CAHs the ACA and Beyond John T. Supplitt, Senior Director AHA Section for Small or Rural Hospitals 10 th Mid-South CAH Conference.

CAHs the ACA and BeyondJohn T. Supplitt, Senior DirectorAHA Section for Small or Rural

Hospitals

10th Mid-South CAH Conference

1.Political Environment2.Funding the Federal

Government3.Regulatory policy

a.Routine and other rulemaking

b.ACA implementation3.Rural hospital advocacy

agenda

Agenda

Political Environment

December 31, 2012

“We Were Warned”• Moratorium on

Medicare physician cuts expire

• Payroll tax cut expires• Bush tax cuts expire• Sequester scheduled to

kick-in• Debt ceiling will need

to be extended, AGAIN

Piling On Rural• CBO “options” document - $62B

in savings if eliminate CAH, MDH, SCH

• Biden Group/Rep. Cantor - $14B to reform rural hospitals

• House Ways and Means “options” document – references CBO options

• Pres. Obama proposal to “supercommittee”– Reduce CAHs payment of 101%

of costs to 100% – Prohibit CAH designation for

those CAHs that are less then 10 miles from nearest hospital

• MedPAC principles

Old Vulnerabilities

HR 3630Middle Class Tax Relief &Job Creation Act of 2011

New Vulnerabilities• Reductions in payments to hospitals for assistance

to low-income Medicare beneficiaries (bad debt);• Reductions in payments for evaluation and

management services provided in hospital outpatient departments;

• Extending the current cap on exceptions process to therapy services provided in hospital outpatient departments;

• Weakening prohibition on the establishment of new physician-owned specialty hospitals, and relaxing the restrictions for growth; and

• Providing the CMS with new authority to make additional across-the-board cuts to Medicare inpatient hospital rates through the use of retrospective coding adjustments

2012 Congressional Calendar

You are here.

Funding the Federal

Government

House FY 2013 Budget

• Convert Medicaid into a block grant program – reducing federal spending $5 B in FY 2013 and $810 B over 10 years

• Rescind individual subsidies and Medicaid expansions in the ACA, but keep $500 billion in Medicare cuts

• Increase the Medicare retirement age by two months per year until it reaches 67

• Combine Medicare Parts A and B• Increase means testing for Parts B and D.

• Eliminate for one year the 2% defense and domestic discretionary spending cuts sequestered under the Budget Control Act

• Retain 2% Medicare cuts – sequesters $6 B over 10 years

• Transition Medicare to a premium support program in 2023

Reductions to Medicare payments: • Bad debt. • Indirect Medical Education

(IME). • Rural providers. • Post-acute care. • Independent Payment Advisory

Board Reductions to Medicaid payments: • Medicaid provider taxes. • Medicaid payment formulas. • Medicaid DSH payments.

President’s 2013 Budget

SELECT RURAL PROGRAMS($ in millions)

FY 2011 FUNDING

FY 2012 FUNDING

FY 2013 PRES.

Health Centers 2,481 2,672 2,967

Nat. Health Service Corps 315 295 300

340B Office of Pharm. 4 4 10

Rural Health Policy Develop. 10 10 10

Rural Health Outreach Grants 56 56 56

Rural & Community AEDs .24 1 0

Rural Hospital FLEX Grants 41 41 26

State Offices of Rural Health 10 10 10

Telehealth 12 12 12

President’s 2013 BudgetAnnual Appropriations

Continuing Resolution

Regulatory Policy

On Our (CAH) Radar• Medicare Conditions of

Participation• OPPS Proposed Rule

and Direct Supervision• ICD-10• HUD 242 Financing• Drug Shortage• MedPAC• MBQUIP• ACA Implementation

Regulatory Policy Update

Medicare CoPs

Final Rule• Governance and

Medical Staff• CAH Services• Elimination of

Paperwork• Outpatient Services

Direct Supervision

Advisory Panel on Hospital Outpatient Payment

• Renames the APC panel

• Expands membership to CAHs and SR hospital

• Amends the charter to address supervisionExtends through CY 2012 its enforcement

moratorium on the direct supervision policy for outpatient therapeutic services provided in CAHs and in small and rural hospitals with 100 or fewer beds.

