HFMA Legislative Update

Presented by Adam D. Romney

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AGENDA

Federal Legislative Update• Health Care Reform• Key Federal Legislation• 2012 Election

California Bills of Interest

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FEDERAL LEGISLATION2012 HFMA Legislative Update

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HEALTH CARE REFORM

Supreme Court, Implementation, New Federal Legislation, and Election 2012

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Supreme Court Decision

June 28, 2012 5 to 4 vote Individual mandate upheld

– Congress’s power to “lay and collect tax” – Not within scope of commerce clause

Medicaid expansion– Federal government cannot withhold federal Medicaid

funding to states that do not expand their Medicaid programs

– States can only lose new Medicaid funding– CHA estimates that PPACA will result in 2M additional

Medicaid insureds

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New Constitutional Challenges Filed

January 2012, Sec. Sebelius announced that as part of required “preventive health services” health insurance plans must cover contraceptives for women free of charge

Insurance plans must comply by Aug. 1, 2012 (church affiliated organizations given one additional year to comply)

May 21: 43 Catholic institutions initiate actions challenging the “Contraceptive Mandate”– Suits allege violations of Religious Freedom Restoration

Act (RFRA), rights to free speech, exercise, and establishment clause rights under the First Amendment

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Readmissions

Review of Readmissions Concept: – IPPS payment reductions if hospital experiences

“excess readmissions” when compared to “expected” levels of readmissions based on a 30-day “episode of care” for specified conditions

Reductions: up to 1% for FY2013, 2% in 2014 and 3% in 2015 and after

Specified conditions are:– Heart attack/AMI (ICD-9 codes 410-410.91)– Heart failure (ICD-9 codes 402-404, plus 428)– Pneumonia (ICD-9 codes 480-88)

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Readmissions

Implementation:– Applies to discharges as of October 1, 2012– Readmission measures and data available

on https://www.qualitynet.org – CMS has announced 30-day appeal period

What will be the impact?– CMS estimates hospitals will lose $300M– Approximately 34% of hospitals will avoid

cut– 14% will suffer full reduction

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Value-Based Purchasing

Review of VBP concept: – Set aside a pool from existing Medicare PPS

dollars– Redistribute the pool among PPS hospitals

based on performance as compared to: (1) other hospitals, and (2) each hospital’s prior performance

– Creates incentives to improve quality– Should be budget-neutral in the aggregate

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Value-Based Purchasing

Implementation:– Applies to discharges beginning October 1, 2012– Estimated pool for FY2013: $850M– Hospitals notified of estimated incentive payment via

QualityNet prior to Oct. 1, 2012– Exact amount to be released on Nov. 1, 2012 (30-day

review)– VBP payment amount entered Jan. 1, 2013

According to CMS:– top 95th percentile hospitals will receive as much as

1.575% in VBP payment– 5th percentile hospitals will receive as little as 0.434%

in VBP payment

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Medicare Shared Savings Program

Review– Providers and suppliers (hospitals, physicians,

others) work together in ACO structure to manage and coordinate care for Medicare FFS beneficiaries assigned to the ACO

Shared Savings– If the ACO reduces the cost of the care for those

beneficiaries by more than a set amount, and if ACO meets all specified quality measures, then portion of the amount saved will be shared with ACO

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Medicare Shared Savings Program

Where are we now?– Final Rule: 76 Fed. Reg. 67802 (Nov. 2, 2011)– For FY2013, NOI accepted until 6/29/12– Application approval or denial decisions, Fall

2012– July 1 HHS announced 89 new ACOs– Total ACOs now 154 (including 32 Pioneer

ACOs)– 2.4M beneficiary lives now covered by ACOs

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Bundled Payment for Care Improvement Initiative

Administered by CMMI Four models:

– Model 1: Acute Care Hospital Stay Only—all inpatient hospital services; all MS-DRGs

– Model 2: Acute Care Hospital Stay plus Post-Acute Care—all inpatient hospital services, physician services, and post-acute care services; agreed-upon MS-DRGs only

– Model 3: Post-Acute Care Only—all physician services and post-acute care services relating to an inpatient stay; agreed-upon MS-DRGs only

– Model 4: Acute Care Hospital Stay Only—all inpatient hospital services and physician services furnished during an inpatient stay; agreed-upon MS-DRGs only

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RAC Expansion to Medicare Part C

PPACA (Sec. 6411) expands RAC program to Medicare Part C (Medicare Advantage)

CMS has requested public comments on the development of the Part C RAC program– How to identify Part C under/overpayments?– Phased in approach?– What qualifications should Part C RAC contractors

demonstrate?– Should there be a separate overview agency?– Limit number of Part C RACs to create uniformity?

