STATE LEGISLATIVE ISSUES FEDERAL BUDGET ISSUES WASHINGTON POLITICS

1. STATE LEGISLATIVE ISSUES FEDERAL BUDGET ISSUES WASHINGTON POLITICS HFMA West Virginia Chapter Joe Letnaunchyn President & CEO West Virginia Hospital Association October 10, 2013

2. CURRENT HEALTHCARE ISSUES • 2013 WV State Legislative Session • Medicaid payment issues • Medicare Payment Issues • What’s next in Washington, DC ??

3. 2013 WV Legislative Session

4. 2013 WV Legislative Session • 60-day session - delayed one month due to elections • More than 2,000 bills introduced only 190 passed • Focused on education transformation and prison overcrowding. • Last year’s primary focus was on substance abuse

5. 2013 WV Legislative Session More healthcare bills that passed: • SB 21 – Healthcare transparency act: “AKA” name tags – 2015 rules but vetoed by Governor for technical flaws • SB 355 – Final payment of employee wages after termination – 3 business days • HB 2383 – maternity coverage to dependents under PEIA • SB 335 – special Certificate of Need exemption for Weirton Medical Center • HCR 117 – Study of the CON program – joint Health Committee meeting held in July

6. HB 2108 – Mandatory Use of Seatbelts

7. 2013 WV Legislative Session Healthcare bills that did not pass: • $$ cap on payments to providers by external parties for copies of patient medicalrecords: • Originated in House Judiciary Committee, but…. • Assigned to House Health Committee – died in Health Committee • Will be an ongoing problem in 2014 in House Judiciary • Ongoing conflict with federal vs. state law provisions • HB 2797 – eliminating the Certificate of Need program

8. 2013 WV Legislative Session Other healthcare bills that did not pass: • HB 2261 - inmate medical coverage by Medicaid versus State prison system • SB 593 – tobacco tax increase • HB 2383 – reorganization of DHHR

9. After the 2013 WV Legislative Session • Appointment of new DHHR Cabinet Secretary • New Speaker of the House • New House Committee assignments: • House Judiciary Committee Chair • House Health Committee Vice-Chair • Senator Evan Jenkins switches parties in late July: announces Run for the 3rd Congressional District

10. Medicaid Payment Issues

11. Medicaid Payment Issues • Expansion of coverage under the ACA • Announcement by Governor Tomblin on May 2nd – federal state partnership • Potential for 90,000 new covered lives up to 133% of the FPL • Goal of Governor is to is to expand managed care – shift cost risk • Causes issues with hospital UPL program • Enrollment begins 10/1/2013 • Coverage effective 1/1/2014 • Federal funding scheduled at 100% percent FMAP rate for the first 3 years – then phases down to 90% federal by 2020.

12. Medicaid Payment Issues • Managed care expansion for the SSI population being evaluated by DHHR – about 55,000 lives • Currently covered under fee-for-service program Implementation not likely to occur before the 2nd quarter of 2014 at the earliest, but likely will be later • Will be phased-in starting with the Northern panhandle and then move to the southern counties • Requires federal approval by the WVMCAC and CMS • Not likely to impact the Medicaid Hospital UPL program for 2013 thru 2014. • Discussions ongoing with Secretary Bowling, Medicaid and Governor’s staff

13. Medicaid Payment Issues • Hospital UPL program (7/1/13 – 6/30/14): payments to continue without interruption. Tax rate reduced from 0.88% to 0.45%. • Program benefits 27 acute care facilities • Statewide UPL hospital “net benefit” approx. $57 million in FY 2014 after tax payments. • Actual “net benefit” depends on the level of revenue and amount of tax actually paid by each hospital. • IGT program also being implemented for 2014.

14. Medicaid Managed Care Penetration

15. Federal Payment Issues

16. Federal Payment Issues • Continued uncertainty around the federal budget and provider payments - Medicare and Medicaid. • “Fiscal Cliff” legislation passed on January 1, 2014 reduced Medicare hospital payments over 3 years for the physician-fix: $85 million statewide hit on hospitals 2013 thru 2015. • Next “Fiscal Cliff” for the SGR will occur in December 2013 when the current one-year fix expires – will hospitals have to fund it again? • 2% Sequestration payment cuts that began in May 2013 are likely to continue. • Numerous other payment cut provisions being considered – have the potential to further reduce provider payments.

17. Quality Issues Affecting Payments • Medicare readmissions – implemented 10/1/2012 to eliminate payments for readmissions within 30 days of earlier discharge. • Includes, pneumonia, heart failure and heart attack. • Significant reduction in the number of hospitals nationally with readmission $$$ penalties. • Value based purchasing changes – hospital scores continue to adversely impact payments for some hospitals.

18. Medicare Readmissions Penalties at Work • Modern Healthcare – August 2013 • 40% of hospitals reduced their penalties between 2012 and 2013 • 27% stayed the same– no penalties in either year. • Hospitals with the maximum (2%) penalty reduced from 274 hospitals in 2013 to 19 hospitals in 2013.

19. Another Potential Risk • Sequester for defense (and other discretionary programs) are STOPPED, but • Medicare sequester for provider and payments continue • Replacement savings from entitlement programs……ON TOP OF SEQUESTER

20. Continuing Resolution • Expired on March 27, 2013 • House proposal – continue at current funding levels with flexibility for Defense spending • Senate proposal – continue current funding levels and create four different departments • Expected Resolution – deadline October 1, 2013.

21. House Budget “Resolution” • Completed in mid-March – similar to last year’s proposal • ACA • Repeals coverage (again), but maintains provider cuts • Medicare • $127 billion in cuts • Includes numerous provisions • Medicaid • $756 billion in cuts • Block grants to states • Outlook: Unlikely

22. House Payment Reductions: Hospitals Same options as before • Prospective coding offset ($8 billion) • E&M coding/HOPD ($7 billion)…and other site neutral payment options • Hospital bad-debt reductions ($20 billion) • Post acute care update reductions ($42 billion) • CAH: payment reductions and qualification criteria ($2 billion) • GME reductions ($10 billion) • IPAB expansion • Medicaid: cap provider tax/assessments ($22 billion)

23. Senate Budget “Resolution” • First Resolution in 4 years • Passed only with Democrat support • Half revenue / half spending • Maintains provider cuts • Numerous healthcare payment cuts • $275 billion • Across the board cuts • Outlook for proposal • To conference committee • Budget is widely different than House • Unlikely to be reconciled

24. Senate Budget Resolution Passed Senate 50-49 on Saturday morning, March 23, at 5:00 a.m.

25. Next Steps on Budget Resolutions • Will there be a conference (committee) between the House and Senate? • Not yet!!

26. April 2013 Gallop Poll

27. Obama Administration Scandals

28. Summer Vacations

35. Syria – Another Congressional Distraction

36. Washington, DC Navy Base Shooting September 16th

42. Upcoming Fiscal Cliffs • Appropriations: October 1st • Debt limit: Mid-late October • Physician payment fix: December 31st

47. Upcoming Fiscal Cliffs • Appropriations: October 1st • Debt limit: Mid-late October • Physician payment fix: December 31st