Determining Health Care’s Future in Texas

July 11, 2013 | Dallas, Texas

Bobby Hillert – Executive DirectorTexas Orthopaedic Association

Bhillert@toa.org | 214.728.7672 cwww.toa.org

Scope of PracticeCommercial Insurance1.Silent PPO regulation (HB 620)2.Decreasing OON3.Pricing Transparency4.Exchange – Tight NetworkWorkers’ Comp• Closed formulary• Outpatient functional therapy reportingMedicaid dual eligible Co-pay

Medicare Administrative Contractor (Novitas)IPABSGR fix• Site neutral payments• Fee-for-service – future?Increased Research Data• Direct Project (the New Health IT)• ICD-10Continuum of CarePhysician & Hospital VBPSite Neutral PaymentsMedicare ReadmissionsOpting out of MedicareRon Wyden Senate Finance

State Congress/Medicare IndustryKey Issues Facing a Typical Orthopaedic Practice

Benchmarking Effectively Across Practices (Texas Surgical Quality Collaborative)Health IT/EHRs/Direct ProjectConsolidationIncreasing CostsThird Party Administrators/Employers Demanding More

Overview:Sample of Industry Issues (July 2013)

Industry (Texas)•Freestanding cath labs•Freestanding ERs/urgent care•Consolidation•IVF ASCs

Medicare/Congressional Issues•SGR•Employer mandate•Hospital Outpatient/Physician Fee Medicare 2014 proposals (July 8)•Kidney care ACO applications (August 10)•Psych proposed payment Medicare 2014 (late July)•Debt ceiling deadline (fall 2013)•ACA open enrollment (October 1)•Medicare proposal to use PET imaging for Alzheimer’s Disease (July 3)•ESRD bundle rebase = 12% Medicare decrease•Home health Medicare 2014 proposal = 1.5% decrease (June 27)•Obesity drug reimbursement legislation (Medicare)•Post-Acute Medicare payment reform not happening (home health, nursing homes, IRFs, LTCHs

Health Care Stakeholders in AustinProviders Non-providers Lawmaker

PhysiciansSenator Charles SchwertnerOrthopaedic Surgeon

Senator Bob DeuellFamily Practice Physician

Senator Donna CampbellER Physician/Ophthalmologist

Rep. John ZerwasAnesthesiologist

Rep. Greg BonnenNeurosurgeon

Rep. JD SheffieldFamily Practice Physician

Tarrant County:A Microcosm For the State’s Political Future?

2012 Presidential

Tarrant County:Romney: 57.1%Obama: 41.4%

2008 Presidential

Tarrant County:McCain: 55.4%Obama: 43.7%

2012 Presidential

State of Texas:Romney: 57.2%Obama: 41.4%

2008 Presidential

State of Texas:McCain: 55.4%Obama: 43.7%

•Tarrant only one of six large counties in Texas to support Romney.•City of Fort Worth one of only four “major cities” to support Romney (Phoenix, Oklahoma City, & Salt Lake City).

Source: Texas Tribune

U.S. Congress:2014 Elections

U.S. House

•Likely to remain in Republican control.•Heavy Texas influence within Rules, Energy & Commerce, and Ways & Means Committees.

U.S. Senate

•Biggest impact on health care will be Max Baucus’ retirement (D-Montana).•Ron Wyden (D-Oregon) to take Senator Baucus’ position.

•National health expenditures rose 3.9% in 2011, same rate as in 2009 and 2010.•Slowest growth in the 52 years that the government tracked this spending.

Slowing Health Care Costs?

Health Care Consolidation

Industry Issues:Rising Expenses

“Many private orthopaedic practices may find significant challenges to maintaining financial solvency in the future, according to research presented during the 2013 AAOS Annual Meeting by Alberto D. Cuellar, MD. Dr. Cuellar’s Scientific Poster, ‘The Economic Conundrum of Private Practice Orthopaedic Surgery,’ was selected as the overall best poster by the Central Program Committee.”

American Academy of Orthopaedic Surgeons

“Physician Employment” in Texas

2009 2011 2013 2015

Legislation signed into law allows Parkland (Dallas) to employ physicians. Rural hospital legislation is vetoed by the governor.

HB 1700 is signed into law by the governor and allows rural hospital physician employment. This includes counties with a population of 50,000 or less; sole community hospitals; and critical access hospitals.

