Health Lawyers Release Top 10 List

The American Health Lawyers Association released its list of the top 10 healthcare issues for 2018. Not surprisingly, healthcare reform and the status and future of the Affordable Care Act (ACA) came in first. Emergency preparedness, telemedicine and digital health and the opioid epidemic also made the list. The full list appears below, followed by a bit more on the number one issue.

 

  1. Healthcare Reform and the ACA
  2. Fraud and Abuse
  3. Ransomware
  4. Payment Reform Model Trends
  5. Medicaid Outlook for 2018
  6. Hospital Mergers, Acquisitions, and Affiliation Transactions
  7. Drug Cost/Pricing
  8. The Opioid Epidemic
  9. Telemedicine and Digital Health
  10. Emergency Preparedness

 

Healthcare Reform and the ACA

 

The ACA remains the law, but its future is uncertain. Repeal and replace didn’t pass in Congress, but the Tax Cut and Jobs Act repeals the “central pillar” of the ACA—the individual mandate.

 

Some analysts caution that this will seriously threaten the stability of the individual and small group health insurance markets, including the health exchanges.

 

The Congressional Budget Office (CBO) estimated that between 4 and 13 million individuals would lose insurance coverage and that premiums in the individual and small group insurance markets would rise about 10% as a result of this provision. Others note that the penalty for failure to have health insurance was never large enough to significantly influence enrollment decisions, so its elimination will not dramatically alter insurance markets. There has been some discussion of Congress revisiting health reform as early as this year.

 

Outlook for 2018

 

The authors noted that the Administration has said it expects the ACA to “implode” on its own, even without legislative action. “For now, though, it seems that ongoing uncertainty over the ACA’s fate has not proven too disruptive to health insurance markets. Though major national insurance companies have continued to withdraw their offerings from the exchanges, in 2018, there are no ‘bare counties’ without health plans participating in the exchanges. Early enrollment was better than expected, but ultimately enrollment numbers fell below 2017 levels, likely due to an abbreviated enrollment period, consumer confusion and significant marketing cuts.

 

“In 2018, issuers will make projections about the effects of the repeal of the individual mandate on enrollment numbers and the risk profile of insureds and will continue tracking exchange enrollment numbers, the shifting regulatory landscape for the exchanges and the likelihood of further legislative changes (whether stabilizing or destabilizing) in deciding on their 2019 health exchange participation and premium rates. Individuals, particularly those without employer-sponsored coverage, will decide whether to take up or retain coverage without the individual mandate. Providers likewise will monitor the impact of the repeal of the individual mandate, other health reform initiatives, and issuer responses on the uninsured rate, Medicaid coverage and reimbursement, and patients’ cost-sharing obligations.” (AHLA Connections, January/February 2018)

 

 

 

 

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Regulation Reductions Emphasized in CMS’s 2018 Plans

Hospitals will see some of their leading regulatory concerns addressed in 2018 by CMS, according to Seema Verma, administrator of CMS. Verma noted that the Administration “is committed to reducing the regulatory burden on hospitals.”

 

Verma made her comments to the American Hospital Association (AHA) last week. The AHA’s president and CEO, Rick Pollack, noted that “hospitals are constantly challenged to implement new or revised regulations all while keeping track of the old ones, and doing so as they meet and maintain their core mission of providing high-quality service.” Pollack added that hospitals are increasingly frustrated with the time and resources being devoted to “pushing paper” that has little to do with improving the quality of care or access to services. (“2018 CMS Plans: New Models, Cuts to Measures, and Simplification of CoPs, HFMA Weekly, January 19, 2018)

 

CMS plans to address the following regulations:

 

  • Conditions of Participation (CoPs), which are requirements that hospitals and other providers must meet to participate in Medicare and Medicaid. CMS plans new “deregulatory” rules on streamlining CoPs. AHA had requested that CoPs be evidence-based, aligned with other laws and industry standards, and flexible to support different patient populations and communities
  • Reductions in the quality measures hospitals are required to report to CMS (under annual Medicare payment rules)
  • Meaningful use requirements of the EHR Incentive Program
  • Telehealth policy changes—strict limitations now exist, but CMS wants to increase its use within those legal strictures
  • Stark Law and Anti-Kickback Statute to the extent that the current waiver program (for some new innovative care-delivery models) would be available outside demonstration projects and models; also to allow existing waivers to apply to similar arrangements with Medicaid or commercial payers

 

Welcome Back Value-Based Payment Models

 

CMS plans to take an aggressive approach to value-based payment. This surprised some industry experts because CMS had eliminated two mandatory bundled payment models in 2017 and made another one optional for participants in some markets.

 

Verma also talked about two issues that CMS plans to address: quality-reporting requirements in value-based models and the design of ACOs. She noted that CMS will be looking at AOs in a different way but did not elaborate.

 

(Source: “2018 CMS Plans: New Models, Cuts to Measures, and Simplification of CoPs, HFMA Weekly, January 19, 2018)

 

 

 

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Research Examines Medicaid Expansion Effects on Hospital Closures

States that expanded Medicaid eligibility under the Affordable Care Act (ACA) experienced improved financial performance and substantially lower likelihoods of closure, especially in rural markets and counties that had large numbers of uninsured adults before Medicaid expansion, according to researchers at the University of Colorado School of Public Health.

