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Modern American
Health Care
Balancing Performance and Compliance in the Current
Climate of Reform


Craig B. Garner
April 2013
Copyright 2013
Modern American Health Care
                   Balancing Performance and Compliance




          INTRODUCTION




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Modern American Health Care
                                                            Balancing Performance and Compliance



A Brief History of Health Care in the United States

Throughout the 1800s, access to the delivery of care rendered by the
few elite hospitals (totaling fewer than 200 in 1873) in cities such as
New York, Boston and Philadelphia went hand-in-hand with one’s status
in society. Most medical care took place in the home.

By the 1920s, the hospital had become a national institution in America,
with more than 5,000 facilities appearing across the country. This trend
brought with it advances in technology, more trained physicians, and
greater quality of care.

As conditions in health care improved, the practice of medicine in the
United States shifted from home to hospital. People went to a hospital to
get better, benefitting from medical advances and greater availability of
care.


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Modern American Health Care
                                                           Balancing Performance and Compliance



A Brief History of Health Care, continued


In 1946, the Hospital Survey and Construction Act (the Hill Burton Act)
disbursed approximately $3.7 billion to hospitals so they could meet the
growing needs of the nation. The Hill Burton Act sought to create 4.5
hospital beds per 1,000 people nationwide.

The Hill Burton Act forced hospitals and their communities to work
together, combining federal funds with local monies to cover expenses.

By the 1960s, health care in the United States was at a crossroads.
Access to treatment had increased, but so had the corresponding price
tag. With the passage of Medicare in 1965, our nation solidified its
commitment to government sponsored health care.




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Modern American Health Care
                                                           Balancing Performance and Compliance




The Patient Protection and Affordable Care Act

  On March 23, 2010, President Obama signed the Patient Protection and
  Affordable Care Act into law.

  The Health Care and Education Reconciliation Act followed a week later.

  Together, this landmark legislation became the Affordable Care Act.




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Modern American Health Care
                                                                Balancing Performance and Compliance



Who Pays for the Affordable Care Act?

          Drug manufacturers

          Health insurers

          Medical device manufacturers (excise tax starting in 2013)

          Indoor tanning services

          Medicare Payroll Tax increases (starting in 2013)

          Businesses that offer high-end "Cadillac" plans

          Taxpayers, in part through the Individual Mandate

          Companies, in part through the Business Mandate


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Modern American Health Care
                                      Balancing Performance and Compliance




          REFORM FROM THE
          PATIENT’S PERSPECTIVE

          Essential Health Benefits
          Individual and Group Market Reforms
          Improving Coverage
          Medical Loss Ratio
          Individual Mandate
          Employer Mandate




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Modern American Health Care
                                                               Balancing Performance and Compliance



Essential Health Benefits
          Ambulatory patient services
          Emergency services
          Hospitalization
          Maternity and newborn care
          Mental health and substance use disorder
          Prescription drugs
          Rehabilitative and habilitative services and devices
          Laboratory services
          Preventative and wellness services / chronic disease management
          Pediatric services, including oral and vision care

    42 U.S.C. § 18022



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Modern American Health Care
                                                   Balancing Performance and Compliance




Nearly Essential Health Benefits

          Emergency room visits
          Ambulance services
          Diabetes care management
          Kidney dialysis
          Physical therapy
          Durable medical equipment
          Prosthetics
          Infertility treatment
          Organ and tissue transplantation

Institute of Medicine, Essential Health Benefits



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Modern American Health Care
                                                                          Balancing Performance and Compliance



Individual and Group Market Reforms
    Fair Health Insurance Premiums (42 U.S.C. § 300gg)

             Individual or Family
             Rating Area (states will decide)
             Age (but not more than 3 to 1 for adults)
             Tobacco Use (but not more than 1.5 to 1)


    End of Preexisting Condition Exclusion (42 U.S.C. § 300gg-3)
    Coverage for Adult Child Until the Age of 26 (42 U.S.C. § 300gg-14)
    Guaranteed Availability of Coverage (42 U.S.C. § 300gg-1)




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Modern American Health Care
                                                                     Balancing Performance and Compliance



What Are the Levels of Coverage?

           Bronze (60% of the full actuarial value of the benefits)

           Silver (70% of the full actuarial value of the benefits)

           Gold (80% of the full actuarial value of the benefits)

           Platinum (90% of the full actuarial value of the benefits)

           Catastrophic (29 years old or younger or exempt from Section
           5000A)

     42 U.S.C. § 18022(d), (e)




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Modern American Health Care
                                              Balancing Performance and Compliance




Precious Metals (January 2013)

           Platinum 30-day average = $1,585
           Gold 30-day average = $1,673
           Silver 30-day average = $31




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Modern American Health Care
                                                            Balancing Performance and Compliance




Taxes and Flexible Spending Accounts in 2013

           Individual contributions to flexible spending accounts for medical
           expenses can no longer exceed $2,500 per year.

           New regulations limit the itemized deduction for unreimbursed
           medical expenses (previously 7.5% of adjusted gross income) to
           10%.

           Taxes on wages above $200,000 increased by 0.9%.

           Unearned income is subject to a new 3.8% increase.




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Modern American Health Care
                                                              Balancing Performance and Compliance



 Minimum Medical Loss Ratio
 Referred to as the “80/20 provision” of the Affordable Care Act, the
 Medical Loss Ratio (MLR) applies as follows:

           Large group market:  An issuer must provide a rebate to enrollees if
           the issuer has an MLR of less than 85% (subject to adjustments).

           Small group market and individual market: An issuer must provide a
           rebate to enrollees if the issuer has an MLR of less than 80% (also
           subject to adjustments).

 States retain the option to set a higher MLR to ensure that premiums are
 used for clinical services and quality improvements. 

      45 C.F.R. Part 158




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Modern American Health Care
                                                             Balancing Performance and Compliance



Minimum Medical Loss Ratio, continued


    “[A]n issuer must rebate a pro rata portion of premium revenue if it does not
    meet an 80 percent MLR for the small group market in a State that has not
    set a higher MLR. If an issuer has a 75 percent MLR for the coverage it
    offers in the small group market in a State that has not set a higher MLR,
    the issuer must rebate 5 percent of the premium paid by or on behalf of the
    enrollee for the MLR reporting year after subtracting premium and
    subtracting taxes and fees. . . . In this example, an enrollee may have paid
    $2,000 in premiums for the MLR reporting year. If the Federal and State
    taxes and licensing and regulatory fees that may be excluded from premium
    revenue . . . are $150 for a premium of $2,000, then the issuer would
    subtract $150 from premium revenue, for a base of $1,850 in premium. The
    enrollee would be entitled to a rebate of 5 percent of $1,850, or $92.50.” 

       45 C.F.R. § 158.240(c)(2)


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                                                            Balancing Performance and Compliance



Individual Mandate (How to Maintain Minimum Essential Coverage)

            Government sponsored programs (Medicare, Medicaid, CHIP,
            Tricare, Veterans, Peace Corps); or

            Employer-sponsored plan; or

            Plans in the individual market (Exchange, Basic Health Program,
            CO-OPs);

            Grandfathered health plan; or

            Other

           26 U.S.C. § 5000A



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Modern American Health Care
                                                                                              Balancing Performance and Compliance




The Penalty                     Minimum
                                Essential
                               Coverage?
                                                                       Yes


                                                                                                         1. Self-funded student coverage
                                                                                                            2. Foreign health coverage
Collecting the Penalty                                   NEW WAYS TO QUALIFY (1/30/13)                    3. Refugee medical assistance
                                                                                                                 4. Medicare Part C
                                   No                                                                         5. State high risk pools
                                                                                                             6. AmeriCorp volunteers


      Waiver of criminal
      penalties                                                   1. Religious?
                                                                 2. Not Present?
                               Exception?      Yes                   3. In Jail?
                                                                 4. Low Income?
                                                                   5. Hardship?
                                                                 6. Indian Tribe?
      Limitations on
      liens and levies
                                  No




                                                        $695 (or less)




                           PENALTY (in 2016)
                                                            or                       not to                Bronze Level of
                             the greater of                                         exceed                    Coverage



                                                          2.5% of
                                                     household income




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Modern American Health Care
                                                             Balancing Performance and Compliance



Employer Mandate

      The Affordable Care Act does not require employers to offer health
      insurance coverage to their employees.

      For “large employers” (those with 50 or more full-time employees),
      however, the law imposes a penalty ($2,000 per employee) if any of
      their full-time employees qualify for and receive federal subsidies.

      The large employer penalty does not apply for the first 30 employees.

      For small businesses that are not required to provide health coverage,
      generous new tax credits will be available to those businesses with low-
      paid employees to encourage them to provide qualified health insurance
      for their employees.

      26 U.S.C. § 4980H

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Modern American Health Care
                                                                Balancing Performance and Compliance



Small Business Health Care Tax Credits

The Affordable Care Act provides tax credits to small businesses with low-
paid employees: 

            Must cover at least 50% of the cost of health care coverage for some of
            its workers based on the single rate.

            Must have fewer than the equivalent of 25 full-time workers (for example,
            an employer with fewer than 50 part-time workers may be eligible).

            Must pay average annual wages below $50,000.

            In 2010 this credit was up to 35% of a small business’ premium costs
            (25% for tax-exempt employers). On January 1, 2014, this rate will
            increase to 50% (35% for tax-exempt employers).



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Modern American Health Care
                                                               Balancing Performance and Compliance



Small Business Health Care Tax Credits, continued

In a May 2012 publication, the United States Government Accountability
Office (GAO) concluded: 

           Fewer small businesses claimed the Small Employer Health
           Insurance Tax Credit in 2010 than expected. 170,300 small
           businesses claimed the tax credit out of an estimated 1.4 to 4 million
           eligible employers.

           There were $468 million in credits claimed, although most claims
           were limited to partial rather than full percentage credit.

           Only 8,100 employers claimed the full credit.




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Modern American Health Care
                                                              Balancing Performance and Compliance



Employer W-2 Reporting Requirements

           For 2012, W-2 forms included the total cost of employer-sponsored
           health insurance coverage.

           Required by the Affordable Care Act, the disclosures are designed to
           raise awareness among employees of health care expenses.

           These health benefits are still tax free.

           The new information appears in Box 12 of the standard W-2 form, with
           the two-letter code DD.




