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1、1,HEALTH CARE INDUSTRY PERSPECTIVES ON HEALTH CARE REFORM,Mississippi ChapterHealthcare Financial Management Association2010 Ethics,Accounting&Auditing and PFS WorkshopJune 11,2010Hilton Hotel,Jackson MS,2,STRATEGIC OPPORTUNITIES FOR HOSPITALS,3,Health Care Delivery System Reform,The Senate Finance
2、Committee Legislation Will Include Payment Reforms Aimed at Improving the Delivery System,Prerequisite,Tactics,The Goal,3.,2.,1.,4,A Roadmap to Reform,Most of President Obamas Ambitious Health Care Goals Depend on Bending the Cost Curve,Source:1)http:/www.whitehouse.gov/issues/health_care/,Catalyst,
3、Primary Outcome,Secondary Outcome,Tertiary Outcome,Causal Relationship Between the Presidents Health Care Goals,Assure Affordable Coverage,Reduce Cost Growth,Invest in Prevention and Wellness,Improve Safety and Patient Care,Maintain Coverage During Job Transitions,End Barriers for Pre-Existing Condi
4、tions,Protect Families from Medical Bankruptcy,Guarantee Choice of Docs and Health Plans,5,Selected Provisions,Administrative SimplificationMoving to standardized processes by evaluation of systems every 3 years using input from the National Committee on Vital Statistics,the Health Information Techn
5、ology Policy Committee,the Health Information Standards Committee,standard setting organizations and stakeholders-Public Health Services Act Sec.399HH(a),as added by Act Sec.3011 of the Patient Protection and Affordable Care Act(P.L.111-148).Delivery System ChangesBundling beginning 2013 pilots thru
6、 2015(Social Security Act Sec.1866D,as added by Act Sec.3023 of the Patient Protection and Affordable Care Act(P.L.111-148).Readmissions 2013 penalties for“excessive re-admissions”(SSA Sec.1886(q)(3),as added by Act Sec.3025 of the Affordable Care Act).Hospital acquired conditions-Act Sec.2702 Accou
7、ntable Care Organizations 2012,allows hospitals and physicians to provide leadership in voluntary ACOs.Some savings to be shared Section 3022 of the Patient Protection and Affordable Care Act(P.L.111-148)adds Social Security Act Sec.1899Innovation Center 2011 creates a Center for Medicare and Medica
8、id Innovation designed to improve quality and reduce program expenditures-Section 3021 of the Patient Protection and Affordable Care Act(P.L.111-148)amends Title XI of the Social Security Act by adding the new SSA Sec.1115A,6,Global Payments,The Legislation Will Include Expanded Bundled Payment Demo
9、nstration Projects,Proposed Bundled Payment System:,Current Payment Methodology:,1:,2:,30 Day Episode of Care,Sample Inpatient Stay,MAC,Hospital Negotiated Pmts,Payment,7,Selected Provisions,Independent Payment Advisory Board(IPAB)Section 3403 of the Patient Protection and Affordable Care Act(P.L.11
10、1-148)Binding payment recommendations on Medicare and non-binding on private insurers payments to providersExclusion such as hospitals(except CAH)until 2019340B drug program extended Act Sec.7101(a)of the Patient Protection and Affordable Care Act(P.L.111-148),amending Public Health Service Act Sec.
