new jersey chapter - HFMA NJ · 2013. 4. 18. · Whether with tax, audit or consulting, ... the...

2013 Tax Provisions of

Healthcare Reform...Page 6

Medicare Physician –

Hospital Collaboration Pilot...

0

Partnership fo

r Patie

nts...

Page 13

Affordable InsuranceExchanges...Page 18

Proposed Regulations Seek

to Clarify the Affordable

Care Act.......Page 23

Early Spring 2013 • vol 59 • num 3

new jersey chapter

Scott Mariani, Partner and healthcare industry expert, knows how critical it is for hospitals

and healthcare delivery systems to implement the right strategies for financial survival. His healthcare clients trust his advice and guidance, enabling them to focus on what matters most

—providing quality patient care. Whether with tax, audit or consulting, helping his clients avoid fiscal trauma is Scott’s specialty.

Scott Mariani, Partner, JD

Practice Leader, Healthcare Services Group

[email protected] • 973.898.9494

Focus 1

Early Spring 2 0 1 3

focus•advertisers• focus•features•

focus•points•

focus•cover•

Besler

CBIZ KA Consulting Services, LLC

Fox Rothschild LLP

Liberty Billing

McBee Associates, Inc.

NJ Smart Start Buildings

Panacea Healthcare Solutions

ParenteBeard, LLC

William H. Connolly & Assoc.

WithumSmith+Brown

2013 Tax Provisions of Healthcare Reform by Anthony J. Panico, CPA and John A. Smith, Jr. ……………………………………… 6

Medicare Physician – Hospital Collaboration Pilot – Gainsharing that Works by Sean Hopkins, Jo Surpin and Michael Kalison ………………………………………… 10

Partnership for Patients: Working Together to Improve Quality, Efficiency and Patient Safety by Jennifer Sryfi, MHA ………………………………………………………………… 13

Affordable Insurance Exchanges: Coming to a State Near You by James A. Robertson, John W. Kaveney and Cecylia K. Hahn …………………………… 18

Proposed Regulations Seek to Clarify the Affordable Care Act by Karen R. McLeese ………………………………………………………………… 23

Shared Responsibility PaymentArticle Courtesy of CBIZ ……………………………………………………………… 27

The Value Journey: 2013 and Beyond by Gregory M. Adams, FHFMA ………………………………………………………… 32

Managing the Hidden Indirect Costs of Healthcare Technology Equipment by Jennifer Vanegas ………………………………………………………………… 35

2012 Compliance Effectiveness SurveyPrepared by: New Jersey HFMA C.A.R.E. Forum and New Jersey Hospital Association by Mike McKeever …………………………………………………………………… 37

Be a Flu Fighter: 2012-2013 Seasonal Influenza Update by Shannon Davila, RN, MSN, CIC, CPHQ ……………………………………………… 40

The Fiscal Cliff Tax Deal: What Does It Mean For You? by Dave Springsteen ………………………………………………………………… 42

Apply for the NJ HFMA Annual Scholarship …………………………… 44

Who’s Who in the Chapter ...... 2

The President’s View by John Brault, MHA, FHFMA ........ 3From the Editor by Elizabeth G. Litten, Esq. ............ 4Who’s Who in NJ Chapter Committees ........... 16

Focus on Finance .................... 28

Your Personal Finances ......... 30

Focus on Industry ................... 31

Certification Corner ................ 33

Job Bank Summary ................ 34

Mark Your Calendar ................ 36

New Members .......................... 39

Meet A New Member ............. 46

Cover courtesyof Hermitage Press


2 Focus

focus/hfmaWho’s Who in the Chapter 2012-2013Chapter Website …………………………………..www.hfmanj.org

Communications CommitteeDeborah E. Shapiro, MBA, Director ..............................................................WFS ServicesElizabeth G. Litten, Esq., Chair ........................................................... Fox Rothschild LLPAl Rottkamp, MBA, Vice Chair .............................. Princeton Healthcare System/AramarkAnthony F. Consoli ................................................................... CBIZ Benefits & InsuranceMark Dougherty, FACHE ........................................................ Energy Systems Group, LLCLaura Hess, FHFMA ............................................................................................ NJHFMAJohn Manzi ................................................................ Panacea Healthcare Solutions, LLCRhonda Maraziti .....................................................................WithumSmith + Brown, P.C.Nicole K. Martin, MPH, Esq. ..................................................................... Martin Law, LLCWilliam McCann ................................................................................................HealthfirstDavid A. Mills ..............................................................................Hinduja Global SolutionsAmina Razanica .............................................................New Jersey Hospital AssociationJames A. Robertson, Esq. ..........................McElroy, Deutsch, Mulvaney & Carpenter, LLPRoger D. Sarao, CHFP ................................................... New Jersey Hospital Association

NJ HFMA Chapter OfficersPresident, John Brault, FHFMA .....................Neighborhood Health Services CorporationPresident-Elect, David J. Wiessel ........................................................ Ernst & Young, LLP Secretary, Heather Weber ............................................................................ParenteBeard Treasurer, Tracy Davison-DiCanto, MBA , FHFMA ..................Princeton Healthcare System

NJ HFMA Board MembersStacey Bigos – Associate Board Member ........................New Jersey Hospital Association

Steve Bilsky .............................................................................................................. Causey

Anthony F. Consoli ...................................................................... CBIZ Benefits & Insurance

Laurie Grey ............................................................................ Princeton Healthcare System

Scott Mariani ............................................................................WithumSmith + Brown, P.C.

Michael McKeever .................................................................................................... UMDNJ

Darlene Mitchell ...................................................................Hunterdon Healthcare System

Rosemary Nuzzo .................................................................................................Atlanticare

Roger Sarao, CHFP – Ex-Officio .......................................New Jersey Hospital Association

Diana Sessions – Associate Board Member ........................................................Accenture

Deborah E. Shapiro, MBA ...............................................................................WFS Services

Stella Visaggio, FHFMA, CPA .....................................................Hackettstown Regional MC

Dan Willis ............................................................................Children’s Specialized Hospital

NJ HFMA Advisory CouncilMichael Alwell, FHFMA ....................................................Saint Michael’s Medical Center Mary T. Taylor, MBA, FHFMA .......................................... Southern Ocean Medical CenterBrian P. Sherin, MBA, FHFMA ...................................................................Besler ConsultingJoseph J. Dobosh, Jr., MBA ................................................Children’s Specialized Hospital

Advertising Policy/Annual RatesThe Garden State “FOCUS” reaches over 1,000 healthcare professionals in various fields. If you have a product or service you would like the healthcare financial industry to know

about, please take advantage of this great opportunity!Contact Laura Hess at 888-652-4362 to place your ad or receive a copy of the Chapter’s advertising policy. The Publications Committee reserves the right to refuse any ad not consistent

with the overall mission of the Chapter. Inclusion of an ad in this Newsmagazine does not infer endorsement of the product or service by the Healthcare Financial Management Association or the Publications Committee. Neither the Healthcare Financial Management Association nor the Publications Committee shall be responsible for slight variations in production quality of published advertisements. Effective July 2006 Rates for 5 bi-monthly issues are as follows:

Display Full Page Half Page Quarter PageBack Cover – Full Page Color $4,600 NA NAInside Back & Front Covers – Full Page, Color $4,350 NA NAFirst Inside Ad – Full Page, Color $4,250 NA NAFirst Inside Ad – Full Page, Black & White $3,450 NA NAInside Ad – Color $3,450 $2,600 NAInside Ad – Black & White $2,150 $1,450 $875Center Spread – 2 Full Pages, Color $5,900 NA NACenter Spread – 2 Full Pages, Black & White $3,800 NA NANEW! Web Ads are available to our FOCUS advertisers – $250 for 3 months

Ads should be submitted as print ready (CMYK) PDF files along with hard copy. Payment must accompany the ad. Deadline dates are published for the Newsmagazine. Checks must be payable to the New Jersey Chapter - Healthcare Financial Management Association.

DEADLINE FOR SUBMISSION OF MATERIAL Issue Date Submission Deadline January December 1 April February 28 June April 30 October July 15 December October 15

IDENTIFICATION STATEMENTGarden State “FOCUS” (ISSN#1078-7038; USPS #003-208) is published bimonthly by the New Jersey

Chapter of the Healthcare Financial Management Association, c/o Elizabeth G. Litten, Esq., Fox Rothschild, LLP, 997 Lenox Drive, Building 3, Lawrenceville, NJ 08648-2311

Periodical postage paid at Trenton, NJ 08650. POSTMASTER: Send address change to Garden State “FOCUS” c/o Laura A. Hess, FHFMA, Chapter Administrator, Healthcare Financial Management Association, NJ Chapter, P.O. Box 6422, Bridgewater, NJ 08807

OBJECTIVEOur objective is to provide members with information regarding Chapter and national activities,

with current and useful news of both national and local significance to healthcare financial profes-sionals and as to serve as a forum for the exchange of ideas and information.

EDITORIAL POLICY Opinions expressed in articles or features are those of the author(s) and do not necessarily reflect the view of the New Jersey Chapter of the Healthcare Financial Management Association, or the Communications Committee. Questions regarding articles or features should be addressed to the author(s). The Healthcare Financial Management Association and Communications Committee assume no responsibility for the accuracy or content of any articles or features published in the Newsmagazine. The Communications Committee reserves the right to accept or reject contributions whether solicited or not. All correspondence is assumed to be a release for publication unless otherwise indicated. All article submissions must be typed, double-spaced, and submitted as a Microsoft Word document. Please email your submission to:Elizabeth G. Litten, Esq. [email protected]

REPRINT POLICY The New Jersey Chapter of the HFMA will not reprint articles published in Garden State FOCUS Newsmagazine. Individuals wishing to obtain reprint authorization must obtain it directly from the author(s) of the article. The cover of the FOCUS may not be used in the reprint; however, the reprint may note that the article was published in a specific issue. The reprint may not imply endorsement by the HFMA, directly or indirectly.


Focus 3

The President’s View . . .

It was seven years ago this month that I attended my first New Jersey Chapter board meeting as the junior board member. I was an experiment, three years out of college, and a chapter member for a little over a year. The board sought to invite fresh ideas and new insight. I’m sure that many would tell you that they got a little more than they bargained for with me, but I can confirm that I did as well. There is very little that I have accomplished in my career that has not been supported by my active membership in the New Jersey Chapter of HFMA. The incredible education and networking opportunities offered by the chapter have been invalu-able to my career development. Attaining the CHFP credential, and eventually becoming a Fellow in HFMA, served to validate my achievements. Almost more important have been the many friends I have made along the way, who truly enrich both my personal and professional life. It is for all of these gifts that this organization has given me that I continue to “pay it forward” through volunteering as a chapter leader.

On the second Tuesday of January, a year or so earlier, I attended my first chapter meeting. The PFS Quarterly was attended by over 200 people that year. I sat in the back of the room, listening to presentations on implementing the HIPAA privacy rule and patient friendly billing. It’s hard to believe that we worried about being able to serve our patients under such “draconian” regula-tions. It was this experience that opened my eyes to the value of HFMA. Thinking back, today, I can truly see the value in the education that HFMA has provided me over the years. But, it was more than the presentations that day at the “PFS Quarterly” that established HFMA’s value proposition in my mind.

At lunch, over the normal Woodbridge Hilton banquet fare, the then president of the chapter, Rick Parker, introduced himself to me. I was 24 at the time, and although I can’t quite recall, I’m sure that initially I was only concerned with making it to the happy hour at the conclusion of the meeting. Rick, after welcoming me to the chapter, provided a piece of advice during that conversa-tion that I have never forgotten. He invited me to “get involved”. He explained that membership in HFMA was valuable in and of itself, but that to get the most out of my membership I needed to become active in the chapter, that for every hour I put into the chapter I would see a twofold return. Eight years later, halfway through my term serving as your President, I can confirm that everything Rick said that day was correct.

The last few months of the chapter year bring with them a packed agenda. Take the opportunity to attend one of our fantastic education sessions, the annual cost report seminar, some very timely webinars, our March Bi-Monthly meeting presented by the CARE Forum, and our annual Women’s Leadership session are just a few of the events we have planned. The golf outing in May is a great escape from the office and an even greater way to network with your peers at Fiddlers Elbow Country Club. While I look forward to seeing you at these great events, I hope you will consider going beyond simple attendance at a New Jersey Chapter event. Get involved. Become an active member in one of the chapter’s many committees and forums. I have no doubt that you will find, as I have, the value in volunteering with the chapter.

Sincerely,

John M. Brault, MHA, FHFMA

John Brault


4 Focus

From The Editor . . .

Elizabeth G. Litten

Dear Readers:

This is a dense issue. I must admit that it took me a while to proof read it, because I got caught up in trying to digest the information contained in each article. For the readers out there who, like me, fill much of our working hours devoted to understanding the changing health care landscape, the article topics are likely to be familiar, but the amount of new information and level of detail under each topic and within each article is daunting.

Not too long ago, I complained to the Communications Committee members, during one of our “what types of articles do we want to try to gather for the upcoming issue” brainstorming sessions, that we seemed to be recycling the same old topics – Stark law issues, fraud and abuse, charity care payment challenges, Medicare RAC audits, revenue cycle and coding issues, etc. – issue after issue. I even suggested we create blog-type categories on the website in which we could catalogue each of the frequently-recurring topics and republish articles from this magazine. The recurring topics evolve over time, of course, but reading variations on the same theme year after year can be painfully dull. Now, it seems that even reading about RAC audits or ICD-10s again would be reassuringly familiar. There’s no doubt about it, though. We will have an overwhelming supply of new article content as changing laws and market realities keep attorneys, compliance officers, administrators, operations, finance, and strategy experts busy navigating new roads.

I was struck by the eye-opening (or eye-closing, depending on the day) newness and density of content of the articles in this issue. I was also struck by the fact that most, if not all, of the articles were written by New Jersey HFMA Chapter members or colleagues of Chapter members. We are a pretty smart bunch, I must say. Please keep writing, reading, thinking, contributing, and being involved in our Chapter. Your ideas, knowledge, and participation help us all.

Regards,

Elizabeth G. LittenEditor

Focus 5

FinancialIncentives

forEnergy

Effi ciency

For Our HospitalHealthcare administrators are always looking for ways to control costs and energy usage continues to be a large part of our operating budget. We turned to New Jersey’s Clean Energy Program™ for a FREE Benchmarking Report, which was a big help in understanding what equipment we needed to upgrade fi rst.

That’s Just What The Doctor Ordered.

To learn more about benchmarking for buildings in the public and private sectors,visit NJCleanEnergy.com/BENCHMARKING or call 866-NJSMART to speak with a program representative.

NJ SmartStart Buildings® is a registered trademark.Use of the trademark without permission of the NJ Board of Public Utilities is prohibited.


6 Focus

On June 28, 2012, in a landmark 5-4 decision, the Supreme Court voted to uphold the individual mandate pro-vision included in the 2010 Patient Protection and Affordable Care Act (“Act”). The individual mandate, effective January 1, 2014, requires individuals to have “minimum essential coverage” with respect to health care. The vote to uphold was justified by the fact that the penalty associated with not hav-ing “minimum essential coverage” was not a violation of the Constitution but merely represents a tax and it is in Congress’ power to tax individuals. The Act contains many provisions, of which a majority are tax provisions, which affect employers, employees, individuals, small businesses, providers and insurers. This article outlines five (5) of the key tax provisions that became effective January 1, 2013.

1. Form W-2 Healthcare Benefit ReportingThe Act includes a provision, with the addition of Internal

Revenue Code (“IRC”) §6051(a)(14), that certain businesses must begin reporting the aggregate cost of employer-sponsored group health coverage provided to employees on their respec-tive Forms W-2. Employer-sponsored coverage is coverage un-der any group health plan made available to an employee by an employer which is excludable from an employee’s gross income under IRC §106, or would be so excludable if it were employer provided coverage. Employer-sponsored coverage also includes the cost for an employee’s dependents participating in the group health plan.

Originally effective for the 2011 year, in October, 2010, the IRS issued Notice 2010-69 which made this reporting op-tional for the 2011 tax year; mandatory for 2012 (Forms W-2 that will be issued in January, 2013). Employers that issued 250 or more Forms W-2 for 2011 are subject to this new reporting requirement on 2012 Forms W-2. As a result of a comment period which closed on July 18, 2011, the IRS issued Notice 2012-9 in January of 2012 which restated, clarified and expanded earlier IRS Notice 2011-28.

The reportable cost to be disclosed includes both the em-ployer and employee portions and will be reported on 2012 Forms W-2 in Box 12 utilizing the code “DD”. In addition, as originally outlined in IRS Notice 2011-28, this new report-ing requirement is for informational purposes only and will not be considered taxable wages. The IRS has stated that the purpose of the requirement is “to provide useful and com-

parable consumer information to employees on the cost of their health care coverage”.