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Modern American Health Care
                    Balancing Performance and Compliance




           The Affordable Care Act

           Year by Year




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Modern American Health Care
                                                                                                                             Balancing Performance and Compliance




                                                                                                                 SMALL        LARGE   SELF-FUNDED
           YEAR                                    SUBJECT                                      INDIVIDUAL
                                                                                                                 GROUP        GROUP      (ASO


           2010   Dependent coverage for adult children to age 26                           Y                Y           Y            Y


           2010   No lifetime or annual dollar limits on essential health benefits          Y                Y           Y            Y



           2010   No lifetime dollar limits on coverage                                     Y                Y           Y            Y


           2010   100% coverage for in-network preventive care                              Y                Y           Y            Y


                  No annual dollar limits on certain types of benefits (restricted annual
           2010                                                                             Y                Y           Y            Y
                  limits allowed until 2014)


           2010   No pre-authorization for emergency services (patient protection)          Y                Y           Y            Y


                  No higher cost share for out-of-network emergency services (patient
           2010                                                                             Y                Y           Y            Y
                  protection)


           2010   No pre-existing condition exclusions for children                         Y                Y           Y            Y



           2010   Revised appeals process                                                   Y                Y           Y            Y


           2010   Early retiree reinsurance program (fund exhausted 2011)                   NA               Y           Y            Y


                                                                                            Y                Y           Y
           2010   MLR requirements                                                                                                    NA
                                                                                            (80%)            (80%)       (85%)

                  No pre-tax reimbursements from health spending or flexible spending
           2010                                                                             NA               Y           Y            Y
                  accounts (HSA/FSA) for non-prescribed, over-the-counter medications




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Modern American Health Care
                                                                                                         Balancing Performance and Compliance



                                                                                                       SMALL            LARGE       SELF-FUNDED
    YEAR                                  SUBJECT                                     INDIVIDUAL
                                                                                                       GROUP            GROUP          (ASO

    2011   20% tax for nonqualified HSA withdrawals                               Y                Y                Y               Y


    2012   Reporting value of employer-sponsored coverage on W-2                  NA               Optional         Optional        Optional


    2012   Summary of Benefits & Coverage (SBC)                                   Y                Y                Y               Y


    2012   60-day notice of material modification                                 Y                Y                Y               Y


    2012   Women’s Preventative Care                                              Y                Y                Y               Y


                                                                                                   Transitional     Y               Y
    2013   Reporting value of employer-sponsored coverage on W-2                  NA               relief           (employer       (employer
                                                                                                   until 2014       responsibility) responsibility)


                                                                                                   Y               Y               Y
    2013   Employee notification of exchanges, including subsidies and tax credits NA              (employer       (employer       (employer
                                                                                                   responsibility) responsibility) responsibility)


    2013   Flexible Spending Account contributions limited to $2,500/year         NA               Y                Y               Y

                                                                                                   Y                Y               Y
                                                                                  Y                (health plan     (health plan    (employer
           Patient-Centered Outcomes Research Institute (PCORI)-sponsored
    2013                                                                          (health plan     pays on          pays on         responsible
           comparative effectiveness research fee (CER)
                                                                                  pays)            employers’       employers’      for calculating
                                                                                                   behalf)          behalf)         amount
    2013   Free choice voucher required to be provided to qualifying employees    NA               Repealed         Repealed        Repealed




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Modern American Health Care
                                                                                                                                    Balancing Performance and Compliance



                                                                                                                      SMALL          LARGE      SELF-FUNDED
           YEAR                                    SUBJECT                                          INDIVIDUAL
                                                                                                                      GROUP          GROUP         (ASO

                                                                                               Y                 Y              Y
                                                                                               (health plan      (health plan   (health plan
           2014   Insurer Fee (or Health Insurance Tax)                                        pays on           pays on        pays on         NA
                                                                                               employer’s        employer’s     employer’s
                                                                                               behalf)           behalf)        behalf)

                                                                                                                                                Y
                                                                                                                 Y              Y               (employer
                                                                                                                 (health plan   (health plan    encouraged to
           2014   Transitional Reinsurance Fee                                                 NA                pays on        pays on         calculate
                                                                                                                 employers’     employers’      amount and
                                                                                                                 behalf)        behalf)         pay fee
                                                                                                                                                directly)

           2014   Essential health benefits (EHB) package required                             Y                 Y              NA              NA

                                                                                                                                Y               Y
                                                                                                                                (transitional   (transitional
           2014   Out-of-pocket maximum limits applied (cumulative for all coverage)           Y                 Y
                                                                                                                                relief until    relief until
                                                                                                                                2015)           2015)

           2014   No pre-existing condition exclusions regardless of age                       Y                 Y              Y               Y


           2014   Coverage waiting period not to exceed 90 days                                Y                 Y              Y               Y


                                                                                                                 Y                              Y
                                                                                                                 (dependent on                  (dependent on
           2014   Employers with 50+ required to offer coverage with minimum value (MV) NA                                     Y
                                                                                                                 number                         number
                                                                                                                 of employees)                  of employees)


                                                                                                                                Y               Y
                                                                                                                                (dependent on   (dependent on
           2014   Auto-enrollment required by employers with 200+ employees                    NA                NA
                                                                                                                                number          number
                                                                                                                                of employees)   of employees)


           2014   Coverage of routine care costs for patients* participating in clinical trials Y                Y              Y               Y




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Modern American Health Care
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                                                                                                  SMALL         LARGE   SELF-FUNDED
   YEAR                                     SUBJECT                             INDIVIDUAL
                                                                                                  GROUP         GROUP      (ASO

                                                                                                                        Y
                                                                                                                        (dependent on
   2014    “Small group” redefined as 1-100 (states may defer until 2016)   NA               Y             Y
                                                                                                                        number
                                                                                                                        of employees)
           1
   2014    Deductible limits $2,000 individual / $4,000 family              NA               Y             NA           NA


   2014    HIPAA nondiscrimination rules on wellness programs               NA               Y             Y            Y


   2014    Wellness program maximum incentive increase to 30%               NA               Y             Y            Y


   2014    Individual mandate                                               Y                NA            NA           NA


   2014    Guaranteed issue                                                 Y                Y             Y            Y


   2014    Rating limitations                                               NA               Y             NA           NA


           40% excise tax on high-cost
   2018                                                                     Y                Y             Y            Y
           “Cadillac” plans




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Modern American Health Care
                    Balancing Performance and Compliance




           Health Insurance
           Exchanges




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Modern American Health Care
                                           Balancing Performance and Compliance




“The Health Insurance Marketplace is
designed to help you find insurance
that fits your budget, with less hassle.
No matter where you live, you’ll be
able to buy insurance. . . . New laws
mean plans must treat you fairly and
can’t deny you coverage because of
pre-existing conditions.”


Source: CMS Toolkit




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Modern American Health Care
                                                              Balancing Performance and Compliance



How Do Exchanges Work?

           Make comparison shopping easier

           Lower barriers for new competition in the insurance market

           Provide savings and choice through transparency

           Determine individual tax credits/subsidies

           Increase competitive advantage for enrollees

           Focus on the uninsured




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Modern American Health Care
                                                                   Balancing Performance and Compliance




State-Based Exchange

     Each individual state operates all Exchange activities, but a state may use federal
     government services for the following areas:


              Premium tax credit and cost sharing reduction determination

              Exemptions

              Risk adjustment program

              Reinsurance program




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Modern American Health Care
                                                                      Balancing Performance and Compliance



State Partnership Exchange

     State operates activities for:


               Plan management (and/or)

               Consumer assistance

     State may elect to oversee directly, or in the alternative rely upon federal
     government services for the following activities:


               Reinsurance program

               Medicaid and CHIP eligibility assessment or determination



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Modern American Health Care
                                                                      Balancing Performance and Compliance




Federally-Facilitated Exchange

     Operated by HHS, but state may elect to perform these activities itself, or it can
     use federal government services for the following activities:


              Reinsurance program

              Medicaid and CHIP eligibility assessment or determination




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Modern American Health Care
                                                                  Balancing Performance and Compliance




Exchange Transparency

   As part of the application process, each state should post certain sections from
   its application on the appropriate state website, including:

             Exchange board and governance structure
             Stakeholder consultation plan
             Outreach and education plan
             Role of agents and brokers
             Coordination strategy
             Pre-Existing Condition Insurance Plan (PCIP) transition
             Long-term operational cost plan




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Modern American Health Care
                                                                Balancing Performance and Compliance




California Health Benefit Exchange

   The California Health Benefit Exchange posts the following vision, mission and
   value set on its website (www.healthexchange.ca.gov):

             Consumer-focused
             Affordability
             Catalyst
             Integrity
             Partnership
             Results




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Modern American Health Care
                                  Balancing Performance and Compliance




           DELIVERING
           MEDICAL CARE

           Accountable Care Organizations

           Bundled Payments for Care Improvement Initiative

           Patient-Centered Medical Homes




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Modern American Health Care
                                                              Balancing Performance and Compliance




Accountable Care Organizations

     An ACO is a shared savings program that promotes accountability for a
     patient population, coordinates items and services under Medicare
     parts A and B, and encourages investment in infrastructure and
     redesigned care processes for high quality and efficient services.

     42 U.S.C. § 1395jjj: “Not later than January 1, 2012, the Secretary shall
     establish a shared savings program (in this section referred to as the
     ‘‘program’’) that promotes accountability for a patient population and
     coordinates items and services under parts A and B, and encourages
     investment in infrastructure and redesigned care processes for high
     quality and efficient service delivery.”




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Modern American Health Care
                                                               Balancing Performance and Compliance




Accountable Care Organizations, continued

     By aligning health care providers that focus on improvement, efficiency, and
     experience within a particular patient demographic, ACOs connect
     reimbursement with quality, outcomes, and resource utilization. This is a
     significant departure from the traditional fee-for-service model that for years
     has been the standard in American health care.

            January 10, 2013 -- 106 new ACOs approved by CMS.

            July 9, 2012 -- 87 new ACOs approved by CMS.

            April 10, 2012 -- 27 new ACOs approved by CMS.




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Modern American Health Care
                                                             Balancing Performance and Compliance




ACO Application (July 2012)

    [S]ubmit a narrative describing how the ACO will . . . implement its quality
    assurance and improvement program including but not limited to the ACO’s
    processes to promote evidence-based medicine, beneficiary engagement,
    coordination of care, and internal reporting on cost and quality. Please
    include a description of remedial processes and penalties (including the
    potential for expulsion) that would apply for non-compliance.