Other new laws allow employment at county hospitals in Harris, El Paso, and Bexar counties. Texas Scottish Rite wins approval, too.

Physician employment should be a quiet issue in 2013.

Could all Texas hospitals ask for employment in 2015?

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SB 1661 is signed into law and sets up additional requirements for 5.01(a)s to protect physicians’ clinical autonomy.

Consolidation:Which Specialties Are Entities Acquiring

Source: The Health Care Services Acquisition Report 2007-2012. Irving Levin Assoc, Inc. Analysis: Adam Lynch, Principle Valuation

•Orthopaedics – 3%•Hospitalist/Emergency – 20%•Family/Internal – 14%•Multi-specialty – 9%•Neonatology/Pediatrics – 9%•Cardiology – 14%•Other – 31%

The Future of Fee-for-service:Two ApproachesMedPAC:Switch to global payments

Providers & Industry:Retain a balance

Entities Factoring into a New Payment Model:

• Physicians and other providers• Facilities• Payors• Industry (medical devices)• Home health• New payment models• Site neutral payments• Tighter networks (commercial side)

“What will be the balance between productivity payments and payments for these non-productivity

items or, better yet, these management of care services?”

- Michael McCaslin, CPASomerset CPAs, P.C.

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Fee-for-service: FFS’s Death or a Balanced Approach?

His Prediction:

The Short Term (Next Three Years)• 60 to 70 percent fee-for-service• 40 to 30 percent cost management

The Mid Term (Four to Seven Years)• 50 percent fee-for-service• 30 percent cost management• 20 percent quality/outcomes

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Positives for Global Payments Positives for FFS

• MedPAC embraces global payments (evidenced in their desire to keep physician ownership of ancillary services for coordinated care purpose).• Volume not as important (compared to FFS). • Does not focus on (and reward) value of care.

• More volume = more data for quality measures.• Resource-based relative value scale (RBRVS) – FFS always around, but RBRVS created in early 1990s when costs started rising. • Hospitals see value in FFS, as evidenced by RVUs for hospital-employed physicians (productivity measured).• Too many hospitals in certain markets over staffed?• Physicians have “ownership” in FFS.• Care not withheld for patients.

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SGR Replacement:Energy & Commerce Release (July 2013)

Traditional SGR

Incentive Payment Program (Measured Against Peers)

Two Payment Models

Threshold/Benchmark Update Incentive Payment Model•All fee schedule providers able to achieve the maximum update.•Stakeholders will determine benchmarks.•Highest composite score will receive the highest update.

Percentile Update Incentive Payment Model•Covers all fee schedule providers within a Peer Composite.•Payment update based on fee schedule provider’s percentile ranking (a comparison).•Top performers earn highest update.

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SGR Replacement:Quality Measures

Core Competency Categories (Specialty Societies to Determine)•Clinical care.•Safety.•Care coordination.•Patient and caregiver experience.•Populations health and prevention.

New Payment Models(Medicare & Industry)

ACOsBundled PaymentsGain SharingMedical HomesIPABThird Party Administrators

Evolution of Payment Risk

Bundled payments

Gain-sharing

New commercial insurance products

Capitation

Shared Savings

“Balanced” FFS

Traditional FFS

Continuum of Care Map for a Hospital Visit

Pre-surgery/hospitalization Hospitalization Home

health/SNF Follow-up

SNF vs. home health

Role of social media/patient engagement

•Readmissions•Data collection

New Payment ModelsACOs, Bundled Payments, IPAB, Medical Homes

Accountable Care Organizations

Bundled Payments – The Affordable Care Act requires HHS to develop a national, voluntary bundled payment pilot program to provide incentives for providers to coordinate care. (Effective 2013.) A Medicare pilot project in the 1990s focused on on heart bypass surgery at seven hospitals.Medicare Physician Group Practice Demonstration Project (Medicare) It includes 10 physician groups (approximately 500 physicians and 22,000 beneficiaries). MedPAC cited increased quality. However, it could not quantify cost savings at this point in time.Acute Care Episode (ACE) – Gain Sharing Competitive bidding, shared savings. Over $1 million dollars in savings in San Antonio and sooner than expected payments.“Hillcrest (Tulsa) made a slight profit on the 415 patients — 295 cardiac and 120 orthopedic — that it treated through Sept. 30, 2009. Hillcrest officials say their orthopedic cases are up 2 percent this year and cardiac cases are up 27 percent, but they don’t know whether that’s because of the bonuses or the fact that the hospital just spent millions to improve its facilities.”Medical Home – The Independent Medicare Advisory Board will test medical home models.Center for Medicare & Medicaid Innovation Center/Independent Payment Advisory Board (IPAB) – Tests, evaluates, and expands different payment structures.