2. Patient-Centered Outcomes Research Fee

The IRS, on December 5, 2012, issued final regulations with respect to the fees associ-ated with the Patient-Centered Outcomes Research Trust Fund (“Fund”). The Fund was es-tablished to fund the Patient-Centered Outcome Research Institute (“Institute”) which was established under the Act to advance comparative clini-cal effectiveness research that will help patients, clinicians, purchasers and policymakers make informed health decisions. The Fund will be supported by fees to which certain health insurance policies and plan sponsors of certain self-funded health plans are subject.

Under the final regulations, IRC §4375 imposes a fee on is-suers of “specified health insurance policies” for each policy year ending on or after October 1, 2012 and before October 1, 2019. Specified health insurance policies, as defined in the regulations, include accident and health insurance policies that are issued with respect to individuals residing in the United States. They do not include stop-loss or indemnity reinsurance policies.

The fee is equal to $1 per average number of covered lives for policy or plan years ending October 1, 2012 through Sep-tember 30, 2013. The fee increases to $2 per average number of covered lives for policy or plan years ending October 1, 2013 through September 30, 2014. For each year thereafter, until plan years ending on or before September 30, 2019, the fee will be equal to $2 per average number of covered lives plus an adjustment for inflation.

The fee is reportable on Federal Form 720, Quarterly Fed-eral Excise Tax Return, which is currently in the process of being revised by the IRS to incorporate this provision. For calendar year taxpayers, the initial fee is reportable on Form 720 and due by July 31, 2013. All fiscal year taxpayers must

2013 Tax Provisionsof Healthcare Reform

by Anthony J. Panico, CPA and John A. Smith, Jr.

Anthony J. Panico

John A. Smith, Jr.


Focus 7

file Form 720 and remit the appropriate fee by July 31st of the calendar year immediately following the last day of the plan year. Taxpayers need to be aware that the fee will need to be remitted electronically using the Electronic Federal Tax Payment System (EFTPS). As such, if not already set up for electronic filing, organizations will need to do so at least 30 days prior to the Form 720 due date.

There are various ways to calculate the number of covered lives for fully insured and self-insured plans. The final regu-lations define these methods. Fully insured plans can utilize an actual count, a snapshot method, NAIC member months method or a State Form method. Self-insured plans can utilize an actual count, a snapshot method or a Form 5500 method. The chosen method for either type of plan must be used for the entire plan year and the same method must be used for all policies subject to the fee.

3. Net Investment Income TaxBeginning January 1, 2013, there is an additional net invest-

ment income tax on unearned income, imposed by IRC §1411, in the form of a 3.8% surtax to which certain unearned income of certain individuals will be subject. The surtax is intended to raise a significant amount of revenue to assist in raising the necessary funds to pay for the various costs associated with the Act. The tax applies to individuals, trusts and estates, if certain thresholds are met; however, this article focuses on its applica-bility to individuals.

The IRS, on November 30, 2012, issued proposed regula-tions with respect to this net investment income tax. These regulations are proposed to be effective for tax years beginning after December 31, 2013. Until such time, individuals may rely on the proposed regulations for purposes of being in com-pliance with IRC §1411.

The net investment income tax is reportable on an indi-vidual’s Federal Form 1040, U.S. Individual Income Tax Re-turn, and is subject to IRS rules and regulations relating to estimated tax provisions. Therefore, individuals subject to the tax, beginning in 2013, should take the necessary steps to ad-just their federal income tax withholding or increase estimated tax payments accordingly.

The net investment income tax is applied to the lesser of net investment income for the taxable year, or the excess, if any, of the modified adjusted gross income (defined below) for the year over a threshold amount. The threshold amounts are as follows:

• $200,000forsinglefilers; • $250,000 for married filing jointly; and • $125,000formarriedfilingseparately.

Under IRC §1411(d), modified adjusted gross income is a taxpayer’s adjusted gross income increased by the excess, if any, of foreign earned income normally excludable under IRC §911(a) less amounts deducted in computing adjusted gross

income and deductions attributable to foreign earned income. Net investment income includes, under Proposed Regula-

tion §1.1411-4, the following:

• Interest, dividends, capital gains, rent and royalty income, and non-qualified annuities, • Otherincomeandgainsfrompassiveactivities, • Other income and gains from businesses involved in the trading of financial instruments and commodities, and • Gains from the sale of interests in S Corporations and partnerships, with certain exceptions.

In computing net investment income, losses from passive activities should be included in the computation to the extent that the losses are deductible on the taxpayer’s individual in-come tax return for that year. Basically, passive losses can be used to offset passive income for purposes of computing net investment income. Capital losses and loss carry-forwards are also available to offset any capital gains realized in the same tax year to which the 3.8% tax applies.

Under the proposed regulations, any gain resulting from a sale of stock in an S corporation or an interest in a partnership, to the extent the owner is a passive owner and does not mate-rially participate in the activity, is considered net investment income and subject to the net investment income tax. The proposed regulations contain a lot of important information, however, of particular importance; taxpayers will be given a “fresh start” with respect to any prior grouping elections that they have made for purposes of testing material participation in flow-through entities or rental real estate activities. As a re-minder, under IRC §469, a taxpayer’s investment in a flow-through entity is passive unless the taxpayer materially par-ticipates in the activity. In order to materially participate, the taxpayer must satisfy one of seven mechanical tests under IRC §469, which are typically based on the number of hours the taxpayer performs in the activity.

Other gains that are includable in net investment income are gains on sales of stocks, bonds and mutual funds, capital gains from mutual funds and gains from sales of investment real estate. Furthermore, the net investment income tax applies to any amount of gain resulting from the sale of a principle/primary residence that is not excludable gain under IRC §121. This exclusion currently exempts the first $250,000 of gain for single filers and $500,000 of gain for married couples.

Please note that certain investment expenses can be used to offset net investment income including, but not limited to, investment interest, investment advisory or brokerage fees and allocable state and local income taxes.

4. New Additional Medicare TaxAlso effective January 1, 2013, there is an additional Medi-

care tax that both employees and employers need to take into continued on page 8


8 Focus

consideration. As with the net investment income tax, a signifi-cant portion of the revenue raised by the Act will be generated by this additional Medicare tax.

The Federal Insurance Contribution Act imposes two wage taxes on employees; Old-Age, Survivors, and Disability Insurance (social security tax) and Hospital Insurance (Medi-care tax). The social security tax rate is currently 12.4% of which the employer and employee contributes equally 6.2%. For 2013, the social security wage base limitation stands at $113,700. Currently, the Medicare tax rate is 2.9% of which the employer and employee shares equally 1.45%. There is cur-rently no wage base limitation for the Medicare tax.

Effective January 1, 2013, there is an increase to the Medi-care tax of .9% which will be imposed on employees only. The .9% increase only applies to individuals whose Medicare wages exceed certain dollar thresholds. These threshold amounts are as follows:

• $250,000fortaxpayersfilingjointreturnsandforsurvi- ving spouses;• $125,000 for married taxpayers filing separate returns; and • $200,000 for single taxpayers.

The above thresholds are not indexed for inflation. An employer is required to withhold the additional Medicare tax on an employee’s Medicare wages in excess of $200,000, without regard to the wages of the employee’s spouse. An em-ployee is liable for any additional Medicare tax not required to be withheld by an employer. Taxpayers cannot request ad-ditional withholding for the additional Medicare tax but can request additional income tax withholding by updating their Form W-4, Employees Withholding Allowance Certificate. As with the net investment income tax, the additional Medicare tax is subject to IRS rules and regulations with respect to es-timated tax provisions. Therefore, individuals should consider estimated tax payments in these instances. Employers are not be responsible for determining whether an employee’s com-bined income with his or her spouse will subject them to the increased Medicare tax.

The .9% Medicare tax increase outlined above also applies to self-employed individuals beginning in 2013. Additionally, it is important to note that the income tax deduction for one-half of the self-employment tax will be calculated without re-gard to the additional hospital insurance tax.

The additional Medicare tax will be calculated and reported on an individual’s Form 1040. The additional Medicare tax withheld by employers will also be reported on Form 1040 and any overpayment of this tax will be applied against all taxes reflected on the taxpayer’s Form 1040. Any underpayment of the tax will need to be paid by the taxpayer. This scenario can arise when both a husband and wife each have Medicare wages less than $200,000. In this instance, their employers are not

required to withhold the additional Medicare Tax. If, when combined, their Medicare wages exceed the married filing jointly threshold of $250,000, they will be subject to a .9% Medicare tax on the excess when filing their Form 1040.

The IRS, on November 30, 2012, issued proposed regula-tions with respect to this additional Medicare tax. These regu-lations provide guidance to employers and individuals with respect to the implementation of the additional Medicare tax. The IRS is accepting comments with respect to these proposed regulations until March 5, 2013. Taxpayers can rely on the proposed regulations for all tax periods that begin before the date the final regulations are published in the Federal Register. In addition, the IRS has posted forty seven (47) frequently asked questions with respect to the additional Medicare tax on its website. These questions address issues associated with ba-sic concepts surrounding the tax, individual issues and issues that employers and payroll service providers will face.

5. Flexible Spending AccountsEffective for 2013, the contribution limit to a medical flex-

ible spending account will be reduced from $5,000 to $2,500 per employee, per year.

SummaryThis article is intended to highlight certain issues that tax-

payers face in 2013 with respect to the 2010 Patient Protec-tion and Affordable Care Act. Accordingly both employers and employees should review these new requirements in greater detail for compliance with the IRS rules and regulations and the potential impact of additional tax liability for future con-sideration in their tax planning process.

About the AuthorsAnthony J. Panico, CPA, is a Partner at WithumSmith+Brown, Certified Public Accountants and Consultants, and is a member of the firm’s Healthcare Services Group. Anthony can be reached at [email protected].

John A. Smith, Jr., is a Supervisor at WithumSmith+Brown, Certified Public Accountants and Consultants, and is a member of the firm’s Healthcare Services Group. John can be reached at [email protected].

WS+B’s healthcare services group specializes in providing tax, accounting and auditing and consulting services to integrated healthcare delivery systems, hospitals and medical centers, long-term care and assisted living facilities, foundations, supporting organizations, physician groups and other healthcare organiza-tions. WS+B’s healthcare services group currently provides health-care services throughout the northeast, including New Jersey, New York, Pennsylvania and Rhode Island.

continued from page 7

Focus 9

Partnering With Our Clients For 40 Years To Make Them Extraordinary

Jeffrey Silvershein Principal 212.594.6669 Jeff [email protected]

Denials Prevention—Attack potential denials on the front end with our Concurrent Emergency Department Medical Necessity Reviews to prevent avoidable denials, address weaknesses in documentation, and deliver clinical documentation improvement.

Appeals Management—Recover revenue associated with denied claims and reduce denial rates with our successful appeals process and root-cause analysis.

Revenue Recovery—Identify underpayments and recover lost revenue with our proven revenue data mining services.

Revenue Cycle Enhancement—Improve billing effi ciency and accuracy with the help of our knowledgeable health care fi nance professionals, sound processes, and ability to drive lasting improvements.

Regulatory Compliance—Strengthen internal compliance initiatives and reduce risk with the help of our expert consulting team.

McBee Associates, Inc. is committed to achieving measurable results for each client. With a team of consulting professionals who have expertise unmatched in the industry, the fi rm designs and delivers custom services to address each client’s particular need. Our solutions fi t seamlessly within the client’s culture to ensure lasting improvements and long-term benefi ts. Organizations that excel partner with McBee Associates.


10 Focus

Medicare Physician – Hospital Collaboration Pilot – Gainsharing that Works

by Sean Hopkins, Jo Surpin and Michael Kalison

The industry initiative to enable hospitals to compensate physicians directly for efficient performance – “gainsharing” – commenced in 1999 with a meeting between the NJHA and the Health Care Financing Administration (“HCFA”). Con-cerns from lawmakers and regulators over quality of care and fraud had derailed all previous attempts to align provider in-terests, except for very limited exceptions. But NJHA felt that with the increasing calls for health reform, it was important for the industry to have a seat at the table. To accomplish this, the industry had to be “part of the solution.” The solution started with a broad based, comprehensive framework that would enable doctors and hospitals to collaborate effectively at the institutional level on issues of cost and quality. But to be credible, NJHA’s “unsolicited” application had to directly address the concerns in Washington and Baltimore that had killed or neutered previous proposals.

The New Jersey Physician-Hospital Collaboration Dem-onstration (the “Demonstration”) was able to gain approval from CMS because of safeguards designed directly into the gainsharing methodology: the adjustment for severity of ill-ness, limits on physician incentive payments, protections to insure that the tool would be used to promote improved performance, not payment for referrals, and so forth. But opening the door was just the first step. The Demonstration merged experience from an earlier New Jersey demonstration that had provided Medicare with the model for the Inpatient Prospective Payment System; basically, a set of design princi-ples which required practical solutions, and allowed complex-ity only when necessary. These principles made sure that the ambitious project would get off the ground, and not crash and burn as so many before it had; that the methodology could be successfully implemented in virtually any setting.

With the basic methodology established, the focus turned to the doctors and hospitals. Substantial time was devoted to identifying fundamental issues that could harm participation or compromise effectiveness. So, for example, steps were taken to insure that the basic system could function without disturb-ing the existing form and process of provider payment, and an adjustment included to insure that doctors would not lose professional income as a result of helping hospitals to become

more efficient. As to the hospi-tals, separate incentive formu-lae were developed to enable institutions to recognize physi-cians that performed efficiently, as well as encouraging improve-ment across the board.

Much was accomplished during the Demonstration: steering committees at each participating hospital customized the meth-odology to meet the unique needs of the institution; the linkage to quality improvement and care redesign was firmly es-tablished; data reporting tools improved and physician partici-pation steadily increased. And, while almost all participating hospitals benefitted, certain hos-pitals developed strategies that clearly demonstrated the role of gainsharing. Improvements were made in areas including: admission planning, fewer mar-ginal but costly diagnostic tests, timely first starts in the OR and reduction in turnaround time, cost effective use of critical care and telemetry units, increased use of CPOE and reliance on P&T recommendations, requiring consultants to show up within 24 hours, responding to outstanding chart queries and avoiding the delinquent chart list, evidence based selection of medical devices and hardware, effective discharge planning and post-discharge follow-up. As to the latter, NJHA devel-oped a post-discharge tracking tool called Well on Track that improved the effectiveness of post-discharge outreach and care.

CMMI has linked the future of health reform to the devel-opment of new structures, like accountable care organizations.

Sean Hopkins

Jo Surpin

Michael Kalison


Focus 11

Structures reorganize the way in which parts of the health care delivery system – people and business entities – relate to one another. Most have been tried before, many without success. For these structures to succeed, they must have a plan: a pro-gram that identifies an objective for the structure, effectively aligns the interests of the parties, and rewards behavior that furthers the objective. This is common to all successful busi-nesses. In healthcare, this begins with effective collaboration between doctors and hospitals; without this foundation the venture – ACO or stand-alone - cannot succeed. The Dem-onstration provided the basic program; the New Jersey Model 1 Pilot, the next generation of the gainsharing, will build on this foundation.

The New Jersey Model 1 PilotThe New Jersey Model 1 Pilot, now scheduled to start

in 2013, essentially expands the current Demonstration and opens the program to all New Jersey acute care hospitals. Because of this, the physician eligibility requirements have been relaxed. Under the Demonstration, only physicians on staff at the beginning of the program were allowed to par-ticipate. Under the Pilot, physicians new to a hospital must wait 12 months (and have at least 10 admissions during that 12 month period). Admissions by physicians with multiple admitting privileges continue to be capped, but the cap is a “rolling cap,” rather than one fixed at the beginning of the program. All participating physicians must be involved in the hospital’s quality program. Perhaps most important in terms of physician participation, work will begin shortly on meth-odologies to extend eligibility to other physicians currently on staff. Specifically, participation under the Demonstration was limited to the “Responsible Physician,” that physician identi-fied on the uniform bill as most responsible for resource uti-lization while the patient was hospitalized. Although it was pointed out that other kinds of physicians were often involved in the management of certain kinds of cases – e.g., consul-tants in cardiology cases – the issue was deferred to insure the successful implementation of the basic gainsharing methodol-ogy. With the beginning of the Pilot, subcommittees will be formed to identify the specific classes of cases where this issue is relevant and, consistent with the objectives of the program, specific methodologies to insure that adding physicians will contribute to the improvement of overall performance.