11、340B(a)(4)by adding subparagraphs(M)through(O)Market basket update adjustments-Affordable Care Act Sec.3401RAC expansion-Affordable Care Act Sec.6411Graduate Medical Education no reductions in IME payments but re-distributes 65 percent of unused residency to primary care and surgeons SSA Sec.1886(h)
12、(8)(B),as added by Act Sec.5503(a)(4)of the Affordable Care Act,8,Something To Think About,Be proactive,explore how to make the new legislation work in your organizationIgnoring the delivery and payment system changes will be detrimentalMost importantly,understand totally where your revenue comes fr
13、om and how this will changeTax Exemption,9,Financially Positive or Negative for Health Care Providers,ModelingMarket Basket UpdateDSH-UPLHospital Acquired ConditionsPhysician Payment RevisionsContracts with other payers,10,Being Pro Active,Model impacts of Medicare and MedicaidEstimate income/volume
14、 levels of“new patients”Evaluate service linesEvaluate costsDirect careSupport,11,Know the margins The Driving Forces,12,Model of Governmental Payers,13,Non Governmental Payers,Impact of Health Insurance Exchanges on traditional insuranceImpact of family coverage and shifts to employersImpact of“pay
15、 the penalty”un or under insuredRemember“bend the cost curve”,14,Being Pro Active,Model impacts of Medicare and MedicaidEstimate income/volume levels of“new patients”Evaluate service linesEvaluate costsDirect careSupport,15,Reviewing Service lines,Outpatient Rehabilitation Services Primarily two ser
16、vices Occupational&Speech TherapyDetermined the payer mix was unable to sustain the current level of expense.Due to the competition and availability in the service area,the Hospital elected to discontinue service.Net increase to contribution margin$600,000 annually.,16,Being Pro Active,Model impacts
17、 of Medicare and MedicaidEstimate income/volume levels of“new patients”Evaluate service linesEvaluate costsDirect careSupport,17,Analysis of Costs,The Cost structureDirect patient careComponents of OverheadIdentified areas for cost savingsInvested in premier database to benchmark both cost and quali
18、tyExpended Information Technology funds for capturing data and developing standardized processes,18,Labor Costs,Productivity standard which was an integration of standards established by a proprietary database and adapted Hospitals cultureReview of standards began with a bi-weekly process which was
19、historical and reactionaryMoved to a daily matrix which was successful due to the step transition(key moving from reactionary to integrated)Savings as a result of the intense use of standardsFTEs decreased from 4.5 to 3.9 per adjusted occupied bedReduction of salary costs of$6.8 millionOther conside
20、rations including freezing merit increases and elimination of contract staffing,19,Purchased Services,Retirement Plan Hospital operated under a defined benefit“Freeze”implemented with alternative retirement planWith matching mechanism through 403(b)savings of$700k annuallyReal Estate and other renta
21、l agreementsNegotiated through consolidations and space eliminations resulted in$270k savingsManagement of professional servicesHired a director for key areas including IOP,BIO Med,Rehab and Housekeeping-savings of$1million,20,Quality&Efficiency,Chief Medical Officer established a work group to eval
22、uate the clinical effectiveness of the following programs:CardiologyPediatricsOrthopedicsBehavioral HealthWomens Health Services including NurseryGeneral medical Surgical,21,Key Finding,Length of Stay too highWith 60%of total expense representing labor costs,the Hospital began an intense review of d
23、aily activities and labor hoursGreatest opportunity Review standards and protocols for delivery of patient careIntensified use of Hospitalist programIndexed length of stay 100%of standard,22,Other Considerations,Mindset review of expenseFormulary review of Pharmacy-$200kCourier alignment with outpat
