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Bruce R. Rieker, J.D. Vice President, Advocacy April 24, 2014

Legislative Briefing. Bruce R. Rieker, J.D. Vice President, Advocacy April 24, 2014. Nebraska’s Hospitals. Below the surface 90 hospitals 41,000 employees 11,000 patients daily $4.9 billion in net patient revenues $1.1 billion in community benefits and bad debt 1.8 million Nebraskans

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Bruce R. Rieker, J.D. Vice President, Advocacy April 24, 2014

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  1. Legislative Briefing Bruce R. Rieker, J.D. Vice President, Advocacy April 24, 2014

  2. Nebraska’s Hospitals • Below the surface • 90 hospitals • 41,000 employees • 11,000 patients daily • $4.9 billion in net patient revenues • $1.1 billion in community benefits and bad debt • 1.8 million Nebraskans • 220,000 uninsured 3

  3. Nebraska’s Hospitals • 2012 Community Benefits $1.1 B • Charity care $109 M • Unpaid cost of Medicare $341 M • Unpaid cost of Medicaid $167 M • Bad debt $247 M • Subsidized care, cash, in-kind $204 M

  4. Legislation • State • Medicaid expansion • Telemedicine • Prescription drug monitoring • Integrated practice agreements for NPs • Medical liability • Taxes 5

  5. Medicaid Expansion • LB 887 – Wellness in Nebraska (WIN) Act • Failed to overcome filibuster • Economy depends on system that works for all • Individuals and families earning lowest incomes cannot get help in Marketplace • Only opportunity for those 19-64 who earn less than 133% of FPL • $14,856/individual and $30,675/family of four 6

  6. Nebraskans by FPL Source: Kaiser Family Foundation. Note: Nebraska Total Population 1,809,700

  7. Non-elderly Uninsured

  8. Wellness in Nebraska • Fiscal sense • $2.3 billion of federal funds to improve health of Nebraskans through 2020 • $360 million per year • $990,000 per day • State’s costs for next six years is $16 million • Economic activity of $2.3 billion would more than offset costs • General Fund revenue estimated at $107 million 9

  9. Wellness in Nebraska • Direct spending offsets • Disability programs -- $53 M • Prescription drugs for low-income individuals who are HIV positive or have AIDS -- $5.25 M • Behavioral health services -- $14 M • Comprehensive Health Insurance Program (CHIP) --$46 M • Inmates of correctional facilities -- $4 M 10

  10. Wellness in Nebraska • Utilizes private insurance marketplace • 100-133% of FPL • $11,170 to $14,856 for individuals • $23,050 to $30,576 for families of four • Private insurance through Marketplace or employer sponsored coverage • Private coverage could result in broader provider network 11

  11. Wellness in Nebraska • Personal responsibility • Requires contribution of two percent of income • May be waived if engaged in wellness activities such as yearly exams, screenings and immunizations • Helps individuals engage in own health care decisions that can lead to better health care outcomes • Copays for inappropriate use of ER 12

  12. Wellness in Nebraska • Innovation improves health and health system • Ensures connection to primary care physician and patient-centered medical home • Provides necessary preventive care, manages chronic conditions and reduces trips to ER and admissions • Utilizes new payment design strategies that reward use of efficient and effective treatment models that decrease costs and improve health 13

  13. Wellness in Nebraska • Bridges coverage gap • Currently no avenue to health insurance for those with incomes below 100% of FPL who are not eligible for existing Medicaid program • Not eligible for tax credits through the Marketplace • More than 54,000 uninsured adults would gain coverage 14

  14. Wellness in Nebraska • Saves lives • New England Journal of Medicine study comparing mortality rates for insured and uninsured • For every 176 adults covered by expanded Medicaid, one death per year would be prevented • At least 500 deaths per year in Nebraska would be prevented 15

  15. Wellness in Nebraska • Proponents • Maximizes 100% federal funding • Strengthens private marketplace • Supports employer provided insurance participants • Delivery reform and innovation • Legislative action required if federal funding drops below 90% 16

  16. Wellness in Nebraska • Opponents • Money better used elsewhere • Lack capacity • Feds cannot meet obligation • Other states experienced higher ER utilization • Removes incentives for change • Better to direct them to marketplace • Philosophically opposed 17

  17. Transparency • LB 76 - Health Care Transparency Act • Signed into law • Requires Director of Insurance to appoint Health Care Data Base Advisory Committee • Make recommendations regarding the creation and implementation of Health Care Data Base • Provide tool for objective analysis of costs and quality, promote transparency 18