Similar to the issue of expanding physician eligibility, the Pilot will allow hospitals to increase the level of incentive pay-ments from 25% of professional fees, the allowable limit under the Demonstration, up to 50%. As to this, NJHA is well aware that a proper balance must be struck to insure that the pro-gram is sustainable: that participating hospitals must continue to realize sufficient improvement in performance in order to justify maintaining the program. Two steps are being taken to achieve this balance. First, the formula for the Improvement incentive has been modified: physician-specific improvement

will now be measured from the prior year instead of the base year. This responds to the problem of continuously paying for “old improvement.” Second, a methodology will be developed to measure year over year improvement at the institutional level. Increases in the amount of the incentive, from current levels up to 50%, will be linked directly to overall institutional performance. By linking overall physician performance to the overall financial health of the institution, the program insures that participating hospitals will not be forced to pay out mon-ies they cannot afford.

Insuring “program integrity” extends to a new condition added to the Pilot by CMMI: Medicare will be entitled to a one half (½)% discount in the 2nd 6 months, 1% in year 2, and 2% in year 3. Data gathered from the Demonstration indicates that most hospitals should be able to comply with this. Nevertheless, like the two safeguards above, a threshold has been added to the program to protect participating hospi-tals. Beginning in year 2, overall institutional achieved savings must be at least equal to the Medicare discount. Individual institutions may implement a higher threshold – for example, the Medicare discount plus the incentive payments; but, at a minimum, participating hospitals will not be obligated to pay incentives unless the discount is met. Finally, and perhaps most important, a hospital may withdraw from the Pilot with 60 days notice.

In conclusion, it is helpful to view participation in the Pilot as a process. After years of legal and regulatory restrictions, there are tangible signs that the importance of gainsharing has finally been internalized. True integration cannot be achieved without effectively aligning provider incentives. References to gainsharing throughout the Accountable Care Act indicate an understanding that initiatives like accountable care and bun-dling will falter if providers are not unified in promoting or-ganizational performance. But this is a long war with many battles to be fought along the way. For example, NJHA has made clear to CMMI that any future legislatively mandated reductions in Medicare payments, resulting in duplication of the savings required under the Pilot, would be unfair and un-acceptable. Also, there is the focus on quality improvement and care re-design. Since quality improvement emerged from the Demonstration as the highest priority of the participating hospitals and their physicians, this could present an opportu-nity to help shape Medicare thinking and will be a primary focus of Model 1. Bottom line: Pilot hospitals will have a seat at the table in what will certainly be one of the most impor-tant discussions concerning the future path of the Medicare program. NJ hospitals have influenced national health policy dating back to the use of DRGs and the implementation of prospective payment. Model 1 is the next forum for the NJ hospital industry to continue its long standing role in shaping national health policy.

continued on page 12


12 Focus

The statements contained in this document are solely those of the authors and do not necessarily reflect the views or policies of CMS. The authors assume responsibility for the accuracy and complete-ness of the information contained in this document.

About the AuthorsSean J. Hopkins is a Senior Vice President with the New Jersey Hospital Association, a policy and advocacy organization located in Princeton New Jersey. As a Senior Vice President, Mr. Hopkins is responsible for overseeing all economic modeling and financial projections, all continuing education programming, and leads the Association’s Federal policy and advocacy efforts in Washington and oversees the NJ Medicare Gainsharing Demonstration Project. Mr. Hopkins serves as a member of the Healthcare Financial Manage-ment Association’s (HFMA) National Advisory Council advising the HFMA on healthcare reform issues. He previously served as an ex-officio board member for the New Jersey Chapter of the HFMA.

Jo Surpin is President of Applied Medical Software, Inc. From 1977 to 1982, Ms. Surpin was the Assistant Project Manager for the New Jersey Department of Health Case Mix (DRG) Project.

She was instrumental in the development and implementation of the State’s reimbursement system, which later served as the founda-tion for Medicare’s Prospective Payment System. AMS is an exten-sion of this earlier work, but with an emphasis on performance based incentives for physicians. The patented AMS Performance Based Incentive System® is being used in the NJ Medicare Gain-sharing Demonstration, as well as in several commercial programs. Ms. Surpin is a member of the HFMA. Michael J. Kalison is Chairman of Applied Medical Software and Of Counsel to the law firm McElroy, Deutsch, Mulvaney & Car-penter LLP. A graduate of the Wharton School and Law School of the University of Pennsylvania, Mr. Kalison served a clerkship on the Supreme Court of New Jersey. In 1976 he was retained by the New Jersey Department of Health to head up a Medicare demonstration charged with developing a prospective payment system for acute care hospitals based on patient case-mix. Utiliz-ing Diagnosis Related Groups (DRGs) as the basis of payment, the demonstration provided the model for the Medicare Inpatient Prospective Payment System (IPPS).



Focus 13


In this era of healthcare reform, one of the most significant challenges to hospital finances is the payment adjustment for hospital-acquired conditions (HACs) introduced by the Deficit Reduction Act of 2005 and reinforced by the Patient Protection and Affordable Care Act (ACA) passed in 2012.

Since October 2008, Inpatient Prospective Payment System (IPPS) hospitals no longer receive higher payment for cases when one of a list of selected conditions is acquired during hospitalization. The ACA goes further by imposing payment penalties on the 25 percent of hospitals whose rates of HACs, such as pressure ulcers, complications from extended use of catheters and injuries caused by falls, are the highest.

The HACs targeted by these provisions were selected be-cause they are: high cost or high volume or both; result in assignment of a case to a Medicare Severity Diagnosis Related Group (MS-DRG) that has a higher payment when present as a secondary diagnosis; and could reasonably have been pre-vented through the application of evidence-based guidelines (DHHS, 2012). The IPPS FY 2013 Final Rule published by the Centers for Medicare and Medicaid Services (CMS) in August 2012 listed the current selected HACs as follows:

• Foreignobjectretainedaftersurgery; • Airembolism; • Bloodincompatibility; • Pressureulcers(stagesIIIandIV); • Fallsandtrauma; • Catheter-associatedurinarytractinfection; • Vascularcatheter-associatedinfection; • Manifestationsofpoorglycemiccontrol; • Surgical site infection following four selected types of procedures; • Deepveinthrombosisandpulmonaryembolismfollow- ing total knee or hip replacement; and, • Iatrogenicpneumothoraxwithvenouscatheterization.

These provisions are expected to reduce Medicare costs by $3.2 billion over 10 years. In addition, the ACA called for a Hospital Readmissions Reduction Program to help hospitals improve patient transitions across the care continuum and reward hospitals that are successful in reducing avoidable

readmissions, reducing Medicare costs by $8.2 billion through 2019 (CMS Office of the Actuary, 2010). CMS also is work-ing to establish similar nonpayment provisions for Medicaid aimed at both hospital and nonhospital providers, in order to save a total of $35 million ($20 million for the federal share and $15 million for states) for FYs 2011 through 2015. It is anticipated that the positive effects of these provisions have the ability to extend to all payers and consumers that hospi-tals serve and will improve the overall quality of care provided in hospitals.

Addressing the ChallengeTo guide hospitals and other healthcare providers in re-

ducing the adverse events and readmissions related to the nonpayment provisions, DHHS launched the Partnership for Patients initiative, a public-private partnership to help improve the quality, safety, and affordability of healthcare for all Americans. The Partnership for Patients brings together hospitals, employers, physicians, nurses and patient advo-cates along with state and federal governments in a shared effort to make hospital care safer, more reliable and less costly (http://partnershipforpatients.cms.gov).

A key element of this partnership are the 26 Hospital Engagement Networks (HENs) working across the country to help identify solutions already working to reduce health care acquired conditions and disseminate them to other hospitals and providers. The networks specifically address adverse drug events, catheter-associated urinary tract infec-tions, central line-associated bloodstream infections, injuries from falls and immobility, obstetrical adverse events, early elective deliveries, pressure ulcers, surgical site infections, venous thromboembolism, ventilator-associated pneumonia and preventable readmissions.

The New Jersey Hospital Association (NJHA) has con-tracted with CMS to lead a New Jersey-based HEN of 62 participating hospitals. These hospitals are committing staff time and organizational resources to work with NJHA and nationally recognized experts to identify opportunities for improvement in their own facilities, adopt best

Partnership for Patients: Working Together to Improve Quality, Efficiency and Patient Safety

By Jennifer Sryfi, MHA


14 Focus

practices and report data regularly to measure their results. Together, they are focused on the two national goals of Part-nership for Patients:

• Keeppatientsfromgettinginjuredorsicker.Bytheend of 2013, the goal is to reduce HACs by 40 percent compared with 2010. Achieving this goal would mean about 1.8 million fewer injuries to patients, with more than 60,000 lives saved over the next three years.

• Helppatientshealwithoutcomplications.Bytheend of 2013, the goal is to achieve a 20 percent reduction in hospital readmissions caused by preventable complications during a transition from one care setting to another, compared with 2010. Achieving this goal would mean more than 1.6 million patients could recover from illness without suffering a preventable complication requiring readmission to the hospital within 30 days of discharge.

The NJHEN has developed learning collaboratives on each topic and brings expert faculty from across the country to share their knowledge, tools and best practices through a vari-ety of educational formats. NJHEN staff also provide ongoing technical assistance and support to hospitals in implementing quality improvement interventions and collect data to track and monitor hospital progress in meeting quality improve-ment goals, providing rapid feedback on progress.

Improving Operational EfficiencyNJHEN is unique from other HENs across the country in

that it places a special emphasis on improving operational ef-ficiency. The Institute for Healthcare Optimization is working with the NJHEN to apply flow management methodologies within participating hospitals. This model utilizes a collabora-tive approach, group learning and sharing of information and is designed to reduce healthcare professionals’ stress and short-ages, improve patient throughput, reduce patient mortality, improve quality and lower cost.

The NJHEN also supports hospital strategies to deepen leadership engagement, promote organizational culture change

and strengthen engagement of patients, families and com-munity stakeholders in efforts to improve patient safety and quality of care.

Reducing Harm and ReadmissionsThe efforts of the NJHEN and its affiliated hospitals are

expected to improve resource utilization, reduce readmissions and lower the overall cost of care, with the specific goals of reducing preventable harm in New Jersey hospitals by 40 per-cent and readmissions by 20 percent. To date, participating hospitals have seen a 25 percent reduction in catheter-associat-ed urinary tract infections, central line-associated bloodstream infections and fall rates remain below national averages, 78 and 74 percent reductions in SSIs for total knee replacement and colon surgeries, respectively, and readmissions declining each quarter.

To learn more about NJHEN goals, activities and accom-plishments to date, please visit the Web site atwww.njha.com/PFP.

About the AuthorJennifer Sryfi, MHA, is Director, Community Programs at New Jersey Hospital Association. She can be reached at [email protected].

ReferencesDepartment of Health and Human Services, Centers for Medi-care & Medicaid Services. (2012). Hospital-Acquired Conditions (HAC) in Acute Inpatient Prospective Payment System (IPPS) Hospitals Fact Sheet. Retrieved from http://www.cms.gov/Medi-care/Medicare-Fee-for-Service-Payment/HospitalAcqCond/down-loads/hacfactsheet.pdf.

Centers for Medicare & Medicaid Services, Office of the Actuary. (2010). Estimated Financial Effects of the “Patient Protection and Affordable Care Act,” as Amended. Retrieved from http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/Ac-tuarialStudies/downloads/PPACA_2010-04-22.pdf.



16 Focus

•Who’s Who in NJ Chapter Committees•

2012-2013 Chapter Committees and Scheduled Meeting Dates*NOTE: Committees have use of the NJ HFMA Conference Call line.

If the committee uses the conference call line, their respective attendee codes are listed with the meeting date information below.

PLEASE NOTE THAT THIS IS A PRELIMINARY LIST - CONFIRM MEETINGS WTH COMMITTEE CHAIRS BEFORE ATTENDING.

CHAIRMAN/EMAIL/ CO-CHAIR/EMAIL/ SCHEDULED MEETING MEETING BOARD COMMITTEE PHONE PHONE DATES*/TIME LOCATION LIASON Nadinia Davis Dara Quinn First Thursday of the Month Meeting in person at Deloitte & Touche, Darlene MitchellCARE (Compliance, [email protected] [email protected] (888) 269-3831 9:00 AM Princeton, NJ for Oct., Jan., April and July [email protected], Risk, & Ethics) (973) 960-4076 (973) 972-8942 Attendee Code: 5952498 Balance are calls. Please call to confirm (908) 237-7059

Elizabeth Litten Al Rottkamp First Thursday of each month Fox Rothschild offices Deborah ShapiroCommunications [email protected] [email protected] (888) 269-3831 9:15 AM 997 Lenox Dr Bldg 3 [email protected] (609) 896-3600 (609) 584-6508 Attendee Code: 7844155 Lawrenceville, NJ (201) 617-7100

Mike McKeever Mary Cronin & Stacey Bigos First Friday of each month Dan WillisEducation [email protected] [email protected] / (888) 269-3831 10:00 AM Conference Calls [email protected] (973) 972-6859 [email protected] Attendee Code: 7363742 (908) 301-5458 (732) 839-1217 / (609) 275-4017

Certification Eric S. Fishbein Cheryl Cohen First Friday of each month Mike Alwell(Sub-committee [email protected] [email protected] (888) 269-3831 10:00 AM Conference Calls [email protected] Education) (860) 677-7888 (609) 259-3363 Attendee Code: 7363742 (973) 877-2853

FACT (Finance, Lisa Hartman Michael DiFranco / Mark Laccetti Second Wednesday of each Month Scott Mariani Accounting, Capital [email protected] [email protected] / (888) 269-3831 8:00 AM Conference Calls [email protected]& Taxes) (609) 853-7140 [email protected] Attendee Code: 8730600 (973) 898-9494 x420 (215) 814-1757 / (215) 557-2217

Dan Willis Mike Ruiz de Somocurcio & Erica Waller Fourth Thursday of each Month John Brault Institute 2012 [email protected] [email protected] / (888) 290-0578 8:00 AM Conference Calls [email protected] (908) 301-5458 [email protected] Attendee Code: 8788393 (908) 753-6401 ext. 1605 (609) 662-2459 & (609) 620-8335

Kevin Joyce Jill Squires 1/17/13, 3/6/13, 4/3/13, 6/5/13, 7/10/13, Stella Visaggio Managed Care [email protected] [email protected] 9/3/13, 10/14/13, 12/16/13 New Jersey Hospital Association [email protected] (732) 562-7823 (201) 894-3099 (888) 290-0549 2-4 PM Board Room (908) 850-6928 Attendee Code: 7775069

Maria Facciponti Kevin Margolis & Tim Bialek Call for meeting arrangements Locations alternate Deborah ShapiroMembership Services/ [email protected] [email protected] / (888) 269-3831 by month - [email protected] (973) 614-9100 [email protected] Attendee Code: 5495569 please contact the chairs (201) 617-7100 (609) 662-2422 / (908) 243-8640

William Hunt Dara Derrick 2/14/13, 4/11/13 Diana SessionsPatient Access Services [email protected] [email protected] (888) 269-3831 9:30 AM CBIZ KA Consulting offices [email protected] (201) 996-2897 (908) 850-6870 Attendee Code: 8942192 in East Windsor, NJ (770) 330-1259

Josette Portalatin Steven Stadtmauer Second Friday of each Month Tony Consoli Patient Financial Services [email protected] [email protected] (888) 290-0578 10:00 AM New Jersey Hospital Association [email protected] (201) 291-6017 (973) 778-1771 Ext. 146 Attendee Code: 6748634 Board Room (732) 794-2662

Brian Herdman Charina Fanara Third Tuesday of each Month Monmouth Shores Corp. Park Rosemary NuzzoRegulatory & [email protected] [email protected] (888) 269-3831 9:00 AM Meridian Conf. Room 1C [email protected] (609) 918-0990 (732) 919-5208 Attendee Code: 9169098 1350 Campus Pkwy, Neptune (609) 383-2114

Vickie McElarney Nora Burdi First Wednesday except Jan which is 1/9 Steven Bilsky Revenue Integrity [email protected] [email protected] (888) 290-0578 9:00 AM New Jersey Hospital Association [email protected] (732) 418-8423 (201) 291-6384 Attendee Code: 8128109 (303) 672-9896

Michael Ruiz de Somocurcio Diana Sessions Second Thursday of each Month Brian Sherin Sponsorship [email protected] [email protected] (888) 290-0578 8:30 AM Conference calls [email protected] (732) 726-6709 (770) 330-1259 Attendee Code: 8451888 (609) 514-1400


Focus 17

Join HFMA Join a Committee!

by Cynthia M. Biggio

I am a patient accounting director for a health care system in southern New Jersey. I belong to the professional organi-zation named the Healthcare Financial Management Associa-tion. I joined this organization 10 years ago. The association is a wonderful professional organization for this niche profession.

