HFMA NATIONAL POLICY UPDATE: REGULATORY …...HFMA NATIONAL POLICY UPDATE: REGULATORY AND MARKET...
Transcript of HFMA NATIONAL POLICY UPDATE: REGULATORY …...HFMA NATIONAL POLICY UPDATE: REGULATORY AND MARKET...
HFMA NATIONAL POLICY UPDATE:REGULATORY AND MARKET OUTLOOK
Chad Mulvany, FHFMADirector, Healthcare Finance Policy, Strategy and DevelopmentHFMA
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Agenda
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• The Political Process• Fiscal Reality• Transformation and Disruption• Closing Comments
Extenders
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While the Continuing Resolution Funded CHIP and Delayed ACA Taxes, It Did Not Include Other Key Healthcare Policy Items
Political Process
Legislative Status of Key Health Policy Items
Passed Likely to Pass Questionable
• ”PAYGO” Suspension• 6 Year CHIP Extension• Med Device Tax Delay
(2018 – 2019)• Health Insurance Tax Delay
(2019)• Caddie Tax Delay (2022)
• Community Health Center Funding (expires 3/31/18)
• Medicare Dependent Hospital Program*
• Low-Volume Hospital Adjustment Program*
• Part B Therapy Cap Exceptions*
• Ambulance Add-On*
*Expired 9/30/17
• ACA Cost Sharing Reduction Subsidies (Alexander-Murray Bill)
• ACA Reinsurance for High Cost Beneficiaries (Collins-Nelson Bill)
239 193
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2018 Elections
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Safe R Likely R Leans R Toss-up Likely D Leans D Safe DIND
178 174
0
Current:
Projected:
Source: http://cookpolitical.com, accessed 12/14/17
Republicans Have a Significant Advantage in the House…
51 49
0 50 100
47 35
0 50 100
…However, the Senate Is in Play
U.S. House of Representatives U.S. Senate
Political Process
The Administration’s 2018 Agenda
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CMS Is Providing Increased Flexibility on Medicaid Plan Design
The Trump administration early Thursday initiated a pivotal change in the Medicaid program, announcing that for the first time the federal government will allow states to test work requirements as a condition for coverage.
The announcement came in a 10-page memo with detailed directions about how states can reshape the federal-state health program for low-income people.
Trump Administration Clears Way To Force Some Medicaid Enrollees To Work
Source: https://khn.org/news/medicaid-officials-unveil-guidance-for-states-seeking-to-set-work-requirements/
Political Process
Key Elements of Pending Coverage Waivers
New or Amended Waiver Proposals Undergoing Public Comment or CMS Review
AR AZ IA IN KY MA ME UT WIPremiums/Lockout ü ü ü ü ü ü ü ü
Cost Sharing ü ü ü ü ü ü ü ü üHealthy Behavior Incentives ü ü ü ü ü ü
NEMT Waiver ü ü ü üIMD Exclusion Waiver ü ü ü ü ü ü
Retro Waiver ü ü ü ü ü ü üDelay in Enrollment ü ü
Drug Screening üTime Limits ü ü ü
Partial Expansion (w/ Enhanced Federal Funding) ü ü
Work-Related Provisions ü ü ü ü ü ü üHealth Savings-Like Accounts ü ü ü
Late Renewal Paperwork Penalty/ Lockout ü ü
Closed Formulary ü
ü= For childless adults and
other populations (expansion state)
ü = For childless adults(non-expansion state)
ü = For other populations (non-expansion state)
ü = For childless adults (expansion state)
Source: Cindy Mann, Partner, Manatt Healthcare, Presentation to HFMA Large System CFO Council, October 6, 2017
2018 Governors Races
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36 States Have Governors Races with Up to 14 State Houses Potentially Changing Party
Political Process
Agenda
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• The Political Process• Fiscal Reality• Transformation and Disruption• Closing Comments
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Unsustainable Growth
Excess Medicare and Medicaid Cost Growth Threatens Long-Term U.S. Fiscal Stability
Source: 1) https://www.cbo.gov/system/files/115th-congress-2017-2018/presentation/52913-presentation.pdf
Federal Debt Given Different Rates of Excess Cost Growth for Medicare/ Medicaid Spending
Fiscal Reality
Inadequate MD Reimbursement
