Health and Reimbursement Reform Strategies For the Future PPACA Michael A. Granovsky MD CPC FACEP President LogixHealth

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1 Reimbursement & Coding Conference 2014 February 18-22, 2014 New Orleans, LA The Future of US Healthcare: Implementation is Here PPACA 2014 (+)Michael A. Granovsky, MD, CPC, FACEP President, LogixHealth; Editor ED Coding Alert, Subject Matter Expert AAPC ED Subspecialty Certification Exam; Chair of ACEP s Coding and Nomenclature Committee; Member Reimbursement Committee; CFO Greater Washington Emergency Physicians, Fort Washington, Maryland; Co-Course Director, ACEP's Reimbursement Trends and Coding Strategies in EM/Advanced Procedure Coding for EM (+)David A. McKenzie, CAE Reimbursement Director, ACEP, Irving, Texas; Staff Contact, AMA RVS Update Committee, the CPT Editorial Panel, and the CPT Advisory Committee; Liaison to Reimbursement and Coding and Nomenclature Advisory Committees, ACEP OBJECTIVES: Identify the key areas to prepare your practice for the new healthcare reimbursement environment. Review the evolving Medicare, Medicaid, and Private Payer payment methodologies. Develop strategies to respond to Value Based Purchasing and Episodes of Care reimbursement models. 2/18/ :15:00 AM - 11:15:00 AM TU-03 Disclosure Information (+) No significant financial relationships to disclose

2 Health and Reimbursement Reform Strategies For the Future PPACA 2014 Michael A. Granovsky MD CPC FACEP President LogixHealth David McKenzie CAE ACEP Director of Reimbursement How Are We Looking? 1

3 Affordable Care Act (ACA) Has Arrived 28 states filed suits to overturn the ACA Supreme Court upholds the individual mandate to buy health insurance declaring it a tax However, the mandated full expansion of Medicaid originally described by the ACA is not supported by the Supreme Court Medicaid expansion can not be mandated by the ACA Each Individual State may decide whether to expand their Medicaid eligibility from current levels to the ACA described level: 138% of Federal Poverty Limit (FPL) Family of 4 roughly $32,500 Who Is Currently Uncovered? Most states cover kids and pregnant women through a combination of Medicaid and CHIP Adults stratified to parents and non disabled adults Currently nondisabled Adults, (<65 y.o.), earning more than their State s Medicaid eligibility cut off are the major uninsured cohort 2

4 Baseline Medicaid Eligibility for Adults by State Many states currently require very low incomes (well below 138% of FPL) to qualify for Medicaid MD 122% FPL MI 64% FPL TX 25% FPL ACA Increases Eligibility to 138% of FPL Adult Medicaid Expansion By State Changes in Parent Medicaid Eligibility Under the ACA Medicaid Expansion, as a Percent of the Federal Poverty Level 3

5 Percent of States Population Uninsured Which States Are Expanding Medicaid Where the States Stand on Medicaid Expansion 25 States, D.C. Expanding Medicaid December 20, 2013 Expanding Coverage (16) Considering Expansion (3) Not Expanding Coverage at this time (21) Note: As of 12/20/13 all policies subject to change. Results are estimates based on literature review, census data, and Advisory Board research. 4

6 ACA Coverage Gap The ACA has a meaningful coverage gap Ineligible for that State s Medicaid program No Expansion could be as low as 50% of FPL Don t qualify for a subsidy to buy an Exchange plan Most states not expanding Medicaid subsidies start at 100% of FPL Worse in states not expanding Medicaid 4.8 million patients concentrated in Texas, Florida, Georgia, North Carolina and Ohio ACA Coverage Gap 5

7 Impact of Medicaid Expansion Decision On Payer Mix By State Percent Uninsured MA 0-5% MI 5 10% TX % The Oregon Experiment and ED Volume Study followed Portland area patients randomly selected in a 2008 lottery to receive Medicaid coverage with people who entered the lottery but remained uninsured Those who gained coverage made 40 percent more visits to the emergency room than their uninsured counterparts during their first 18 months with insurance The pattern was so strong that it held true across demographic groups, times of day and types of visits, including those for conditions that were treatable in primary care settings. 6