The Healthcare Financial Management Association was originally founded for a small group of hospital accountants. Over the past 60 years the organization has evolved to include a large base of various healthcare professionals. The association is national and has headquarters based in Westchester, Illinois. Professional development is the association’s primary goal. A national professional certification program is offered, as well as many other resources available to the members.

My professional knowledge and abilities have been greatly increased by belonging to the Healthcare Financial Manage- ment Association. The association has various state and national meetings where issues are addressed and education takes place. Potential advocacy on issues is discussed and what action is being taken by the organization. These meetings allow networking with other professionals in the field and making contacts.

As mentioned previously the association has a national certification program. The certifications are called a Certified Healthcare Financial Professional, Certified Revenue Cycle Representative, or a Fellow of Healthcare Financial Manage-ment Association. These certifications involve self study and signing up for a test. Once the test is passed a certification is

obtained and to maintain the certification a certain amount of continuing education credits needs to be earned yearly.

Committees are available to join and a governing board. These enable a person to pursue what they are passionate about within their field. For example, there is a Patient Finan-cial Services Committee that advocates for claims processing and reimbursement issues, and an education committee that encourages professional certification

Another valuable asset that contributes toward increasing professional knowledge and abilities is the network of infor-mation and resources available. The association has a website with valuable information and links. The website is up to date with information in regard to today’s healthcare environment. The website also is linked in. This is a link that allows you to ask questions and comment to others that belong to the association. The link helps you to increase your knowledge via other’s experiences. The website is a very resourceful tool.

The knowledge and abilities that the Healthcare Financial Management Association provides has affected my career success. It has helped me to perform better obtaining greater results. The ability to succeed is related to the knowledge that you have and the value that you bring to your employer. Possessing the ability to tap into the most up to date informa-tion, and ask questions of others has been valuable. Belonging to a professional organization or association is integral to your career success.


18 Focus

One of the critical aspects of the Patient Protection and Affordable Care Act (“ACA”) is the establishment of the Affordable Insurance Exchanges (the Patient Protection and Affordable Care Act). These Exchanges are intended to provide both individuals and small businesses with access to health insurance coverage through a competitive marketplace allowing for the direct comparison of prices, quality and other factors. Thus, consumers theoretically should be able to obtain, through competition, the highest quality of coverage at the lowest price. Pursuant to the ACA, the Exchanges are required to be established within each state no later than January 1, 2014.1 The decisions made between now and then by each state will have a significant impact upon how health insurance is made available and who controls the marketplace in the future.

How Do the Exchanges Function?Prior to their establishment, states must first choose between a series of options for the

design and operation of their particular Exchange. The options include a State-based Exchange, run by the state, or a Federally-facilitated Exchange, established and operated by the Secretary of the United States Department of Health and Human Services (“HHS”). Within the Federally-facilitated Exchange option, states may elect to pursue a State Partnership Ex-change where the state administers and operates certain limited activities associated with the management plan and consumer assistance.2

Whether operating a State-based Exchange or a State Partnership Exchange, a state must go through a formal approval process, which consists of the submission of the Exchange Blue-print, consisting of a declaration letter and an Exchange application.3 The original dates set for submission of the declaration letter and exchange application were November 16, 2012 (30 days prior to the required approval date of January 1st) and December 14, 2012 (10 days prior to the required approval date of January 1st), respectively.4 However, on November 15, 2012, pursuant to a request by Governors Bob McDonnell and Bobby Jindal, HHS agreed to permit all states to file both the declaration letter and exchange application together on December 14, 2012. States were also permitted until February 15, 2013 to request to operate a State Partner-ship Exchange.5

Approval by HHS will be based upon the state’s ability to demonstrate that it can satisfac-torily perform all required Exchange activities. However, HHS appears to have recognized that during the initial year of implementation, states will be in various stages of development when the Exchange Blueprints are submitted and thus will utilize conditional approvals for instances where the Exchanges have not been fully established at the time of the Exchange Blueprint sub-mission. All that is required is a demonstration by the state that significant progress has been made toward meeting the Exchange requirements and that the Exchange will be operational for the initial enrollment period beginning October 1, 2013.6

Regardless of the Exchange model selected, all States are required by federal law to be ready to enroll consumers into coverage on October 1, 2013 and fully operational by January 1, 2014. It remains to be seen whether the States or the federal government will be able to meet these fast-approaching deadlines.

Affordable Insurance Exchanges: Coming to a State Near You

by James A. Robertson, John W. Kaveney and Cecylia K. Hahn

James A. Robertson

Cecylia K. Hahn

John W. Kaveney


Focus 19

1. State-based ExchangesAs the name suggests, State-based Exchanges offer the most

control by the state as it controls and operates all Exchange ac-tivities. These activities include contracting with health plans, providing consumer outreach and education, building the necessary information technology infrastructure and enrolling the individual citizens of the state into some form of cover-age. However, as mentioned above, for those states that elect to operate a State-based Exchange, they must first submit an Exchange Blueprint for approval by the federal government. The Exchange Blueprint outlines how the Exchange “meets, or will meet, all legal and operational requirements associated with the model [the state] chooses to pursue.”7 To be approved, the state’s Exchange Blueprint must meet a myriad of federal regulations governing the standards required of all Exchanges.8 Thus, while this Exchange model does offer the greatest con-trol by the state, it is still subject to a significant amount of uniformity and control by the federal government as required by federal law. In fact, a person could fill an entire textbook attempting to identify and discuss all of the standards and regu-lations already promulgated and adopted by the federal govern-ment to govern the standards for Exchanges. The following is a sampling of requirements to provide some context of the types of issues the federal government has placed an emphasis upon in shaping the uniformity all Exchanges must possess:

(1) Exchanges must service the entire geographic area of the state unless special circumstances are demonstrated to warrant multiple distinguished Exchanges9

(2) Exchanges may only offer health plans that “have in effect certification issued or are recognized as plans deemed certified . . . as a [qualified health plan (“QHP”)]10

(3) Exchanges must provide consumer assistance tools including toll-free call centers, an up-to-date website and both outreach and education activities11

(4) Exchanges must have in place security and privacy standards for any personally identifiable information collected to determine eligibility for a particular QHP12

(5) Exchanges must have standards in place to identify eligibility of applicants to enroll in particular QHPs where they meet a limited regulatory defined set of stan-dards of citizenship, residency and lack of incarceration13

Thus, while State-based Exchanges are state controlled and operated, they are still subject to a significant amount of federal control and oversight. States are required to obtain approval of their Exchange models from HHS no later than January 1, 2013.14

2. Federally-facilitated ExchangesFor those states without an approved Exchange on January

1, 2013, the regulations require HHS to establish and operate a Federally-facilitated Exchange within those states.15 Under such a model, HHS operates the Exchange. Though it is yet unknown exactly how the Federally-facilitated Exchanges will operate, CMS released a memo in May 2012 providing some guidance and offering an insight into at least the initial policy decisions.16 Therein, HHS articulates four “guiding principles” for Federally-facilitated Exchanges based upon comments re-ceived at the time the proposed rules were being adopted. They are as follows:

1) Commitment to consumers: Our goal is to ensure that consumers in all 50 States and the District of Columbia have access to high-quality, affordable health coverage options through a State-based Exchange, Partnership Exchange, or FFE. We will continuously seek to im-prove policies and processes in each Exchange in pursuit of a positive and seamless consumer experience.

2) Market parity: HHS will work to harmonize market requirements inside and outside of an FFE to promote the competitiveness of each FFE, minimize administra-tive burden for issuers, and ensure consumer protections.

3) Leveraging the traditional State role: HHS recognizes the significant experience and the traditional role of States in many core areas of FFE operations. We will seek to capitalize on existing State policies, capabilities, and infrastructure that can also assist in implementing some of the components of an FFE.

4) Engagement with States and other stakeholders: HHS will seek input from a variety of stakeholders to support and inform decision-making. We will communicate our progress regularly so that affected parties understand how each FFE is developing and have adequate time to prepare for successful participation.

In applying these “guiding principles,” HHS has indicated it will adopt a clearinghouse type model and contract, at least initially, with all health plans that meet all certification stan-dards as a QHP. This will be reassessed once the Exchanges are operational and HHS has additional time to review and assess its certification process. The Exchange will also, among numerous other functions, take responsibility for determin-ing eligibility for individuals’ premium tax credit and cost-sharing reductions.17

While the Federally-facilitated Exchanges will be largely operated by HHS, HHS has advised that it “intends to work in collaboration with States, where appropriate, to ensure



20 Focus

the best, most effective experience for the State and its residents.”18 Additionally, even if states do not choose to enter into a partnership type roll, states may nevertheless elect to run reinsurance programs or coordinate with the Center for Medicaid and CHIP Services (“CMCS”) on Medicaid and CHIP eligibility. Finally, it must be emphasized that even in a state where a Federally-facilitated Exchange is implemented, insurers and health plans must meet not only the federal re-quirements, but also the already existing state laws governing insurers and health plans.19

3. State Partnership ExchangesThe third option falls in the middle of these two extremes

whereby the state operates a State Partnership Exchange. Un-der this model, HHS administers and operates the majority of the aspects of the Exchange while the state maintains primary responsibility for select activities. Those activities may include: (1) plan management – conducting all analysis and reviews necessary for QHP certification, collect and transmit data to HHS and manage the certified QHPs and (2) consumer assis-tance – providing in-person assistance to consumers about fil-ing, coverage options, reporting and enrollment.20 This allows states to maintain some involvement while not shouldering the brunt of the operational and financial burden.

What Have States Decided to Do?As of December 17, 2012, 19 states, along with the Dis-

trict of Columbia,21 have declared their intention set up a State-based Exchange.22 All of these states, except Minne- sota, have established the legal authority for their exchanges. Amajorityhavepassedlegislationwhilesix,Kentucky,Min-nesota, Mississippi, New Mexico, New York and Rhode Island, are utilizing non-legislative mechanisms such as executive order to establish their Exchange.23 In all, these states account for approximately 115 million people, of which 9.8 million are presently uninsured and potentially eligible for tax credits.24

Back in the fall of 2010, to assist in establishing State-based Exchanges, HHS provided states with funding of up to $1 million each for planning grants. In 2011, states were able to begin applying for level one and level two establish-ment grants. Level one grants are to provide additional fund-ing as states developed their various policies and operational elements for the Exchanges while level two are intended as multi-year awards to carry a state from now through the end of 2014 and are given only where significant implementation progress has been demonstrated.25 Through these establish-ment grants, states have received as little as $3.4 million (Del-aware) and as much as $196 million (California) to establish their Exchanges.26 In all, as of November 2012, approximately

$2 billion has been distributed to the states through the vari-ous available grants.27

In most instances, the structure and governance of the State-based Exchanges have begun to take shape. The three structures most commonly utilized are: (1) a quasi-govern-mental structure (e.g. California, Massachusetts, Connecti-cut); (2) oversight through an existing state agency (e.g. New York, Rhode Island,Vermont); and (3) creation of a non-profit corporation (e.g. Hawaii and Mississippi).28 In almost all circumstances, and regardless of the Exchanges’ structure, an independent Board of Directors will govern with the number and composition of the board varying among the states.29 Over half of these states have also specified the relationship they will have with the QHPs. Some have chosen a clearinghouse model whereby the Exchange will contract with all QHPs that meet the minimum standards required (as discussed above).30 Other states have chosen to be an active purchaser and only selectively contract with specific QHPs.31 Selective contracting is a strategy to try and improve plan quality, better coordinate health care services and attempt to negotiate better plan pricing by restricting the QHPs allowed to be offered in a particular state.32

Conversely, 32 states have declined State-based Exchanges (New Jersey being among them) with only seven of those states declaring their intent to pursue a State Partnership Exchange.33 Approximately 197 million people reside in these 32 states, of which about 18.3 million are uninsured and potentially could qualify for tax credit subsidies.34 Thus, unless these states change their positions, the federal government will be respon-sible for operating the Exchanges for approximately two-thirds of the population and uninsured.

Several of the governors for these states have expressed their disappointment with the way in which HHS has rolled out the Exchanges and their regulations. On December 12, 2012, Governor Tom Corbett of Pennsylvania announced in a let-tertoSecretaryKathleenSebeliusthathisstatewouldnotbeestablishing a State-based Exchange due to HHS’ failure to provide enough detail about the operation of the proposed Ex-change.35 Governor Corbett also expressed concern that state authority to run the Exchange is “illusory” given the fact that even though after 2015 the state will be solely responsible for the cost of the exchange, it will “have no authority to govern the program.”36

Governor Bob McDonnell of Virginia also recently in-formed HHS that Virginia would not be creating a State-based Exchange.37 Governor McDonnell expressed similar frustration over the federal governments unwillingness to pro-videsufficientinformationforVirginiatodeterminewhetherit would have enough control over its own Exchange if imple-mented.38 Despite pushes from both his own advisory counsel



Focus 21

andhealthinsurerslocatedinVirginiatosupportaState-basedExchange, Governor McDonnell rejected the plan claiming in a statement that “despite repeated requests for information, we have not had any clear direction or answers from Wash-ington until recent days, and we cannot conclude, as we re-view those materials, that we would have the control and flex-ibility needed to efficiently and effectively run our own state exchange.”39GovernorMcDonnellwarned,“IfVirginiansarefaced with running a costly, heavily regulated bureaucratic ex-change without clear direction from Washington, then it is in the best interest of our taxpayers to let Washington manage an exchange at this time.”40

What Path Has New Jersey Chosen for Its Exchange?Here in New Jersey, Governor Chris Christie has grappled

with similar tough decisions in the face of pressure from those in the State legislature to adopt a State-based Exchange. On December 6, 2012, Governor Christie vetoed a bill (S2135 – New Jersey Health Benefit Exchange Act) approved by the Democrat controlled Legislature that would have established a State-based Exchange.41 This was the second time Governor Christie vetoed such a bill with the first bill (A2171 – New Jersey Health Benefit Exchange Act) reaching his desk back in May 2012, prior to the United States Supreme Court’s decision about the constitutionality of the ACA.42

In his veto, Governor Christie expressed concern that de-spite the deadline to declare New Jersey’s intentions, the state still awaited substantial federal guidance on how each of the three Exchange models would function.43 Of primary con-cern to the governor in the veto was the unknown cost. For example, Governor Christie raised the question of “whether the federal government intends to share user-fee revenue with the states in a Partnership Exchange.”44 Further, Governor Christie called it “irresponsible” were he to agree to a State-base Exchange when “the total price for such a program has never been quantified, and is likely to be onerous.”45 The Governor summed up his position by stating, “In short, I will not ask New Jerseyans to commit today to a state-based ex-change when the federal government cannot tell us what it will cost, how that cost compares to our other options, and how much control they will give the states over this state-financed option.”46

On February 15, 2013, Governor Christie confirmed that he would leave the operation of New Jersey’s Exchange to the federal government. While Governor Christie closed the door to a State-based Exchange in 2014, he did leave open the pos-sibility of a state operated Exchange in future years if the fed-eral government better outlines and explains the requirements and characteristics of the Exchange to better allow New Jersey to assess its cost and benefit to the state.47

ConclusionWhile this is not what many supporters of the ACA envi-

sioned when the law was passed and $2 billion was pumped into various federal grants to encourage State-based Exchanges, HHS remains confident that the Exchanges will be in place and all consumers will have access by January 1, 2013.48 It is yet to be determined whether the federal government will be able to shoulder the financial burden of operating the Ex-changes on its own over the long-term or convince more states to establish their own State-based Exchanges. What is certain is that regardless of the model implemented in each state, the fed-eral government is shaping a very specific and tailored health insurance delivery system that will significantly change the way in which health insurance is bought and sold in this country.

About the AuthorsJames A. Robertson is a Partner and head of the health care prac-tice at McElroy, Deutsch, Mulvaney & Carpenter LLP, with ten offices in New Jersey, New York, Connecticut, Massachusetts, Pennsylvania, Delaware, and Colorado.

John W. Kaveney and Cecylia K. Hahn are associates in the health care practice at McElroy, Deutsch, Mulvaney & Carpenter LLP.