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Medicare Payment Growth Will Not Keep Up with Practice Expenses
Medical Group Management AssociationCumulative % Change Since 2001 for Physician-Owned Multispecialty with Primary Care-Only
Groups for Operating Cost, the Consumer Price Index, and Medicare Physician Payments
Fiscal Reality
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Hospital Bottom Lines
The CBO Projects Input Price Growth Will Continue Outstripping Medicare Payment Increases
-19.0%
-14.0%
-9.0%
-4.0%
1.0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Illustrative Hospital Medicare Margin Impact:CBO Projections of Growth in Medicare Payment and Input Prices
Sources:1) 2014 Margin: MedPAC; Assessing Payment Adequacy and Updating Payments: Hospital Inpatient and Outpatient Services; December 10, 20152) Growth in Medicare Revenue and Input Prices: The Congressional Budget Office Economic Outlook: 2016 – 2026, pg 673) HFMA Analysis
CBO Projection
Modest Cost Control
Significant Cost Control
Fiscal Reality
“Paper” Cuts
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• Medicaid DSH• 340B Reductions for Medicare• Sequestration• Site-Neutral Payments
Fiscal Reality
Federal Medicaid Reform
“Capping” or “Block Granting” Medicaid Has Been Proposed to Reform the Program and Reduce Expenditures
Comparison of Traditional Medicaid to Caps or Block GrantsProgram Feature Traditional
MedicaidPer Capita Allotment Block Grant
Federal Funding
The federal government
“matches” state spending for
qualifying services/
populations.
A per capita allotment is the product of the state’s per capita allotment for
the four major beneficiary categories. Allotment is determined
by a state’s average medical assistance and non-benefit
expenditures per full-year-equivalent enrollee.
Funding is determined using a base year, assuming states transition expansion individuals into other
coverage.
Spending and benefit decisions for able-bodied adults and children rest
solely with states.
ACA Expansion Population Yes Phased Out Starting in 2019. No
Inflation Adjustment Yes No No
Population Adjustment Yes Yes No
Fiscal Reality
Block Granting’s Impact
“Capping” or “Blocking” Will Reduce Federal Funding for Medicaid…
($196)
($732)($800)($700)($600)($500)($400)($300)($200)($100)
$0
ACA Medicare Cuts Medicaid Block Grant
Comparison of 10-Year Savings from ACA Medicare Market Basket Reductions to a Medicaid Block Grant Proposal
Billions of Dollars
Sources:1) https://fas.org/sgp/crs/misc/R40486.pdf2) https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/costestimate/amendreconprop.pdf
Fiscal Reality
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Public Options
A Number of States Have Recently Advanced Public Option-Related Legislation
“Single Payer” LegislationMedicaid “Buy-In” Legislation
Examples of Recent Public Option Legislative Activity
Fiscal Reality
Agenda
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• The Political Process• Fiscal Reality• Transformation and Disruption• Closing Comments
New Voluntary Bundles
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Transformation and Disruption
CMMI Recently Announced 32 New Inpatient and Outpatient Episodes of Care as Part of CMMI Advanced
Source: https://www.hfma.org/Content.aspx?id=58872
Bundled Payment for Care Improvement Results - General
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Results from the Year Three BPCI Report Are Based on Limited Data and Therefore Largely Inconclusive
One of the 23 episodes evaluated
reduced costs.
Systematic improvements in quality have not
occurred.
Participants in prospective episodes withdrew due to the
administrative burden.
Savings Quality Administrative Burden
Transformation and Disruption
Bundles – LEJR Results
Hospital-Initiated Lower Joint Replacement Episodes Show Promise
Reductions in Total and SNF Episode Spending for Fracture and Non-Fracture Cases
BPCI Hospital Compared to Control Hospital
Sources:1) https://downloads.cms.gov/files/cmmi/bpci-models2-4yr3evalrpt.pdf
•Episodes at BPCI hospitals cost $1,273 less
•BPCI Participants reduced SNF LOS by 1.0 and 2.4 days for non-fracture and fracture cases.
