American Hospital Association Federal Update

November 11, 2014

Overview

• Election 2014

• Ebola

• Regulatory Update • Physician Fee Schedule Final Rule

• Outpatient Final Rule

• Veterans Affairs Regulations

• Rural Advocacy Agenda

Beyond Election Day…

Dan Cassidy (R) Mary Landrieu (D)

Louisiana Run-Off

December 6

Beyond Election Day…

Alaska

Dan Sullivan (R) Mark Begich (D)

Six-year itch?

1950

Truman

1958

Eisenhower

1986

Reagan

1998

Clinton

2006

Bush

2014

Obama

-28

-48

-5

+5

-30

-12

House Senate

-6

-13

-8

0

-6

-7

Beyond 2014

• 2014 (36)

– Democrats: 21

– Republicans: 15

• 2016 (34)

– Democrats: 10

– Republicans: 24

• 2018 (33)

– Democrats: 28

– Republicans: 8

Senate Leadership

John Cornyn (R-TX)

John Thune (R-SD)

Senate Committees

• Finance

– Orrin Hatch (R-UT)

• HELP

– Lamar Alexander (R-TN)

• Budget

– Jeff Sessions (R-AL)

– Mike Enzi (R-WY)

• Appropriations

– Thad Cochran (R-MS)

House of Representatives

• Leadership…

no expected changes

• Committees – Ways and Means

Paul Ryan (R-WI)

Kevin Brady (R-TX)

– Budget Tom Price (R-GA)

– Energy and Commerce Anna Eshoo (D-CA)

Frank Pallone (D-NJ)

Congressional Schedule

• Appropriations

• Appointments (while under Democratic control)

• Ebola

Lame Duck Prospects

• GOP sets congressional agenda:

– Still need 60

– But, only need 50 for budget

mandating reconciliation process

(platform for reforms?)

“Legacy” vs. gridlock

2015-2016 Outlook

• GOP sets congressional agenda:

– Still need 60

– But, only need 50 for budget

mandating reconciliation process

(platform for reforms?)

“Legacy” vs. gridlock

− Appointments

− Oversight hearings

2015-2016 Outlook

• No consensus

– Incremental:

Repeal medical device tax

Change definition of full-time employee

Has Democrat support

Delay employer mandate

Repeal individual mandate

Repeal restrictions on

physician-owned hospitals

2015-2016 Outlook

GOP Health Care Priorities

• No consensus – Incremental:

Repeal medical device tax

Change definition of full-time employee

Has Democrat support

Delay employer mandate

Repeal individual mandate

Repeal restrictions on physician-owned hospitals

‒ Comprehensive repeal of ACA

GOP alternative

2015-2016 Outlook GOP Health Care Priorities

• No consensus – Incremental:

Repeal medical device tax

Change definition of full-time employee

Has Democrat support

Delay employer mandate

Repeal individual mandate

Repeal restrictions on physician-owned hospitals

‒ Comprehensive repeal of ACA

GOP alternative

• Implications of presidential politics

2015-2016 Outlook GOP Health Care Priorities

• Message…repeal and replace

• Legislative…incremental

2015-2016 Outlook

Likely Scenario

Fiscal Cliffs and Deadlines

• December 11, 2014 - Federal budget…appropriations

• December 31, 2014 − Medicaid physician

“cliff”

• April 1, 2015 − Medicare physician “cliff”

− Debt Limit

• Prospective coding offsets ($8 billion)

• Site neutral payment policies − E&M code/HOPD ($10 billion)

− 66 additional APCs procedures ($9 billion)

− 12 procedures performed in ASCs ($6 billion)

• Hospital bad-debt reductions ($20 billion) (Assistance for low income Medicare beneficiaries)

• GME reductions ($10 billion)

• CAH: payment reductions and qualification criteria

($2 billion)

• Post acute care ($70 billion)

• IPAB expansion ($4.1+ billion)

• Medicaid: − State provider assessments ($22 billion)

• 340B

Need for budget predictability

Overview

• Election 2014

• Ebola

• Regulatory Update • Physician Fee Schedule Final Rule

• Outpatient Final Rule

• Veterans Affairs Regulations

• Rural Advocacy Agenda

Ebola

Coordination

Helping Hospitals Respond

AHA Ebola Preparedness Page

www.aha.org/ebola

Helping Hospitals Respond

AHA Ebola Preparedness Page

www.aha.org/ebola

Overview

• Election 2014

• Ebola

• Regulatory Update • Physician Fee Schedule Final Rule

• Outpatient Final Rule

• Veterans Affairs Regulations

• Rural Advocacy Agenda

PFS Final Rule CY 2015

• Transitions the Ambulance Fee Schedule to the

new OMB CBSA and RUCA delineations for the

purpose of payment calculations

• Adds several codes to the telehealth list:

– Psychotherapy/analysis

– Prolonged E & M; and

– Annual wellness visit

• Removes employment requirements for services

furnished "incident to" RHC and FQHC visits,

effectively allowing them to contract, rather than

employ, non-practitioner staff

PFS Final Rule CY 2015

• Includes the Interim Final Rule applying to the

Medicare EHR incentive program

– CMS provides certain eligible hospitals and

physicians through Nov. 30 to apply for a

hardship exception to avoid penalties in FY

2015 (hospitals) and CY 2015 (physicians)

– Exception only available for those that: Had not attested to meaningful use before FY/CY

2014;