8 Medicaid Expansion: ED Reimbursement Realities CBO estimates the ACA will lead to 14 million newly insured patients in 2014 The ACA will create an additional 16 million newly insured patients from States Expanding Medicaid Coverage will see enhanced per patient collections over time Shift self pay ($15 $20) to Medicaid ($50 $80) Site specific 7% 10% shift over time 40k visit ED $150,000 in additional revenue States Not Expanding will still see future DSH (hospital subsidy) payments drastically reduced by the Feds Less services available self pay ED visits PPACA DSH Cuts Delayed Disproportionate Share Hospital (DSH) Federal funding to hospitals treating indigent patients 3,100 hospitals receive some DSH subsidies 93% of payments to large urban institutions 65% of payments to teaching Hospitals Supports the safety net PPACA significant DSH reductions Rationale: With Medicaid expansion states would no longer require DSH support PPACA was intended to expand Medicaid to all states. The recently passed Bipartisan Budget Act for 2014 delays Medicaid DSH cuts until In 2016, hospitals will face double the DSH reductions Cuts softened somewhat for states not expanding Medicaid 7

9 Assisting Medicaid Expansion States reporting significantly higher enrollment in Medicaid than in private insurance since the exchanges opened CMS has awarded $307 million in bonuses to 23 states that found ways to increase the enrollment of kids in Medicaid Colorado received the highest award $58.5 million Maryland the second highest award, at $43.5 million. Nine states received significant bonuses over 5 years Alabama, Alaska, Illinois, Kansas, Michigan, New Jersey, New Mexico, Oregon and Washington Assisting Medicaid Expansion Sates successfully capturing newly qualified Medicaid enrollees are using a variety of methods including: Pre qualification: already on food stamps or in a partially subsidized low income health plan direct mailing to targeted citizens (food stamps or welfare) automated enrollment of children Oregon direct mailings to residents enrolled in other safety net programs including food stamps Maryland newly eligible Medicaid enrollees 25 times the number who signed up for private coverage.prequalifying Medicaid enrollees through an automated process 8

10 State Highlights: Medicaid Expansion. Arkansas: 70,595 new Medicaid applications 3,672 through state s existing Medicaid website 1,785 paper or phone applications 65,000 were positive responses to a mailing to 132,000 households that receive food stamps Connecticut: 51,000 new enrollees 3,550 new enrollees through state run Medicaid website 48,000 enrolled in a state run low income health program prequalified and auto enrolled into expanded Medicaid Illinois: 100,000 Cook County residents in a low income trial program automatically rolled over to Medicaid State Decisions For Creating Health Insurance Exchanges States Decisions for Creating Health Insurance Marketplaces 16 State Based 7 Fed/State Partnership 26 Federal 9

11 Example: Health Exchange Michigan Michigan is operating a partnership exchange in collaboration with the federal government. Michigan oversees the health plans Most other functions are managed by the federal government Michigan residents are using the federal website, healthcare.gov to purchase coverage many glitches 120,000 visits to the state s online premium calculator in the first ten days of October lots of federal website error messages 11 health insurance companies selling policies Benchmark plan Priority Health HMO product 75 products According HHS more than 1.1 million people (14% of the population) in Michigan are uninsured and eligible to use the health insurance marketplace Exchange Operational Basics Guaranteed Issue may not refuse coverage to individuals ED Services required benefit Citation: MB k; (3); No rescission eliminates insurance company practice of refusal to pay based on pre existing conditions Limits on premium (price) variation Age 3: 1 Smoking status 1.5 : 1 Annual coverage limits and lifetime limits eliminated Individuals between 138% 400% of the FPL receive federal subsidies (roughly $32,500 $94,200) 10

12 Health Exchange Subsidies: Who Qualifies? Medicaid Exchange With Subsidy Household Size 100% 138% 150% 200% 300% 400% 1 $11,490 $15,893 $17,235 $22,980 $34,470 $45, ,510 21,453 23,265 31,020 46,530 62, ,530 27,014 29,295 39,060 58,590 78, ,550 32,575 35,325 47,100 70,650 94, ,570 38,135 41,355 55,140 82, , ,590 43,696 47,385 63,180 94, , ,610 49,255 53,415 71, , ,440 Exchange Products Tiers Must be equal to the scope of benefits provided under a typical employer plan, as determined by DHSS Michigan Priority Health HMO Four levels of coverage Vary depending on % of actuarial value Platinum: benefits equivalent to 90% of typical employer plan Gold: equivalent to 80% Silver: benefits actuarially equivalent to 70% Bronze: benefits equivalent to 60% of the typical plan 11