New Payment Models:Four Rounds of Medicare ACOs

July 9, 2012: 89 ACOs were announced.  

April 10, 2012: Medicare announced 27 new ACOs.

Thirty-two ACOs participating in the Medicare Pioneer Program were announced in December 2011.

Six Physician Group Practice Transition Demonstration organizations were announced in January 2011.

Another round announced January 2013.Start Date: July 1, 2012• San Antonio - BHS Accountable Care LLC• Texas (community health centers) - Essential Care Partners LLC• Houston - Memorial Hermann Accountable Care Organization• Texas (DFW) - Methodist Patient Covered ACO• Houston - Physicians ACO• Northern Texas/Southern Oklahoma - Texoma ACO Start Date: April 1, 2012• Texas (Houston-based) - Accountable Care Coalition of Texas, Inc.• Rio Grande Valley - RGV ACO Health Providers, LLC Note: this is an advance payment modelPioneer ACOs: Announced December 19, 2011• Austin (Central Texas) - Seton Health Alliance • Tarrant/Johnson/Parker Counties - North Texas ACO 21

January 2013:Round Four of Medicare ACOs

The largest set to date, 106, were announced on January 10, 2013.New Texas ACOs Include:• Accountable Care Coalition of North Texas. This ACO was developed by Houston-based Collaborative Health Systems (CHS) and will include 70 physicians. CHS’s parent company, Universal American, is a Medicare Advantage provider.• Amarillo Legacy Medical ACO.• Essential Care Partners II, LLC. This is another ACO developed by CHS.• Integrated ACO.• Rio Grande Valley Health Alliance.• Scott & White Healthcare Walgreens Well Network.

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New Payment ModelsBundled Payments for Care Improvement

Several options for hospital/post acute care (PAC):•Delivered by a hospital.•Delivered by a post-acute care provider.

As a Model 3 provider, Encompass is entering a fully at-risk relationship with Medicare for certain patients. The program includes 180 MS-DRGs, which are then sorted into 48 bundles with each bundle covering either a 30-, 60-, or 90-day period depending on the providers selection of duration.

Each bundled payment will cover all the cost incurred from the date of the homecare admission for the agreed upon period. Encompass has elected to cover the 90-day bundled period. Any patient that is discharged from an acute care setting that had one of the 180 defined MS-DRGs and comes to Encompass as their first post discharge stop within 30 days of discharge will be subject to the bundled payment.

Condition Medical or Surgical

# of Episodes Mean 25th Percentile 75th Percentile Ratio of 75th to 25th Percentile

Stroke Medical 10,740 $20,411 $6,856 $30,300 4.4

Simple pneumonia

Medical 20,780 $10,567 $2,787 $15,082 5.4

Coronary bypass

Surgical 2,276 $6,539 $1,887 $7,957 4.2

Heart failure Medical 15,376 $9,301 $2,319 $12,379 5.3

Major small/bowel

Surgical 6,180 $8,169 $2,176 $10,528 4.8

Joint Surgical 29,627 $9,752 $4,006 $13,277 3.3

Hip/femur procedures

Surgical 7,814 $22,052 $13,244 $30,045 2.3

Fractures hip/femur

Medical 2,066 $17,392 $9,044 $23,854 2.6

Kidney/urinary tract

Medical 10,133 $13,048 $3,909 $19,771 5.1

Septicemia Medical 4,961 $13,532 $3,861 $20,116 5.2

Average 4.3

Medicare Spending on Post-acute Care During 90-day Bundle (5% of 2007 & 2008 claims)