    Submit a narrative describing how the ACO defines, establishes,
    implements, evaluates, and periodically updates its process and
    infrastructure to support internal reporting on quality and cost metrics that
    lets the ACO monitor, give feedback, and evaluate ACO participant and
    ACO provider/supplier performance.




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ACO Application, continued
Submit a narrative describing how the ACO defines, establishes,
implements, evaluates, and periodically updates its process to promote
patient engagement.

            Evaluate the health needs of its assigned beneficiary population
            (including consideration of diversity in its patient population) and
            develop a plan to address the needs of its population.

            Communicate clinical knowledge/evidence-based medicine to
            beneficiaries in a way they can understand.

            Engage beneficiaries in shared decision-making in ways that consider
            beneficiaries’ unique needs, preferences, values and priorities.

            Establish written standards for beneficiary access and communication
            and a process for beneficiaries to access their medical records.

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Modern American Health Care
                                                              Balancing Performance and Compliance




ACO Quality Measures
   CMS will measure quality of care using nationally recognized measures in four
   key domains:

             Patient/caregiver experience (7 measures)

             Care coordination/patient safety (6 measures)

             Preventive health (8 measures)

  At-risk population:

           Diabetes (6 measures)
           Hypertension (1 measure)
           Ischemic Vascular Disease (2 measures)
           Heart Failure (1 measure)
           Coronary Artery Disease (2 measures)

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Other ACO Requirements
           Eligibility

           Governance and Leadership

           Compliance Plan

           Data Submission

           Public Reporting and Transparency

           Audits and Monitoring

           Assignment of Beneficiaries

           Data Sharing

           October 2011 Revisions*



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Bundled Payments for Care Improvement Initiative

     Model 1: Retrospective Acute Care Hospital Stay Only

            Episode of care is defined as the inpatient stay

            Physicians paid separately

            Some gainsharing permitted

     Model 2: Retrospective Acute Care Stay plus Post-Acute Care

            Episode will end either 30, 60 or 90 days after discharge

            Can include up to 48 different clinical condition episodes




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Bundled Payments for Care Improvement Initiative, continued

     Model 3: Retrospective Post-Acute Care Only

            Triggered by acute care hospital stay and begins at initiation of
            post-acute care services with a participating skilled nursing
            facility.

            Post-acute care services must begin within 30 days of
            discharge and end either 30, 60 or 90 days after the initiation of
            episode.

            May include up to 48 different clinical condition episodes.




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Bundled Payments for Care Improvement Initiative, continued

     Model 4: Acute Care Hospital Stay Only

            CMS makes a single, prospectively determined bundled
            payment to the hospital that would encompass all services
            furnished during the hospital stay by the hospital, physicians
            and other practitioners.

            Related admission for 30 days after discharge is included.

            May include up to 48 different clinical condition episodes.




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Included Episodes

Major joint upper extremity; Amputation; Urinary tract infection; Stroke; Chronic
obstructive pulmonary disease, bronchitis/asthma; Coronary artery bypass graft surgery;
Major joint replacement of the lower extremity; Percutaneous coronary intervention;
Pacemaker; Cardiac defibrillator; Pacemaker device replacement or revision; Automatic
implantable cardiac defibrillator generator or lead; Congestive heart failure; Acute
myocardial infarction; Cardiac arrhythmia; Cardiac valve; Other vascular surgery; Major
cardiovascular procedure; Gastrointestinal hemorrhage; Major bowel; Fractures of femur
and hip/pelvis; Medical non-infectious orthopedic; Double joint replacement of the lower
extremity; Revision of the hip or knee; Spinal fusion (non-cervical); Hip and femur
procedures except major joint; Cervical spinal fusion; Other knee procedures; Complex
non-cervical spinal fusion; Combined anterior posterior spinal fusion; Back and neck
except spinal fusion; Lower extremity and humerus procedure except hip, foot, and
femur; Removal of orthopedic devices; Sepsis; Diabetes; Simple pneumonia and
respiratory infections; Other respiratory issues; Chest pain; Medical peripheral vascular
disorders; Atherosclerosis; Gastrointestinal obstruction; Syncope and collapse; Renal
failure; Nutritional and metabolic disorders; Cellulitis; Red blood cell disorders; Transient
ischemia; Esophagitis, gastroenteritis and other digestive disorders.


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Patient-Centered Medical Homes

Comprehensive Team of Care Providers

           Physical and mental health needs

           Physicians, advanced practice nurses, physician assistants, nurses,
           pharmacists, nutritionists, social workers, educators and care
           coordinators

           Built around the community

Patient Centered (partnering with patients and their families)




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Patient-Centered Medical Homes, continued
Coordinated Care During Transitions
           Specialty care
           Hospitals
           Home health care
           Community Services
Accessible Services
           Shorter waiting times for urgent needs
           Enhanced in-person hours
           24 hour telephone or electronic access to team member
Quality and Safety
           Evidence-based medicine
           Patient satisfaction
           Sharing data

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           MEDICAID EXPANSION




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What Is Medicaid?

     Medicaid is health insurance for individuals who qualify financially,
     as well as families with dependent children, the aged, blind or
     disabled.

             Medi-Cal

             KanCare

             SoonerCare

             Hoosier Healthwise

             MassHealth

             SALUD!

             TennCare


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Medicaid Expansion

  77 Federal Register 17144 (Mar. 23, 2012) (Final Rule)

           Implemented provisions of the Affordable Care Act related to Medicaid
           eligibility, enrollment and coordination with the Exchanges, CHIP, and
           other programs.

           Simplified the eligibility rules in Medicaid and CHIP.

           Set the minimum Medicaid income eligibility level of 133 percent of the
           Federal Poverty Level for most non-disabled adults under age 65.




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Medicaid Expansion, continued

  Proposed Rule (Jan. 14, 2013)

           Reflects new statutory eligibility provisions.

           Proposes changes to provide states more flexibility to coordinate
           Medicaid and CHIP eligibility, appeals and other administrative
           procedures.

           Modernizes and streamlines existing rules.




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Medi-Cal

           Created in California during its 1975 Second Extraordinary Session.

           CAL. WELF. & INST. CODE § 14000:
           “The purpose [of Medi-Cal] is to afford to qualifying health care and related remedial
           or preventative services, including related social services which are necessary for
           those receiving health care under [Medi-Cal].”

           Includes 25% of California’s population.




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Modern American Health Care
                                                              Balancing Performance and Compliance




Medicaid Expansion and the Supreme Court


     The United States Supreme Court held that Congress has the authority
     to offer funding for states to expand Medicaid by 2014 without imposing
     retroactive financial conditions. National Fed. of Indep. Bus. v. Sebelius,
     132 S. Ct. 2566, 2606-07 (2012).

     Congress never dreamed that any State would refuse to go along with
     the expansion of Medicaid. Congress well understood that refusal was
     not a practical option. (Id. at 2665 (Scalia, Kennedy, Thomas and Alito,
     JJ, dissenting).




PAGE: 53
Modern American Health Care
                                                              Balancing Performance and Compliance




Medicaid Expansion By the Numbers

    The Federal Government will pay 100% of added expenses for newly
    eligible beneficiaries through 2016, 95% in 2017, 94% in 2018, 93% in
    2019 and 90% in 2020 and thereafter.

    States must pay “qualified” physicians Medicaid fees at least equal to
    Medicare rates starting in 2013.

    Pay increase applies to family physicians, internists and pediatricians
    (and in some instances specialists) provided (1) they are Board-certified
    or (2) at least 60% of the Medicaid codes they billed in the previous year
    were primary care codes identified in the Affordable Care Act.




PAGE: 54
Modern American Health Care
                               Balancing Performance and Compliance




           PERFORMANCE BASED
           REIMBURSEMENT

           Hospital Value-Based Purchasing
           Physician Value-Based Purchasing
           Hospital Readmissions Reduction Program
           Hospital Acquired Conditions




PAGE: 55
Modern American Health Care
                                                                Balancing Performance and Compliance



Hospital Value-Based Purchasing (VBP) Program

           The DRG system will begin to give way to value-based purchasing.

           CMS will start paying hospitals Medicare “bonuses” based upon overall
           performance, adherence to quality measures and patient satisfaction.

           This epic change is designed to transform a system that has historically
           been based on cost into one that focuses primarily on quality and
           performance.

           Funding for value-based purchasing comes from base operating DRG
           reductions (1% in 2013, 1.25% in 2014, 1.5% in 2015, 1.75% in 2016,
           and 2% thereafter).

           Hospitals with poor performance ratings may be excluded from bonus
           opportunities.



PAGE: 56
Modern American Health Care
                                                         Balancing Performance and Compliance



Hospital VBP, continued

      The VBP Program is based on a hospital’s total performance score
      (TPS), which includes, in part, 12 Clinical Process of Care measures
      (70% of the TPS) in the following categories:

             Acute Myocardial Infarction

             Heart Failure

             Pneumonia

             Surgical Care Improvement Project




 PAGE: 57
Modern American Health Care
                                                       Balancing Performance and Compliance



Hospital VBP, continued

      The TPS also includes 8 Patient Experience of Care dimensions
      (30% of TPS) from the Hospital Consumer Assessment of Healthcare
      Providers and Systems (HCAHPS) survey:

             Communication with doctors
             Communication with nurses
             Responsiveness of hospital staff
             Pain management
             Communication about medication
             Cleanliness and quietness
             Discharge information
             Overall rating


 PAGE: 58
Modern American Health Care
                                                          Balancing Performance and Compliance




Form Over Substance

   Follow HCAHPS Quality Assurance Guidelines

            Hospitals must continuously collect and submit HCAHPS data in
            accordance with the current HCAHPS Quality Assurance
            Guidelines and the quarterly data submission deadlines.

            To participate in the collection of HCAHPS data, a hospital must
            either (1) contract with an approved HCAHPS survey vendor or (2)
            self-administer the survey, provided the hospital attends HCAHPS
            training and meets Minimum Survey Requirements.

            Four approved methods of administering the CAHPS Hospital
            Survey: (1) mail; (2) telephone; (3) mixed (mail followed by
            telephone); and (4) active interactive voice response.