24、ient-$175kBenefit plan sync with industry-$1.5 milOverall,everything is matched up with:Board Policy and MissionRating Agency Capital AccessBudget constraints,23,Analysis of PPACAs Impact on Employers,24,September 23,2010 Plan Changes,UNAVOIDABLE AND/OR NON-GRANDFATHERABLE PROVISIONS1.No Lifetime Li
25、mits on“Essential Benefits”2.Restrictions on Annual Limits for“Essential Benefits”3.No Pre-Existing Conditions Exclusions for Children Under 194.If a child under 26 is not eligible for enrollment in a separate employer sponsored plan,then plan already providing coverage to children must extend cover
26、age through age 25 regardless of student/marital/dependent status5.Existing Coverage cant be rescinded absent fraud6.Large Employers(200 FTEs)must auto-enroll new employees7.Non-prescription,over the counter drugs(excluding insulin)cant be included in a Flexible Spending Account(“FSA”)deduction For
27、tax years beginning after 12/31/10,25,September 23,2010 Plan Changes,AVOIDABLE AND/OR GRANDFATHERABLE PROVISIONS FOR PLANS EXISTING BEFORE MARCH 23,20101.Certain Evidence-Based Preventive Care(Including Well-Child Care)and Immunizations Cant Be Subject to Cost-Sharing 2.Insurance Based/Non-Self Fund
28、ed Plans Must Comply with Requirements Preventing Favorable Treatment of Highly Compensated Employees3.Internal/External Appeals Processes4.Enrolled Employees May Select Any Participating Primary Care Doctor5.No Pre-Authorization or Increased Out of Network Cost Sharing for emergency services 6.No P
29、re-Authorization or Mandatory Referral for OB-GYN Services,26,Small Employer Tax Credit(2010-2013),SMALL EMPLOYER(25 FTEs)TAX CREDIT FOR 35%OF HEALTH CARE COVERAGE COSTIn order to receive,employer must subsidize at least 50%of employee premiums 50%Credit Is Available for Tax Years 2014-2015 Technica
30、lly its available for any two years beginning after 12/31/13-presumably the 2014-15,but not necessarily.,27,2011 Calendar Year Changes,1.Aggregate Value of Employer Sponsored Coverage Must Be Identified on 2011 W-22.Value of coverage to be identified on W-2 will be determined in the same manner as t
31、he 40%excise or“Cadillac”tax,namely,through use of current COBRA valuation and will include employee paid premiums and FSA contributions but exclude stand-alone dental/vision.,28,2013 Calendar Year Changes,1.Annual Employee Pre-Tax Contributions to FSA Capped at$2,5002.Hire-Date/Annual Enrollment Di
32、stribution of Standardized Summary of Plan Benefits/Coverage3.Mandatory Employee Notice of Rights to Health Insurance Exchange Subsidy(Including“Free Choice Voucher”),29,2014 Calendar Year Changes,1.No Pre-Existing Conditions Exclusions or Limitations2.No Coverage Waiting Period Greater Than 90 Days
33、,30,Grandfatherable/Avoidable Changes For Plans Existing Before January 1,2014,1.Group Insurance Coverage Is Guaranteed for Issue and Renewal(Subject to Annual/Special Enrollment Periods)2.Group Plans Became Subject to Modified Community Rating Rules:Gender/Health Status Cant Be Used for Premium Cal
34、culationAge Premium Variations Limited to 3:1Tobacco Premium Variations Limited to 1.5:13.“Essential Health”Benefits Must Be Offered for small group plans Does not apply to large groups or to self-insured plans4.Limits on Out of Pocket Expenses/DeductiblesIndividual($5,950)and$2,000Family($11,900)an
35、d$4,000,31,2014 Calendar Year Changes(cont.),HEALTH INSURANCE EXCHANGESList of Qualified Plans becomes available through either state/federal AdministratorFour Levels of Plans Based on Actuarial Value Between 60-90%Exchange Plans Must Offer Essential BenefitsExchange-Based Subsidy Eligibility:Househ
36、old Incomes Between 100-400%FPL(88K for Family of Four)Ineligible for government healthcareEmployer sponsored plan doesnt pay at least 60%of actuarial value and premium exceeds 9.5%of annual household income Exchange Based Employer PenaltiesEmployers With Over 50 FTEs incur$143/month or$2,000(annual
37、ly)per employee(after first 30)for failure to offer“minimum essential coverage”to all FTEs/dependents if ONE receives a subsidy through an Exchange Employer with Over 50 FTEs incur$250/month or$3,000 annual tax for each employee who opts for Exchange due to“Unaffordable Minimum Essential Coverage”me