Condition HHA SNF IRF Ratio of IRF to SNF Spending

Ratio of SNF to HHA Spending

Stroke $13,344 $33,266 $40,881 1.2 2.5

Simple pneumonia

$12,403 $26,597 $39,166 1.5 2.1

Coronary bypass

$39,708 $52,554 $60,677 1.2 1.3

Heart failure $13,881 $30,984 $45,516 1.5 2.2

Major small/bowel

$25,658 $39,443 $48,933 1.2 1.5

Joint $17,712 $28,013 $32,891 1.2 1.6

Hip/femur procedures

$17,177 $38,324 $40,770 1.1 2.2

Fractures hip/femur

$9,980 $26,947 $32,200 1.2 2.7

Kidney/urinary tract

$11,597 $27,613 $37,739 1.4 2.4

Septicemia $16,516 $32,961 $47,081 1.4 2.0

Average 1.3 2.1

Medicare Spending on Bundles:SNF vs. HHA vs. IRF

New Payment ModelsBundled Payments for Care Improvement

Quality IssuesIndustry: Benchmarking Against Other Practices

Public Policy: Medicare VBP for facilities & Physicians

For a number of surgeons, quality benchmarking data are largely anecdotal and involve a pen and paper. Increasing a physician’s ability to benchmarking quality data against numerous sources could enhance the physician’s negotiating power with commercial health insurance plans.

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Quality Benchmarking Across Practices:A Negotiation Tool for Physician Practices?

Employer-based Health Plan Consultants & Quality

Texas Surgical Quality Collaborative

VBP for Medicare Physicians:Quality & Satisfaction Ratings

2010: Affordable Care Act &

VBP for physicians

2011: Physician Compare launched

January 2012: CMS to announced VBP measures; reports

to physicians regarding comparisons.

2015:CMS to adopt VBP by this date;

VBP for some; pay for reporting for all (EHR, not ACA).

2013: 2015 VBP payments will be

based on 2013 data2017:

All physicians will participate in VBP.

Source: Press Gainey. 29

Thoughts from Press Ganey (April 23 TOA eConnect Article)

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Value-based Purchasing:April 23 TOA eConnect

What’s Coming from Medicare

• 2012: Physician Compare Web site launched.• 2013: Data for both quality and patient experience are on the verge of being publicly reported (PQRS data added to web site in 2013).• 2014: PQRS & CGCAHPS data publicly reported – 1.5 percent adjustment for failure to report.• 2015: Payment adjustments begin.• 2017: Full VBP program in place for all physicians.

Practices preparing for Medicare VBP

•A large multi-specialty group in Texas will only award the previously withheld patient experience bonus if a physician meets the 90th percentile rank in his or her specialty.• Other groups have phased in a patient experience component to their compensation plan, and may ramp up the required rank over the course of 24 to 36 months.

Medicare Hospitals:Value-Based Purchasing Overview

October 1, 2012:1st Inpatient VBP Payments

July 1, 2009 – March 31, 2010Baseline Calculation Period

July 1, 2011 – March 31, 2012Comparison Period

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30% of VBP: Texas Patient Experience of Care

Source: CMS HCAHPS; patients who had overnight stays from July 2009 – June 2010; updated April 11, 2011.35

70% of VBP: Texas Clinical Process of Care

36Source: CMS HCAHPS; patients who had overnight stays from July 2009 – June 2010; updated April 11, 2011.

December 2012:CMS VBP Report

37Source: American Medical News. “Physician-owned hospitals seize their moment.” April 29, 2013.

Hospital Location Change in Pay

1. Treasure Valley Hospital Boise, Idaho .83%

2. Lincoln Surgical Hospital Lincoln, Nebraska .78%

3. Baylor Medical Center at Trophy Club Trophy Club, Texas .78%

4. TOPS Surgical Specialty Hospital Houston, Texas .75%

5. Marlboro Park Hospital Bennettsville, South Carolina .74%

6. Baylor Medical Center at Uptown Dallas, Texas .74%

7. Irving Coppell Surgical Hospital Irving, Texas .73%

8. Surgical Hospital at Southwoods Youngstown, Ohio .73%

9. Indiana Orthopaedic Hospital Indianapolis, Indiana .72%

10. Baylor Heart and Vascular Hospital Dallas, Texas .72%

• 2012: $468,000– 26 physicians received Year 1 payment

• 2013: $240,000– 20 physicians received Year 2 payment– 5 are now completing Year 2 in 2013, – 1 didn’t meet criteria

– (Payments received after April 1st are subject to the 2% sequestration adjustment.)