PAGE: 59
Modern American Health Care
                                                         Balancing Performance and Compliance



Physician VBP

     For groups with 25 or more physicians, CMS recommends that the
     following outcome measures be used in the calculation:

            30-day post discharge visits

            All cause readmissions

            Composite of acute prevention quality indicators (pneumonia, UTI,
            dehydration)

            Composite of chronic prevention quality indicators (COPD, heart
            failure, diabetes)




PAGE: 60
Modern American Health Care
                                    Balancing Performance and Compliance




Physician Value Modifier Amount
Combine each quality measure into
a quality composite and each cost
measure into a cost composite
using the following domains:




 PAGE: 61
Modern American Health Care
                                                               Balancing Performance and Compliance




Hospital Readmissions Reduction Program

     Starting October 1, 2012, the Hospital Readmissions Reduction Program
     (HRRP) reduces a hospital’s base operating Medicare diagnosis-related
     group (DRG) payments with respect to readmissions for three conditions,
     including: (1) acute myocardial infarction (AMI); (2) heart failure (HF); and
     (3) pneumonia (PN).

     Adjustment Factor:  A hospital’s “adjustment factor” or readmission payment
     adjustment is the greater of (1) the ratio of a hospital’s aggregate dollars for
     excess readmissions to their aggregate dollars for all discharges or (b) the
     statutory adjustment maximum for the Fiscal Year (FY).  For FY 2013, the
     number cannot exceed 0.99 (i.e., a 1% reduction). The statutory floor
     adjustment factor is 0.98 for FY 2014 and 0.97 for FY 2015 and subsequent
     years.




 PAGE: 62
Modern American Health Care
                                                 Balancing Performance and Compliance



Hospital Readmissions Reduction Program, continued




PAGE: 63
Modern American Health Care
                                                             Balancing Performance and Compliance



Hospital-Acquired Conditions

     The Deficit Reduction Act of 2005 (DRA) requires a quality
     adjustment in Medicare Severity Diagnosis Related Group (MS-DRG)
     payments for certain hospital acquired conditions. CMS has titled
     the provision “Hospital-Acquired Conditions and Present on
     Admission Indicator Reporting” (HAC & POA).

            Hospitals do not receive the higher payment for cases when one
            of the selected conditions is acquired during hospitalization (i.e.,
            was not present on admission).

            The case is paid as though the secondary diagnosis is not
            present.




 PAGE: 64
Modern American Health Care
                                                              Balancing Performance and Compliance




Hospital-Acquired Conditions, continued

     The Inpatient Prospective Payment System (IPPS) Fiscal Year 2013
     Final Rule sets forth the applicable HACs:

            Foreign Object Retained After Surgery

            Air Embolism

            Blood Incompatibility

            Pressure Ulcer Stages III & IV

            Falls and Trauma (fracture, dislocation, head injury, burn, etc.)

            Catheter-Associated Urinary Tract Infection

PAGE: 65
Modern American Health Care
                                                           Balancing Performance and Compliance



Hospital-Acquired Conditions, continued

     Additional HACs:

            Vascular Catheter-Associated Infection

            Manifestations of Poor Glycemic Control

            Surgical Site Infections Following Coronary Artery Bypass Graft
            and Certain Orthopedic Procedures (spine, neck, shoulder, elbow)
            and Bariatric Surgery and Implantation of Cardiac Electronic Device

            Deep Vein Thrombosis and Pulmonary Embolism Following Certain
            Orthopedic Procedures (total knee and hip replacements)

            Latrogenic Pneumothorax with Venous Catheterization


PAGE: 66
Modern American Health Care
                             Balancing Performance and Compliance




           OTHER PROVISIONS
           Innovation

           Prevention

           Fraud and Abuse




PAGE: 67
Modern American Health Care
                                                            Balancing Performance and Compliance




Innovation and Prevention
     To reduce patient health care expenditures, the Affordable Care Act must
     rely upon innovation and prevention, hoping to improve upon the delivery
     of health care in the United States. Some examples include:

             Center for Medicare & Medicaid Innovation ($10 billion each decade)

             School-Based Health Center Grants ($50 million)

             Prevention and Public Health Fund ($11 billion through 2022)

             Education and Outreach Campaign for Preventative Benefits

             Community Transformation Grants

             Patient-Centered Outcomes Research Institute (PCORI)


PAGE: 68
Modern American Health Care
                                            Balancing Performance and Compliance




Fraud and Abuse
      The Affordable Care Act increases
      the Federal Government’s arsenal
      to combat health care fraud, abuse
      and waste.
      Some examples include:

           Mandatory Compliance Programs

           60 Days to Pay

           Physician Owned Hospitals

           Medicaid RACs

           Physician Payment Sunshine Act




PAGE: 69
Modern American Health Care
                                                             Balancing Performance and Compliance



Mandatory Compliance Programs
     Section 6401(a)(7) of the Affordable Care Act requires all providers and
     suppliers who participate in Medicare to adopt a compliance program as a
     condition precedent.

     The Office of the Inspector General (OIG) has encouraged the industry “to
     exercise due diligence to prevent and detect criminal conduct and otherwise
     promote an organizational culture that encourages ethical conduct and a
     commitment to compliance with the law” consistent with the Federal
     Sentencing Guidelines for Organizations (FSGO).

     Section 6102 of the Affordable Care Act specifically requires nursing homes
     to establish “a compliance and ethics program that is effective in preventing
     and detecting criminal, civil, and administrative violations” by March 23,
     2013.



PAGE: 70
Modern American Health Care
                                                            Balancing Performance and Compliance



60 Days to Pay
     Last year the Federal Government made it clear that health care providers
     must return federal overpayments within 60 days from the time the
     overpayment was first identified.

     Failure to follow this new requirement set forth in Section 6402(a) of the
     Affordable Care Act throughout any ten-year “look-back” period creates
     potential liability under the False Claims Act.

     Providers are held to a standard of actual knowledge or “reckless disregard
     or deliberate ignorance” for purposes of identifying an overpayment under
     the new regulations.




PAGE: 71
Modern American Health Care
                                                              Balancing Performance and Compliance



Physician-Owned Hospitals
     Section 6001 of the Affordable Care Act limits the “whole hospital exception”
     under the physician self-referral prohibitions, more commonly known as the
     Stark Laws. This exception applies only to physician-owned hospitals that
     had physician ownership as of March 23, 2010, and had obtained a
     Medicare provider number by the end of 2010.

     Subsequent regulations clarified requirements for and restrictions on
     physician-owned hospitals, including but not limited to:

             Requirements for “grandfathered facilities”

             Clarification that “physician ownership” can change but never
             increase

             Limitations on physical expansion (i.e., total number of beds)


PAGE: 72
Modern American Health Care
                                                            Balancing Performance and Compliance




Medicaid RACs
     The 2003 legislation that began the Recovery Audit Contractor (RAC)
     program to detect and correct improper payments within Medicare has since
     expanded under the Affordable Care Act.

     Section 6411 of the Affordable Care Act requires each state to establish its
     own recovery audit program for Medicaid.

     Clarified through November 2010 regulations, the burden to succeed placed
     on these Medicaid RACs is certain to increase exponentially in 2014 when
     Medicaid Expansion officially begins.




PAGE: 73
Modern American Health Care
                                                              Balancing Performance and Compliance




Physician Payment Sunshine Act
     Enacted in February 2013, Section 6002 of the Affordable Care Act (the
     Physician Payment Sunshine Act) deals primarily with transparency and
     public disclosure.

     It requires disclosures by certain manufacturers of drugs, devices, and
     biological or medical supplies, as well as group purchasing organizations
     (GPOs), including but not limited to: (a) certain physician ownership or
     investment interests; and (b) certain payment information made by these
     entities to physicians.

     The deadline to collect this information is August 1, 2013, and the reporting
     deadline is March 31, 2014.




 PAGE: 74
Modern American Health Care
                              Balancing Performance and Compliance




           CHALLENGES
           Contraception Controversy

           Debt Ceiling, Fiscal Cliff and Sequestration

           HIPAA, HITECH and GINA




PAGE: 75
Modern American Health Care
                                                            Balancing Performance and Compliance



The Contraception Controversy
     When first announced in August 2011, the inclusion of contraceptive care
     as a mandatory component in the employer promotion of preventative
     services sparked a First Amendment debate.

     Regulations in February 2012 created a temporary enforcement safe
     harbor for objecting employers.

     The February 2013 regulations set the new threshold, allowing
     employers to:

             Oppose providing coverage for some or all of the previously
             required contraceptive services on the basis of religious grounds;

             Exist as a nonprofit entity; and

             Represent themselves as a religious entity.

PAGE: 76
Modern American Health Care
                                                             Balancing Performance and Compliance


Debt Ceiling, Fiscal Cliff and Sequestration

      How will the nation’s financial challenges impact the Affordable Care Act?

      How many percentage points will it take before a hospital collapses?

              The debt ceiling compromise proved to be the final blow to the
              Community Living Assistance Services and Supports (CLASS)
              Program.

              The fiscal cliff disrupted a major portion of the funding for the
              Consumer Operated and Oriented Plans (CO-OPs).

              Will sequestration prove to be another catalyst for the reduction of
              provider reimbursement?




PAGE: 77
Modern American Health Care
                                                              Balancing Performance and Compliance



HIPAA (Health Insurance Portability and Accountability Act) and
HITECH (Health Information Technology for Economic and Clinical Health Act)

The most recent privacy regulations were released in January 2013, affecting
almost 700,000 health care entities.

The costs involved include:

           Breach notifications -- as much as $14.5 million (in 2011), not including
           the estimated initial expense of $3.9 million to set up the toll-free
           notification lines.

           Business associates -- as high as $150 million, including security rule
           compliance documentation and BAAs.

           Notification to patients of privacy practices (for providers, health
           insurers and third party administrators -- as much as $56 million.

PAGE: 78
Modern American Health Care
                                                               Balancing Performance and Compliance




The Digital Medical Record
Existing privacy laws require practically every health
care related electronic device to employ encryption
algorithms, from a home facsimile or copy machine to
all institutional servers.

Laptops and other portable devices must default to
unreadable ciphertext, a protocol far beyond the
ordinary login password.

Last year’s release of the Medicare and Medicaid Programs’ Electronic Health
Record Incentives specified hospital stage two (out of three stages) criteria to
qualify for electronic health record incentive payments.

Physicians’ Medicare incentive payments can be as high as $44,000, but the
future penalty for not participating is up to 3% of all Medicare payments starting in
2017.

 PAGE: 79
Modern American Health Care
                                                                Balancing Performance and Compliance




The Genetic Information Nondiscrimination Act of 2008 (GINA)

    GINA is the leading federal protection of genetic information, but it only
    prohibits genetic discrimination in health insurance and employment.

