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Sustaining Revenue Under the Affordable Care Act Alabama Hospital Association January 24, 2014

Sustaining Revenue Under the Affordable Care Act Alabama Hospital Association January 24, 2014. Dan M. Silverboard Jennifer E. Tyler. Presentation Overview. Background: Payment Reform Under the ACA Readmissions Reduction Program Hospital Value-Based Purchasing Program

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Sustaining Revenue Under the Affordable Care Act Alabama Hospital Association January 24, 2014

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  1. Sustaining Revenue Under the Affordable Care ActAlabama Hospital AssociationJanuary 24, 2014 Dan M. Silverboard Jennifer E. Tyler

  2. Presentation Overview • Background: Payment Reform Under the ACA • Readmissions Reduction Program • Hospital Value-Based Purchasing Program • Hospital-Acquired Conditions Reduction Program • Direct Employer Contracting • Opportunities in Telemedicine • Mergers and Acquisitions • Billing and Collections

  3. Health Spending/Percent GDP Source: CMS

  4. Background: Key Facts • Alabama opt-in to the Medicaid expansion would have covered approximately 240,000 previously uninsured persons—or sixty percent (60%) of its uninsured population. • DSH Reduction (UAB): • $307,827,500 in DSH payments in FY2011. This accounts for nearly 10% of all Medicaid spending in Alabama.

  5. Background: ACA Payment Reform • “Estimates suggest that as much as $700 billion a year in health care costs do not improve health outcomes.” - Peter Orszag, Former Director of the Congressional Budget Office

  6. Background: ACA Payment Reform • Focus on quality of care when determining provider reimbursement. • Implemented through Prospective Payment System and private commercial contracts. • Affected providers: • Hospitals • Individual clinicians • Managed care organizations (MAOs) • Accountable care organizations (ACOs)

  7. Affordable Care Act Provision with Quality Focus Value based purchasing • 3001 - Hospital value-based purchasing • 3006 - Value-based purchasing for SNF • 3014 - Quality and efficiency measurement • 10301 - Develop a plan to implement VBP for ambulatory surgical centers • 10326 - Pilot testing for pay-for-performance Hospital readmissions • 3025 - Hospital readmissions reduction program • 3026 - Community-based care transitions program Healthcare acquired conditions • 2702 - Payment adjustment for health care-acquired conditions • 3008 - Payment adjustment for conditions acquired in hospitals Accountable care organizations • 2706 - Pediatric accountable care organization demonstration project • 3022 - Medicare Shared Savings Program Dual eligibles • 2602 - Providing federal coverage and payment coordination for dual eligible beneficiaries Preventative services • 4103 - Annual wellness visit providing a personalized plan • 4104 - Removing barriers to preventive services • 4105 - Evidence-based coverage of preventive services Coordination of care • 2703 - State option to provide health homes for enrollees with chronic conditions • 2704 - Demonstration project to evaluate integrated care around a hospitalization Long term care • 2401 - Community first choice option • 2402 - Removal of barriers to providing home and community based services • 2403 - Money follows the person rebalancing demo • 2404 - Protection for recipients of home and community-based services against spousal • impoverishment • 10202 - Incentives for states to offer home community based serviced Public reporting • 10303 - Development of outcome measures • 10327 - Improvements to the physician quality reporting system -- also see Provision 3002 • 10331 - Public reporting of performance information Quality reporting initiative • 2701 - Adult health quality measures • 3002 - Improvements to the physician quality reporting system. • 3004 - Quality Reporting for Long Term Care Hospitals (LTCH), inpatient rehabilitation • hospitals, and hospice programs • 3005 - Quality reporting for PPS-exempt cancer hospitals • 10322 - Quality reporting for psychiatric hospitals

  8. Financial Impact of CMS Quality Programs

  9. Readmissions Reduction Program Background • Recommended by Medpac in 2007, 2008 Reports to Congress. • Public reporting of readmissions began in 2009 on Hospital Compare. • Authority: • Adopted as part of PPACA (section 3025) in 2010. • Codified in SSA, §1886(q). • Initial program policies in FY 2012 IPPS final rule. • Regulations at 42 C.F.R. §412.152. • Effective October 1, 2012. • $8.2 billion in cost savings.

  10. Readmissions Reduction Program • Why are Readmissions a Target? • Hospitals are the most expensive setting for health care delivery, costing between $1,600 and $2,000 a day per patient and consuming $850 billion of the $2.7 trillion spent annually on health care in the U.S. • MedPac (2008): “Within 30 days of discharge, 17.6 percent of admissions are readmitted, accounting for $15 billion in Medicare spending in 2005…12 percent were avoidable.” • NEJM (2009): 1 in 5 Medicare patients are readmitted; avoidable readmissions cost $17 billion annually.