Key Findings
Transformation and Disruption
Muddled Medicare Shared Savings Program Results
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Compared to the Benchmark, the MSSP Costs CMS $400M…
(400) (200)
- 200 400 600 800
FY 2013 FY 2014 FY 2015 FY 2016
MSSP Benchmark vs. Actual Spending$, Millions
MSSP Net Savings
Shared Savings Paid Net of Repayments
Net Loss to Medicare
…More Sophisticated Analysis Suggests Savings Are Occurring
FY 2014 “Difference in Difference” AnalysisMSSP Change in Per-Beneficiary-Per-Year
Spending Relative to Comparison
-264
-94-49
(300)
(200)
(100)
-
2012Cohort
2013Cohort
2014Cohort
% Target Price -2.6% -.9% -.5%
Sources:1) https://www.cms.gov/Research-Statistics-Data-and-Systems/Downloadable-Public-Use-Files/SSPACO/2) HFMA Analysis3) https://jamanetwork.com/journals/jama/fullarticle/2552452
Transformation and Disruption
MSSP Observations
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Several Trends Emerge When Comparing ACOs That Generate Savings to Those That Don’t
It takes time. The longer an ACO is in the program, the more likely it will generate “sharable” savings.
More to cut. ACOs that share savings typically have higher benchmarks ($11,614) than those that don’t ($10,563).
Risk changes behavior. Risk-bearing ACOs account for 10% of participants but are responsible for 30% of savings.
Physicians Save More: In 2016, 42% of MD-led ACOs received savings, compared to 23% of ACOs with hospitals.
1. http://www.ajmc.com/printer?url=/contributor/travis-broome/2017/10/cms-releases-medicare-shared-savings-program-2016-results2. https://www.healthaffairs.org/do/10.1377/hblog20171212.585293/full/3. https://jamanetwork.com/journals/jama/fullarticle/25524524. https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2017.0814
Sources:
Transformation and Disruption
Rethinking Referrals
Early Results Suggest MD-Led ACOs Generate More Savings…
… Referral Management Has Been a Key Strategy
0%
10%
20%
30%
40%
50%
60%
70%
2013 2014 2016
Physician ACO Hospital ACO
% MSSP Participants with
Expenditures Below the Benchmark
Example: Palm Beach ACO
2013 Gross Savings: $39M2014 Gross Savings: $32M
Key Strategies:- Provided feedback to MDs on use
patterns
- Partnered with post-acute providers
- Improved care transitions
- Invested in patient outreach
Sources:
1. http://jama.jamanetwork.com/article.aspx?articleid=1861359#jvp140051r5
2. Email communication with David Muhlestein, Leavitt Partners, 1/4/15
3. HFMA Analysis of CMS MSSP Financial Data PUF Files
Transformation and Disruption
Medicaid Payment Reforms
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Episode/Bundled PaymentsAR, NY, TN, CT, OK, SC
Shared SavingsNJ, MD, ME, MN, VT, RI
Global Budget/ Capitated ModelMD, CA, OR, MA
CPC+ ProgramsAR, CO, HI, KS, KY, MI, MO, MT, NJ, NY, OH, OK, OR, PA, RI, TN, LA*, NE*, ND*
Changes to Supplemental PaymentsNM, CO, OH, TX
Payment Reform
Source: Cindy Mann, Partner, Manatt Healthcare, Presentation to HFMA Large System CFO Council, October 6, 2017
Many States Are Taking the Lead in Payment Reform Efforts
Transformation and Disruption
Social Supports Matter
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Evidence Suggests Social, Economic, and Environmental Factors Are Better Predictors of Health than Access to Care.