Footnotes142 U.S.C. 18031(b)(1)2Center for Consumer Information and Insurance Oversight (“CCIIO”), Center for Medicare & Medicaid Services (“CMS”). “Blueprint for Ap-proval of Affordable State-based and State Partnership Insurance Ex-changes.” November 9, 2012. http://cciio.cms.gov/resources/files/hie-blue-print-11092012.pdf. p 13Ibid. at p 44Ibid.5Sebelius,Kathleen.CorrespondencefromtheSecretaryofHealthandHu-man Services. November 15, 2012.6CCIIO, CMS, “Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges.” November 9, 2012. http://cciio.cms.gov/resources/files/hie-blueprint-11092012.pdf. p4-57CCIIO, CMS. “Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges.” November 9, 2012. http://cciio.cms.gov/resources/files/hie-blueprint-11092012.pdf. p 18Ibid.945 C.F.R. 155.105(b)1045 C.F.R. 155.10001145 C.F.R. 155.2051245 C.F.R. 155.2601345 C.F.R. 155.3051445 C.F.R. 155.105(a)1545 C.F.R. 155.105(f )16CCIIO, CMS. “General Guidance on Federally-Facilitated Exchanges.” May 16, 2012. http://cciio.cms.gov/resources/files/FFE_Guidance_FINAL_ VERSION_051612.pdf.17TheKaiserFamilyFoundation.“EstablishingHealthInsuranceExchanges:An Overview of State Efforts.” November 2012. http://www.kff.org/healthre-form/upload/8213-2.pdf. p 2



22 Focus

18CCIIO, CMS. “Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges.” November 9, 2012. http://cciio.cms.gov/resources/files/hie-blueprint-11092012.pdf. p 319CCIIO, CMS. “General Guidance on Federally-Facilitated Exchanges.” May 16, 2012. http://cciio.cms.gov/resources/files/FFE_Guidance_FINAL_VERSION_051612.pdf.p920Ibid.21NY,VT,MA,RI,CT,MD,MS,KY,MN,CO,MN,UT,WA,OR,ID,NV,CA,HI22Center on Budget and Policy Priorities. “Status of State Health Insurance Exchange Implementation.” December 17, 2012.

http://www.cbpp.org/files/CBPP-Analysis-on-the-Status-of-State-Exchange- Implementation.pdf. p 123Ibid.24Radnofsky, Louise. “U.S. Faces Big Insurance-Exchange Burden.” WSJ. December 14, 2012. http://online.wsj.com/article/SB10001424127887324296604578179731269549130.html25Ibid. at p 526Ibid.27Radnofsky, Louise. “U.S. Faces Big Insurance-Exchange Burden.” WSJ. December 14, 2012. http://online.wsj.com/article/SB10001424127887324296604578179731269549130.html

28TheKaiserFamilyFoundation.“EstablishingHealthInsurance Exchanges: An Overview of State Efforts.” November 2012.http://www.kff.org/healthreform/upload/8213-2.pdf. p 329Ibid.30Ibid.31Ibid.32Ibid.33Federally-facilitated Exchange - ME, NH, PA, NJ, OH,IN,WI,VA,TN,SC,GA,FL,AL,LA,TX,OK,KS,MO,NE,SD,ND,MT,WY,AZ,AK.StatePart-nershipExchange–AK,DE,IL,IA,MI,NC,WV34Radnofsky, Louise. “U.S. Faces Big Insurance-Ex-change Burden.” WSJ. December 14, 2012. http://online.wsj.com/article/SB10001424127887324296604578179731269549130.html35George, John. “Pa. Rejects Running Own Health Insurance Exchange Under Affordable Care Act.” Philadelphia Business Journal. December 12, 2012. http://www.bizjournals.com/ philadelphia/news/2012/ 12/12/pa-rejects-running-own-health.html36Ibid.37Sluss, Michael. “Governor Says ‘No’ to State Health Insurance Exchange.” December 15, 2012. http://www.roanoke.com/politics/wb/31798738Ibid.39Ibid.40Ibid.41Veto of Governor Chris Christie to Senate Bill 2135. December 6, 2012. http://blogs.app.com/ capi-tolquickies/files/2012/12/S-2135-AV.pdf42Veto of Governor Chris Christie to Assembly Bill 2171. http://www.njleg.state.nj.us/2012/ Bills/A2500/ 2171_V1.HTM43Veto of Governor Chris Christie to Senate Bill2135. December 6, 2012. http://blogs.app.com/ capi-tolquickies/files/2012/12/S-2135-AV.pdf44Ibid.45Ibid.46Ibid.47Ibid.48Radnofsky, Louise. “U.S. Faces Big Insurance-Exchange Burden.” WSJ. December 14, 2012. http://online.wsj.com/article/SB10001424127887324296604578179731269549130.html

We know the risks

We have the solutions

New Jersey’s Leading Hospital/Healthcare Insurance BrokerWe provide our clients with the best combination

of coverage, pricing and risk management.

56 Park Street / Montclair, NJ 07042-2999Tel: 973.744.8500 Fax: 973.744.6021 www.whconnolly.com

William H. Connolly & Co., LLCInsurance and Risk Management

Risk Ad_3 7/11/11 5:16 PM Page 1



Focus 23

Proposed Regulations Seek to Clarify theAffordable Care Act*Please see note immediately following article for updated information.

by Karen R. McLeese

Now that the election is behind us, the Agencies are furiously issuing guidance. Three sets of proposed regulations have recently been issued. Specifically, these rules address well-ness programs, essential health benefits, and the rating restric-tions, guaranteed issue and renewal rules of the Affordable Care Act (ACA).

WELLNESS PROGRAMS As background, the ACA enhances rules relating to well-

ness programs. These provisions become applicable for plan years beginning on or after January 1, 2014.

Last week, the governing ACA Agencies (HHS, DOL and IRS) issued proposed implementing regulations, together with a fact sheet, relating to wellness programs. These proposed regulations suggest that the wellness rules will apply to both grandfathered and non-grandfathered plans.

In general, these regulations follow the rules previously es-tablished for wellness programs under the HIPAA law, with one noteworthy exception – the financial incentive or deter-rent is significantly increased, as more fully described below.

Generally, there are two types of wellness programs: a participation-only program and an outcome-based/health-contingent program.

A participation-only wellness program rewards individuals for participating in the program. Neither the HIPAA law nor the ACA imposes particular standards on participation-only programs, except that the program must be available to all similarly situated individuals. Examples of such programs include:

• Costorfeesforafitnesscentermembership. • A reward for participation in a diagnostic testing program, as long as the reward is not outcome-based. • Aprogramtoencouragepreventivecarethroughwaiver of deductible or co-pays such as prenatal care or well- baby visits. Note, however, non-grandfathered plans are required to provide certain preventive health services without the imposition of cost sharing.

• A program for reimbursement of a smoking cessation program, as long as it is not outcome-based. • Arewardforattendingmonthlyhealtheducationseminars.

An outcome-based wellness program, also known as a health-contingent wellness program, requires that a certain health-related standard be achieved. This type of program, both under the HIPAA law and ACA, must meet five criteria. The only real distinction between the HIPAA and ACA crite-ria is that the financial incentive can be as much as 30% be-ginning January 1, 2014; or, if the program relates to tobacco free standards, the incentive can be as much as 50 percent. It is important to note that if an outcome-based/health con-tingent wellness program combines both types of incentives, the maximum reward or penalty cannot exceed 50% of the cost of coverage. Conversely, if a wellness program combines a participation-only component (as described above) and an outcome-based/health contingent component, then no re-striction applies to the participation-only portion. Therefore, the maximum incentive could exceed the 30% or 50% thresh-old as long as the portion of the program that is contingent falls within these standards.

In addition to the financial incentive, there are four ad-ditional criteria for an outcome-based/health contingent well-ness program; they are:

1. The program must be reasonably designed to promote health or prevent disease, and cannot be overly burden-some. The program cannot be designed in a way that would cause it to be suspect, or be a subterfuge to evade the purposes of the law. 2. The program must give individuals the ability to qualify for the program, at least once annually. 3. The program must be available to all individuals and of-fer reasonable alternative methods of compliance for those who cannot comply because of health reasons. The pro-gram may request proof of the inability to comply. Follow-ing are examples of reasonable alternative standards:

Karen R. McLeese



24 Focus

If a program requires completion of an educational program, the plan must make the educational program available instead of requiring an individual to find such a program unassisted, and cannot require an individual to pay for the cost of the program.

If the reasonable alternative standard is a diet program, plans are not required to pay for the cost of food but must pay any membership or participation fee.

If an alternative is recommended by the employer’s medical adviser, and if the individual’s personal physician attests that the plan’s recommendations are not medically appropriate for that individual, the plan must provide a reasonable alternative standard that accommodates the physician’s recommendations of medical appropriate-ness. Plans may impose standard cost sharing under the plan or coverage for medical items and services furnished based upon the physician’s recommendations.

To the extent a plan’s initial standard for obtaining the full or a portion of a reward is based on the results of a measure-ment, test, or screening relating to a health factor, such as a biometric examination or a health risk assessment, then the plan must provide a reasonable means of qualifying for the reward to those individuals unable to meet the standard.

4. In any plan material that describes wellness programs, the availability of alternative standards must be described. The plan must disclose in all plan materials describing the terms of the program the availability of other means of qualifying for the reward or the possibility of waiver of the otherwise applicable standard. If plan materials merely mention that a program is available, without describing its terms, then this disclosure is not required. Following is some model language that can be used to satisfy the notice requirement:

“Your health plan is committed to helping you achieve your best health status. Rewards for participating in a well-ness program are available to all employees. If you think you might be unable to meet a standard for a reward under this wellness program, you might qualify for an opportunity to earn the same reward by different means. Contact us at [insert contact information] and we will work with you to find a wellness program with the same reward that is right for you in light of your health status.’’

The regulations provide additional model language that could further describe aspects of the program, such as pro-grams aimed at cholesterol reduction, fitness programs, and smoking cessation programs.

Essential Health Benefits For plan years beginning on or after January 1, 2014, the

ACA requires certain plans to include coverage for an “essen-tial health benefits package” to cover 10 specific categories of benefits. This definition of essential benefits is important in that it provides a standardized framework of benefit coverage that must be included in health plans. The 10 categories are:

1. Ambulatory patient services. 2. Emergency services. 3. Hospitalization. 4. Maternity and newborn care. 5. Mental health and substance use disorder services, in-

cluding behavioral health treatment. 6. Prescription drugs. 7. Rehabilitative and habilitative services and devices. 8. Laboratory services. 9. Preventive and wellness services and chronic disease

management. 10. Pediatric services, including oral and vision care.

On November 26, 2012, the Department of Health and Human Services issued proposed regulations relating to the es-sential health benefits package. As provided in prior guidance (Defining Essential Benefits in a previously published CBIZHealth Reform Bulletin), as well as in these proposed regula-tions, states can utilize one of several plan design categories for defining essential benefits. The CCIIO website has posted a list of the various state-selected benchmark plans, as well as the de-fault benchmark plan in the event that a state fails to select one.

States may require qualified health plans offered through an exchange to offer certain benefits in addition to essential health benefits. A base-benchmark plan that does not include items or services within one or more categories must be sup-plemented, in accordance to HHS criteria.

Affected Plans The proposed regulations clarify that only individual and

small insured plans, and plans offered through the exchange, must comply with essential health benefit package require-ment. To the extent that self-funded plans and large insured plans offered outside the exchange offer essential health ben-efits, these essential benefits cannot be subject to annual and lifetime limits.

Cost-sharing Requirements The regulations clarify certain provisions relating to cost-

share requirements. Generally, the law provides that cost-shar-ing restrictions, such as deductible and out-of-pocket limits will be imposed on plans.



Focus 25

For plan years beginning on or after January 1, 2014, the annual deductible cannot exceed $2,000 for self-only coverage, or $4,000 for coverage other than self-only. These regulations clarify that the deductible restrictions only apply to individual and small group health plans, and plans offered through the exchange. These deductible limits do not apply to large plans offered outside the exchange or to self-funded plans.

The annual out of pocket limits must match those limits applicable to health savings accounts (HSA). While we do not know the HSA limits for 2014 yet, the high-deductible health plan annual out-of-pocket limit for self-only coverage in 2013 is $6,250; $12,500 for family coverage. The out of pocket limits apply to all types of plans; though, with the exception of emergency services, these restrictions only apply to in-network services.

For subsequent years, the deductible and out-of-pocket limits may be adjusted annually to reflect cost increases.

Actuarial valuation calculation for determining level of coverage

The proposed regulations include some clarifications relat-ingtocalculationofactuarialvaluation.Actuarialvalue(AV)refers to a percentage measurement of expected health care costs covered by the plan and used to determine an overall measurement of the plan’s generosity. For example, a plan with an80%AVwouldbe expected topay, on average, 80%of expected medical expenses for the essential health benefits. The individuals covered by the plan would be expected to pay, on average, the remaining 20% of the expected expenses in the form of deductibles, co-payments, and coinsurance. The law definesAVrelativetocoverageoftheessentialhealthbenefitsfor a standard population.

Qualified health plans offered to individuals and small employer group markets both in and outside an exchange must meet the bronze, silver, gold, or platinum actuarial levels of benefits and coverage. A bronze plan is required to have anAVof60%;asilverplan,70%;agoldplan,80%;andaplatinum plan, 90%.

The CCIIO has released a proposed actuarial value calculator, together with an AV Methodology for purposes of determiningwhetheraplan’sAVsisbasedonanationalstan-dard population.

Determining Minimum Value Under the law, a plan fails to provide minimum value if

the plan’s share of the total allowed costs of benefits provided under the plan is less than 60% of such costs. Determining minimum value is important to employers, particularly those employing 50 or more full-time equivalent employees, in that if the employer plan fails the minimum value test, or is un-affordable, a shared responsibility tax may be triggered. For

the purposes of determining whether an employer’s group health plan provides a minimum value of benefits, the plan can utilize a minimum value calculator or safe harbor to be established by HHS/IRS, or the plan can seek an appropriate actuarial certification.

Rating Restrictions, And Guaranteed Availability And Renewability Rules

Similar to the HIPAA insurance market reforms, the ACA expands on certain provisions relating to fair health insurance premiums, guaranteed availability, guaranteed renewability, risk pools, and catastrophic plans. The Department of Health and Humans Services issued Health Insurance Market Re-form regulations to implement the ACA’s reform mechanisms. These provisions do not apply to grandfathered plans. Follow-ing are highlights of these market reform rules.

Fair Health Insurance Premiums For plan years beginning on or after January 1, 2014,

insurers issuing individual and small group health plans cov-ering 100 or fewer employees, may only vary premium rates based upon:

Individual or family coverage; The rating area; Age. Certain variations of age bands are permissible, i.e., one band for under age 21; a yearly band for those aged 21 to 63; and a single band for those aged 64 and above; and Tobacco use. Rates can’t vary by more than 1.5:1 for like individuals who vary in tobacco usage.

States imposing narrower ratio parameters relating to coverage, rating areas, age or tobacco usage must be approved by CMS.

While these restrictions generally do not apply to large group health plans, they would apply to a large health plan offered through the exchange.

Guaranteed Availability of Coverage Similar to the HIPAA guaranteed availability provision,

the ACA requires insurers offering health insurance coverage in the individual and group market to offer all approved prod-ucts to individuals and employers. Beginning January 1, 2014, insurers are required to accept any individual or employer ap-plying for coverage under these products, regardless of health status, risk, or medical claims and costs, with limited excep-tions. ACA expands the guaranteed availability requirement beyond the small group market to include the individual and large group market as well.

In addition, the regulations establish new open and spe-cial enrollment periods in addition to those required under continued on page 26


26 Focus

HIPAA. The proposed regulations require insurers to main-tain a year-round enrollment period for employers to purchase group coverage. In the individual market, plans would have open enrollment periods consistent with those required by qualified health plans offered through an exchange. Insurers are also required to establish special enrollment periods in con-nection with events that would trigger eligibility for COBRA continuation coverage. In this instance, the current HIPAA 30 calendar day election period would extend to 60 calendar days, consistent with the exchange standard.

Guaranteed Renewability of Coverage The proposed ACA regulations relating to guaranteed

renewability of coverage are similar to those imposed under HIPAA. However, the ACA rules apply to both individual policies and contracts issued to both small and large groups. Specifically, renewal of contracts can only be denied in the fol-lowing instances:

1. Failure to pay premium; 2. Fraud or intentional misrepresentation by the employer

or employee; 3. Material noncompliance with contract terms such as

contribution or participation requirements; 4. The insurer terminates the plan, i.e., ceases to do busi-

ness within a geographic area;

5. In the case of a network plan, there are no enrollees re-siding or working within the network service area; or

6. An employer’s membership in the bona fide association ceases, but only if the coverage is terminated uniformly with-out regard to any health status-related factor relating to any covered individual.

Conclusion While these regulations are just proposed at this point,

they do give some indication as to how the government is viewing implementation of the law. The comment periods re-lating to these proposed regulations ends soon (December 26, 2012 for regulations relating to essential health benefits and market reform provisions; January 26, 2013 for the proposed wellness regulations). Hopefully, more definitive guidance will be provided shortly thereafter. In the meantime, these rules can be used as a roadmap for making plan design deci-sions in the interim.