• February 27-28: Supervision Panel Met– Recommended 27 HCPCS codes be

downgraded to general supervision• Next meeting of the HOP Panel: August 27-29• Must identify HCPCS codes that clinical staff

can justify revising from direct to general– Formal presentations, limited to 5 minutes per

individual or organization, – Oral comments, which will be limited to 1 minute

for each individual and a total of 3 minutes per organization

Direct Supervision

ICD-10

In the proposed rule, CMS indicates that it considered other options before proposing a one-year delay. They included: 1. retaining the October 1, 2013 date; 2. maintaining the date for ICD-10-PCS only, but delaying ICD-10-CM for diagnosis codes only; 3. forgoing ICD-10 altogether and wait for ICD-11; and 4. mandating a uniform delay for ICD-10-CM and ICD-10-PCS.

Department of Housing and Urban Development’s (HUD) proposed increase to its multifamily and health care mortgage insurance premiums (MIP) as announced in the referenced Federal Register notice.

HUD Section 242

Drug Shortage Survey Results

• 820 hospitals responded• 99% reported a shortage• Nearly half reported >21 drugs

in shortage.• 82% of hospitals report that

they have delayed treatment • 7 in 10 hospitals reported

treating patients with less effective drugs

• 77% rarely or never receive advance notification of shortage

Shortage DynamicsCommon Factors Behind Shortages• Product quality/manufacturing problems• Not enough manufacturing capacity• Discontinuation of products• Problems with or shortages of raw materials or

components• Increase in demand due to another shortage• Loss of manufacturing site• Industry consolidation (fewer firms making these

products)• Generally not economically attractive

ECONOMIC ANALYSIS OF THE CAUSES OF DRUG SHORTAGES – HHS, ASPE October 2011 The current class-wide shortages in the industry appears to be a consequence of a substantial expansion in the scope and volume of products produced by the industry that has occurred over a short period of time, without a corresponding expansion in manufacturing capacity.

MedPAC Rural Report

Principles for Rural Access• Fewer physicians, but patient satisfaction

equivalent• Consumption of services is equal – ergo

access is equal• Quality is similar, but mortality and process

measures are worse• Payment is adequate for Home Health, SNF,

Hospice, inpatient rehab, and hospitals

MedPAC Rural Report

Principles for Rural Quality• Quality of care in rural and urban areas

should be equal for non-emergency services rural providers choose to deliver

• Quality of emergency care may differ between rural and urban areas due to limitations of small rural hospitals and the necessity to treat the patient at the rural facility

• All providers should be evaluated on all the services they provide and the data should be publicly reported

MedPAC Rural Report

Principles for Rural Payment Adjustments• Target providers that are the sole source

of care• Payments should be empirically justified• Low-volume adjustments should be tied to

total volume• Don’t duplicate adjustments• Maintain incentives for cost control

Benefits of Participating in MBQIP • Engage in quality improvement initiatives• Improves patient care across a broad

population• Improves hospital services, administration

and operations• Allows for clear benchmarking and the

identification of best practice CAHs• Receive technical assistance regarding

cutting edge quality improvement tools and models

• Prepare CAHs for the future where CAHs will likely have to report measures

• Fulfills the Quality Improvement portion of Flex Grant

MBQIP and Partnership for Patients

Requirements for Tax-Exempt HospitalsThe ACA added section 501(r) that includes additional requirements that a hospital ORGANIZATION must meet to qualify for tax exemption under section 501(c)(3) in tax years beginning after March 23, 2010.