No Part C final rule yet. . . .

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RAC Expansion to Part D

PPACA (Sec. 6411) expands RAC program to Medicare Part D (Prescription Drug Benefit)

Model is similar to Medicare Parts A/B RAC to audit Part D sponsoring Organizations (sponsor)

Part D RACs paid on contingency Examples given by CMS of improper Medicare

Part D payments include: – Excluded prescribing provider– Duplicate payments– Direct and Indirect Remuneration (DIR)

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RAC Expansion to Medicaid

PPACA (Sec. 6411) requires all states to implement RAC program to review Medicaid payments

States must amend their State Medicaid Plan– California’s SPA was approved 2/18/12

States must contract with one or more eligible contractors to review Medicaid claims– DHCS awarded contract to Health Management

Systems, Inc. (4/5/12) Contingency-based payment (Capped at 12.5

percent) Effective date of final rule was 1/1/12

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RAC Expansion to Medicaid

States have flexibility in establishing RAC programs, Inclusion/exclusion of Medicaid managed care? Appeals process for disputes with Medicaid

RACs? Application of Medicare “good cause”

requirements? Limits on the number and frequency of records

that a Medicaid RAC contractor may request?

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Insurance Reforms

Summary of Benefits and Coverage: Insurers must issue “clear” summary information to consumers, uniform definitions– 77 Fed. Reg. 8706 (Feb. 14, 2012)

Health Insurance Exchanges: Standards for states to establish exchanges creating competitive marketplace – will be operational by 1/1/14– Proposed 76 Fed. Reg. 41866 (July 15, 2011), final

77 Fed. Reg. 18,310 (March 27, 2012); HHS guidance documents for states (May 16, 2012)

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FEDERAL LEGISLATION UPDATE

Middle Class Tax Relief and Job Creation Act of 2012

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Middle Class Tax Relief and Job Creation Act of 2012

Enacted Feb. 22, 2012 HR 3630 Part of larger bill to extend 2% Social

Security payroll tax cut, extend unemployment benefits, expands FEMA, etc.

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Sustainable Growth Rate (“SGR”)

2012 MPFS contained a 27.4% reduction in physician payments based on the SGR, scheduled to take effect March 1, 2012.

The Act avoided the reduction, again (every year since 2003).

Medicare physician payment rates will now remain at their current levels through December 31, 2012.

CMS, along with other organizations, has indicated hope that Congress will implement a permanent solution to the SGR rate problem.

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Extension of Medicare Work Geographic Adjustment Floor

Current law requires payment rates under the MPFS to be adjusted geographically to reflect area differences in the cost of practice.

However, Congress had boosted payments for the work component or wRVU of physician fees in areas where labor cost is lower than the national average.

The provision would extend the existing 1.0 floor on the “physician work” index through December 31, 2012.

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Extension of Exceptions Process for Medicare Therapy Caps

Current law places annual per beneficiary payment limits on outpatient therapy services provided by non-hospital providers.

Beneficiaries can get an exception to the cap for medically necessary therapy services.

The Act also expands the cap on outpatient therapy services by applying both the cap and exceptions process to therapy services provided in hospital outpatient departments.

Both the exceptions process and expansion of the therapy caps to the outpatient setting expire at the end of 2012.

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Other extensions under MCTRJCA

Ambulance add-on payments:12/31/12 Outpatient hold harmless provision:

12/31/12 Qualifying Individual (QI) program:

12/31/12 Transitional Medical Assistance (TMA):

12/31/12

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Reduction of Bad Debt Treated as an Allowable Cost

Reduces bad debt reimbursement for all providers for all populations to 65 percent. – Providers currently receiving 100 percent

reimbursement for their bad debt would have a three-year transition of 88 percent, 76 percent, and 65 percent, respectively.

– Providers currently reimbursed at 70 percent for their bad debt would be reduced to 65 percent.

– The Act would not extend the existing accommodation for bad debt incurred by SNF providers on behalf of dual eligibles, which is currently reimbursed at 100 percent.

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Rebasing Medicaid State DSH Allotments

PPACA reduced DSH payments, starting in 2014, to reflect the expected decrease in uncompensated care as reform increases the number of patients with insurance.

The Act extended the DSH payment reductions for an additional year, through fiscal year 2021.

Results in savings of $4.1B over 11 years.