About the AuthorKaren R. McLeese is Vice President of Employee Benefit Regula-tory Affairs for CBIZ Benefits & Insurance Services, Inc., a divi-sion of CBIZ, Inc. She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal em-ployee benefits law. Ms. McLeese is based in the CBIZ Leawood, Kansas office.


*Since CBIZ issued this Health Reform Bulletin on November 26, 2012, final regulations have been released by the federal government on what defines essential health benefits, released an updated actuarial valuation calculator and actuarial value calculation methodology for purposes of determining whether a plan’s actuarial value is based on a national standard population. (see CBIZ Health Reform Bulletin issued February 25, 2013 at http://www.cbiz.com/page.asp?pid=8689).

In addition, the IRS has issued a minimum value calculator and minimum value calculator methodology to determine whether the employer’s group health plan provides a minimum value of benefits, the plan can utilize a minimum value calculator, a designed-based safe harbor checklist to be established by HHS/IRS, or the plan can seek an appropriate actuarial certification. The CCIIO has released Minimum Value Calculator (http://cciio.cms.gov/resources/files/mv-calculator-final-2-20-2013.xlsm), together with a Mini-mum Value Calculator Methodology (http://cciio.cms.gov/resources/files/mv-calculator-methodology.pdf ) for purposes of determining a plan’s minimum value. See final Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation at http://www.gpo.gov/fdsys/pkg/FR-2013-02-25/pdf/2013-04084.pdf.

Lastly, we also know that the affordability standard for Employer Shared Responsibility obligations will have three methods for mea-surement (see CBIZ Health Reform Bulletin issued on January 9, 2013 at http://www.cbiz.com/page.asp?pid=10168) and that on January 30, 2013, the IRS issued final regulations specifically relating to defining the “affordability” standard. These regulations affirm that affordability is based on the cost of single coverage in the employer’s least expensive plan. While large employers must offer coverage to their full-time employees (those working 30 or more hours per week) and their dependents (children under age 26), the affordability, according to these regulations, is based only on single coverage. This should come as welcome news to employers.


Focus 27

Shared Responsibility PaymentArticle Courtesy of CBIZ

Large employers will have some difficult decisions to make between now and 2014 as the prospect of the euphemistically named “shared responsibility payment” looms on the horizon. The shared responsibility payment is a nondeductible excise tax assessed on large employers who do not provide affordable and adequate health coverage to their full-time employees.

Beginning in 2014, large employers (generally those with more than 50 full-time employees or equivalents) must provide minimum essential coverage at an affordable rate to all full-time employees (defined as those who work at least 30 hours per week) in order to avoid the excise tax. This may require: • Offering coverage to previously excluded full-time

employees, • Increasingthepercentageoftotalcostscovered,• Increasing the portion of the premiums paid by the

employer, and/or • Offeringadditionalbenefits.“Minimum essential coverage” constitutes 60% of the total

benefit costs of a health plan that provides “essential health benefits.” Essential health benefits include: ambulatory pa-tient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; prescription drugs; rehabilitative services and devices; laboratory services; preventive and wellness services; and pedi-atric services. Coverage is provided at an “affordable rate” if the employee’s contribution, including salary reduction amounts, does not exceed 9.5% of household income, currently based on the cost of single coverage. For purposes of determining whether coverage is provided at an affordable rate, employers can rely on an employee’s Form W-2 Box 1 wages.

For employers who do not offer coverage to all full-time employees, the excise tax is equal to $2,000 multiplied by the number of full-time employees less 30 (assuming at least one is eligible for a federal subsidy, such as a premium assistance credit or cost-sharing assistance, and participates in an Ex-change). For employers who offer coverage to all full-time em-ployees, but the coverage is not affordable or does not provide minimum value, the excise tax is equal to $3,000 multiplied by the number of full-time employees eligible for a federal subsidy and participating in an Exchange. The total excise tax, however, cannot exceed $2,000 multiplied by the number of full-time employees less 30.

A large employer, for purposes of the excise tax, is an em-ployer who employed an average of at least 50 full-time em-ployees on business days during the preceding calendar year. For purposes of determining if it is a large employer, an employer must also include, in addition to its full-time employees, a num-ber of full-time equivalent employees determined by dividing

the aggregate number of hours of service of employees who are not full-time employees for the month, by 120. Employers are exempt from the excise tax if its workforce exceeds 50 full-time employees for 120 or fewer days during the calendar year and the employees in excess of 50 employed during the 120-day period are seasonal workers.

Controlled groups of corporations, partnerships and pro-prietorships under common control, and affiliated service groups are treated as one employer for purposes of determin-ing whether an employer exceeds the 50 full-time employee threshold. In addition, for purposes of calculating the $2,000 excise tax, only one 30-employee reduction is allowed for all persons within a multi-employer group. The 30-employee re-duction is allocated among these persons ratably based on the number of full-time employees employed by each person.

As previously mentioned, a full-time employee is one who on average works 30 or more hours per week. While mak-ing that determination for traditional full-time employees is simple, classifying employees who work variable hours or sea-sonal employees is considerably more complicated. The IRS provides a “look-back/stability period” safe harbor which al-lows employers to make the full-time determination by look-ing back at an employee’s actual hours worked over a certain period of time (the “look-back period”) and then categorizing that employee accordingly for a certain period (the “stability period”) regardless of the actual hours the employee works during that period. A variation of this safe harbor that exam-ines hours worked during an initial measurement period may be applied to new employees.

Employers who do not currently cover all full-time em-ployees should estimate what excise tax, if any, they will owe based on their current health plan structure. Then they will need to perform a cost-benefit analysis that compares the cost of expanding coverage, as necessary to avoid the excise tax to the cost of leaving the current plan structure intact and paying the excise tax.

Employers should also explore what other changes it can make to its health plan that would mitigate the cost of expand-ing coverage to more employees. For example, employers may be able to reduce the overall cost of the health plan by increas-ing co-pays and co-insurance percentages, increasing the em-ployees’ share of the premiums or eliminating certain benefits. Any such changes should be carefully considered, however, as overly-aggressive changes could cause the plan to violate the “minimum essential coverage,” “minimum value” or “afford-able rate” standards. These types of changes may also cause the health plan to lose its grandfathered status which could subject the plan to additional requirements.


28 Focus

A.Q.As a hospital CFO, what are the things I should be thinking about and doing, going into 2013?

It appears that 2013 will bring another year of challenges to the hospital industry. Eighteen states have adopted exchanges of their own, with the federal government vowing to set up exchanges in the remaining states. While New Jersey and Pennsylvania have not opted to set up their own exchanges, they have let the Feds know that they would participate in a Federal/State facilitated exchange. While the panacea of affordable care for all is doubtful, it reemphasizes the necessity of hospitals to operate in the most cost effective manner possible.

Nothing is off the table when it comes to managing costs, whether it is human capital, provider, utilities or supplies. Employers, governments and insurers, as payers of services, have made it quite clear that healthcare inflation is unsustainable. There is a great degree of uncertainty in the industry, fueled by concerns over the impending development of ACOs and state exchanges taxability of healthcare benefits, increased enforcement actions by OIG and RAC auditors, new Medicaid Integrity contractors gearing up for intensive audits, bond covenant defaults, lack of capital for projects and erosion of the bottom line. As a hospital CFO, what are the things you should be thinking about and doing, going into 2013? The following is a list of Top 10 New Year’s Resolutions every hospital CFO should be making in order to move forward on a positive note in 2013: 1. Bundled payments are déjà vu all over again. With the advent of ACOs and challenges of affordable care, hospitals should be preparing, more than ever, to bundle hospital based physician costs (hospitalists, anesthesia, emergency, pathology, radiology, NPPs, social workers and employed physicians) into your rates if you have not done that already. Under healthcare reform, more people than ever will visit your facility, but not necessarily with the best insurance coverage. Efficiency and cost controls will drive you toward profitability, since most of these new patients will be eligible for Medicaid-expanded benefits, putting a strain on hospitals. With or without expansion the ACA reduces DSH payments, so beware! Procedure

demand will be up on an outpatient basis since pent up demand from 2012 will finally materialize as Ex- changes start to come online. And don’t forget to price your procedures to be competitive with free standing facilities, if possible. 2. Have you created medical homes? Medical homes

are clearly going to be the key driver of managing healthcare costs under reform. Do your homework on how to adapt your institution to be profitable in the new healthcare environment. Antitrust exemptions exist for new initiatives such as alliances and ACOs. If you have not aligned with your physicians, better get busy because medical homes will be driving volumes of both inpatient and outpatient services well into the future! Also, don’t forget to fix your contracts with payors before changing your business model.

3. Quality at your hospital will be a key driver for reimbursement. Payment reform is rewarding facilities that can do the right things and measure them; the shared savings programs sponsored by Medicare are proof of that! Healthcare associated infections and patient centered outcomes are in the sights of the healthcare reform law. Don’t rely on the government or payors to measure your quality. Be prepared to support your activities and outcomes. Remember how many reports have been issued in the past that have erroneous measurement data that needed to be refuted? Also, don’t forget that patients will be asked to give feedback on their care which has no bearing, per se, on the real clinical outcome. If you have not invested in caremaps and benchmarking physicians, you ought to give it strong consideration. I’m also an advocate of MBWA (management by walking around) when it comes to seeing how patients view your facility and staff. During my hospital days, I had some interesting insights into patient perceptions by taking a daily walk onto patient floors and sticking my head into rooms to ask patients

A Hospital CFO’s Top 10 Resolutionsfor 2013

Lewis D. Bivona, Jr.

•Focus on Finance•


Focus 29

and families how we were doing. You would be surprised by the useful intelligence you can get from this half-hour per day time investment. You must also address the new paradigm, that the patient is still your patient post-discharge; track patients and invest in follow-up services that prevent readmissions.

4. When in doubt, don’t layoff! Enlist department heads, managers and line staff to be agents of change instead of worker drones. Infection reductions are clearly within the purview of environmental services staff cleaning protocols and doctor/nursing hygienic measures. Pharmacy staff can make recommendations regarding the most cost effective drugs. If you have a nursing overtime problem, ask the nurses to help you solve it. No one wants to be without a job and generally most employees have the best interest of the hospital at heart.

5. Do not scrimp on compliance activities! Make compliance a strategic initiative and ingrain them in your organizational culture. With the increased scrutiny that hospitals will be receiving by all governmental payors, you cannot afford to side-step good business and governance practices. Compliance and internal controls will be a key ally in saving your hospital from embarrassing press articles and, even worse, monetary recoupments and fines. More than last year, both the Federal and State governments are investing in more resources to bear on regulatory audits from the OIG, OCR, DSH, RAC and the IRS. Don’t forget that the IRS will be screening 990’s with a fine tooth comb; make sure that your tax filings are accurate!

6. Pay attention to revenue cycle coding including the impending change to ICD-10. Many providers still have not prioritized preparation activities for ICD-10, thinking that those changes would be pushed back one more time. Not so. CMS announced in its “Final Rule” that it will be October 1, 2014, for real! Those that are not ready will suffer financially. ICD-10 preparation cannot be put off any longer since system testing and educating billers, coders, staff and physicians will be required.

7. Standardize physician preference items, if you have not already done so. Hospitals are often surprised about how many items are similar in their CDM. Remember, even if you belong to a GPO, you probably could get better pricing through standardization of materials and devices. If you don’t belong to a GPO, your opportunities are even greater. Getting doctors

together on a single item like sutures can save you $20-30K per year. Think of the opportunities thatexist to save money. This task will become even easier in a shared savings environment!

8. Remember, time is money! Patient flow and scheduling should be fine-tuned to eliminate wasting of resources. Many new hospital designs incorporate “nursing pods” to make nursing staff more effective in providing care and eliminating unnecessary movements. Not building a new hospital? Ask your nurses what repetitive tasks that could be eliminated or pushed down to a lower cost employee. As always, OR scheduling can kill a hospitals budget. Strive to keep schedules on time; that includes making physicians responsible for their start times!

9. Consider the possibility of a merger with another hospital for strategic reasons, including the ability to manage patients through a large network which is the heart of accountable care. M&A activity is expected to peak within the next year and stand-alone hospitals will find that it is harder to achieve economies of scale that will be required under healthcare reform. Review of data supports that hospital systems typically perform 3-4% points higher than unaffiliated hospitals. Other benefits of mergers or affiliations include ease of medical staff management and better access to capital.

10. High touch not only includes patient quality items. Remember your hospitals mission and continue outreach activities in the community, remembering that community services could be on your 5500 Form! Patient loyalty is as important to future revenues as any other activity.

Remember that success rarely comes to those who wait… it comes to those that DO! Use these tips wisely to propel your organization forward in 2013!

About the AuthorLewis D. Bivona, Jr., CPA, AFE, is a partner with Withum Smith+Brown, Certified Public Accountants and Consultants, based in the Firm’s Princeton, NJ, office, with over 33 years of experience in the healthcare industry. Please feel free to contact Lew via email at [email protected].


30 Focus

As your child prepares to head off to college, he or she is likely looking forward to a new level of independence. How-ever, with freedom comes responsibility. One “extracurricular” activity that every student should master while in college is personal money management. During a school year, the av-erage college or university student spends nearly $4,000 for books, supplies, transportation, and personal expenses (Trends in College Pricing—2008, The College Board). Parents who allow their students to “spend as they go” may find themselves refilling a seemingly bottomless well.

Laying the GroundworkTo help prevent overspending, parents can help their

students develop basic money management skills. Consider the following steps to help get your child off to a good start at college:

1. Before your student leaves for college, have an open dis-cussion of expectations—both your child’s and yours.

2. Consider providing a lump sum each semester, setting guidelines on how long the money must last.

3. Explain when checks or money transfers can be expect-ed, the amount your student will receive, and any rules con-cerning use of the funds.

Parents have several options for getting the funds to their college student. They can send checks or transfer funds di-rectly into an account through the bank or online. However, it may be difficult to cash a personal check without a local bank account. Even with the convenience of online banking, it may be a good idea for your student to open a small account on campus.

While some parents may avoid credit cards, especially for a student who has difficulty managing money, others may find a credit card to be a useful backup, especially in an emergencyor for certain expenses, such as car rentals, plane fares, and train tickets.

Cultivating Money SmartsTo encourage young adults to take responsibility for their

finances, parents can start by teaching them to manage their own savings and checking accounts. Have them meet with a bank representative to open the accounts, and practice balanc-ing the monthly statements.

This accountability will help set the foundation for future financial independence. Parents can also emphasize the impor-tance of disciplined spending. Recommend that young adults allocate a set amount per week for discretionary spending, so they are not tempted to withdraw funds too quickly or care-lessly. By discussing what this amount must cover, students may come to realize that too many late night pizzas or long-distance phone calls to friends can easily exhaust the funds.

Although many schools require first-year students to live in a dorm on campus, parents can use the decision about whether to live on or off-campus as an exercise in evaluating financial trade-offs. Initially, your child may think it will be cheaper to live off-campus.

However, in many college towns with a high demand for off-campus housing, accommodations within walking dis-tance of the campus are expensive. Also, landlords frequently require a one-year lease—a period longer than the school year. On the other hand, living offcampus may allow students to save money by sharing housing expenses and preparing their own meals. You may revisit this decision as your child pro-gresses to the sophomore or junior year, as he or she makes friends and becomes acclimated to the area.

Reaping RewardsBoth you and your college-age child can benefit if he

or she “makes the grade” in personal money management. Life can become easier for you if you can count on your child to manage out-of-pocket expenses while away at school. And, your child may be better prepared for future finan-cial independence.

Mark McLafferty

Your Personal FinancesHelp Your College Student “Make the Grade” in Personal MoneyManagement

by Mark McLafferty, MBA


Focus 31

•Focus on Industry•

The information contained in this newsletter is for gen-eral use, and while we believe all information to be reliable and accurate, it is important to remember individual situa-tions may be entirely different. The information provided is not written or intended as tax, legal, or financial advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the

information presented nor any opinion expressed constitutes a representation by us or a solicitation of the purchase or sale of any securities. This article is reprinted with permission from Liberty Publishing, Inc., Beverly, Ma Copyright 2010.

About the AuthorMark McLafferty, is a financial representative with Emerald Financial Resources, a MassMutual Agency; courtesy of Massa-chusetts Mutual Life Insurance Company (MassMutual).

Mark can be reached at [email protected].

Saint Michael’s Medical Center and Prime Healthcare Services have signed a non-binding Letter of Intent, the first step in a process leading to a definitive agreement for Prime Healthcare to purchase the Newark-based medical center. The purchase of Saint Michael’s by Prime Healthcare would ensure the medical center remains open and continues its mission to provide excellence in health care to the people of Newark and the surrounding communities.