    GINA does not regulate access, security or disclosure of genetic or whole
    genome sequence information across all potential users, nor does it protect
    against discrimination in other contexts.

    State laws vary for similar protections.

    Genetic information protections are only briefly mentioned in the Affordable
    Care Act (42 U.S.C. § 300gg-3(b)(1)(B) (Treatment of Genetic
    Information)): “Genetic information shall not be treated as a condition . . . in
    the absence of a diagnosis of the condition related to such information.”



 PAGE: 80
Modern American Health Care
                                                                 Balancing Performance and Compliance




Additional Resources

www.healthcare.gov (U.S. Government)
www.healthreform.kff.org (The Henry J. Kaiser Foundation)
www.hhs.gov (The U.S. Department of Health and Human Services)
www.cms.gov (Centers for Medicare & Medicaid Services)
www.oshpd.ca.gov/reform (Office of Statewide Health Planning & Development)
www.chhs.ca.gov (California Health & Human Services Agency)




 PAGE: 81
Modern American Health Care
                                                                 Balancing Performance and Compliance




Craig B. Garner

Craig is an attorney and health care consultant, specializing in issues pertaining to
modern American health care and the ways it should be managed in its current climate of
reform.

Craig’s law practice focuses on health care mergers and acquisitions, regulatory
compliance and counseling for providers. Craig is also an adjunct professor of law at
Pepperdine University School of Law, where he teaches courses on Hospital Law and the
Affordable Care Act.

Between 2002 and 2011, Craig was the Chief Executive Officer of Coast Plaza Hospital in
Norwalk, California. Craig is also a Fellow Designate with the American College of
Healthcare Executives, a Member of the State Bar of California, Business Law Section,
Health Law Committee and a Vice Chair of the Healthcare Reform Educational Task Force
of the American Health Lawyers Association.

Additional information can be found at www.craiggarner.com.



 PAGE: 82
THANK YOU
        Craig B. Garner
 1299 Ocean Avenue, Suite 400
    Santa Monica, CA 90401
   Craig@CraigGarner.com
        (310) 458-1560
    www.CraigGarner.com

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Modern American Health Care: Balancing Performance and Compliance in the Current Climate of Reform