  18. Medicaid Managed LTC • LB 854 – Prohibits issuance of a LTC Request For Proposal before Sept. 1, 2015 • Signed into law • Health care professionals affected by proposed Medicaid Managed Long Term Services and Supports (MLTSS) project concerned with unreasonable timeline • Proposed May 2014 deadline for RFP did not allow sufficient time to clearly understand plan and provide meaningful input 19

  19. Medical Liability • LB 893 – Changes amount recoverable under Nebraska Hospital-Medical Liability Act • Signed into law • Current limit is $1.75 million per occurrence • Increased amount to $2 million after Dec. 31, 2014 • Another bill, LB 862, proposed increase to $2.5 million • Judiciary Committee advanced LB 893 to General File with amendment to increase cap to $2.25 million • Amended into LB 961 20

  20. Psychology Interns • LB 901 – Psychology internships through Behavioral Health Education Center • Signed into law • Funding for five doctoral-level psychology internships in first year with increase to ten by third year • Placed in communities where presence will improve access in rural and underserved areas 21

  21. Appropriations • LB 905 – Mid-biennium budget adjustments • Law notwithstanding governor’s veto • $150,000 to Rural Health Provider Incentive Program • $1.5 million for six FQHCs • $212,000 for tuition for EMS responder training • $1.8 million for pediatric cancer research at UNMC • $10 million for behavioral health aid 22

  22. Nurse Practitioners • LB 916 – Eliminate integrated practice agreements for nurse practitioners • Signed into law • Requires all NPs to submit a transition-to-practice agreement (TPA) or evidence of 2,000 hours of practice completed under TPA or similar agreement • NPs intending to be supervising providers must submit evidence of 10,000 hours of practice completed under TPA or similar arrangement 23

  23. Prescription Monitoring • LB 1072 – Prescription Drug Monitoring • Signed into law • Requires Board of Pharmacy to establish program to monitor prescribing and dispensing of substances that demonstrate potential for abuse 24

  24. Telemedicine • LB 1078 – Amend Nebraska Telehealth Act • On General File • Clarifies that physician, PA, NP and pharmacist may establish patient relationship in person or with real-time, two-way electronic video conference • Reimbursement shall, at a minimum, be same rate as Medicaid rate for comparable in person consultation and shall not depend on distance between patient and practitioner 25

  25. Interim Studies • LR 422 – Develop recommendations towards transformation of state’s health care system • LR 559 – Examine issues surrounding Medicaid Reform Council • LR 565 – Evaluate benefits of adding antidepressant, antipsychotic, and anticonvulsant drugs to Medicaid PDL • LR 575 – Examine issues relative to in-home personal services 26

  26. Interim Studies • LR 576 – Evaluate status of EHRs and HIEs • LR 580 – Examine reforms of behavioral health   • LR 592 – Behavioral health workforce development • LR 596 – Evaluate “Physician Orders for Life-Sustaining Treatment” and “Out-of-Hospital DNR” protocols • LR 601 – Examine impacts of implementing, and failing to implement, Medicaid expansion 27

  27. Fiscal Landscape • National Debt • $16.7 trillion • Nearly $53,000 per citizen • Nation’s Budget • Income $2.17 T • Spending $3.82 T ($1.65 T)

  28. Political Landscape • Congress • Senate • 53 Democrats • 45 Republicans • 2 Independents • House of Representatives • 232 Republicans • 201 Democrats • 2 vacancies

  29. Affordable Care Act • Delivery System Changes • Health information technology requirements • Insurance exchanges • Value-based purchasing programs • Bundled payments • Accountable care organizations • Population health • Reimbursement reductions and penalties

  30. Congress and CMS • Medicare reductions • Nebraska hospitals • Negative 11.9 percent margin for Medicare • Incurring cuts over $1.3 B through 2022 • Additional cuts of $1.6 B over ten years under consideration • Profound impact on access and subsidized care

  31. Medicare Cuts • Existing legislative cuts • ACA: $856 million • Update factor cuts • Quality-based payment reforms (VBP, readmissions & HACs) • Medicare DSH cuts • Sequestration: $271 million • 2% reduction authorized by Budget Control Act

  32. Medicare Cuts • Existing legislative cuts • Bad debt: $2.8 million • Reduced to 65% • Middle Class Tax Relief and Job Creation Act • Coding adjustments: $65 million • Retrospective adjustments over four years • American Taxpayer Relief Act

  33. Medicare Cuts • Existing regulatory cuts • Coding adjustments $114 million • Inpatient: 1.9% in 2013 • Home health: 1.32% in 2013

