How to Survive, Even Thrive, in Changing Times

How to Survive, Even Thrive, in Changing Times May 20, 2010 Coopersmith Health Law Group

Agenda • What Health Care Reform will mean to you • What payers are doing now - and what they may be doing in the future • Surviving and Thriving • It’s all about relationships

Presenters • Jeff Coopersmith, former OIC Chief Counsel • Kristin Peterson, former WSHA Director of Legal and Clinical Policy • Dwight Johnson, former Regence Director of Provider Contracting

Moral of the Story In health care, Always forces beyond your control With Great Recession and now massive new health care law, easy to think less and less is under your control, especially at small rural hospitals

Moral of the Story But many things remain in your control Key to ensuring survival and improving margins are within the four walls of your hospital

Moral of the Story Despite torrent of new acronyms that will come with the new law… And the innovation that will come… Perhaps from the new law, but certainly from the private sector

Moral of the Story Whether you survive and thrive will still depend on old-fashioned ability to forge relationships, as well your ability to adapt to changing times

Moral of the Story Only two sure things in health care: • Change 2. Resistance to Change

Moral of the Story AWPHD, WSHA provide superb advocacy in Olympia and D.C. As CEO, you must be the superb advocate for your hospital with payers and regulators

Health Care Reform Payers nationwide will be absorbing an estimated 32 million newly insured individuals when the law is fully implemented • Expect all payers to grow enrollment, but not equally.

Health Care Reform • How will this affect your hospital • Without health care reform, OIC estimated 1 million uninsured in WA State by 2011 • 1 in 4 working age adults in rural WA • Cost of uncompensated care: $1 billion

Health Care Reform • Insurance reforms • Individual Mandate • State-based health insurance exchanges • Private insurers offer coverage to groups and individuals • Subsidies for premiums • Medicaid • Expands Medicaid eligibility to low-income individuals: under 65 with incomes up to 133% of the federal poverty level • National impact: 16 million more individuals to participate in Medicaid and SCHIP • WA impact: potential of 500,000 new enrollees

Health Care Reform • Rural Payment Provisions • MedPAC report on payment adequacy for rural providers • Allows CAHs to participate in the 340B program • Federal program that requires drug companies participating in Medicaid to give certain entities up-front discounts

Health Care Reform • Payment Reform • Reduce Medicare spending • Independent Payment Advisory Board • Enhanced Fraud and Abuse Efforts • Medicare Advantage • Plan payments/premiums gradually reduced to bring payments closer to average costs of Medicare beneficiaries, by county

Health Care Reform Care and Payment Reform • HHS will provide grants for medical home models • Bundled payments – set payment for hospital, physician services • Value-based purchasing • Pay for reporting expanded to Medicare providers • Insurance companies must report quality information to HHS and enrollees • Accountable Care Organizations (ACOs)

Health Care Reform • Barriers to Alternative Models of Care: • Initial investment of resources • Physician cultural barriers that reward professional autonomy, individual responsibility • Current decision-making process between hospital, physicians and patients • Payer contracts: reward this model of care? • Potential legal obstacles: • Antitrust • Corporate practice of medicine • HIPAA

Health Care Reform • Rural access to providers • Increased funding for the National Health Service Corps • Scholarships, loan repayment programs to recruit medical students • Focus on underserved, uninsured, rural, and minority populations • State grant program for providers in medically underserved areas • Establishes public health loan repayment program • Grants to increase, diversify workforce

Health Care Reform • Physician Payment Reform • 10% bonus for certain primary care physicians in Medicare • Medicaid must increase payments to primary care physicians to 100% of Medicare payment rates for 2013 and 2014

Health Care Reform Summary • Potential Impact on your hospital • More insured individuals • Alternative models of care may be rewarded • Continued focus on quality • More focus on fraud, abuse

Payer Landscape • Medicare • Medicaid • L & I • MSC/Premera • Regence/Asuris/BlueShield • Group Health • First Choice • Aetna • Cigna • United Healthcare Public Payers Local Payers National Payers

Payer Landscape • In 2009, commercial payers in WA lost 157,000 enrollees: these patients became uninsured or went to a public payer • As a result, commercial payers cut their administrative and provider budgets

Market Trends • Focus on pay-for-performance: “adding value” • More contract pages, more “legalese” • Increased Pre and Post-Payment Audits

Surviving and Thriving • Reimbursement • Public Payers • Commercial Payers

Surviving and Thriving • Chargemaster • Annual updates to your hospital charges • Five-year overhaul

Surviving and Thriving • Charge for every service, every time • Charge with the right code • Charge according to the contract; one size does not fit all

Surviving and Thriving • Denials, Underpayments, Slow Payments • Low A/R ≠ Good A/R : Write-offs • High dollar, high volume

Surviving and Thriving • The better you are at billing, the better you are at negotiating • It is always apparent to payers which hospital knows what it is doing, and which one doesn’t

Surviving and Thriving • Ask these questions of your hospital: How do we add value • to patients? • to the community? • to the purchasers? • How is the clientele we serve special? • How are we different? • Lines of Business (SNF, HH, OP Rehab) • Types of Service (Deliveries, Vascular Surgery) • Administrative Efficiencies (LEAN, EMR/EHR)

Surviving and Thriving • Identify Goals • Financial • Resolve issues with the current agreement. • Prepare for negotiations • Know your numbers • Know your current agreement language and rates

Surviving and Thriving • Know key issues in advance • Billing office: timely claims payment, appeals process, ability to solve issues quickly • Admitting: Easy to obtain an authorization, determine eligibility • Know alternative scenarios in advance

Surviving and Thriving • Payers’ Mindset: • Who is the customer? • Why? • Payers are in the network business.

Surviving and Thriving • Challenge contract terms that cost you money • Know what to ask for, know how your hospital adds value to the payer. • You would be surprised how much in the contract is open for discussion

Summary • Change is Constant in Health Care • Must Adjust, but Old-Fashioned Relationships will Always be Essential • For CEOs: Surviving and Thriving must take place within your Hospital, as well as in partnership with AWPHD, WSHA

Questions? Please contact Coopersmith Health Law Group: (206) 343-1000 Jeff Coopersmith Jeff@coopersmithlaw.com Dwight Johnson Dwight@coopersmithlaw.com Kristin Peterson Kristin@coopersmithlaw.com www.coopersmithlaw.com

How to Survive, Even Thrive, in Changing Times