  11. Readmissions Reduction Program • Program Measurements • Acute-care hospital readmissions within 30-days for discharged Medicare FFS patients. • Effective for discharges on or after Oct. 1, 2012. • Applicable Conditions: • Acute myocardial infarction • Heart failure • Pneumonia • Chronic obstructive pulmonary disease (2015) • Elective hip/knee arthroplasty (2015)

  12. Readmissions Reduction Program Key Points • “Readmission” occurs when a Medicare patient is discharged from an acute care hospital and then is admitted to the same or another acute care hospital within 30 days. • Can be for any cause (i.e., it does not have to be for the same cause as the initial admission). • Exclusions: • For FY 2014, unplanned readmissions following a planned readmission so long as within 30 days of the initial admission. • Same-day hospital inpatient readmissions for the same condition to the same hospital. • Excludes transfers to another IPPS hospital, discharges against medical advice.

  13. Readmissions Reduction Program • Penalty Assessment: • “Excess readmission ratio” (ERR) is calculated based on the hospital’s readmission performance as compared to the national average for the condition. • ERR is then risk-adjusted for clinically relevant factors (limited patient demographics, comorbidity, patient frailty). • CMS utilizes administrative claims data. • Penalty Amount: • FY 2013: Up to 1% • FY 2014: Up to 2% • FY 2015: Up to 3%

  14. Readmissions Reduction Program • Reporting Requirements • Readmission data is reported on Hospital Compare website. • Hospitals are able to review data prior to publication and may make corrections, though not to claims data. • Limited appeal rights.

  15. Readmissions Reduction Program Hospital Compare Data

  16. Readmissions Reduction Program • FY 2013 Program Results: • 2,225 hospitals penalized. • $227 million in penalties. • 77% of safety net hospitals were penalized. • 81% of Alabama hospitals penalized. • CMS considering incorporating socioeconomic factors into risk-adjustment (race, ethnicity, income, lifestyle, patient access to primary care).

  17. Value-Based Purchasing Program Authority: • Section 3001(a) of PPACA. • Codified in SSA, §1886(o). • Final Rule, 76 FR 26490 (May 6, 2011). • Regulations at 42 C.F.R., §412.160 et seq. • Additional guidance in IPPS rules (2012-2014). Applicability: • All “subsection (d)” hospitals – all hospitals paid under IPPS. Critical access hospitals and small hospitals are excluded.

  18. Value-Based Purchasing Program Program Metrics: • How well hospital follows “best clinical practices” in certain areas (“Clinical Process of Care Domain”). • How well hospital enhances patient experience (“Patient Experience of Care Domain”). • Mortality outcomes for certain conditions (added for FY 2014) (“Outcome Domain”). • Areas are evaluated based on specific quality measures. Exposed Funds: • 1% of DRG payment upwards or downwards for FY 2013, increased annually by ¼%. • 1.25% for FY 2014 DRG payments/1.5% for FY 2015. • Caps out at 2% in 2017.

  19. Value-Based Purchasing Program • Program Funding: • All hospitals participating will have their base operating DRG payment for each patient discharge reduced • The money will be used to fund the incentive payments. • CMS estimates $1.1 billion available in FY 2014. • Data Collection: • Patient Experience Domain: HCAHPs survey data is used. • Clinical Process of Care Domain: Chart abstracts are used. • Outcome Domain: Medicare claims data. • Surveys and abstracts are collected through the Hospital Inpatient Quality Reporting Program.

  20. Value-Based Purchasing Program • Hospital Inpatient Quality Reporting Program (HIQRP) • Requires acute care hospitals to submit data regarding specific quality measures for common health conditions among Medicare patients which typically result in hospitalization. • Hospitals that successfully report are paid a higher annual update to their payment rates by CMS. • Eligible hospitals that do not participate receive an annual market basket update with a 2% reduction. • 95% of hospitals participate.

  21. Value-Based Purchasing Program • Scoring Methodology: • Achievement Score • Improvement Score • Total Performance Score: Higher of Achievement Score or Improvement Score for each measure. CMS then aggregates the scores for each measure to achieve one score for the category. After the scores are weighted, they are added together to get the total performance score, which is then converted into a payment adjustment percentage (PAP). • VBP Bonus = PAP x hospital’s base DRG operating payment.

  22. Value-Based Purchasing Program

  23. Value-Based Purchasing Program

  24. Value-Based Purchasing Program

  25. Value-Based Purchasing Program

  26. Value-Based Purchasing Program • Appeals: • Yes. Within 30 days from time CMS payment report is posted, the hospital must submit a “Corrections Request.” • The hospital may submit an appeal within 30-days on the CR if denied. • The appeals process is facilitated through QualityNet. • Reporting: Results for each individual performance measure as well as a hospital's total performance are reported on Hospital Compare.

