician would not accept them as new patients
hospital outlook
Hospital Outlook
  • Increasingly negative view for nonprofits
    • Nonprofit hospitals continue to see declines in volumes, revenue growth. – Moody’s Investor Service
    • 2012 may have been “high water mark” – Fitch
    • Moody’s predicts slow revenue growth, confirms negative outlook – Advisory Board Daily Briefing
    • In states that say no to Medicaid, hospitals worry about “death by 1,000 cuts” – Advisory Board
hospital outlook1
Hospital Outlook
  • Nonprofits at tipping point
    • Ever-decreasing ability to offset charges and negative trends
    • Weakening revenues
      • Smaller annual payment increases
      • Weaker commercial increases
      • Flat-to-declining inpatient volumes

Source: HFMA

hospital outlook2
Hospital Outlook
  • Strong, vulnerable, fragile and scared
    • Declining volumes and reimbursements
    • No clear business model
    • Inconsistent data being published
    • Safety through mergers and alliances
continuing concerns
Continuing Concerns
  • Access
    • Physicians limiting government business
    • Narrow networks
    • Critical but unprofitable
  • High quality
    • Recruiting best physicians and nurses
    • Less capital for replacement and new technology
  • Workforce
    • Age, health and recruitment
future of medicaid
Future of Medicaid
  • Broad premises
    • Delivery will be based on some form of population health management
    • Hospitals have opportunity to lead system redesign
  • Primary drivers
    • Transition of state agencies from welfare providers to active purchasers of services
    • Convergence between Medicaid and commercial insurance
future of medicaid1
Future of Medicaid
  • Needs and opportunities
    • Encourage state policies that allow formation and success of provider-led models
    • Enhance success of expansion efforts with innovative approaches that integrate Medicaid with commercial insurance markets
    • Support efforts to develop innovative, payer solutions for addressing needs of medically frail, dually eligible, and complex chronic beneficiaries
future of medicaid2
Future of Medicaid
  • Hospital implications
    • Purchasing strategies will require more risk through performance-based contracting
    • Convergence of Medicaid and employer-sponsored insurance will lead to a seamless coverage continuum
    • Prospect of direct contracting between Medicaid and provider systems may create opportunities for delivery of dedicated services to beneficiaries
    • Not all hospitals are capable of developing or participating
drivers of change
Drivers of Change
  • Macroeconomics
    • Recession left people without jobs and insurance
    • Federal and state budget issues
  • Pressures from payers
  • Difficult to raise financing for capital projects
drivers of change1
Drivers of Change
  • Demands from aging population
    • Physician recruitment
    • More advanced services
    • More ER visits from uninsured
  • Affordable Care Act
    • More covered lives
    • More Medicaid and Medicare payers
    • All providers affected by marketplace
reform based competency
Reform Based Competency
  • Success factors in reform environment
    • Viable infrastructure for employing physicians
      • Recruitment and retention, including specialists
      • Leverage primary care network
      • Align physician capacity with market demand
    • Competitive facilities and equipment
    • Low cost
    • Initiatives for care management, IT and clinical integration
care coordination
Care Coordination
  • Physician integration
    • Recognize forces affecting physicians
    • Hospital or system capabilities and infrastructure
    • Well defined strategic financial plan with sufficient resources and performance targets
    • Ensure strong physician participation, leadership and governance
care coordination1
Care Coordination
  • Physician integration
    • Use technology to connect
    • Ensure objective assessment of readiness for value-based care transformation
    • Use disciplined, integrated approach to practice acquisition and employment
    • Manage to achieve goals and performance standards
care coordination2
Care Coordination
  • Current environment
    • Electronic health record system implementation
    • Primary market populations defined
    • Status of capitated activity
    • Population health management infrastructure (i.e. insurance products, provider network, care management, etc.)
    • Wellness infrastructure
care coordination3
Care Coordination
  • Future considerations
    • Electronic health records actively mined for best practice applications and hub for population management
    • Population management will likely drive care coordination needs (i.e. patient centered medical homes, bundled payment models, etc.)
care coordination4
Care Coordination
  • Quality and patient satisfaction
    • Focus of reform is quality, value and outcomes
    • Shift from volume-based and cost-based models to value-based patient centered models
    • Quality and outcomes that currently impact reimbursement for PPS hospitals could eventually impact CAHs
advocacy
Advocacy
  • Contact sport
    • If we are not at the table, we are probably on the menu.
    • Have to be present to win.
    • Engage, educate and empower.
    • Hold them accountable!
questions
Questions?

Thank you.

Bruce R. Rieker, J.D.

Vice President, Advocacy

brieker@nebraskahospitals.org