1. Financial Assistance Policy/Emergency Medical Care

2. Billing and Collection3. Limitation on Charges4. Community Health Needs Assessment

ACA Implementation

Community Health Needs Assessment• Definition of a Hospital Organization• Hospital Organizations with Multiple Hospitals• Documentation of a CHNA• How and When a CHNA is Conducted• Community Served by a Hospital• Persons Representing the Broad Interests of the Community• Making a CHNA Widely Available to the Public• CHNA Implementation Strategy• How and When a CHNA Strategy is Adopted• $50K Excise Tax on Failure to Meet Requirements• Reporting Requirements

ACA Implementation

Medicare Shared Savings Program• ACOs will continued to be paid based on FFS• They can receive a “shared savings” payment if:

actual spending is below a benchmark• CMS offers two options:

• Advance Payment Model• Pioneer ACOs

“One-Sided” Model• Years 1 & 2: shared savings only• Year 3: shared savings & losses• Minimum Savings Rate: 2.0%-

3.9%• Shared savings: 50:50 (bonus

cap of 7.5%; loss cap of 5%)• Able to share the first dollar

savings

“Two-Sided” Model• Years 1-3: shared savings or

losses• Minimum Savings Rate: 2.0%• Shared savings: 60:40 (bonus

cap 10%; loss cap of 5% Y1, 7.5% Y2, 10% Y3)

• Able to share first dollar savings

ACA Implementation

2 VBP Demonstrations for Certain Excluded Hospitals

• Critical Access Hospitals • Hospitals with a small number of cases or

quality measures– Test innovative methods of measuring and rewarding

quality and efficient health care– Begin by March 23, 2012; 3-year period– Budget neutral– Number of sites to be selected by the Secretary– No more than 18 months after demo, report to

Congress on recommendations to establish permanent program

ACA Implementation

Rural Hospital Advocacy Agenda

• Extend Expiring Provisions• R-HoPE• Provider Taxes• Direct Supervision for

Outpatient Services• The 340B Drug Discount

Pricing• Repealing the IPAB• Reauthorizing Conrad-30• Drug Shortages• The Rural Hospital Access

Act

2012 Rural Advocacy Agenda

Medicare ExtendersKey Hospital Provisions

R-HoPE

• “Sense of the Senate/Congress”• Extend the outpatient hold harmless through 2013• Increase the lo-vol adjustment to 2000 discharges in 2012• Extend cost-based reimbursement for rural outpatient labs• Eliminate isolation test for CAH-based ambulance services• Introduce capital infrastructure revolving loan program• Extend the billing for the technical component of

physician pathology services• Reimburse CAHs for CRNA on-call services

Rural Hospital Protection Act Sam Graves (R-MO) an Ron Kind

(D-WI)

The Rural Hospital Protection Act (H.R. 1398) would ensure that the full cost of certain provider taxes are considered allowable costs for purposes of Medicare reimbursements to critical access hospitals (CAHs).

Provider Taxes

Direct Supervision

Protecting Access to Rural Therapy Services ActSen. Jerry Moran (R-KS)

• adopts a default standard of general supervision for outpatient therapeutic services

• establishes a advisory panel of clinicians to set up an exceptions process for those services that would require higher level of supervision

• establishes a special rule for CAHs based upon Medicare CoPs• revises the definition of “direct supervision” to allow for

telemedicine, telephone or other technology• puts in place a hold harmless from civil or criminal action back

to 2001

340B Program Improvement Act

Reps. McMorris Rodgers (R-WA), Rush (D-IL) and Emerson (R-MO)

Repealing the IPAB

Reauthorizing Conrad 30

The Rural Hospital Access Act

The Rural Hospital Access Act (S.2620) (H.R. 5943)

Sens. Schumer(D-NY) and Grassley(R-IA)

Reps. Reed (R-NY) and Welch (D-VT)

Would extend the MDH program and the low-volume adjustment for one year to September 10, 2013.

943

SCOTUS

We Care…We Vote

Objectives• Impact congressional elections• Educate public and candidates on key issues

in preparation for deficit reduction debate– Why are health costs rising?– What are we doing about it?– What more can be done?

• Good citizenship…and highlighting hospitals as voters (big employers)

™

Join Partnership for Action The Partnership for Action brings members of the hospital and health system family together, with their state hospital association and the AHA, to educate elected officials in Congress.

Join us to help make it clear that the decisions legislators make in Washington, DC, have important implications back home.

Questions and Discussion

John SupplittSenior Director

AHA Section for Small or Rural Hospitals

Chicago, IL312-422-3306

[email protected]

Contact Information