 

“Those hospitals in the states that expanded Medicaid were much less likely to close than hospitals in states that did not expand Medicaid,” said one of the authors of the study. (“Medicaid Expansion Lessened Hospital Closures: Study, HFMA Weekly, January 12, 2018)

 

It appears that a surge in emergency department (ED) visits resulted from Medicaid expansion, the authors noted. In 2014, ED visits by Medicaid beneficiaries and the Children’s Health Insurance Program increased by 25 percent, or more than 10 million.

 

The Centers for Disease Control and Prevention reported an even larger increase in ED visits in 2014—11 million—and attributed it to Medicaid expansion.

 

The financial challenges for rural hospitals are varied. Financial performance could get worse if federal payment provisions such as Medicare “extenders,” or add-on payments (which lapsed in December) are not addressed.

 

Additionally, hospital advocates are pushing for the government to lift federal limits on the amount of bad debt that hospitals can write off.

 

“Because the ACA isn’t working the way it should and there are actually more people not being able to afford their care, these rural hospitals need to be allowed—as they have in the past —to offset their bad debt,” an author of the study said.

 

Bad debt has been falling for hospitals nationally but has more than doubled at rural hospitals since the ACA’s passage. In rural areas, people with serious health conditions who are enrolled in high-deductible health plans (HDHPs) get care at their local critical access hospital (CAH). By the time those hospitals stabilize the patients and transfer them to suburban and urban hospitals—as required by federal rules—the patients have exceeded their deductibles and insurers pay for the rest of their care. But deductibles for HDHP enrollees are never paid to CAHs because many policyholders cannot afford them. That lack of payment hits CAHs bottom line.

 

(Source: “Medicaid Expansion Lessened Hospital Closures: Study, HFMA Weekly, January 12, 2018)

 

 

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M&A: Study Shows Slower Financial Improvement for Acquired Hospitals

Hospitals and health systems, looking for economies of scale and the potential for reducing the cost of care, have increasingly taken the merger and acquisition (M&A) route. In partnership with the Deloitte Center for Health Solutions, HFMA conducted a study of more than 750 merger transactions between 2008 and 2014 to examine how M&A affects a hospital’s performance.

 

The research showed that acquired hospitals, on average, experienced a post-transaction decline in operating margins, revenue and expenses that typically lasted two years.

 

There was no evidence that quality measures changed at acquired hospitals. However, immediate investments and additional staffing were sometimes required to improve quality at an acquired hospital, which can impact financial performance.

 

Taking an in-depth look at mergers that achieved more favorable results than others, researchers identified eight strategies and business practices related to integration planning and execution that correlated with achievement of higher margins. Survey respondents noted that M&A was more likely to succeed when leaders:

 

  • Developed a strong strategic vision for pursuing the transaction
  • Had explicit financial and non-financial goals
  • Held leadership accountable, often at the vice- president level, for integration efforts
  • Identified cultural differences between the organizations
  • Made clear and upfront decisions on executive and mid-management leadership
  • Aligned clinical and functional leadership early in the process
  • Followed best practices for integrating the acquired or merged organization into the parent organization
  • Implemented project management best practices, with tracked targets and milestones, from day one of transaction close until two years after

 

Compared with survey peers who participated in M&A transactions that did not achieve both cost and quality goals, the vast majority of executives involved in high-value transactions said the transactions included a defined operating model that had:

 

  • A strategic vision for the combined entity
  • Identified and validated areas for value capture
  • A strategy to realize revenue growth and cost-reduction opportunities
  • An understanding of key enablers

 

“Executives from organizations looking to be acquired should consider evaluating their internal culture long before a solicitation is sent to potential acquirers. They also should manage the timing of the solicitation process carefully and avoid informal, detailed M&A conversations with executives from health systems where they have relationships. Such conversations risk getting ahead of the board and community. For example, if one of these key stakeholders does not recognize the need to become a part of a larger health system, it could complicate the process.” (Hospital M&A: When done well, M&A can achieve valuable outcomes, Deloitte Center for Health Solutions and HFMA, 2017)

 

The study researchers interviewed executives who noted that conversations prior to reaching an agreement to merge or acquire should focus on difficult issues that tend to be avoided during pre-transaction discussions, due to concerns that they might derail the transaction. Potentially sensitive subjects include:

 

  • Determining the powers the acquired facility’s board will retain if it remains in place
  • Defining the roles that executives in each organization will play in the combined organization
  • Articulating decision-making authority at each level of the organization so that key projects aren’t negatively affected
  • Identifying high-level strategies for redistributing/rationalizing key service lines that could shift volume to or from the acquired facility

 

(Sources: “Research: Hospital Mergers & Acquisitions,” HFMA Weekly, January 5, 2018 and Hospital M&A: When done well, M&A can achieve valuable outcomes, Deloitte Center for Health Solutions and HFMA, 2017.)

 

For a link to the Deloitte/HFMA research, click here:

 

 

 

The Board’s Role in Leading Through Transition, iProtean’s latest advanced Governance course, now appears in your library. It features Karma Bass and Marian Jennings on issues such as dealing with uncertainty, new elements for evaluating the CEO, prudent risk-taking, critical questions, recommended practices, destination metrics and changing over time.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.