  • 1. Modern American Health Care Balancing Performance and Compliance in the Current Climate of Reform Craig B. Garner April 2013 Copyright 2013
  • 2. Modern American Health Care Balancing Performance and Compliance INTRODUCTION PAGE: 2
  • 3. Modern American Health Care Balancing Performance and Compliance A Brief History of Health Care in the United States Throughout the 1800s, access to the delivery of care rendered by the few elite hospitals (totaling fewer than 200 in 1873) in cities such as New York, Boston and Philadelphia went hand-in-hand with one’s status in society. Most medical care took place in the home. By the 1920s, the hospital had become a national institution in America, with more than 5,000 facilities appearing across the country. This trend brought with it advances in technology, more trained physicians, and greater quality of care. As conditions in health care improved, the practice of medicine in the United States shifted from home to hospital. People went to a hospital to get better, benefitting from medical advances and greater availability of care. PAGE: 3
  • 4. Modern American Health Care Balancing Performance and Compliance A Brief History of Health Care, continued In 1946, the Hospital Survey and Construction Act (the Hill Burton Act) disbursed approximately $3.7 billion to hospitals so they could meet the growing needs of the nation. The Hill Burton Act sought to create 4.5 hospital beds per 1,000 people nationwide. The Hill Burton Act forced hospitals and their communities to work together, combining federal funds with local monies to cover expenses. By the 1960s, health care in the United States was at a crossroads. Access to treatment had increased, but so had the corresponding price tag. With the passage of Medicare in 1965, our nation solidified its commitment to government sponsored health care. PAGE: 4
  • 5. Modern American Health Care Balancing Performance and Compliance The Patient Protection and Affordable Care Act On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act into law. The Health Care and Education Reconciliation Act followed a week later. Together, this landmark legislation became the Affordable Care Act. PAGE: 5
  • 6. Modern American Health Care Balancing Performance and Compliance Who Pays for the Affordable Care Act? Drug manufacturers Health insurers Medical device manufacturers (excise tax starting in 2013) Indoor tanning services Medicare Payroll Tax increases (starting in 2013) Businesses that offer high-end "Cadillac" plans Taxpayers, in part through the Individual Mandate Companies, in part through the Business Mandate PAGE: 6
  • 7. Modern American Health Care Balancing Performance and Compliance REFORM FROM THE PATIENT’S PERSPECTIVE Essential Health Benefits Individual and Group Market Reforms Improving Coverage Medical Loss Ratio Individual Mandate Employer Mandate PAGE: 7
  • 8. Modern American Health Care Balancing Performance and Compliance Essential Health Benefits Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder Prescription drugs Rehabilitative and habilitative services and devices Laboratory services Preventative and wellness services / chronic disease management Pediatric services, including oral and vision care 42 U.S.C. § 18022 PAGE: 8
  • 9. Modern American Health Care Balancing Performance and Compliance Nearly Essential Health Benefits Emergency room visits Ambulance services Diabetes care management Kidney dialysis Physical therapy Durable medical equipment Prosthetics Infertility treatment Organ and tissue transplantation Institute of Medicine, Essential Health Benefits PAGE: 9
  • 10. Modern American Health Care Balancing Performance and Compliance Individual and Group Market Reforms Fair Health Insurance Premiums (42 U.S.C. § 300gg) Individual or Family Rating Area (states will decide) Age (but not more than 3 to 1 for adults) Tobacco Use (but not more than 1.5 to 1) End of Preexisting Condition Exclusion (42 U.S.C. § 300gg-3) Coverage for Adult Child Until the Age of 26 (42 U.S.C. § 300gg-14) Guaranteed Availability of Coverage (42 U.S.C. § 300gg-1) PAGE: 10
  • 11. Modern American Health Care Balancing Performance and Compliance What Are the Levels of Coverage? Bronze (60% of the full actuarial value of the benefits) Silver (70% of the full actuarial value of the benefits) Gold (80% of the full actuarial value of the benefits) Platinum (90% of the full actuarial value of the benefits) Catastrophic (29 years old or younger or exempt from Section 5000A) 42 U.S.C. § 18022(d), (e) PAGE: 11
  • 12. Modern American Health Care Balancing Performance and Compliance Precious Metals (January 2013) Platinum 30-day average = $1,585 Gold 30-day average = $1,673 Silver 30-day average = $31 PAGE: 12
  • 13. Modern American Health Care Balancing Performance and Compliance Taxes and Flexible Spending Accounts in 2013 Individual contributions to flexible spending accounts for medical expenses can no longer exceed $2,500 per year. New regulations limit the itemized deduction for unreimbursed medical expenses (previously 7.5% of adjusted gross income) to 10%. Taxes on wages above $200,000 increased by 0.9%. Unearned income is subject to a new 3.8% increase. PAGE: 13
  • 14. Modern American Health Care Balancing Performance and Compliance Minimum Medical Loss Ratio Referred to as the “80/20 provision” of the Affordable Care Act, the Medical Loss Ratio (MLR) applies as follows: Large group market:  An issuer must provide a rebate to enrollees if the issuer has an MLR of less than 85% (subject to adjustments). Small group market and individual market: An issuer must provide a rebate to enrollees if the issuer has an MLR of less than 80% (also subject to adjustments). States retain the option to set a higher MLR to ensure that premiums are used for clinical services and quality improvements.  45 C.F.R. Part 158 PAGE: 14
  • 15. Modern American Health Care Balancing Performance and Compliance Minimum Medical Loss Ratio, continued “[A]n issuer must rebate a pro rata portion of premium revenue if it does not meet an 80 percent MLR for the small group market in a State that has not set a higher MLR. If an issuer has a 75 percent MLR for the coverage it offers in the small group market in a State that has not set a higher MLR, the issuer must rebate 5 percent of the premium paid by or on behalf of the enrollee for the MLR reporting year after subtracting premium and subtracting taxes and fees. . . . In this example, an enrollee may have paid $2,000 in premiums for the MLR reporting year. If the Federal and State taxes and licensing and regulatory fees that may be excluded from premium revenue . . . are $150 for a premium of $2,000, then the issuer would subtract $150 from premium revenue, for a base of $1,850 in premium. The enrollee would be entitled to a rebate of 5 percent of $1,850, or $92.50.”  45 C.F.R. § 158.240(c)(2) PAGE: 15
  • 16. Modern American Health Care Balancing Performance and Compliance Individual Mandate (How to Maintain Minimum Essential Coverage) Government sponsored programs (Medicare, Medicaid, CHIP, Tricare, Veterans, Peace Corps); or Employer-sponsored plan; or Plans in the individual market (Exchange, Basic Health Program, CO-OPs); Grandfathered health plan; or Other 26 U.S.C. § 5000A PAGE: 16
  • 17. Modern American Health Care Balancing Performance and Compliance The Penalty Minimum Essential Coverage? Yes 1. Self-funded student coverage 2. Foreign health coverage Collecting the Penalty NEW WAYS TO QUALIFY (1/30/13) 3. Refugee medical assistance 4. Medicare Part C No 5. State high risk pools 6. AmeriCorp volunteers Waiver of criminal penalties 1. Religious? 2. Not Present? Exception? Yes 3. In Jail? 4. Low Income? 5. Hardship? 6. Indian Tribe? Limitations on liens and levies No $695 (or less) PENALTY (in 2016) or not to Bronze Level of the greater of exceed Coverage 2.5% of household income PAGE: 17
  • 18. Modern American Health Care Balancing Performance and Compliance Employer Mandate The Affordable Care Act does not require employers to offer health insurance coverage to their employees. For “large employers” (those with 50 or more full-time employees), however, the law imposes a penalty ($2,000 per employee) if any of their full-time employees qualify for and receive federal subsidies. The large employer penalty does not apply for the first 30 employees. For small businesses that are not required to provide health coverage, generous new tax credits will be available to those businesses with low- paid employees to encourage them to provide qualified health insurance for their employees. 26 U.S.C. § 4980H PAGE: 18
  • 19. Modern American Health Care Balancing Performance and Compliance Small Business Health Care Tax Credits The Affordable Care Act provides tax credits to small businesses with low- paid employees:  Must cover at least 50% of the cost of health care coverage for some of its workers based on the single rate. Must have fewer than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 part-time workers may be eligible). Must pay average annual wages below $50,000. In 2010 this credit was up to 35% of a small business’ premium costs (25% for tax-exempt employers). On January 1, 2014, this rate will increase to 50% (35% for tax-exempt employers). PAGE: 19
  • 20. Modern American Health Care Balancing Performance and Compliance Small Business Health Care Tax Credits, continued In a May 2012 publication, the United States Government Accountability Office (GAO) concluded:  Fewer small businesses claimed the Small Employer Health Insurance Tax Credit in 2010 than expected. 170,300 small businesses claimed the tax credit out of an estimated 1.4 to 4 million eligible employers. There were $468 million in credits claimed, although most claims were limited to partial rather than full percentage credit. Only 8,100 employers claimed the full credit. PAGE: 20
  • 21. Modern American Health Care Balancing Performance and Compliance Employer W-2 Reporting Requirements For 2012, W-2 forms included the total cost of employer-sponsored health insurance coverage. Required by the Affordable Care Act, the disclosures are designed to raise awareness among employees of health care expenses. These health benefits are still tax free. The new information appears in Box 12 of the standard W-2 form, with the two-letter code DD. PAGE: 21
  • 22. Modern American Health Care Balancing Performance and Compliance The Affordable Care Act Year by Year PAGE: 22
  • 23. Modern American Health Care Balancing Performance and Compliance SMALL LARGE SELF-FUNDED YEAR SUBJECT INDIVIDUAL GROUP GROUP (ASO 2010 Dependent coverage for adult children to age 26 Y Y Y Y 2010 No lifetime or annual dollar limits on essential health benefits Y Y Y Y 2010 No lifetime dollar limits on coverage Y Y Y Y 2010 100% coverage for in-network preventive care Y Y Y Y No annual dollar limits on certain types of benefits (restricted annual 2010 Y Y Y Y limits allowed until 2014) 2010 No pre-authorization for emergency services (patient protection) Y Y Y Y No higher cost share for out-of-network emergency services (patient 2010 Y Y Y Y protection) 2010 No pre-existing condition exclusions for children Y Y Y Y 2010 Revised appeals process Y Y Y Y 2010 Early retiree reinsurance program (fund exhausted 2011) NA Y Y Y Y Y Y 2010 MLR requirements NA (80%) (80%) (85%) No pre-tax reimbursements from health spending or flexible spending 2010 NA Y Y Y accounts (HSA/FSA) for non-prescribed, over-the-counter medications PAGE: 23
  • 24. Modern American Health Care Balancing Performance and Compliance SMALL LARGE SELF-FUNDED YEAR SUBJECT INDIVIDUAL GROUP GROUP (ASO 2011 20% tax for nonqualified HSA withdrawals Y Y Y Y 2012 Reporting value of employer-sponsored coverage on W-2 NA Optional Optional Optional 2012 Summary of Benefits & Coverage (SBC) Y Y Y Y 2012 60-day notice of material modification Y Y Y Y 2012 Women’s Preventative Care Y Y Y Y Transitional Y Y 2013 Reporting value of employer-sponsored coverage on W-2 NA relief (employer (employer until 2014 responsibility) responsibility) Y Y Y 2013 Employee notification of exchanges, including subsidies and tax credits NA (employer (employer (employer responsibility) responsibility) responsibility) 2013 Flexible Spending Account contributions limited to $2,500/year NA Y Y Y Y Y Y Y (health plan (health plan (employer Patient-Centered Outcomes Research Institute (PCORI)-sponsored 2013 (health plan pays on pays on responsible comparative effectiveness research fee (CER) pays) employers’ employers’ for calculating behalf) behalf) amount 2013 Free choice voucher required to be provided to qualifying employees NA Repealed Repealed Repealed PAGE: 24
  • 25. Modern American Health Care Balancing Performance and Compliance SMALL LARGE SELF-FUNDED YEAR SUBJECT INDIVIDUAL GROUP GROUP (ASO Y Y Y (health plan (health plan (health plan 2014 Insurer Fee (or Health Insurance Tax) pays on pays on pays on NA employer’s employer’s employer’s behalf) behalf) behalf) Y Y Y (employer (health plan (health plan encouraged to 2014 Transitional Reinsurance Fee NA pays on pays on calculate employers’ employers’ amount and behalf) behalf) pay fee directly) 2014 Essential health benefits (EHB) package required Y Y NA NA Y Y (transitional (transitional 2014 Out-of-pocket maximum limits applied (cumulative for all coverage) Y Y relief until relief until 2015) 2015) 2014 No pre-existing condition exclusions regardless of age Y Y Y Y 2014 Coverage waiting period not to exceed 90 days Y Y Y Y Y Y (dependent on (dependent on 2014 Employers with 50+ required to offer coverage with minimum value (MV) NA Y number number of employees) of employees) Y Y (dependent on (dependent on 2014 Auto-enrollment required by employers with 200+ employees NA NA number number of employees) of employees) 2014 Coverage of routine care costs for patients* participating in clinical trials Y Y Y Y PAGE: 25
  • 26. Modern American Health Care Balancing Performance and Compliance SMALL LARGE SELF-FUNDED YEAR SUBJECT INDIVIDUAL GROUP GROUP (ASO Y (dependent on 2014 “Small group” redefined as 1-100 (states may defer until 2016) NA Y Y number of employees) 1 2014 Deductible limits $2,000 individual / $4,000 family NA Y NA NA 2014 HIPAA nondiscrimination rules on wellness programs NA Y Y Y 2014 Wellness program maximum incentive increase to 30% NA Y Y Y 2014 Individual mandate Y NA NA NA 2014 Guaranteed issue Y Y Y Y 2014 Rating limitations NA Y NA NA 40% excise tax on high-cost 2018 Y Y Y Y “Cadillac” plans PAGE: 26