  27. Value-Based Purchasing Program Early Program Results • FY 2013: 1,557 hospitals received bonuses, 1,427 had reductions. • FY 2014: 1,231 hospitals received bonuses, with reductions to 1,451 hospitals. • Bigger teaching hospitals did the worst, with smaller, community hospitals faring better. • Fifty-seven% of for-profit hospitals received bonuses, while only 21% of government-owned hospitals gained money. • “For nearly two-thirds of the hospitals, the changes are less than a quarter of a percent…[s]till, for hospitals with lots of Medicare patients, hundreds of thousands of dollars are at stake.” (Kaiser Health News)

  28. HAC Reduction Program Beginning in FY 2015, the Hospital-Acquired Condition (HAC) Reduction Program, mandated by the Affordable Care Act, requires CMS to reduce hospital payments by 1 percent for hospitals that rank among the lowest-performing 25 percent with regard to HACs.

  29. HAC Reduction Program • Authority: • 2005 Deficit Reduction Act • In 2009, CDC found preventable HACs added $6 billion in health care costs. • Section 3008 of PPACA. • Codified in SSA, § 1886(p) • Regulations at 42 C.F.R., § 412.170 et seq. • FY 2014 IPPS Rule.

  30. HAC Reduction Program Penalties/Reporting • HAC/POA Policy: For discharges on or after October 1, 2008, hospitals do not receive additional payment where a designated HAC is not present on admission. Payment is made as though no secondary diagnosis were present. • HRP: Beginning in FY 2015 hospitals in the lowest 25% for HACs will receive a 1 percent penalty on reimbursement. Penalty adjustment will occur after base DRG payment adjustments have been calculated and made for the VBP and readmission reduction programs. • Data: IQR Program. • Reporting: Hospital Compare.

  31. HAC Reduction Program • Designated HACs (Present on Admission Policy): • Foreign Object Retained after Surgery • Air Embolism • Blood Incompatibility • Stage III and IV Pressure Ulcers • Falls and Trauma • Vascular Catheter-Associated infection • Catheter-Associated Urinary Tract Infection • Manifestations of Poor Glycemic Control • Deep Vein Thrombosis and Pulmonary Embolism Following Certain Orthopedic Procedures • SSI Following Bariatric Surgery for Obesity: • SSI Following Cardiac Implantable Electronic Device (CIED) • SSI Following Certain Orthopedic Procedures • SSI, Mediastinitis, following Coronary Artery Bypass Graft (CABG) • Latrogenic Pneumothorax with Venous Catheterization

  32. HAC Reduction Program: Calculation • Domain 1 (8 AHRQ Measures - 35%): • Pressure ulcer rate; • Iatrogenic pneumothorax rate; • Central venous catheter-related blood stream infection rate; • Postoperative hip fracture rate; • Postoperative pulmonary embolism /deep vein thrombosis rate; • Postoperative sepsis rate; • Wound dehiscence rate; and • Accidental puncture and laceration rate. • Domain 2 (2 CDC Measures - 65%): • Central Line-Associated Blood Stream Infection • Catheter-Associated Urinary Tract Infection. • Total HAC Score: D1 + D2 (Risk Adjusted - age, gender, and comorbidities).

  33. Encouraging Enrollment in Exchanges Encouraging Enrollment in Exchanges • Enrolling patients in exchanges is high priority • Various methods: • Navigators: Ascension Health/Providence Health and AIDS Alabama, Tombigbee Healthcare Authority • Local meetings, local health fairs • Insurance phone hotlines • Mining patient records to determine potential eligibility

  34. Finding Coverage for Patients • Medicaid enrollment: Presumptive enrollment • At least one state requires presumptive enrollment (Illinois). • Under provisions of the ACA qualified hospitals are allowed to make presumptive eligibility determinations for individuals who show potential eligibility for Alabama Medicaid under the primary ACA groups (children, pregnant women and parent/caretaker relatives). • Alabama Medicaid recently issued new guidance on presumptive enrollment

  35. Finding Coverage for Patients • Alabama Medicaid Presumptive Enrollment • Individuals required to submit a simplified hospital PE application to receive presumptive eligibility benefits. • The hospital PE application must be submitted electronically. • The hospital PE determination based on income, household size, citizenship and state residency. • The qualified hospital will accept self-attestation of information and will not perform any verification checks of information provided.

  36. Finding Coverage for Patients • Alabama Medicaid Presumptive Enrollment (cont.) • Presumptive eligibility granted for up to 60 days. • After completing the hospital PE application, the individual will be referred to complete a full Medicaid application. • The individual will be able to complete the Medicaid application online, via paper, over the phone, and in person at their local Medicaid office. • Eligibility worker • Another option for getting individuals signed up for Medicaid is for hospitals to hire an eligibility worker that could actually enroll patients in Medicaid using the Medicaid system.