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ELECTION 2012Obama, Romney and Ryan

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Obama’s Health Care Proposals

Continue implementation of PPACA FY2013 Budget Proposal– Reductions of appx. $303B in Medicare and

$56B in Medicaid over next ten years– Voted down in Senate (99 to 0)

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Obama’s Health Care Proposals

Key reductions in proposed 2013 budget– Reduce payment rates for IRFs, LTCHs, SNFs, and HHAs

by 1.1%– Reduce Medicare coverage of bad debt to 25%– Reduce IME adjustment by 10%– Reduce IRF payments to SNF levels for services that

could be provided in either facility– Reduce SNF payments for facilities with high rates of

preventable readmissions– Reduce CAH payments from 101% to 100% of costs– Reduce advanced imaging reimbursement to account for

higher levels of utilization Some copayment and premium increases

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Congressman Ryan’s Health Care Proposal

Medicaid:– Converts federal share of Medicaid spending into

block grant– States design their own programs

Medicare:– 55 or older: Maintain current Medicare system– Under 55, beginning in 2023:

• Seniors given voucher (aka “premium support”), amount varies with age and income

• Seniors choose between private plans and Medicare. • Eligibility age raised to 67 by 2033 (2 months per year).

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Congressman Ryan’s Health Care Proposal

Repeal portions of PPACA– Several insurance provisions:

• Individual mandate• Health insurance exchanges• Medicaid expansion to 138% of federal poverty level• Penalties on employers if employees obtain coverage

through exchanges• Tax credits for small employers that offer health

insurance.

– The CLASS Act– Independent Payment Advisory Board (IPAB)– The “doughnut hole” fix

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Governor Romney’s Health Care Proposal

From the Mitt Romney Campaign Website:Key Elements of Mitt’s Plan

Nothing changes for current seniors or those nearing retirement Medicare is reformed as a premium support system, meaning that existing spending is repackaged

as a fixed-amount benefit to each senior that he or she can use to purchase an insurance plan All insurance plans must offer coverage at least comparable to what Medicare provides today If seniors choose more expensive plans, they will have to pay the difference between the support

amount and the premium price; if they choose less expensive plans, they can use any leftover support to pay other medical expenses like co-pays and deductibles

“Traditional” fee-for-service Medicare will be offered by the government as an insurance plan, meaning that seniors can purchase that form of coverage if they prefer it; however, if it costs the government more to provide that service than it costs private plans to offer their versions, then the premiums charged by the government will have to be higher and seniors will have to pay the difference to enroll in the traditional Medicare option

Lower income seniors will receive more generous support to ensure that they can afford coverage; wealthier seniors will receive less support

Competition among plans to provide high quality service while charging low premiums will hold costs down while also improving the quality of coverage enjoyed by seniors

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Difference between Romney and Ryan Plans?

FAQ from Mitt Romney’s campaign website (http://www.mittromney.com/issues/medicare)

How is this different from the Ryan Plan?

Shortly after Mitt presented the proposal described here, Congressman Paul Ryan and Senator Ron Wyden introduced a bipartisan proposal that almost precisely mirrors Mitt’s ideas. Unsurprisingly, the Obama administration immediately rejected the proposal. Mitt has applauded the Ryan-Wyden effort and looks forward to working as president with leaders from both sides of the aisle to implement meaningful reforms that will preserve Medicare for future generations.

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Difference between Romney and Ryan Plans?

Required benefit package– “All insurance plans must offer coverage at least

comparable to what Medicare provides today” Beneficiaries pay if Medicare costs are higher

– “‘Traditional’ fee-for-service Medicare will be offered by the government as an insurance plan, meaning that seniors can purchase that form of coverage if they prefer it; however, if it costs the government more to provide that service than it costs private plans to offer their versions, then the premiums charged by the government will have to be higher and seniors will have to pay the difference to enroll in the traditional Medicare option.”

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CALIFORNIA UPDATEPhysicians, Hospitals, Medi-Cal

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AB 1742 – Assignment of Benefits

Would have required health plans to comply with a patient’s request to assign payment to any treating physician

Patients received checks from payors without explanation, physicians have to pursue payment from them

Most California health plans honor patients’ assignment request (not Blue Cross and Blue Shield for out of network physicians)

Status: Failed in Assembly Health Committee

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AB 2064 – Vaccine Reimbursement

Plans and insurers that cover child and adolescent vaccines must fully reimburse physicians/groups an amount not less than the actual costs of acquiring the vaccine plus administration

As the number of recommended vaccines increases, physicians have had to bear more costs as carriers’ payments are often insufficient

Status: Held in Assembly Appropriations on suspense

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SB 1416 – Physician Workforce

Lays the groundwork to create the Graduate Medical Education Trust Fund

Would administer grants to expand physician residency programs in California

Increase the number of students and residents receiving education and training in family practice and as primary care physicians assistants and primary care nurse practitioners

As currently drafted, funding for this program would be dependent on private donations; use of the state’s General Fund would be banned.