According to the Letter of Intent, Prime would continue to operate Saint Michael’s Medical Center in a manner consis-tent with its historic mission. “Saint Michael’s Medical Center has faithfully served the Newark community for many genera-tions,” said David Ricci, president and chief executive officer, Saint Michael’s Medical Center. “We are hopeful that a rela-tionship with Prime Medical can help us meet the challenges of the future and continue our healing mission for residents of Newark for many more years to come.”

“Prime Healthcare is committed to continuing the legacy of Saint Michael’s and ensuring the community is afforded the best patient care, while upholding the traditions of the medi-

cal center,” said Prem Reddy, M.D., FACC, FCCP, chairman, president and CEO of Prime Healthcare Services. “Prime Healthcare’s motto is saving hospitals, saving jobs and sav-ing lives, and we are confident the medical center will emerge stronger from this transition. The people of Newark need and deserve to receive high quality health care.”

The proposed transaction will be subject to satisfactory completion of due diligence and governance and regulatory approvals.

Prime Healthcare, an award winning health system, was nationally recognized in 2012 as one of the “15 Top Health Systems in the Nation” by Thomson Reuters, based on quality of healthcare and patient satisfaction. It also was recognized as a top health system in 2009. Five Prime Health-care hospitals were ranked among the “100 Top Hospitals in the Nation” in 2012.

Recently, The Joint Commission, the leading Medicare ac-creditation organization in the country, announced that eight Prime Healthcare hospitals earned national recognition as “TopPerformeronKeyQualityMeasures”(Top18percent).

Prime Healthcare Services and Saint Michael’s Medical Center, Newark, N.J.,Sign Letter of Intent


32 Focus

The transition to a value based payment system is probably the most significant change to healthcare financing since the advent of Medicare in the 1960s. While there have been other significant changes such as DRGs, and in New Jersey’s case, an all payer DRG system, none have compared to payment for value. Why? Well, this is the first time payments will be driven by results, not activity. What do I mean? For all previous pay-ment systems, whether retrospective or prospective, payments were still tied to volume. You could argue that DRGs pay a fixed amount and therefore hospitals are at risk for the cost per unit which is correct. However hospitals are still paid for the volume of patients they see. So more was still better. Payment for value changes this whole dynamic.

In terms of background this transition to paying for value is driven by several external factors. Clearly the present state of the economy is one. Our federal deficit for the 2012 fiscal year was $1.1 trillion and it is the fourth year in a row that the an-nual deficit has exceeded $1.0 trillion. Our federal healthcare spending as a percentage of GDP continues to grow and when United States outcomes are measured against the rest of the world we do not compare well, especially when cost is factored in. Clearly the present perception is we are not getting value for the amount we spend on healthcare. Given all of these fac-torsHFMAbegantheValueProjecttohelpmemberswiththetransitiontovalue.Phase1oftheValueProjectbeganin2010and had the following objectives:

• Gaininsightintostakeholders’perspectivesonhowto improve value in healthcare• Understandwhatpurchasersandpayersseekfromvalue

providers• Learnhowprovidersarepreparingforvaluebasedpay-

ments

The first task was to define “value.” The definition of val-ue agreed upon is quality/payment. While this seems like a fairly simple equation the variables are very complex. Quality is defined as the composite of patient outcomes, safety, and experiences. The current problem is there is no consensus on

the measures that should be used to measure quality. A survey of hospital CFOs revealed a high degree of variation among commercial carriers in the type of quality and value indicators in the marketplace. This results in a mix message to providers and therefore a lack of focus on where resources should be expended. As for payment it is now being defined as the cost to all purchasers of purchasing care. This changes the thinking on cost and moves it from an episodic point of service (hospi-tal, physician’s office, SNF, etc.) level to a more comprehensive definition which considers total cost across the spectrum of providers as payment.

It is interesting that many providers believe the drive for value with have a positive impact on providers. This conclu-sion seems a bit optimistic given the fact that there will clear-ly be winners and losers and the value bar will continue to be raised as providers improve quality while reducing costs. The key question for providers will be – can you improve at a greater rate than your competitors? This reminds me of the difference between major and minor surgery. Major surgery is when it’s on me; minor surgery is when it’s on you! Seems most providers believe they will be the winners in the transi-tion to value.

Phase 2oftheHFMAValueProjectfocusesonhealth-care purchasers’ expectations in terms of value, and how provider organizations are working to deliver value. Real-izing there are many different types of hospitals and health systems HFMA’s work in this phase focused on how the business model for value differs based on type of provider and how each type of provider needs to develop its own road map for success. Hospitals were grouped into five cohorts, Academic Medical Centers, Aligned Integrated Systems, Multihospital Systems, Rural Hospitals, and Stand Alone Hospitals. Thirty five hospitals participated in the study. The HFMA research identified common challenges that all providers will face on their value journeys, as well as common capabilities, strategies, and tactics that will help them on their way. And they also identified challenges and opportunities that are unique to each group’s road map

by Gregory M. Adams, FHFMA

Gregory M. Adams

The Value Journey: 2013 and Beyond


Focus 33

•Certification Corner•Basic Financial Management Series Update NJ HFMA recently completed its annual Basic Finan-cial Management Series. This series was an opportunity for individuals to gain exposure to nearly all areas of healthcare finance and served as a review class for HFMA members inter-ested in taking the certification exam. Thank you to ARMDS who once again volunteered the use of their Burlington and Bloomfield offices. NJ HFMA would also like to recognize those individuals who so gener-ously volunteered their time to teach the various course mod-ules and share their expertise with the participants. This year’s presenters were Maria Facciponti, Rita Romeu, Tracy Davi-son, John Levay, Cheryl Cohen, and Eric Fishbein.

Change In Certification Maintenance Education RequirementsEffective December 2012, the HFMA Board of Examiners changed the certification maintenance requirements for HFMA members who have earned either the Certified Healthcare Financial Professional (CHFP) or Fellow of

HFMA (FHFMA). The following revisions have been imple-mented:• 90contacthoursofeligibleeducationactivityreduced

to 60 hours• Arevisedandmoreclearlydefinedlistofeligibleeduca-

tion and activities

Details of the revised list of eligible education activities can be found in the certification section of the updated HFMA website.

New FHFMAsThe FHFMA (Fellow of HFMA) designation recognizes educa-tional achievement, professional accomplishments and volun-teer leadership and service in the healthcare finance industry. Congratulations to the NJ Chapter’s newest FHFMAs:

Guy P. Evans, FHFMAMarcus G. Rothenberg, FHFMAEric S. Fishbein, FHFMA

to value. When it comes to achieving value, one size does NOT fit all. Specific details on Phase 2 can be found on the HFMA website and in the publications, Defining and Delivering Value and The Value Journey: Organizational Road Maps for Value-Driven Health Care. Both of these publicationsbuildonthefirstphaseoftheValueProject.Asoutline in phase 1 the four key organizational capabilities are people and culture, business intelligence, performance improvement, and contract and risk management. These capabilities serve as the foundation for the transition to value. Utilizing these capabilities theValueProjects recommendsorganizations need to develop strategic agility by simplifying organizational structures, empowering front line staff, align-ing with physicians, and experimenting with new payment methodologies. Focus must also be placed on aligning value metrics. As stated previously currently there is no consen-sus on the best metrics to measure. However, there is gen-eral agreement that process measures need to be replaced by outcome measures and there needs to be a limited number of metrics measured and they need to be meaningful. Once metrics are established incentives need to be used to drive performance. Given the diversity of providers throughout the country it is important to explore strategic partnerships.

With the exception of those organizations which have all the components of an ACO most providers will need to develop relationships with complimentary providers and payers to be successful. And the last recommendation is to differentiate on value. How your organization defines value may be very different from your competitors. That’s ok but make sure it’s clear to your customers what your organization’s value proposition is. Play to your strengths or, if necessary, build new strengths.

In conclusion while the task in front of us looks daunt-ing I’m reminded of the speech former senator Bill Frist, MD gave at the 2009 HFMA ANI. When discussing the issues confronting the healthcare industry and the political de-bates occurring around the issues he comments to all of us as healthcare leaders, “Somebody has to do something, and it’s going to be – and it has to be – you.” So let’s roll up our sleeves and get to work.

About the AuthorGregory M. Adams, FHFMA is President of Consulting Services at Panacea Healthcare Solutions, Inc.

Greg can be reached at [email protected].


34 Focus

•Focus on...New Jobs in New Jersey•

JOB BANK SUMMARY LISTING

HFMA-NJ’s Publications Committee strives to bring New Jersey Chapter members timely and useful information in a convenient, accessible manner. Thus, this Job Bank Summary listing provides just the key components of each recently-posted position in an easy-to-read format, helping employers reach the most qualified pool of potential candidates, and helping our readers find the best new job opportunities. For more detailed information on any position and the most complete, up-to-date listing, go to HFMA-NJ’s Job Bank Online at www.hfmanj.org.

[Note to employers: please allow five business days for ads to appear on the Web site.]

Job Position and Organization

HEALTHCARE ANALYST Optimus Healthcare Partners Summit, NJ

EXECUTIVE DIRECTOR, PHYSICIAN PRACTICESERVICES Holy Name MC Teaneck, NJ

REIMBURSEMENT CONSULTANT Besler Consulting Princeton, NJ

REIMBURSEMENT ANALYST III Meridian Health MANAGER JOINT VENTURE CONTRACTS Hackensack University MC Hackensack, NJ

FINANCIAL ANALYST Atlantic Health System Morristown, NJ

DIRECTOR ACCOUNTS RECEIVABLE MANAGEMENT (HEALTHCARE DELIVERY) Holy Redeemer Health System Huntington Valley, PA

SENIOR ACCOUNTANT/FINANCIAL ANALYST RWJ Hamilton Hamilton, NJ

DIRECTOR OF MANAGED CARE Saint Joseph’s Healthcare System Paterson, NJ


Focus 35

by Jennifer Vanegas

Managing the Hidden Indirect Costs of Healthcare Technology Equipment

The indirect costs associated with owning healthcare tech-nology equipment are significant and often overlooked when evaluating the total cost of ownership. As technology ages, the costs required to maintain and support the equipment in-crease, making such assets less desirable to own.

In fact, independent studies suggest that over a five-year refresh cycle, the actual purchase price of technology equipment ac-counts for only 20% of its total cost. The other 80% of costs are related to out-of-warranty maintenance and support costs.

Staying on the leading edge of healthcare technology is essential to attract top physicians and to provide the highest quality care for patients. In addition, providers have substan-tial CMS incentives for meaningful use compliance, HIT adoption, and requirements related to ICD-10 preparedness. So how can healthcare professionals acquire the necessary technology and manage costs? The first step is to understand, and then control, the Total Cost of Ownership (TCO).

TCO is an important concept when evaluating the most cost-effective means for deploying technology assets for a pro-vider. TCO evaluations should include the following (partial list of ) components:

+ IT and Office Equipment• PCsandworkstations• Documentimaging• Networkingequipment• Storageequipment• Mobiledevices• Telecom

+ Deployment Soft Costs+ Warranty+ Support+ Records Management• EMR/EHR• PACS

• RFID/RTLS• CPOE• HIS/CIS• HIM• SoftwareUpgrades• DisposalCostsorSalvageValue

As your facility evaluates cost-effective alternatives to ac-quiring technology equipment, one option to consider is a lease-based refresh program. Disciplined lease-based technol-ogy refresh programs achieve the following:

Minimize indirect costs by aligning the finance period with the manufacturer’s warranty.Create stronger cost efficiencies with the decommis-

sioning and disposal of obsolete assets as equipment lessors are more effective at reselling technology assets than the average hospital or clinic. Provide value added asset management tools and services

to help track and manage technology refresh cycles. Offer greater budget consistency by eliminating large,

upfront cash outlays, and replacing them with fixed, predictable monthly payments. Support the organization’s sustainability initiatives:

100% of the technology is reused, rather than ending up in a landfill.

Jennifer Vanegas

12% 68%

20%

Typical Total Cost of Ownership (TCO) of a 5-Year Refresh

Out-of-Warranty Maintenance Costs Support Costs Purchase Cost

Purchase Cost

Out-of-WarrantySupport Costs

$0

$500

$1,000

$1,500

$2,000

$2,500

Year 1 Year 2 Year 3 Year 4 Year 5

Total Cost of Lease-Based Refresh Program

Support Costs Lease Costs



36 Focus

Over a five-year refresh cycle, a lease-based program can save a healthcare provider an average of 18% on technology equipment by minimizing indirect costs and benefiting from a leasing company’s residual expertise.

Residual investment in the equipment by the leasing com-pany is a fundamental reason for the cost savings. At the be-ginning of the lease, the equipment lessor will make assump-tions about the expected value of the asset at the end of the lease term. This assumption is the expected value is based in large part on the lessor’s experience in remarketing the equip-ment. The residual amount lowers the total payments paid by the hospital, compared to other forms of financing.

When implemented correctly, a lease-based technology refresh program offers significant cost advantages over tradi-tional purchase models and can save your hospital significant expense – both in upfront out-of-pocket costs and in long-term maintenance costs.

3rd Party References:The Robert Frances Group, “The Downside of Keeping PCs

Beyond Three Years and How Leasing Can Help”, December 2005Timothy Morey and Roopa Nambiar, “Using Total Cost of Own-

ership to Determine Optimal PC Refresh Lifecycles”, May 2009Sudin Apte, Forrester Research, “Back to Basics: Why IT Leas-

ing Makes Sense in the Economic Meltdown”, January 2009

About the authorJennifer Vanegas is a healthcare technology finance specialist with First American Healthcare Finance. Working from the corporate office in Fairport, New York, Jennifer is an active member of the HFMA in New Jersey, Massachusetts, Rhode Island, and Con-necticut. She can be reached at [email protected].

*HFMA staff and volunteers determined that this product has met specific criteria under the HFMA Peer Review Process. HFMA does not endorse or guarantee the use of this product.

$0

$500

$1,000

$1,500

$2,000

$2,500

Year 1 Year 2 Year 3 Year 4 Year 5

Total Cost Direct Purchase

Support Costs Ongoing Warranty Costs Purchase Cost


mark your calendar . . .

PLEASE NOTE: NJ HFMA offers a discount for those members who wish to attend Chapter events and who are currently seeking employment.

For more information or to take advantage of this discount contact Laura Hess at [email protected] or 888-652-4362. The policy may be viewed at: http://hfmanj.orbius.com/public.assets/A02-Unemployed-Discount/file_168.pdf

April 10, 2013 all dayDouble Tree in Eatontown, NJ Annual Women’s Event

April 24, 2013 8AM-12PMAtlantiCare, FACT Committee’s FREEEgg Harbor Township, NJ Education Event

April 26, 2013 8AM-12PMBarnabus Health FACT Committee’s FREEWest Orange, NJ Education Event

May 4, 2013 2012 Chapter Awards Dinner &The Samuel & Charity Casino NightJosephine Plumeri Benefiting Make-A-WishWishing PlaceMonroe Township

May 7, 2013 all dayFiddler’s Elbow Annual Golf OutingCountry Club


Focus 37

As the role of healthcare compliance has evolved the NJ HFMA CARE Forum has attempted to document the pro-gression of New Jersey providers’ programs through monthly discussion but also through periodic surveys. A comprehen-sive survey was recently performed by a subcommittee of the CARE Forum with assistance from our colleagues at the New Jersey Hospital Association. The results of this most re-cent survey, with comparison to the results from the 2008 NJ HFMA Compliance Survey were presented at the 2012 Annual Institute in Atlantic City by Dara Quinn, the CARE Forum Co-Chair and Angela Melillo. This article attempts to summarize their excellent presentation and the survey results, and hopefully allow the reader to understand the increasing complexity of today’s active compliance programs.

The survey was distributed to approximately 90 people, with 32 respondents, which is a 36% response rate. We asked that only the highest ranking member of the organization’s Compliance Program respond to the survey. The respondents represented hospitals (21), hospital systems (11), physician practices (16), other healthcare facilities, such as SNF, Home Health, etc. (15), and other healthcare entities. The purpose of the survey was to identify the current state of Compliance Programs in light of industry changes, comparing the results where applicable to the 2008 survey. Key areas the 2012survey focused on were questions related to compliance ef-fectiveness and defining the profile of compliance leaders in New Jersey. We also hoped to provide benchmarks by which to measure individual programs and help determine future CARE Forum areas of discussion.