  37. Finding Coverage for Patients • Certified Application Counselors • Individuals who work at hospitals or other provider organizations who can assist individuals in applying for coverage through the health care marketplace. • http://www.enrollamerica.org/toolkits/pe/home.html. • National enrollment site: • Enroll America has useful tools for enrollment, outreach • For example: How to create an Outreach Work Plan • www.enrollamerica.org

  38. Encouraging Enrollment in Exchanges • Caution against premium assistance • October 30, 2013 – DHHS guidance: Qualified Health Plans (QHPs) are not “federal health care programs” for purposes of the Anti-Kickback Statute (AKS) • Appeared to sanction 3rd party premium subsidies for patients purchasing insurance through exchanges

  39. Finding Coverage for Patients • November 4, 2013 DHHS FAQ: “It has been suggested that hospitals, other healthcare providers, and other commercial entities may be considering supporting premium payments and cost-sharing obligations with respect to qualified health plans purchased by patients in the Marketplaces. HHS has significant concerns with this practice because it could skew the insurance risk pool and create an unlevel field in the Marketplaces. HHS discourages this practice and encourages issuers to reject such third party payments. HHS intends to monitor this practice and to take appropriate action, if necessary.”

  40. Addressing Bad Debt Addressing Bad Debt • Hospitals must address bad debt • Payment of copays and deductibles will continue to be a problem for patients in exchanges • High deductible plans lead to large patient responsibility • High deductible plans lead to patients seeking to pay cash only (not report to insurance) • Many patients will remain uninsured • Hospitals must find ways to turn accounts receivable into cash

  41. Addressing Bad Debt • Caution: ACA implemented new rules regarding collections actions, effective Jan. 1, 2014 • New IRC Section 501(r)(6) requires a hospital organization to make reasonable efforts to determine whether an individual is eligible for financial assistance before engaging in extraordinary collection actions (“ECAs”) against the individual.

  42. Addressing Bad Debt • ECAs include: • Reporting to credit agencies • Placing a lien on individual’s property • Attaching or seizing individual’s bank account • Commencing a civil action against an individual • Garnishing individual’s wages • Sales of patient’s debt to third party collection company • IRS is authorized to strip tax-exempt status for “willful and flagrant” violations • AHA & HFMA issued “best practices” for hospitals

  43. Encouraging Enrollment in Exchanges • ACA requires hospitals to revise financial assistance policies to capture more patients (IRC § 501(r)(4)). • FAP should establish: • Eligibility for financial assistance (free & discounted care) • Basis for calculating amounts charged to patients • Method for applying financial assistance • Billing and collections policy (if not separate) • Measures to widely publicize the FAP within the community

  44. Direct Contracting with Employers Direct Contracting with Employers • Traditional model • Employers contract with payors (HMO, MCO, PPO) to access providers • Providers contract with payors (HMO, MCO, PPO) to access patients • Problems • Inflexible • Costly • Administratively difficult to manage

  45. Direct Contracting with Employers • Employers becoming receptive to innovative options • Employers are facing: • Increasing pressure to trim healthcare costs • Drive to keep employees healthy • Employee benefit plans in flux • Drop coverage and push employees to exchanges? • Optimize current coverage?

  46. Direct Contracting with Employers • Examples of Direct Contracts between Employer and Providers • Lowe’s • 225,000 employees and dependents enrolled in Lowes self-funded plan can travel to Cleveland Clinic for heart procedures. • Lowe’s covers all medical deductibles, coinsurance payments, travel costs and lodging for patient and companion.

  47. Direct Contracting with Employers • Examples of Direct Contracts between Employer and Providers • Perdue Farms • Contracts directly with physicians and hospitals • Healthcare costs for the company are less than half of the national average • Wal-Mart • 1.1 million employees and their dependents covered by Wal-Mart’s plan can travel to Cleveland Clinic for cardiac surgery with employer covering deductibles and travel

  48. Direct Contracting with Employers • Benefits of Direct Contracting • Lower costs—No “middleman” cut (network access fees) • More flexibility—Providers can negotiate better deals for important procedures/services • Hospitals can obtain access to patients with reliable source of payment • Less “nit-picking” of medical judgment • Less administrative hassle • Reduced physician burnout, since focus is less on volume and more on quality of care

  49. Direct Contracting with Employers • What makes a hospital attractive to employers? • Outcomes • Transparency • Aligned incentives (e.g., employed physicians) • Geography and access • What will save employees time? • For high risk procedures—employers may be willing to send employees out-of-state • For OB or occupational medicine—employers looking for local providers • Infrastructure (e.g., experience, staff)

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