EHRs:One Central Texas Practice Experience

“Quality or Value-based” Incentives

• Document Process measures: (SCIP, PQRI)• NQF endorses quality measures to select• Appropriate Use Criteria from societies• Clinical Practice Guidelines: Evidence Levels

Medicare Inpatient Policy Considerations

Medicare Readmissions

Medicare Administrative Contractor(Novitas)

Medicare Hospitals:Readmissions

According to the Centers for Medicare & Medicaid Services (CMS), in 2009, more than seven million Medicare beneficiaries experienced over 12.4 million inpatient hospitalizations. One in seven Medicare patients will experience some adverse event such as a preventable illness or injury while in the hospital. One in three Medicare beneficiaries who leave the hospital today will be readmitted within a month.

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•Starting in October 2012, hospitals subject to penalties of up to 1 percent for patients with primary condition of AMI, HF, or PNEU.• In the FY 2014 IPPS proposed rule, CMS proposes to apply an algorithm to account for planned readmissions.•In addition, a proposal to add THA, TKA, and COPD for FY 2015. •Beginning in October 2013, the penalty increases to 2 percent and 3 percent in October 2014.

Condition Readmission Rate

With Readmission (Mean)

W/o Readmission (Mean)

Readmissions to w/o Readmissions

Readmissions as % of Total Episode Cost

Stroke 16% $38,078 $19,824 1.9 26%

Simple pneumonia

17% $24,974 $9,722 2.6 42%

Coronary bypass

18% $55,591 $38,840 1.4 22%

Heart failure 28% $24,900 $10,003 2.5 26%

Major small/bowel

14% $38,297 $21,095 1.8 32%

Joint 8% $40,172 $21,313 1.9 27%

Hip/femur procedures

15% $49,517 $32,707 1.5 24%

Fractures hip/femur

13% $34,550 $20,335 1.7 27%

Kidney/urinary tract

18% $25,511 $11,183 2.3 38%

Septicemia 20% $33,985 $15,447 2.2 36%

Average 17% 2.0 30%

Lowering Readmissions:June 2013 MedPAC Report

NQF Endorsed Quality MeasureFor THA/TKA

CMS Validation Contract - June 2012

• 30 Day Risk-Standardized Readmission Rate (RSRR) to check transitions: Outpatient Coordination of care

Medicine ReconciliationDischarge planning

• Medicare 2008-2010 Part A claims• Mean 30 day RSRR = 5.7%

5th percentile, 4.6% 95th percentile, 7.0%

Source: Marc DeHart, MD – Austin, Texas

NQF Endorsed Quality MeasureCMS Validation Contract - June 2012

• Risk-standardized complication rate (RSCR) following elective primary THA and/or TKA – mean = 3.6%

• Surgical Site Complications:Surgical site bleeding – 30 daysMechanical complications – 90 daysPeriprosthetic joint infection/wound infection - 90 daysDeath – 30 days

• Medical Complications:Acute myocardial infarction – 7 daysPneumonia – 7 days Pulmonary embolism – 30 daysSepsis/septicemia/shock – 7 days

Source: Marc DeHart, MD – Austin, Texas

“Risk-Adjusted”

• Not finding and reporting comorbidities will cost the “readmission score”

• Not “maximizing” medical comorbities will hurt the complication and readmission score.

Source: Marc DeHart, MD – Austin, Texas

Case Study #1:A Large Texas Hospital System

January – December 2012

908 DRG 470 Cases:•163 claims denied after record review/audit.•105 claims denied were successfully appealed.•58 claims denied are waiting an administrative law judge hearing.

Typically Associated with Documentation Errors:•Insufficient documentation.•Failure to demonstrate conservative treatment.•Insufficient duration of conservative treatment.•Lack of medical necessity.•Denial rate – 25 percent.•No audits in the last quarter of 2012.•$887,000 in billed hospital services withheld and under appeal.

Source: Talk by Patrick Palmer, MD at the TOA Socioeconomic Summit in February 2013.47

Medicare MAC Audits:Case Study #1

Outpatient vs. Inpatient Policy Considerations

Site Neutral Payments (total savings of $900M/year; > $140M/year beneficiary cost sharing savings)

Ancillary Services

Physician Ownership

“Growth of Hospital Employment of Physicians Leads to Higher Spending by Private Plans and Their Enrollees.”The growth of hospital employment of physicians is leading to higher spending by private plans outside of Medicare and higher cost sharing for their enrollees (Alexander et al. 2012, Dutton 2012, Kowalczyk 2013a, Kowalczyk 2013b, Mathews 2012).