13 How Many Insurers Will Participate Health Insurance Exchanges: Individual market competition Projected number of medical carriers in the individual market per state Exchange Highlights: Michigan Insurers offering coverage vary by geography Insurers offering varied numbers of products BCBS cover all of Michigan Products: individual plans: 2 gold, 2 silver, 1 bronze and 1 catastrophic Products: small group plans: 1 gold and 1 silver Consumers Mutual Insurance of Michigan, East Lansing: cover Algers, Cheboygan, Monroe Products: individual plans: 2 gold, 2 silver, 2 bronze and 1 catastrophic Products: small group plans: 2 gold, 2 silver and 2 bronze 12

14 Exchanges Starting Slowly Who is buying insurance on the exchanges? Initially, exchanges will be open to: Individuals buying their own coverage Employees of firms with 100 or fewer workers large employers by 2017 Subsidies provided between 138% 400% of FPL Subsidies For Exchange Products: Silver For All? Individual/Families In the form of tax credits Even If you have no tax liability Based on the premium for Silver plan Pay more for Gold or Platinum Premium cost capped at a specified % of income 13

15 Subsidy Example Pat is a single individual non disabled and has an income of 250% of FPL ($28,735) Cost of the silver plan in his area is $5,733 At 250% of FPL Pat s premium personal burden is capped at 8.05% of his income $2,313 The tax credit available to Pat would be $3,420 $5,733 premium minus the $2,313 that Pat must pay The Gradual Transition: Employer to Exchange Employees earning between $32K (~138% FPL) and $94k (400% of FPL) will receive financial subsidies to purchase coverage in the Exchanges Small employers will ramp up more quickly Larger employers (>50) will over time phase down health insurance as a benefit and may offer raises to purchase an Exchange product $2,000 per employee penalty delayed until 2015 (employees > 30 hrs. week) Employees may opt out of Employer plans with a subsidy from the Feds Current state surveys estimate 8.5 million people will be enrolled in the exchanges 14

16 2013 Kaiser Foundation Annual Survey of Employers Employer sponsored health insurance covers 149 million non elderly people 99% of firms > 200 employees offer health benefits Average annual family plan premium cost increased 4% to $16,751 31% of firms are seriously re evaluating their offerings based on the ACA Benefits required > 30 hours in 2015 Employers Shifting Benefits Worker earnings grew 47% from 1999 to 2012 Workers at companies with 200 or more employees paid $3,926, in premiums compared with $1,398 in to 2012 premiums jumped 172%. As premiums rose employers shifted more and more cost to employees Both employers and workers sought economic relief through plans with higher deductibles 15

17 High Deductible Enrollees Large Companies Million HDHP Enrollees Million 10 Million 13.5 Million 15.5 Million HDHP Enrollees 2003 HDHP allowed 0 enrollees HDHPs Grow For All Size Employers 16

18 ACA Marketplace Plans ED is a covered benefit but patient is still responsible for deductibles, co pays and co insurance high patient responsibilities Connecticut Carrier 1 deductible: $3500 $6,350 After deductible 10% co insurance Carrier 2 deductible: $750 $5,000 After deductible 50% coinsurance Carrier 3 deductible $1500 $6350 $150 co pay Exchanges Will Become Enticing To Employers Washington State was facing a $1.2 Billion budget shortfall Plan considered to shift State healthcare costs to the federal government Staffers working hrs/week would get small raises but loose health care coverage The workers would then be able to obtain insurance through the federal plan including the healthcare exchange and qualify for federal subsidies with a $120 million savings to the state 17

19 Employer Coverage Evolution ACA and Exchange ED Revenue Impact 92% of U.S. insured vs. 84% pre ACA Still have 8% uninsured Local concentrations Mass. Experience ED visits Uninsured still concentrated in the ED Estimated 9 million people entering the exchanges Drift from higher reimbursing commercial plans to Exchange Small then larger employers as well as individuals drawn by Federal subsidies 18