Were unable to fully implement 2014 Edition

Certified EHR technology; and

Could have attested under the flexibility options

recently provided by CMS

• Outpatient payment update of 2.2%

• For all services paid under the OPPS, SCH payments

continue at 7.1%

• A single, "packaged payment" for ancillary services

when they support a primary service

• Implementation of Comprehensive APCs

• Data collection on site-of-service for off-campus

provider-based departments

• Outpatient PPS wage index will be based on the most

recent labor market areas that were issued by OMB

• A physician certification for inpatient hospital

admissions only required for long and outlier cases

OPPS Final Rule CY 2015

VA Regulation • Interim Final Rule implementing the Veterans Access,

Choice, and Accountability Act of 2014

– Establishes the Veterans Choice Program that

allows qualifying veterans to elect to receive

hospital care and medical services from non-VA

entities and providers

– Key provisions include:

– Contracting between VA and non-VA providers

– Payment rate

– Prompt payment

– Effective Nov. 4 or Dec. 5

Overview

• Election 2014

• Ebola

• Regulatory Update • Physician Fee Schedule Final Rule

• Outpatient Final Rule

• Veterans Affairs Regulations

• Rural Advocacy Agenda

• Maintaining financial viability of rural

hospitals – R-HoPE Act

– Medicare Extender Priorities

• Improving federal regulatory requirements

for rural health care facilities – 96-hour rule

– Direct supervision

• Protecting special rural payment programs – 340B

– Rural hospital threats

– OIG reports

Rural Advocacy Agenda

• Sponsors

– Senate

John Barrasso (R-WY)

Al Franken (D-MN)

Tom Harkin (D-IA)

Pat Roberts (R-KS)

• Provisions – Extend the outpatient hold harmless

– Extend and increase the low-volume adjustment

– Extend rural ambulance payments

– Extend the billing for the technical component

of pathology services

– Address 96 hour condition of payment

– Implement enforcement delay of direct supervision

R-HoPE Act (S.2359)

Medicare Extender Priorities

• Reauthorization of the MDH program

• Extension of the current Low-Volume Hospital

Adjustment

• Outpatient therapy cap

• Ambulance add-ons

• RCH demonstration program

Rural Payments Eliminated By Congress:

• Outpatient hold harmless

• Section 508

• Extension of payment for the technical component

of certain physician pathology services

96-Hour Rule

• Two existing statutory conditions for

CAHs

• Condition of Participation –CAHs must

provide acute inpatient care for a period

that does not exceed, on an annual

average basis, 96 hours per patient

• Condition of Payment –a physician must

certify that a beneficiary may reasonably

be expected to be discharged or

transferred to a hospital within 96 hours

after admission

96-Hour Rule

• CMS has not historically enforced the

condition of payment, however, if it is

enforced, CAHs will no longer receive

Medicare payment for medical services

requiring a stay longer than 96 hours

• CMS issued new guidance, Jan. 30, 2014

setting forth additional information

regarding this requirement

• Changes in IPPS final rule for FY 2015

Critical Access Hospital Relief Act

AHA is working with concerned lawmakers to

pass legislation that would remove the 96-hour

piece of the physician certification requirement

as a condition of payment.

96-Hour Rule

Direct Supervision

• CMS ended the direct supervision enforcement

moratorium for CAHs and small rural hospitals,

effective Jan. 1, 2014

• CMS will require a minimum of direct supervision for

all outpatient therapeutic services furnished in

hospitals and CAHs

• Hospital Outpatient Payment (HOP) Panel

• CMS encourages hospitals to continue to request changes in

supervision levels through the HOP Panel process

• Since 2012, when the HOP Panel was established, CMS has

reduced the level of supervision for 56 outpatient therapeutic

services

• Summary of March & August Meetings

1

Direct Supervision

Sens. Moran (R-KS)/Tester (D-MT)

Reps. Noem (R-SD)/Peterson(D-MN) • Advisory panel to set up an exceptions

process for those services that require higher

level of supervision

• Default standard of general supervision

• Special rule for CAHs based upon their

Medicare CoPs

• Revise the definition of “direct supervision” to

allow for telemedicine, telephone or other

technology

• Hold harmless from civil or criminal action

back to 2001

Recent Legislative Activity

H.R. 4067

To provide for the extension of the enforcement

instruction on supervision requirements for

outpatient therapeutic services in critical

access and small rural hospitals through 2014

(Rep. Lynn Jenkins - Energy and

Commerce Committee)

340B Drug Program

http://www.aha.org/advocacyissues/alliances/340b.shtml

New Challenges

• Hospital eligibility

• Patient definition

• Contract pharmacy

• Drug diversion

• GPO exclusion

340B “Mega-rule”

www.aha.org

• 2011 CBO “options” document $62B in

savings if eliminate CAH, MDH, SCH

• FY2015 Pres. Obama Budget

• Reduce CAHs payment of 101% of costs

to 100% ($-1.69B)

• Prohibit CAH designation for those

CAHs that are less then 10 miles from

nearest hospital ($-720M)

• 2014 “Omnibus” asks CMS for 10 mile list

Rural Hospital Threats

OIG Reports

• Reports on CAHs – August 2013 – Recommended that CMS seek legislative authority to

remove necessary provider CAHs’ permanent exemption from the

distance requirement, thus allowing CMS to reassess these CAHs

– September 2014 – Recommended that CMS seek legislative authority

to change formula for calculating beneficiary costs for outpatient

services

• Upcoming report

– Payment policy for swing bed services

• Report on RHCs – September 2014 -- Recommended that CMS terminate RHCs that no

longer meet location criteria and issue regulations to ensure that RHCs

determined to be essential providers remain certified as RHCs