  34. Medicare Cuts • Under consideration • Outpatient/physician E/M services • $38 million (H.R. 3630) • Outpatient/physician outpatient services • 66 Ambulatory Payment Classifications (APCs) • $81 million (MedPAC) • Outpatient/ASC outpatient services • 12 APCs • $46 million (MedPAC)

  35. Medicare Cuts • Under consideration • Indirect medical education: $193 million • Cuts payments by more than 50% by reducing reimbursement from 5.47% to 2.2% (Simpson-Bowles) • Direct medical education: $36 million • Limits reimbursement to 120% of average salary paid to residents in 2010, updated annually (Simpson-Bowles)

  36. Medicare Cuts • Under consideration • Bad debt payments: $17 million • Eliminate bad debt payments (Simpson-Bowles) • SCH program: $284 million • Eliminate sole community hospital program (CBO) • CAH payments: $918 million • Eliminate permanent exemption from distance requirement for hospitals with “necessary provider” designation (OIG)

  37. Federal Legislation • H.R. 3698: Two Midnight Rule Delay Act • Delays enforcement of two-midnight rule until October 1, 2014 • S. 183 / H.R. 2053: Hospital Payment Fairness Act • Addresses wage index manipulation in Massachusetts • S. 1012 / H.R. 1250: Medicare Audit Improvement Act • Improves Medicare RAC program

  38. Federal Legislation • S. 1143 / H.R. 2801: Protecting Access to Rural Therapy Services Act • Improves physician supervision requirements • Adopts default standard of general supervision • Defines direct supervision for CAHs consistent with CAH conditions of participation (30 minutes) • Holds hospitals harmless retroactively back to 2001 • H.R. 3769: Delays enforcement of physician supervision requirements for CAHs • Representative Smith

  39. Current Trends • Physicians • Accepting fewer publicly insured patients • Fewer than 75% accept new patients with Medicare and Medicaid • 8% aged 18-64 were told within last 12 months that physician was no longer accepting their coverage • 6% were told physician would not accept them as new patients

  40. Hospital Outlook • Increasingly negative view for nonprofits • Nonprofit hospitals continue to see declines in volumes, revenue growth. – Moody’s Investor Service • 2012 may have been “high water mark” – Fitch • Moody’s predicts slow revenue growth, confirms negative outlook – Advisory Board Daily Briefing • In states that say no to Medicaid, hospitals worry about “death by 1,000 cuts” – Advisory Board

  41. Hospital Outlook • Nonprofits at tipping point • Ever-decreasing ability to offset charges and negative trends • Weakening revenues • Smaller annual payment increases • Weaker commercial increases • Flat-to-declining inpatient volumes Source: HFMA

  42. Hospital Outlook • Strong, vulnerable, fragile and scared • Declining volumes and reimbursements • No clear business model • Inconsistent data being published • Safety through mergers and alliances

  43. Continuing Concerns • Access • Physicians limiting government business • Narrow networks • Critical but unprofitable • High quality • Recruiting best physicians and nurses • Less capital for replacement and new technology • Workforce • Age, health and recruitment

  44. Future of Medicaid • Broad premises • Delivery will be based on some form of population health management • Hospitals have opportunity to lead system redesign • Primary drivers • Transition of state agencies from welfare providers to active purchasers of services • Convergence between Medicaid and commercial insurance

  45. Future of Medicaid • Needs and opportunities • Encourage state policies that allow formation and success of provider-led models • Enhance success of expansion efforts with innovative approaches that integrate Medicaid with commercial insurance markets • Support efforts to develop innovative, payer solutions for addressing needs of medically frail, dually eligible, and complex chronic beneficiaries

  46. Future of Medicaid • Hospital implications • Purchasing strategies will require more risk through performance-based contracting • Convergence of Medicaid and employer-sponsored insurance will lead to a seamless coverage continuum • Prospect of direct contracting between Medicaid and provider systems may create opportunities for delivery of dedicated services to beneficiaries • Not all hospitals are capable of developing or participating

  47. Drivers of Change • Macroeconomics • Recession left people without jobs and insurance • Federal and state budget issues • Pressures from payers • Difficult to raise financing for capital projects

  48. Drivers of Change • Demands from aging population • Physician recruitment • More advanced services • More ER visits from uninsured • Affordable Care Act • More covered lives • More Medicaid and Medicare payers • All providers affected by marketplace

  49. Reform Based Competency • Success factors in reform environment • Viable infrastructure for employing physicians • Recruitment and retention, including specialists • Leverage primary care network • Align physician capacity with market demand • Competitive facilities and equipment • Low cost • Initiatives for care management, IT and clinical integration

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