20 ACA and Exchange ED Revenue Impact Exchange pricing for issuers will be regulated and super competitive potentially leaving little room for provider negotiation May even include managed Medicaid plans 40k visit ED 3% move from Comm. to the Exchange 1200 patients If there is a decrease of $80 per patient $96,000 $200 CPV to $120 CPV Typical silver coverage will be 70%/30% co insurance 1200 patients move from more typical 80/20 plan to a silver 70/30 plan Co insurance increased by ~$25 $30,000 in increased co insurance to collect directly from the patient Putting It All Together 19

21 Wave Of Hospital Consolidation The "biggest wave" of hospital mergers since the 1990s is creating large-scale hospital systems as many as 1,000 of the nation's nearly 5,000 hospitals could seek mergers within the next five years. Stand alone hospitals will struggle to stay independent in new health economy, analysts predict. ED aggregation- some transition to employment, many medium sized groups aggregating, some significant sales Accountable Care Organization (ACO) Basics Groups of doctors, hospitals, and other providers, who band together to provide coordinated high quality care Contract with an insurance carrier for single fixed payment for specific episodes of care as a unit Hip fracture, CABG, Valve replacement Management of COPD or IDDM Payment models include Straight capitation Value based capitation Payment based on outcomes and cost Small or large risk corridors Goal of: Better Outcomes & less Cost greater Value 20

22 Michigan Blue Programs DETROIT, Oct. 15, 2013 /PRNewswire/ Blue Cross Blue Shield of Michigan, Blue Care Network, and the University of Michigan Health System have launched the Michigan Value Collaborativee, an initiative aimed at helping hospitals across the state understand their practice patterns compared with their peers, better manage costs and improve outcomes for patients. Almost 300 physicians and leaders from Michigan hospitals attended the new programʹs kick off meeting on Oct. 10 in Ypsilanti and received their first reports. Hospitals received reports on their performance with heart attacks, congestive heart failure, cardiac surgery, hip replacement, and colon surgery. In the upcoming months, they will begin receiving similar data for many other clinical conditions and procedures. Episode Timeline 21

23 Accountable Care Organizations ED Concerns and Realities Revenue goes to the ACO (Hospital) for an acute episode Hip fracture ED group as a subsidiary of a hospital ACO May push towards being hospital employed Revenue goes to the ACO (Hospital) for chronic episode Dialysis, Diabetes, COPD Nephrology, Endocrine, PMD coordinate payment Hospital pays out to the Orthopedist, Primary Care Physician, Anesthesia, various Consultants, and the ED Revenue Contraction. are we at the end of the line? ACE Demonstration The Acute Care Episode (ACE) Demonstration is a 3 year demonstration that involves the use of a bundled payment for both hospital and physician services MAC Reg. 4: Colorado, New Mexico, Oklahoma, Texas Global payments covering all Part A & Part B services 28 cardiac inpatient surgical services 9 orthopedic inpatient surgical services Patient Protection and Affordable Care Act 5 year pilot for bundled payments for additional services ED physician claims are billed to Medicare and Trailblazer denies the claim with remark code N67. 22

24 N 67 Implications Professional provider services not paid separately. Included in facility payment under a demonstration project. Apply to that facility for payment CMS Bundled Payment Program Program involves several models of care which link payments for multiple services during an episode of care (EOC). Model 1 inpatient hospital stay MDs bill fee for service Model 4 CMS will make a single, prospectively determined bundled payment to the hospital Encompass all services during the inpatient stay by the hospital, physicians, and other practitioners Physicians submit no pay claims to Medicare paid by the hospital out of the bundled payment Related readmissions for 30 days after hospital discharge will be included in the bundled payment amount. Participants can select up to 48 different clinical condition episodes 23

25 Being ACE d Hospital PHO Multi-specilaty group 24

26 Value Based Risk Sharing Risk Corridor Formulary In network referrals Observation Status Utilization Shared Savings HCAHPS CORE Readmissions Obs program LOS Hospital PHO Multi-specialty group The Future? X Obs Unit 25

27 Conclusion The world is rapidly changing Medicaid expansion will create opportunities Health Insurance Exchanges will create economic challenges Hospital value based partnerships more important than ever before Need to design risk corridors tied to our value and under our control Contact Information Michael A. Granovsky MD CPC FACEP President Logix Health David MCKenzie CAE ACEP Director of Reimbursemnt 26