  • 27. Modern American Health Care Balancing Performance and Compliance Health Insurance Exchanges PAGE: 27
  • 28. Modern American Health Care Balancing Performance and Compliance “The Health Insurance Marketplace is designed to help you find insurance that fits your budget, with less hassle. No matter where you live, you’ll be able to buy insurance. . . . New laws mean plans must treat you fairly and can’t deny you coverage because of pre-existing conditions.” Source: CMS Toolkit PAGE: 28
  • 29. Modern American Health Care Balancing Performance and Compliance How Do Exchanges Work? Make comparison shopping easier Lower barriers for new competition in the insurance market Provide savings and choice through transparency Determine individual tax credits/subsidies Increase competitive advantage for enrollees Focus on the uninsured PAGE: 29
  • 30. Modern American Health Care Balancing Performance and Compliance State-Based Exchange Each individual state operates all Exchange activities, but a state may use federal government services for the following areas: Premium tax credit and cost sharing reduction determination Exemptions Risk adjustment program Reinsurance program PAGE: 30
  • 31. Modern American Health Care Balancing Performance and Compliance State Partnership Exchange State operates activities for: Plan management (and/or) Consumer assistance State may elect to oversee directly, or in the alternative rely upon federal government services for the following activities: Reinsurance program Medicaid and CHIP eligibility assessment or determination PAGE: 31
  • 32. Modern American Health Care Balancing Performance and Compliance Federally-Facilitated Exchange Operated by HHS, but state may elect to perform these activities itself, or it can use federal government services for the following activities: Reinsurance program Medicaid and CHIP eligibility assessment or determination PAGE: 32
  • 33. Modern American Health Care Balancing Performance and Compliance Exchange Transparency As part of the application process, each state should post certain sections from its application on the appropriate state website, including: Exchange board and governance structure Stakeholder consultation plan Outreach and education plan Role of agents and brokers Coordination strategy Pre-Existing Condition Insurance Plan (PCIP) transition Long-term operational cost plan PAGE: 33
  • 34. Modern American Health Care Balancing Performance and Compliance California Health Benefit Exchange The California Health Benefit Exchange posts the following vision, mission and value set on its website (www.healthexchange.ca.gov): Consumer-focused Affordability Catalyst Integrity Partnership Results PAGE: 34
  • 35. Modern American Health Care Balancing Performance and Compliance DELIVERING MEDICAL CARE Accountable Care Organizations Bundled Payments for Care Improvement Initiative Patient-Centered Medical Homes PAGE: 35
  • 36. Modern American Health Care Balancing Performance and Compliance Accountable Care Organizations An ACO is a shared savings program that promotes accountability for a patient population, coordinates items and services under Medicare parts A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient services. 42 U.S.C. § 1395jjj: “Not later than January 1, 2012, the Secretary shall establish a shared savings program (in this section referred to as the ‘‘program’’) that promotes accountability for a patient population and coordinates items and services under parts A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery.” PAGE: 36
  • 37. Modern American Health Care Balancing Performance and Compliance Accountable Care Organizations, continued By aligning health care providers that focus on improvement, efficiency, and experience within a particular patient demographic, ACOs connect reimbursement with quality, outcomes, and resource utilization. This is a significant departure from the traditional fee-for-service model that for years has been the standard in American health care. January 10, 2013 -- 106 new ACOs approved by CMS. July 9, 2012 -- 87 new ACOs approved by CMS. April 10, 2012 -- 27 new ACOs approved by CMS. PAGE: 37
  • 38. Modern American Health Care Balancing Performance and Compliance ACO Application (July 2012) [S]ubmit a narrative describing how the ACO will . . . implement its quality assurance and improvement program including but not limited to the ACO’s processes to promote evidence-based medicine, beneficiary engagement, coordination of care, and internal reporting on cost and quality. Please include a description of remedial processes and penalties (including the potential for expulsion) that would apply for non-compliance. Submit a narrative describing how the ACO defines, establishes, implements, evaluates, and periodically updates its process and infrastructure to support internal reporting on quality and cost metrics that lets the ACO monitor, give feedback, and evaluate ACO participant and ACO provider/supplier performance. PAGE: 38
  • 39. Modern American Health Care Balancing Performance and Compliance ACO Application, continued Submit a narrative describing how the ACO defines, establishes, implements, evaluates, and periodically updates its process to promote patient engagement. Evaluate the health needs of its assigned beneficiary population (including consideration of diversity in its patient population) and develop a plan to address the needs of its population. Communicate clinical knowledge/evidence-based medicine to beneficiaries in a way they can understand. Engage beneficiaries in shared decision-making in ways that consider beneficiaries’ unique needs, preferences, values and priorities. Establish written standards for beneficiary access and communication and a process for beneficiaries to access their medical records. PAGE: 39
  • 40. Modern American Health Care Balancing Performance and Compliance ACO Quality Measures CMS will measure quality of care using nationally recognized measures in four key domains: Patient/caregiver experience (7 measures) Care coordination/patient safety (6 measures) Preventive health (8 measures) At-risk population: Diabetes (6 measures) Hypertension (1 measure) Ischemic Vascular Disease (2 measures) Heart Failure (1 measure) Coronary Artery Disease (2 measures) PAGE: 40
  • 41. Modern American Health Care Balancing Performance and Compliance Other ACO Requirements Eligibility Governance and Leadership Compliance Plan Data Submission Public Reporting and Transparency Audits and Monitoring Assignment of Beneficiaries Data Sharing October 2011 Revisions* PAGE: 41
  • 42. Modern American Health Care Balancing Performance and Compliance Bundled Payments for Care Improvement Initiative Model 1: Retrospective Acute Care Hospital Stay Only Episode of care is defined as the inpatient stay Physicians paid separately Some gainsharing permitted Model 2: Retrospective Acute Care Stay plus Post-Acute Care Episode will end either 30, 60 or 90 days after discharge Can include up to 48 different clinical condition episodes PAGE: 42
  • 43. Modern American Health Care Balancing Performance and Compliance Bundled Payments for Care Improvement Initiative, continued Model 3: Retrospective Post-Acute Care Only Triggered by acute care hospital stay and begins at initiation of post-acute care services with a participating skilled nursing facility. Post-acute care services must begin within 30 days of discharge and end either 30, 60 or 90 days after the initiation of episode. May include up to 48 different clinical condition episodes. PAGE: 43
  • 44. Modern American Health Care Balancing Performance and Compliance Bundled Payments for Care Improvement Initiative, continued Model 4: Acute Care Hospital Stay Only CMS makes a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the hospital stay by the hospital, physicians and other practitioners. Related admission for 30 days after discharge is included. May include up to 48 different clinical condition episodes. PAGE: 44
  • 45. Modern American Health Care Balancing Performance and Compliance Included Episodes Major joint upper extremity; Amputation; Urinary tract infection; Stroke; Chronic obstructive pulmonary disease, bronchitis/asthma; Coronary artery bypass graft surgery; Major joint replacement of the lower extremity; Percutaneous coronary intervention; Pacemaker; Cardiac defibrillator; Pacemaker device replacement or revision; Automatic implantable cardiac defibrillator generator or lead; Congestive heart failure; Acute myocardial infarction; Cardiac arrhythmia; Cardiac valve; Other vascular surgery; Major cardiovascular procedure; Gastrointestinal hemorrhage; Major bowel; Fractures of femur and hip/pelvis; Medical non-infectious orthopedic; Double joint replacement of the lower extremity; Revision of the hip or knee; Spinal fusion (non-cervical); Hip and femur procedures except major joint; Cervical spinal fusion; Other knee procedures; Complex non-cervical spinal fusion; Combined anterior posterior spinal fusion; Back and neck except spinal fusion; Lower extremity and humerus procedure except hip, foot, and femur; Removal of orthopedic devices; Sepsis; Diabetes; Simple pneumonia and respiratory infections; Other respiratory issues; Chest pain; Medical peripheral vascular disorders; Atherosclerosis; Gastrointestinal obstruction; Syncope and collapse; Renal failure; Nutritional and metabolic disorders; Cellulitis; Red blood cell disorders; Transient ischemia; Esophagitis, gastroenteritis and other digestive disorders. PAGE: 45
  • 46. Modern American Health Care Balancing Performance and Compliance Patient-Centered Medical Homes Comprehensive Team of Care Providers Physical and mental health needs Physicians, advanced practice nurses, physician assistants, nurses, pharmacists, nutritionists, social workers, educators and care coordinators Built around the community Patient Centered (partnering with patients and their families) PAGE: 46
  • 47. Modern American Health Care Balancing Performance and Compliance Patient-Centered Medical Homes, continued Coordinated Care During Transitions Specialty care Hospitals Home health care Community Services Accessible Services Shorter waiting times for urgent needs Enhanced in-person hours 24 hour telephone or electronic access to team member Quality and Safety Evidence-based medicine Patient satisfaction Sharing data PAGE: 47
  • 48. Modern American Health Care Balancing Performance and Compliance MEDICAID EXPANSION PAGE: 48
  • 49. Modern American Health Care Balancing Performance and Compliance What Is Medicaid? Medicaid is health insurance for individuals who qualify financially, as well as families with dependent children, the aged, blind or disabled. Medi-Cal KanCare SoonerCare Hoosier Healthwise MassHealth SALUD! TennCare PAGE: 49
  • 50. Modern American Health Care Balancing Performance and Compliance Medicaid Expansion 77 Federal Register 17144 (Mar. 23, 2012) (Final Rule) Implemented provisions of the Affordable Care Act related to Medicaid eligibility, enrollment and coordination with the Exchanges, CHIP, and other programs. Simplified the eligibility rules in Medicaid and CHIP. Set the minimum Medicaid income eligibility level of 133 percent of the Federal Poverty Level for most non-disabled adults under age 65. PAGE: 50
  • 51. Modern American Health Care Balancing Performance and Compliance Medicaid Expansion, continued Proposed Rule (Jan. 14, 2013) Reflects new statutory eligibility provisions. Proposes changes to provide states more flexibility to coordinate Medicaid and CHIP eligibility, appeals and other administrative procedures. Modernizes and streamlines existing rules. PAGE: 51
  • 52. Modern American Health Care Balancing Performance and Compliance Medi-Cal Created in California during its 1975 Second Extraordinary Session. CAL. WELF. & INST. CODE § 14000: “The purpose [of Medi-Cal] is to afford to qualifying health care and related remedial or preventative services, including related social services which are necessary for those receiving health care under [Medi-Cal].” Includes 25% of California’s population. PAGE: 52
  • 53. Modern American Health Care Balancing Performance and Compliance Medicaid Expansion and the Supreme Court The United States Supreme Court held that Congress has the authority to offer funding for states to expand Medicaid by 2014 without imposing retroactive financial conditions. National Fed. of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2606-07 (2012). Congress never dreamed that any State would refuse to go along with the expansion of Medicaid. Congress well understood that refusal was not a practical option. (Id. at 2665 (Scalia, Kennedy, Thomas and Alito, JJ, dissenting). PAGE: 53
  • 54. Modern American Health Care Balancing Performance and Compliance Medicaid Expansion By the Numbers The Federal Government will pay 100% of added expenses for newly eligible beneficiaries through 2016, 95% in 2017, 94% in 2018, 93% in 2019 and 90% in 2020 and thereafter. States must pay “qualified” physicians Medicaid fees at least equal to Medicare rates starting in 2013. Pay increase applies to family physicians, internists and pediatricians (and in some instances specialists) provided (1) they are Board-certified or (2) at least 60% of the Medicaid codes they billed in the previous year were primary care codes identified in the Affordable Care Act. PAGE: 54
  • 55. Modern American Health Care Balancing Performance and Compliance PERFORMANCE BASED REIMBURSEMENT Hospital Value-Based Purchasing Physician Value-Based Purchasing Hospital Readmissions Reduction Program Hospital Acquired Conditions PAGE: 55
  • 56. Modern American Health Care Balancing Performance and Compliance Hospital Value-Based Purchasing (VBP) Program The DRG system will begin to give way to value-based purchasing. CMS will start paying hospitals Medicare “bonuses” based upon overall performance, adherence to quality measures and patient satisfaction. This epic change is designed to transform a system that has historically been based on cost into one that focuses primarily on quality and performance. Funding for value-based purchasing comes from base operating DRG reductions (1% in 2013, 1.25% in 2014, 1.5% in 2015, 1.75% in 2016, and 2% thereafter). Hospitals with poor performance ratings may be excluded from bonus opportunities. PAGE: 56
  • 57. Modern American Health Care Balancing Performance and Compliance Hospital VBP, continued The VBP Program is based on a hospital’s total performance score (TPS), which includes, in part, 12 Clinical Process of Care measures (70% of the TPS) in the following categories: Acute Myocardial Infarction Heart Failure Pneumonia Surgical Care Improvement Project PAGE: 57