Contribution of Various Factors to Health Outcomes
Transformation and Disruption
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MIPS Bonuses
MACRA’s “Increased Flexibility” Reduces the MIPS Upside Available to Larger Practices
Practice Size
Number of Eligible NPIs
(000s)
Net Impact of MIPS
($, millions)1 - 9 Clinicians 226 -17910 - 24 Clinicians 81 6125 - 99 Clinicians 148 136100 or More Clinicians 306 482Total 761 500
Practice Size
Number of Eligible NPIs
(000s)
Net Impact of MIPS
($, millions)1 - 15 Clinicians 114 17316 - 24 Clinicians 22 1525 - 99 Clinicians 99 64100 or More Clinicians 319 248Total 554 500
Proposed Rule - 2019 Payment Impact Proposed Rule - 2020 Payment Impact
Sources:1) Medicare Proposed QPP Rule, June 30, 20172) Medicare Proposed QPP Rule, May 9, 20163) HFMA Analysis
Transformation and Disruption
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Potential Advanced APM Upside
In 2015 If Track 1 MSSPs Participated in Track 2, It Would Lead to a Revenue Increase of $886M, Net of Losses
Source: http://avalere.com/expertise/providers/insights/acos-could-see-higher-medicare-payments-by-assuming-more-financial-riskv
Simulated Impact of Shifting from Track 1 to Track 2 for MSSP ACOs (2015)
Transformation and Disruption
Outpatient Joints
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Half of Hip and Knee Replacements Will Occur in the Outpatient Setting within 10 Years, According to Projections
Sources:1) http://newsroom.vizientinc.com/newsletter/research-and-insights-news/outpatient-joint-replacement-unnecessary-concern-or-market-rea
Transformation and Disruption
Home Is Where the Hospital Is
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Many Common Medical Admits Can Be Managed at Home…
Dehydration
UTI
DVT
Cellulitis
CHF
COPD
Pneumonia
% Hospital at Home Cases1
Presbyterian Healthcare Services
…At A Lower Cost and with Better Outcomes
1Numbers in graph represent the MS-DRGs 2015 discharge volume frequency
6th
14th
17th
35th
39th
42th
59th
Source: http://www.commonwealthfund.org/publications/case-studies/2016/aug/~/media/files/publications/case-study/2016/aug/1895_klein_hospital_at_home_case_study_v2b.pdf
Hospital at Home vs. Acute I/POutcomes Comparison
Transformation and Disruption
New Competitors
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M&A Activity Could Increase Health Plans’ Ability to Manage Care
Sources:• https://www.wsj.com/articles/unitedhealth-to-buy-major-doctor-group-for-4-9-billion-from-davita-
1512560700?mg=prod/accounts-wsj• https://www.nytimes.com/2017/12/06/health/unitedhealth-doctors-insurance.html?_r=0• https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2017.0858
• https://www.manatt.com/uploadedFiles/Content/5_Insights/White_Papers/Retail_Clinic_RWJF.pdf• https://www.pressreader.com/usa/los-angeles-times/20171107/281981787862549• https://www.wsj.com/articles/SB10001424052970203347104578100774135846646• https://www.humana.com/about/careers/what-we-do/physicians• https://www.forbes.com/sites/brucejapsen/2017/12/19/humana-wants-to-modernize-home-care-with-
stake-in-4b-kindred-deal/#13fbb3952710
Transformation and Disruption
Agenda
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• The Political Process• Fiscal Reality• Transformation and Disruption• Closing Comments
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Key Takeaways
Despite the Uncertainty, Several Themes Emerge
• Uncertainty at the federal level will continue.
• More authority for healthcare programs shifted to states.
• Federal debt load is on an unsustainable trajectory.
• Future significant cuts to federal healthcare spending are likely.
• “Paper cuts” will continue to stress provider margins.
• The transition to value will likely be led by states.
• Health systems need to offer a strong AAPM platform to grow market
share.
• Changes in technology, payment models and care delivery will shift
volume to lower-cost sites of service.
Common Themes in Current Environment
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Key Actions
Understand Consumer
Preferences3,4,5
Develop APM Platform2
Rationalize Cost Structure1
In Order to Navigate the Uncertain Environment, Health Systems Should Take the Following Steps:
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Resources
HFMA Resources1) Strategies for Reconfiguring Cost Structure
(https://www.hfma.org/valuereconfiguration/)2) Strategies for Physician Alignment and Engagement
(http://www.hfma.org/valuephysicians/) 3) Health Care 2020: Consumerism
(https://www.hfma.org/healthcare2020/) 4) Preparing to Succeed in a Retail Health Environment
(https://www.hfma.org/Content.aspx?id=25734) 5) Giving a Consumer Focus to Strategic Planning in Health Care
(https://www.hfma.org/Content.aspx?id=56575)
Questions?
Chad MulvanyDirector, Healthcare Finance Policy, Strategy
and DevelopmentHFMA
1100 Vermont Avenue NWSuite 500
Washington, DC 20005Office: 202.238.3453
Email: [email protected]
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