Status: Referred to Appropriations Committee, in suspense file

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SB 923 – Workers Compensation Fee Schedule

Would require state to adopt Medicare RBRVS reimbursement system for services covered under workers compensation

Would result in multiple reimbursement reductions for physicians

Status: Inactive

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AB 415 - Telehealth

Replaces existing “telemedicine” statute, B&P §2290.5 Intent is to “create a parity of telehealth with other

health care delivery modes.” Promote telehealth to preserve, augment and enhance

“provider-patient relationship” through the use of telehealth “as a tool to be integrated into practices.”

Pared-down consent requirement – verbal only, to be documented in the medical record

Removes various requirements imposed by health care service plans, health insurers, and Medi-Cal for patients to receive health care services through telehealth.

Status: Approved by Governor in October 2011

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SB 335 – Hospital Fee Program

Imposes a Quality Assurance Fee (QAF)– Imposed on specified hospitals for 30 months (from

June 30, 2011 until December 31, 2013) – Expected to provide hospitals with an overall net

benefit of $5.2 billion over 30 months Provides $85 million per quarter for children’s health

coverage until December 31, 2013 Establishes a mechanism to make increased

payments for out-of-network emergency care provided to Low Income Health Program (LIHP) patients.

Status: Signed by Governor in September 2011

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SB 1081 – Medi-Cal Demonstration Projects

Would allow a District Hospital to become a Low Income Health Program (LIHP) contractor, in a County lacking a County hospital or a County which chooses to not become a Low Income Health Program contractor

Currently, district hospitals are the only public health care entities excluded from becoming LIHP contractors

Status: Passed out of Assembly Committees

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AB 678 – Supplemental Provider Reimbursement for Emergency Services

Allows ground emergency medical transportation service providers owned by public entities (public ground emergency medical transportation providers) to receive supplemental Medi-Cal reimbursement, in addition to the rate of payment that these providers would otherwise receive for Medi-Cal ground emergency medical transportation services, up to actual costs.

The nonfederal share of the supplemental reimbursement would be paid with funds from specified governmental entities through certified public expenditures.

STATUS: Approved by Governor

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AB 1297 – Mental Health

Requires provider reimbursement amounts to be consistent with federal Medicaid requirements for calculating federal upper payment limits.

Requires claims for reimbursement for service to be submitted within longer timeframes required by federal Medicaid requirements and the approved Medicaid State Plan and waivers, instead of shorter timeframes in state regulation.

Status: Approved by Governor

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AB 1728 – Provider Reimbursement Rates

Currently, provider rates of payment for services under the following programs must be identical to the rates of payment for the same service performed by the same provider type pursuant to the Medi-Cal program:– California Childrens Services Program, �– Genetically Handicapped Persons Program, �– Breast and Cervical Cancer Early Detection Program, – State-Only Family Planning Program, – Family Planning, Access, Care, and Treatment (Family PACT) Program, – Healthy Families Program, and – Access for Infants and Mothers Program

This bill would provide an exception requiring hospital inpatient rates of payment for these programs to be 90% of the Medi-Cal hospital interim rates of payment.

Status: Held under submission in committee

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AB 2206 – Dual Eligibles

This bill would authorize persons who are enrolled in a PACE plan to continue to receive their Medi-Cal and Medicare benefits through the PACE plan without having to reselect the plan

Authorize persons who are eligible for PACE to disenroll from a managed care health plan and enroll in a PACE plan at any time to receive their benefits

Would require managed care plans to identify, in their assessments of enrollees, and notify, certain beneficiaries of their potential eligibility for PACE

Status: Ordered to special consent calendar

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AB 574 – Program of All-Inclusive Care for the Elderly

Adds PACE as a Medi-Cal benefit Increases the maximum number of

allowable contracts between DHCS and PACE from 10 to 15

There are currently five PACE sites operating in the state

Status: Approved by Governor 9/30/11

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AB 52 – Rate Approval

Existing Law: – Notification of changes in premium rates or coverage must be

made to contract holder or policyholder– Insurers or plans must file rate information with DMHC– Changes to premium, copayment, deductible or coinsurance

amounts may not be made during certain periods AB 52 would:

– Require insurers and plans to file with DMHC or DOI a rate application for any proposed rate change.

– DMHC/DOI would deny rate changes found to be excessive, inadequate or unfairly discriminatory

– Civil penalties would be imposed on insurers and plans for violation of these provisions

Status: Passed house, ordered inactive in Senate

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