In one example, a patient found that his insurance plan paid $1,605 for an echocardiogram after his cardiologist’s practice was acquired by a hospital system—more than four times the amount paid by the plan when the practice was independent (Mathews 2012). The patient’s share of the bill was about $1,000.

According to the patient, “Nothing had changed, it was the same equipment, the same room.” In another example, a patient who received a 20-minute exam in a hospital-owned practice was charged a $500 facility fee in addition to the physician’s $250 professional fee (Kowalczyk 2013a). In some cases, private plans have stopped paying the additional facility fee for routine office visits provided in hospital-owned entities (Kowalczyk 2013a, Ostrom 2012). 49

MedPAC’s June 2013 Annual Report:Consolidation & Costs

Round 1: E&M Site-neutral Payments2012 MedPAC discussions focused on limiting HOPD payments for E&M services at the physician fee schedule.

Round 2: Ambulatory Payment Classification (APC) GroupsMedPAC believes these procedures do not require an inpatient facility and an ED. As a result, it may recommend significant payment cuts.

Of a sample of 100 of the most negatively impacted hospitals, over half were specialty hospitals and those with low ED rates.First group of 25 APCs (diagnostic tests – bone density):• Performed in physician office more than 50 percent.• Rarely provided during ED visits (less than 10 percent)• Minimal differences in patient severity.• Similar packaging as the physician fee schedule.Second group of 61 APCs:• More packaging ancillaries than the PFS.• Payment could be set at sum of PFS for the primary service and the packaged ancillary services. 50

MedPAC:Site-Neutral Payments

Source: Initial MedPAC analysis in 2012.

Mostly diagnostic tests (Group 1):•Level II echocardiogram w/o contrast (APC 269)

•Level II extended electroencephalography (EEG), sleep, and cardiovascular studies (APC 209)

•Bone density; axial skeleton (APC 288)

•Level II neuropsychological testing (APC 382)

Procedural APCs:•Level II eye tests and treatments (APC 698)

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MedPAC Inpatient Moved to Physician Rates:June 2013 APC Groups Examined (Group 1)

Sample (Group 2):•Level III echocardiogram w/o contrast (APC 270)

•Level I debridement and destruction (APC 12)

•Small intestine endoscopy (APC 142)

•Cardiac computed tomographic imaging (APC) 383 – imaging

•Level IV pathology (APC 344) - tests

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MedPAC Inpatient Moved to “Higher” Rates:June 2013 42 APC Groups Examined (Group 2)

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MedPAC Inpatient APC Rates Moved to ASC:June 2013 APC Groups Examined

APC APC Description Reduction (million)

137 Level V skin repair $26.5

203 Level IV nerve injections 13.2

207 Level III nerve injections 147.5

233 Level II anterior segment eye procedures 3.9

234 Level III anterior segment eye procedures 9.9

239 Level II repair and plastic eye procedures 1.3

240 Level III repair and plastic eye procedures 16.4

241 Level IV repair and plastic eye procedures 5.2

244 Corneal and amniotic membrane transplant 9.5

245 Level I cataract procedures w/o IOL insertion 0.2

246 Cataract procedures with IOL insertion 341.2

247 Laser eye procedures 13.6

Total 588.4

Stark In-office Ancillary Exemption

Threatened to be removed in Washington.

Physical Therapy Settings in Medicaid

Move all down to the lowest rate – regardless of setting.

Imaging in Medicaid

2013 state appropriations provision would take a hard look at ancillary imaging in Medicaid and find ways to decrease this cost.

Ancillary Issues: PT & Imaging

Washington, DC

Stark in-office ancillary exemption under review by Congress for additional savings.

2007 Budget Deficit Act led to first of a series of major cuts to in-office imaging.

2009 Medicare bill led to additional in-office cuts and created in-office imaging credentialing (The Joint Commission).

2010 Affordable Care Act led to more in-office cuts.

Austin, Texas

Past efforts by the radiologists to require registration unlikely.

HB 1809 (2009) led by the Coalition for Ethical Imaging would have created:

•Accreditation and registration system.•Study comparing physician-owned imaging to others.

2011 attempt to create a license (facility fee) for freestanding imaging and pain fluoroscopy clinics failed.

