Www.nebraskahospitals.org Legislative Briefing Bruce R. Rieker, J.D. Vice President, Advocacy April 24, 2014

www.nebraskahospitals.org

Legislative Briefing

Bruce R. Rieker, J.D.Vice President, Advocacy

April 24, 2014

www.nebraskahospitals.org2


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 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 • State –Medicaid expansion–Telemedicine–Prescription drug monitoring – Integrated practice agreements for

NPs–Medical liability–Taxes

5


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

246,80014%

129,9007%

372,40021%

397,50022%

663,00036%

Distribution by Federal Poverty Level, 2010-2011

Under 100%100-138%139-250%251-399%400+%

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


Non-elderly Uninsured

Below 100% 100-138% 139-250% 251-399% 400+%0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

66,500

31,300

67,900

35,60028,300

Federal Poverty Levels


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 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 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 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 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 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 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 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 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 • 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• 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• 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• 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• 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 • 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• 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• 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• 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

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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

• 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

• Congress– Senate• 53 Democrats • 45 Republicans• 2 Independents

–House of Representatives• 232 Republicans • 201 Democrats• 2 vacancies


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

• 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

• 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 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 Cuts

• Existing regulatory cuts– Coding adjustments $114 million• Inpatient: 1.9% in 2013• Home health: 1.32% in 2013


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 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 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• 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 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

• 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

• 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 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

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Hospital Outlook

• Strong, vulnerable, fragile and scared–Declining volumes and

reimbursements–No clear business model– Inconsistent data being published–Safety through mergers and

alliances

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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

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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

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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

www.nhanet.org47

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

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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

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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

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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

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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

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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

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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

www.nhanet.org54

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.)

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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

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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!

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Questions?

Thank you.

Bruce R. Rieker, J.D.Vice President, Advocacy

[email protected]

Documents

Www.nebraskahospitals.org Legislative Briefing Bruce R. Rieker, J.D. Vice President, Advocacy April 24, 2014