38、aning premiums exceeding 9.5%of household income or plan has actuarial value of less than 60%Note:Mercer study says 38%of employees will meet this threshold,32,Health Insurance Exchanges(cont.),FREE CHOICE VOUCHER ELIGIBILITY 1.Household Income Less Than 400%of FPL($43,200-individual)($88,200 family
39、 of four)2.Required to pay between 8 and 9.8%of household income for coverageVoucher Amount=$cost of Coverage Under Employer-Based PlanVouchers are Deductible by EmployersVouchers Are Excluded from Employees IncomeVouchers Apply to All Employers,Regardless of Size,33,2014 Employer Reporting Duties,I
40、F 5O FTEs,THEN:a.declaration that employer does or does not offer minimum essential coverage to FTEs/dependents;b.disclosure of coverage waiting period length;c.disclosure of information on lowest-cost option in each enrollment category;d.disclosure of employers share of total plan costs;e.disclosur
41、e of number and names of employees receiving health care coverage,34,Consequences,Very large employers may drop employer-sponsored coverageAT&T could save$1.8b annuallyCBO estimates that employers that drop coverage would substitute wages for premium benefitsEmployees would buy in to the Exchange,wh
42、ere reimbursement rates will be lower than with employer group plans(not going well in MA),35,Consequences,2010 average cost for family of 4 is$18k;10k funded by employerOther insurance reforms will result in increased premiumsCredits expire when industry fees escalate,36,TAX IMPLICATIONS:TAX-EXEMPT
43、 HOSPITALS,37,TAX-EXEMPT HOSPITAL IMPLICATIONS,Section 9007 of the PPACA added yet another layer of requirements that must be met in order to maintain tax-exempt status and avoid excise tax penalties.Except for the community health needs assessment requirement and imposition of excise tax penalties,
44、Section 9007 applies to taxable years beginning after March 23,2010.,38,TAX-EXEMPT HOSPITAL IMPLICATIONS,cont.,Section 9007 has five primary components:9007(a)adds new requirements for 501(c)(3)hospitals through the addition of Section 501(r)(1)-(7)to the IRC;9007(b)amends IRS Section 4959 to impose
45、 an excise tax for noncompliance with 501(r)(3);9007(c)provides for mandatory federal review of the community benefit activities of 501(c)(3)hospitals;9007(d)adds reporting requirements;9007(e)requires the Secretary of the Treasury to make annual reports to Congress.,39,TAX-EXEMPT HOSPITAL IMPLICATI
46、ONS,cont.,Section 9007(a)adds Section 501(r)(1)-(7)to the IRC and imposes significant new obligations on tax-exempt organizations.Applicability:Section 9007 applies to organizations that operate facilities required by the state to be licensed/registered/recognized as a hospital and to other organiza
47、tions with hospital care as a principal function.Must be tax-exempt under 501(c)(3),so governmental facilities are not included.For multi-hospital systems,the rules apply separately to each facility.,40,TAX-EXEMPT HOSPITAL IMPLICATIONS,cont.,New Section 501(r)has four primary components:Community he
48、alth needs assessment-501(r)(3)Financial assistance policy-501(r)(4)Limits on charges-501(r)(5)Changes to billing and collection methods-501(r)(6)Treasury has requested comments on the 501(r)requirements.,41,TAX-EXEMPT HOSPITAL IMPLICATIONS,cont.,New Section 501(r)components:Component One:Community
49、health needs assessment(501(r)(3):Effective date:taxable years beginning after March 23,2012.Requirements:Must conduct a community health needs assessment in the taxable year or either of the two prior taxable years.Must have adopted a strategy to implement the identified needs.The assessment must t
50、ake into account the input of a broad spectrum of stakeholders in the community served by the facility and it must be made“widely available to the public”.,42,TAX-EXEMPT HOSPITAL IMPLICATIONS,cont.,and,for not complying with Section 501(r)(3),Section 9007(b)imposes an excise tax.Section 9007(b)impos