Imaging Ownership

Physician-owned Distributors (PODs)

2013 HHS OIG Work PlanPhysician-Owned Distributors- High Utilization of Orthopedic Implant Devices Used in Spinal Fusion ProceduresWe will determine the extent to which physician-owned distributors (POD) provide spinal implants purchased by hospitals and are associated with high utilization of such implants. PODs are business arrangements involving physician ownership of medical device companies and distributorships. PODs distribute orthopedic implants, such as devices used in spinal fusion procedures. However, PODs appear to be quickly growing into other areas, such as cardiac implants. Congress has expressed concern that PODs could create conflicts of interest and safety concerns for patients. (OEI; 01-11-00660; expected issue date: FY 2013; work in progress)

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Commercial InsuranceIndustry & Policy Considerations

Insurance Exchanges

New State Products

“Narrow” Networks

2013 Texas Legislature: A Brief Health Care Review

Affordable Care Act

State exchanges

Allied health mandate

OON referral attacks(leg & regulatory)

Usual & customary standards (OON)

Network adequacy standards

Silent PPOs

Pricing transparency

EPOs

Balance billing

Assignment of benefits

Commercial Insurance: Key IssuesWashington, DC Industry Changes Austin

TPAs & employers active

Consolidation

Discouraging OON

Declining reimbursement rates

Provider agreements with plans

Tighter networks

Assignment of benefits

State Health Insurance ExchangesAnalysis of the Subsidies

Steps to determine eligibility:•Must have an income between 133 and 400% of FPL.•Employees who are offered coverage by an employer are not eligible for premium credits unless: a) the employer plan does not have an actuarial value of at least 60% or b) if the employee share of the premium exceeds 9.5% of income.•If you meet the top two requirements, a premium is available on a sliding scale. (The credit is directly to the insurance company.•You must purchase a Silver plan in order to be eligible. The premium credit is the lesser of the following amounts: a) Total monthly premium for qualifying health plan or b) The excess of “adjusted monthly premium” for the applicable second-lowest-cost Silver plan.

FPL (Family of 4)

% of Income Monthly Premium

Actuarial Value

133 – 150% 3 – 4% $74 - $110 94%

150 – 200% 4 – 6.3% $110 - $232 87%

200 – 250% 6.3 – 8.1% $232 - $372 73%

250 – 300% 8.1 – 9.5% $372 - $524 70%

300 – 350% 9.5% $524 - $611 70%

350 – 400% 9.5% $611 - $698 70%60

State Health Insurance ExchangesWhat It Looks Like

Bronze Plan60% actuarial

value

Silver Plan70% actuarial

value

Gold Plan80% actuarial

value

Platinum Plan90% actuarial

value

HIGHLIGHTS• All plans must offer basic services.

• A plan with an actuarial value of 70% means that the insurance plan will pay 70% of typical medical costs while the beneficiary is responsible for 30% of the costs.

• Catastrophic coverage available for individuals under age 30.

• The Office of Personnel Management will contract with private insurers to offer at least two national or multi-state plans to be offered in each state.

CONCERNS• How many plans will actually participate? At first, it will be limited to plans that currently offer individual and small group coverage.• Will TDI work on the exchange?• The insurance networks will be very “tight.” Providers will see decreased reimbursements.

Catastrophic Plan

Under age 30

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Insurance ChoicesForecast of Insurance Coverage

Employer 150M Employer

172MEmployer

169MEmployer

168M

Uninsured 50M Uninsured 23M

Uninsured 18M Uninsured 18M

Medicare 47M

Medicare 52M

Medicare 55M

Medicare 60M

Medicaid 40M

Medicaid 42M

Medicaid 49M

Medicaid 50M

Ind – 27M Ind – 24M Ind – 23M Ind – 24M

SOURCE: The Joint Committee on Taxation/Congressional Budget Office

20102014 2016 2019

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Those plans currently engaged in the small group and individual markets are expected to play the greatest role.

Begin selling in fall 2013 for January 1, 2014 start. Expected to have 11 million to 13 million enrollees, which would create $50 billion to $60 billion in revenue (PwC’s Health Research Institute).

•BCBS of Texas has prepared a product with a tighter market. Already advertising.• UnitedHealth will look at 10 to 25 exchanges.•Aetna will be in about 15 exchanges.•Humana targeting 10 states.•Cigna will likely participate in the 10 states where it already offers individual plans.•Other entities that offer local plans and Medicaid plans are likely to participate.