  • 58. Modern American Health Care Balancing Performance and Compliance Hospital VBP, continued The TPS also includes 8 Patient Experience of Care dimensions (30% of TPS) from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey: Communication with doctors Communication with nurses Responsiveness of hospital staff Pain management Communication about medication Cleanliness and quietness Discharge information Overall rating PAGE: 58
  • 59. Modern American Health Care Balancing Performance and Compliance Form Over Substance Follow HCAHPS Quality Assurance Guidelines Hospitals must continuously collect and submit HCAHPS data in accordance with the current HCAHPS Quality Assurance Guidelines and the quarterly data submission deadlines. To participate in the collection of HCAHPS data, a hospital must either (1) contract with an approved HCAHPS survey vendor or (2) self-administer the survey, provided the hospital attends HCAHPS training and meets Minimum Survey Requirements. Four approved methods of administering the CAHPS Hospital Survey: (1) mail; (2) telephone; (3) mixed (mail followed by telephone); and (4) active interactive voice response. PAGE: 59
  • 60. Modern American Health Care Balancing Performance and Compliance Physician VBP For groups with 25 or more physicians, CMS recommends that the following outcome measures be used in the calculation: 30-day post discharge visits All cause readmissions Composite of acute prevention quality indicators (pneumonia, UTI, dehydration) Composite of chronic prevention quality indicators (COPD, heart failure, diabetes) PAGE: 60
  • 61. Modern American Health Care Balancing Performance and Compliance Physician Value Modifier Amount Combine each quality measure into a quality composite and each cost measure into a cost composite using the following domains: PAGE: 61
  • 62. Modern American Health Care Balancing Performance and Compliance Hospital Readmissions Reduction Program Starting October 1, 2012, the Hospital Readmissions Reduction Program (HRRP) reduces a hospital’s base operating Medicare diagnosis-related group (DRG) payments with respect to readmissions for three conditions, including: (1) acute myocardial infarction (AMI); (2) heart failure (HF); and (3) pneumonia (PN). Adjustment Factor:  A hospital’s “adjustment factor” or readmission payment adjustment is the greater of (1) the ratio of a hospital’s aggregate dollars for excess readmissions to their aggregate dollars for all discharges or (b) the statutory adjustment maximum for the Fiscal Year (FY).  For FY 2013, the number cannot exceed 0.99 (i.e., a 1% reduction). The statutory floor adjustment factor is 0.98 for FY 2014 and 0.97 for FY 2015 and subsequent years. PAGE: 62
  • 63. Modern American Health Care Balancing Performance and Compliance Hospital Readmissions Reduction Program, continued PAGE: 63
  • 64. Modern American Health Care Balancing Performance and Compliance Hospital-Acquired Conditions The Deficit Reduction Act of 2005 (DRA) requires a quality adjustment in Medicare Severity Diagnosis Related Group (MS-DRG) payments for certain hospital acquired conditions. CMS has titled the provision “Hospital-Acquired Conditions and Present on Admission Indicator Reporting” (HAC & POA). Hospitals do not receive the higher payment for cases when one of the selected conditions is acquired during hospitalization (i.e., was not present on admission). The case is paid as though the secondary diagnosis is not present. PAGE: 64
  • 65. Modern American Health Care Balancing Performance and Compliance Hospital-Acquired Conditions, continued The Inpatient Prospective Payment System (IPPS) Fiscal Year 2013 Final Rule sets forth the applicable HACs: Foreign Object Retained After Surgery Air Embolism Blood Incompatibility Pressure Ulcer Stages III & IV Falls and Trauma (fracture, dislocation, head injury, burn, etc.) Catheter-Associated Urinary Tract Infection PAGE: 65
  • 66. Modern American Health Care Balancing Performance and Compliance Hospital-Acquired Conditions, continued Additional HACs: Vascular Catheter-Associated Infection Manifestations of Poor Glycemic Control Surgical Site Infections Following Coronary Artery Bypass Graft and Certain Orthopedic Procedures (spine, neck, shoulder, elbow) and Bariatric Surgery and Implantation of Cardiac Electronic Device Deep Vein Thrombosis and Pulmonary Embolism Following Certain Orthopedic Procedures (total knee and hip replacements) Latrogenic Pneumothorax with Venous Catheterization PAGE: 66
  • 67. Modern American Health Care Balancing Performance and Compliance OTHER PROVISIONS Innovation Prevention Fraud and Abuse PAGE: 67
  • 68. Modern American Health Care Balancing Performance and Compliance Innovation and Prevention To reduce patient health care expenditures, the Affordable Care Act must rely upon innovation and prevention, hoping to improve upon the delivery of health care in the United States. Some examples include: Center for Medicare & Medicaid Innovation ($10 billion each decade) School-Based Health Center Grants ($50 million) Prevention and Public Health Fund ($11 billion through 2022) Education and Outreach Campaign for Preventative Benefits Community Transformation Grants Patient-Centered Outcomes Research Institute (PCORI) PAGE: 68
  • 69. Modern American Health Care Balancing Performance and Compliance Fraud and Abuse The Affordable Care Act increases the Federal Government’s arsenal to combat health care fraud, abuse and waste. Some examples include: Mandatory Compliance Programs 60 Days to Pay Physician Owned Hospitals Medicaid RACs Physician Payment Sunshine Act PAGE: 69
  • 70. Modern American Health Care Balancing Performance and Compliance Mandatory Compliance Programs Section 6401(a)(7) of the Affordable Care Act requires all providers and suppliers who participate in Medicare to adopt a compliance program as a condition precedent. The Office of the Inspector General (OIG) has encouraged the industry “to exercise due diligence to prevent and detect criminal conduct and otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law” consistent with the Federal Sentencing Guidelines for Organizations (FSGO). Section 6102 of the Affordable Care Act specifically requires nursing homes to establish “a compliance and ethics program that is effective in preventing and detecting criminal, civil, and administrative violations” by March 23, 2013. PAGE: 70
  • 71. Modern American Health Care Balancing Performance and Compliance 60 Days to Pay Last year the Federal Government made it clear that health care providers must return federal overpayments within 60 days from the time the overpayment was first identified. Failure to follow this new requirement set forth in Section 6402(a) of the Affordable Care Act throughout any ten-year “look-back” period creates potential liability under the False Claims Act. Providers are held to a standard of actual knowledge or “reckless disregard or deliberate ignorance” for purposes of identifying an overpayment under the new regulations. PAGE: 71
  • 72. Modern American Health Care Balancing Performance and Compliance Physician-Owned Hospitals Section 6001 of the Affordable Care Act limits the “whole hospital exception” under the physician self-referral prohibitions, more commonly known as the Stark Laws. This exception applies only to physician-owned hospitals that had physician ownership as of March 23, 2010, and had obtained a Medicare provider number by the end of 2010. Subsequent regulations clarified requirements for and restrictions on physician-owned hospitals, including but not limited to: Requirements for “grandfathered facilities” Clarification that “physician ownership” can change but never increase Limitations on physical expansion (i.e., total number of beds) PAGE: 72
  • 73. Modern American Health Care Balancing Performance and Compliance Medicaid RACs The 2003 legislation that began the Recovery Audit Contractor (RAC) program to detect and correct improper payments within Medicare has since expanded under the Affordable Care Act. Section 6411 of the Affordable Care Act requires each state to establish its own recovery audit program for Medicaid. Clarified through November 2010 regulations, the burden to succeed placed on these Medicaid RACs is certain to increase exponentially in 2014 when Medicaid Expansion officially begins. PAGE: 73
  • 74. Modern American Health Care Balancing Performance and Compliance Physician Payment Sunshine Act Enacted in February 2013, Section 6002 of the Affordable Care Act (the Physician Payment Sunshine Act) deals primarily with transparency and public disclosure. It requires disclosures by certain manufacturers of drugs, devices, and biological or medical supplies, as well as group purchasing organizations (GPOs), including but not limited to: (a) certain physician ownership or investment interests; and (b) certain payment information made by these entities to physicians. The deadline to collect this information is August 1, 2013, and the reporting deadline is March 31, 2014. PAGE: 74
  • 75. Modern American Health Care Balancing Performance and Compliance CHALLENGES Contraception Controversy Debt Ceiling, Fiscal Cliff and Sequestration HIPAA, HITECH and GINA PAGE: 75
  • 76. Modern American Health Care Balancing Performance and Compliance The Contraception Controversy When first announced in August 2011, the inclusion of contraceptive care as a mandatory component in the employer promotion of preventative services sparked a First Amendment debate. Regulations in February 2012 created a temporary enforcement safe harbor for objecting employers. The February 2013 regulations set the new threshold, allowing employers to: Oppose providing coverage for some or all of the previously required contraceptive services on the basis of religious grounds; Exist as a nonprofit entity; and Represent themselves as a religious entity. PAGE: 76
  • 77. Modern American Health Care Balancing Performance and Compliance Debt Ceiling, Fiscal Cliff and Sequestration How will the nation’s financial challenges impact the Affordable Care Act? How many percentage points will it take before a hospital collapses? The debt ceiling compromise proved to be the final blow to the Community Living Assistance Services and Supports (CLASS) Program. The fiscal cliff disrupted a major portion of the funding for the Consumer Operated and Oriented Plans (CO-OPs). Will sequestration prove to be another catalyst for the reduction of provider reimbursement? PAGE: 77
  • 78. Modern American Health Care Balancing Performance and Compliance HIPAA (Health Insurance Portability and Accountability Act) and HITECH (Health Information Technology for Economic and Clinical Health Act) The most recent privacy regulations were released in January 2013, affecting almost 700,000 health care entities. The costs involved include: Breach notifications -- as much as $14.5 million (in 2011), not including the estimated initial expense of $3.9 million to set up the toll-free notification lines. Business associates -- as high as $150 million, including security rule compliance documentation and BAAs. Notification to patients of privacy practices (for providers, health insurers and third party administrators -- as much as $56 million. PAGE: 78
  • 79. Modern American Health Care Balancing Performance and Compliance The Digital Medical Record Existing privacy laws require practically every health care related electronic device to employ encryption algorithms, from a home facsimile or copy machine to all institutional servers. Laptops and other portable devices must default to unreadable ciphertext, a protocol far beyond the ordinary login password. Last year’s release of the Medicare and Medicaid Programs’ Electronic Health Record Incentives specified hospital stage two (out of three stages) criteria to qualify for electronic health record incentive payments. Physicians’ Medicare incentive payments can be as high as $44,000, but the future penalty for not participating is up to 3% of all Medicare payments starting in 2017. PAGE: 79
  • 80. Modern American Health Care Balancing Performance and Compliance The Genetic Information Nondiscrimination Act of 2008 (GINA) GINA is the leading federal protection of genetic information, but it only prohibits genetic discrimination in health insurance and employment. GINA does not regulate access, security or disclosure of genetic or whole genome sequence information across all potential users, nor does it protect against discrimination in other contexts. State laws vary for similar protections. Genetic information protections are only briefly mentioned in the Affordable Care Act (42 U.S.C. § 300gg-3(b)(1)(B) (Treatment of Genetic Information)): “Genetic information shall not be treated as a condition . . . in the absence of a diagnosis of the condition related to such information.” PAGE: 80
  • 81. Modern American Health Care Balancing Performance and Compliance Additional Resources www.healthcare.gov (U.S. Government) www.healthreform.kff.org (The Henry J. Kaiser Foundation) www.hhs.gov (The U.S. Department of Health and Human Services) www.cms.gov (Centers for Medicare & Medicaid Services) www.oshpd.ca.gov/reform (Office of Statewide Health Planning & Development) www.chhs.ca.gov (California Health & Human Services Agency) PAGE: 81
  • 82. Modern American Health Care Balancing Performance and Compliance Craig B. Garner Craig is an attorney and health care consultant, specializing in issues pertaining to modern American health care and the ways it should be managed in its current climate of reform. Craig’s law practice focuses on health care mergers and acquisitions, regulatory compliance and counseling for providers. Craig is also an adjunct professor of law at Pepperdine University School of Law, where he teaches courses on Hospital Law and the Affordable Care Act. Between 2002 and 2011, Craig was the Chief Executive Officer of Coast Plaza Hospital in Norwalk, California. Craig is also a Fellow Designate with the American College of Healthcare Executives, a Member of the State Bar of California, Business Law Section, Health Law Committee and a Vice Chair of the Healthcare Reform Educational Task Force of the American Health Lawyers Association. Additional information can be found at www.craiggarner.com. PAGE: 82
  • 83. THANK YOU Craig B. Garner 1299 Ocean Avenue, Suite 400 Santa Monica, CA 90401 Craig@CraigGarner.com (310) 458-1560 www.CraigGarner.com