State Health Insurance Exchanges:Health Plan Participation

Source: Wall Street Journal. January 18, 2013 “UnitedHealth Weighs in on New Exchange Option.”

Network Adequacy Rule

Increased Disclosure for Facility-based Physicians

Out-of-network: Physician referring a patient to a facility and the facility would have to:• Notify the uninsured of the possibility that out-of-network providers may provide treatment.• Notify the insurer that surgery has been recommended so that the insurer can coordinate care.• Notify the insurer of the facility that has been recommended.

Disclosure of Payment EstimatesYou have the right to obtain advance estimates:• Of the amounts that the providers may bill for projected services, from your out-of-network provider.• Of the amounts that the insurer may pay for the projected services, from your insurer.

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Out-of-network Issues

•2009 Austin legislation concerning out-of-network co-pays. Fierce debate.•Aetna’s discussions regarding out-of-network referrals to physician-owned facilities during the 2012 regulatory process.

Out-of-network, EPOs, & Tighter Networks

Exclusive Provider Organization Benefit Plans (EPOs)

•Created by the 2009 Legislature at the urging of one commercial plan.•PPO with no out-of-network benefits. Tighter Networks: The Future of Insurance?

• Out-of-network attacks, EPOs, and the state health insurance exchanges are all part of a health plan trend towards tighter networks.• Health plans already indicated that they will offer plans with smaller networks to be competitive in the health insurance exchange. BCBS of Texas example.

Assignment of Benefits

• Some health plans have started sending entire out-of-network facility payment to the patient. The patient is then expected to reimburse the facility.• 2013 legislation would allow for direct payment to providers and bypass assignment of benefits issues.

Key Concepts in Austin

•State lawmakers and regulators cannot control ERISA plans. Therefore, regulate providers and balance billing practices, which could then translate to all health plans, including ERISA.• Physician groups believe that the latest Texas Department of Insurance PPO network adequacy rule will solve balance billing problems by labeling hospitals based on their networks.• HB 2838 (2013 Legislature) would require providers to provide a price that will be accepted in full 48 hours prior to a service. (Focused on facility-based physicians.)

Balance Billing

2013 Legislature• HB 3020: Require hospitals and ASCs to list their top 25 prices and require physicians to list their top 10 prices on a Web site. State Rep. JD Sheffield, DO.• HB 2360 & HB 2359 would also require transparency standards and usual and customary standards. State Rep. Greg Bonnen, MD.

Pricing Transparency

Third Party Administrators – 2012 & 2013•Texas Center for Health Transformation

Common theme: Require providers to reveal their prices on Web sites. Several bills were written by physician lawmakers and key Insurance Committee leaders.

Usual & Customary•FAIR Health•Latest network adequacy proposal called for health plans to reimburse using a usual and customary standard for out-of-network services provided when no in-network provider is available.

Usual & Customary

“Fair Market” ValueU&C

Tied to Medicare %

Physical Therapy (direct access) – carve out for doctorates

Podiatry – ankle & foot

Chiropractors

Optometry – U of H & Higher Education

Advanced Practice Nurses

Likely House hearing.

Abilene court case; podiatrists looking at insurance issues.

Unlikely to move far.

Failed to secure Senate sponsor.

Medicine and nurses compromised.

Scope of Practice: Key IssuesIssue Past Action Outlook

Larger effort failed in 2011.

Podiatrists rejected TOA proposal in 2011.

Filed 11 bills.

Looked to expand scope.

PR efforts & negotiations with medicine

Waste, Fraud, & Abuse•Several bills.

DSH IGT HospitalsFY 2013:• State provides $138 million.• Large, transferring hospitals provide $318 million.• Smaller public hospitals will provide more for the IGT to become fully funded or close to 90 – 95 percent.

FY 2014:• State provides $160 million.• Large, transferring hospitals provide $300 million.

FY 2015:• State provides $140 million.• Large, transferring hospitals provide $285 million.

2015 Texas Legislature:• Re-visit the issue.

Medicaid: 2013 TX Legislature

2011 Legislature: Reshaping Medicaid

Medicaid 1115 Waiver

71

Medicaid: 1115 Waiver

Past: UPL Payments

UC Pool: Uncompensated Care

Costs of care provided when third party coverage unavailable.

DSRIP Pool: Delivery System Reform

Incentive PaymentsQuality bonus payments for

coordinated care improvements.

DSH

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