The Chief Compliance OfficerWhen asked where the Compliance Officer ranked within

the managerial hierarchy of the organization, 25 of the respon-dents answered that they were part of Executive Leadership. Less than half of respondents reported being part of Executive Leadership in 2008. In response to the question “to whom does the Compliance Officer administratively report on a day to day basis,” 20 respondents replied that they reported to the Chief

Executive Officer, 5 that they reported to the Board, 3 to Gen-eral Counsel and 2 each reported to the Chief Financial Officer and the Chief Operating Officer. Beside compliance, half of the respondents in 2012 were also responsible for the Internal Audit function, while over half were responsible for Privacy. Of note is that 6 respondents were also responsible for Risk Man-agement, and 3 were responsible for Human Resources. There were 7 respondents with advanced degrees, defined by the sur-vey as MD, JD or PhD, 16 with Master’s Degrees, and 9 with Bachelor’s Degrees. When asked about certifications, 10 respon-dents reported they were Certified in Healthcare Compliance, 5 were CPA’s, 4 maintained various coding certifications, and 4 reported that they held FHFMA or FACHE certifications.

The Compliance ProgramWhen asked how the organization promoted awareness of

the Compliance Program, 68.8% of respondents replied that they used e-mail messages and the organizations’ intranet/in-ternet web pages. As for encouraging employees to perform their duties in accordance with the compliance program, 87.5% responded that compliance is part of the annual performance review. We asked the respondents to report the top 3 ways em-ployees in their organizations routinely contacted the Compli-ance Officer. The primary way employees contacted the Compli-ance Officer was by direct telephone call (90.6%), anonymous Hotline (71.9%), formal or informal visit to the Compliance Office (62.5%), e-mail (46.9%) and hallway/cafeteria informal meeting (25%). An outside vendor is used to provide Hotline services to 22 of the 32 respondents. Of interest was the volume of calls received through the Hotline. The responses were:

Annual Calls per 1,000 Employees Count Percentage 0 – 5 calls 11 34.4% 6 – 10 calls 8 25.0% 1 – 15 calls 6 18.8%

16 – 20 calls 2 6.2% 21+ calls 5 15.6%

Mike McKeever

2012 Compliance Effectiveness SurveyPrepared by:New Jersey HFMA C.A.R.E. Forum and New Jersey Hospital Association



38 Focus

Results of the Hotline calls are used for educational or perfor-mance improvement purposes by 78.1% of the respondents.

Another area addressed by the survey was the process of screening employees and other appropriate parties for exclu-sions from Federal healthcare programs. The participants re-ported annual screenings for the following groups:

Group Screened Count Percentage Employees 29 90.6% Vendors 27 84.4% Contractors 25 78.1% VoluntaryMedicalStaff 21 65.6% Agency Providers 20 62.5% Volunteers 14 43.8% Referring Providers 10 31.3%

Compliance TrainingMost providers have implemented a Code of Conduct and

have provided training on the code to their employees. Cur-rently, 90.6% of the respondents to the survey provided com-pliance education at new employee orientation and at least annually thereafter to their staff. Another 59.4% of the re-spondents also provided additional training on an as needed basis. Electronic training tools were used by 30 of the 32 re-spondents. Face to face, instructor led training was used by 18 of the respondents, compliance videos were employed by 9 re-spondents, and 8 respondents provided education at employee education fairs sponsored by their facilities. As for the length of time the typical employee spent annually in compliance education, 14 respondents replied 31 to 60 minutes. There were 9 organizations where the amount of time typically spent on compliance education was 61 to 90 minutes, and 5 where the amount of time spent exceeded 91 minutes. There were also 4 respondents who reported that their employees typically spent less than 30 minutes per year on compliance education.

When asked what topics their compliance training typi-cally addressed, the responses were:

Compliance Topic Count Percentage Code of Conduct 32 100% Compliance Hotline 31 96.9% Compliance Program Overview 30 93.8% False Claims Act 29 90.6% Conflict of Interest 29 90.6% HIPAA 28 87.5% Organizational Policy 25 78.1% EMTALA 20 62.5% Identity Theft 14 43.8%

Respondents were split 50/50 over whether they included pre and post session tests as an element of their educational programs, with 16 replying yes and 16 replying no. Finally, respondents reported providing focused compliance training in billing (90.6%), coding (78.1%), provider documentation (46.9%), case management (34.4%), lab (28.1%), as well as other risk areas.

Policies and ProceduresA large percentage of respondents (87.5%) reported that

their compliance policies and procedures were routinely re-viewed and updated in response to a periodic risk assessment. When asked if compliance policies were available on the orga-nization’s intranet, 30 of 32 respondents reported that some or all of their policies were on the intranet. But only 14 respon-dents reported that some or all of their compliance policies were publicly available on the internet. The approval process for additions and updates to compliance policies required some level of approval by either the full Board or the Audit/Compliance Committee of the Board in 27 of 32 responses. Another 22 respondents reported that their Corporate Com-pliance Committee was also involved in the approval process. And 17 of the 32 respondents replied that they had imple-mented a formal overpayment reporting and refunding policy.

Assessing Risk and Monitoring ComplianceA risk based assessment was used to develop auditing and

monitoring plans by 28 of 32 survey participants. In develop-ing the risk assessment, respondents reported using the fol-lowing tools:

Risk Assessment Tool Count Percentage External Regulatory Notices 28 87.5% Regulatory Changes 23 71.9% InterviewswithKeyPersonnel 22 68.8% Input from Compliance Committee 21 65.6% Data Mining/Analysis 10 31.3% Payer Denials 9 28.1%

Audit plans are reviewed and updated annually by 75% of the survey participants. Of interest is the fact that 6 of the 32 respondents reported that they reviewed and updated their audit plan quarterly. In responding to the question regarding the performance of auditing and monitoring, 87.5% report-ed that these functions were performed by Compliance staff, 71.9% reported having implemented departmental monitor-ing of risk areas, 56.3% reported using outside resources, and 28.1% reported using other internal resources, such as Quality Improvement staff.



Focus 39

New MembersCipora MoskowitzHealthcare Consultant(845) [email protected]

Meredith SimmsMonmouth Medical CenterFinancial Analyst(732) [email protected]

Justine StanleyCape Regional Medical CenterAccountant /Payroll Supervisor(609) [email protected]

Jefferson LeeStrategic Financial Analyst(201) [email protected]

Betty Anderson-BlountThe Children’s Hospital of PhiladelphiaCollection Supervisor(267) [email protected]

Robert B. MillerCare OneDirector of Accounts Receivable(860) [email protected]

Sathyavani Akunuru (551) [email protected]

Rodney ConwayRaritan Bay Medical Center(732) [email protected]

Jennifer LeibRobert Wood Johnson University Hospital Controller (732) [email protected]

Cheryl HayneCentrastate Medical CenterManager Patient Financial Services(732) [email protected]

Mervin McLanahanDirector of PFS(917) [email protected]

William J. Bailey, IIBurlington County CollegeAdjunct Faculty(609) [email protected]

Yutonya HortonAtlantic Health SystemManager, Corporate Integrity(973) [email protected]

Scott BogosianPremier Healthcare Exchange, Inc. (PHX)VP of Sales, East Coast(908) [email protected]

Doug StoverGallupSenior Managing Consultant(609) [email protected]

Mary Ann S. LukasSomerset Medical CenterAssociate Director of Finance(908) [email protected]

Doug MeehanTD BankVice President(609) [email protected]

Shannon Wallace-SmithTD BankVice PresidentTreasury Management Sales(856) [email protected]

Glenn P. PrivesWilentz, Goldman & Spitzer, P.A.Attorney(732) [email protected]

Myles B. ChavensonLexisNexisNational Account Manager(856) [email protected]

All participants in the survey reported developing correc-tive action plans in response to identified issues. To ensure appropriate follow up the corrective action plans, 68.8% of respondents reported performing follow up reviews, with the results being shared with Senior Management. The individual Manager’s supervisor was informed of the corrective action plans by 59.4% of the respondents. Implementing the cor-rective action plan was included in performance appraisals by 6 of the respondents’ organizations. Finally, in those situations where disciplinary action is warranted, participants reported that 68.8% of their organizations treated all individuals the same, regardless of their position or rank. Specific disciplinary actions are determined through a collaborative effort involv-ing Compliance and Human Resources in 75% of the organi-zations reporting.

In conclusion, the results of the 2012 Compliance Effec-tiveness Survey depict increasing program complexity and ma-turity. Compliance Officers have moved up in the organiza-tional hierarchy as their roles have increased in scope beyond

basic billing and coding issues. They are now more completely integrated in their organizations’ operations, addressing issues related to quality, privacy, security, and enterprise risk. And based on the responses to this survey those who find them-selves in these roles appear better prepared to deal with those challenges they are currently facing, while also preparing for the new and to date undefined challenges of the future.

I’d like to thank those who assisted in the preparation of this survey, as well as all who participated. Without your valuable assistance we would not have this body of current knowledge by which we can benchmark our own programs. In particular, I’d like to express my thanks to Mary Ditri and Sarah Lechner from the New Jersey Hospital Association, as well as my col-leagues from the NJ HFMA C.A.R.E. Forum: Nadinia Davis, Chair,DaraQuinn,Co-Chair,TomFlynn,KellySauders,LisaHartman, Angela Melillo, BJ Welsh and Peter Hughes.

And a special thank you to Dara Quinn and Angela Mel-illo, who did an extraordinary job presenting the results of the survey at the 2012 Annual Institute this past October.


40 Focus

by Shannon Davila, RN, MSN, CIC, CPHQ

Be a Flu Fighter:2012-2013 Seasonal Influenza Update

Autumn is gone, winter is here and a familiar threat begins to emerge. A week of sore throat, cough, fever and chills that leaves you feeling miserable beyond words. This is seasonal influenza or “flu” and as predicted, the 2012- 2013 flu season is packing a much harder punch than recent years.

Current Status on Influenza IllnessEvery year the Centers for Disease Control and Disease

Prevention (CDC) coordinates with a variety of healthcare partners to continuously monitor influenza activity nationally and globally. Through the monitoring of laboratory confirmed testing, hospital and outpatient symptom monitoring and mortality reporting, the CDC provides current updates on where influenza outbreaks exist and where they are likely to ap-pear. This information also pro-vides healthcare providers with critical data on which strains of influenza are circulating, which helps guide treatment options. According to CDC, as of the last week of December, all 50 states have reported cases of influen-za and 41 states have reported widespread illness. Of the most common strains circulating, all were incorporated in the 2012-2013 vaccine preparation. (ACIP, 2012).

How Influenza is SpreadInfluenza is an acute viral infection that results in an aver-

age of 200,000 hospitalizations per year. (CDC, 2012) It is caused by one of three strains of influenza virus that circulate in the late fall to winter seasons. Of the known strains of A, B and C, most of cases are identified as A and B strains. Despite the relatively mild influenza seasons of 2010 and 2011, 2012- 2013 is proving to be a severe season that is off to a strong and early start. (CDC, 2012)

Influenza is spread when people cough or sneeze and in-fected droplets are inhaled by others or when hands or other items are contaminated with respiratory and nasal secretions. Once exposed to the virus, the average incubation period (from time of exposure to onset of symptoms) is about 48 hours. Symptoms include high fever, sore throat, headache,

runny nose, cough, achiness and general weakness. While fever is a common symptom, it may not be present in all cases. Illness usually lasts up to a week resolving on its own, but the elderly, children, pregnant women and people with chronic medical conditions or weakened immune systems are at higher risk of developing more severe and even life threatening illness and should be monitored closely. (WHO, 2012)

Managing IllnessMost people infected with influenza do not need treatment. When influenza is diagnosed or suspected, sick individuals should stay home, rest and avoid contact with others. If you

must leave home or be around people, it is recommended that you wash your hands frequently and wear a face mask. Once in-fected, people are contagious (able to spread illness) one day before symptoms develop and up to one week after becom-ing sick. Symptoms should be monitored and if the flu wors-ens, patients should contact a healthcare provider. Worsening symptoms that require immedi-

ate care include difficulty breathing and or chest pain, severe loss of fluids, confusion and or loss of consciousness.

Antiviral medications are available to treat influenza and when used within the first 48 hours of illness, can be effective in reducing severity of symptoms and shortening the duration of illness. The CDC recommends that people do not resume work or social activities until they are 24 hours fever free with-out the use of a fever lowering medication.

PreventionAll experts agree that vaccination, otherwise known as the

flu shot, is the number one preventative measure against in-fluenza. The CDC recommends that everyone six months and older receive the flu shot. Flu shots should be given as soon as they are available in early fall, and can take up to two weeks for an individual to develop immunity. Flu vaccines are avail-able as an injection or a nasal mist. When you receive your flu shot you will be given the most current copy of the CDC’s Vaccine InformationStatement (VIS).TheVIS clearly out-

Influenza can be a dangerous illnesscausing great discomfort as well asloss of work time and productivity.

To avoid becoming ill, it is importantto become educated on the risks ofthe flu and the benefits of gettingvaccinated and a healthy lifestyle.


Focus 41

lines the recommendations for the flu shot. Individuals that have experienced a severe allergy to previous flu shots, have a severe allergy to eggs, or a history of Guillain-Barré Syndrome should consult with their healthcare provider before receiving a flu shot.

Other prevention measures include frequent hand wash-ing. Hands should be washed with soap and water or cleansed with an alcohol-based hand sanitizer after coughing, sneezing or handling any items contaminated with respiratory or nasal secretions. Hands should be washed before eating and before touching your eyes, nose or mouth. Proper respiratory eti-quette is important to prevent the spread of influenza. Always cough or sneeze into a tissue or your sleeved elbow to prevent the spread of germs.

Common MisconceptionsThe evidence supporting the

benefits of influenza vaccina-tion is strong; however despite the best efforts of the CDC and supportive partners, many peo-ple still elect to forgo getting a flu shot. It is important for healthcare providers to educate patients about the truth around influenza prevention. The following are common misconceptions about the flu vaccine. (CDC, 2012)

• Theflushotcangiveyoutheflu:False.Theflushotis an inactivated vaccine, meaning the virus used to make the vaccine is dead. It is not a live virus, so it cannot give you the flu.

• Theflu shotwillmakeyou feel sick:False.Themost common side effect of the flu shot is redness and swelling at the injection site. Occasionally, individuals do report a low grade fever and mild discomfort within the first 24 hours after the vaccine is given. Keep in mind it does take two weeks to develop immunity so there is a window of opportunity for a person to be exposed to a viral illness and become ill before immunity develops.

• If you get the flu shot too early, youmay be at risk later in the season: False. The influenza vaccine will

provide immunity for the entire flu season, and it is recommended that you get the vaccine as soon as it becomes available.

• If you get the flu shot, you cannot get the flu: False. While vaccination is the best measure of prevention, depending on the individual’s own immunity, a person can still become infected with influenza.

Final WordsInfluenza can be a dangerous illness causing great discom-

fort as well as loss of work time and productivity. To avoid becoming ill, it is important to become educated on the risks

of the flu and the benefits of get-ting vaccinated and a healthy lifestyle. The annual flu shot should part of everyone’s pre-ventative health maintenance plan just as visiting the dentist or going for your annual medi-cal checkup.

About the AuthorShannon Davila, RN, MSN,

CIC, CPHQ, is Clinical Quality Improvement Manager at the New Jersey Hospital Association. Shannon can be reached at [email protected].

ReferencesWHO (2012). World Health Organization. Influenza (Seasonal).Available from: http://www.who.int/mediacentre/factsheets/fs211/en/.Accessed January 5, 2013

CDC (2012). Centers for Disease Control and Prevention.Seasonal Influenza. Accessed from:http://www.cdc.gov/flu/about/season/index.htm Accessed January 5, 2013

ACIP (2012).Prevention and Control of Influenza with Vaccines: Recommendation of the Advisory Committee on Immunization Practices (ACIP)- United States, 2012-12 Influenza Season. Available from: http://www.cdc.gov/flu/professionals/acip/Accessed January 5, 2013

The annual flu shot should be a partof everyone’s preventative

health maintenance plan just asvisiting the dentist or going foryour annual medical checkup.


42 Focus

by Dave Springsteen

The Fiscal Cliff Tax Deal: What Does It Mean For You?

After much contention and negotiation, President Obama and Congress finally came to agreement on legislation to ad-dress the “fiscal cliff ” – a combination of higher taxes and forced spending cuts scheduled to go into effect in 2013. While the American Tax Relief Act (ATRA) simply extends the deadline for the spending cuts, it does prevent income tax rate increases for all but approximately the top 2% of taxpayers.

ATRA also extends other income tax breaks for individuals and businesses and addresses the Alternative Minimum Tax (AMT) and the estate tax. However, it does not extend pay-roll tax relief, so taxpayers with earned income will see a Social Security tax rate increase of two percentage points.

Following is an overview of some of the act’s key tax law changes.

INDIVIDUAL INCOME TAXES

ATRA makes permanent the 2012 ordinary-income tax rates, ranging from 10% to 35%. But, beginning in 2013, taxpayers with taxable income that exceeds $400,000 (sin-gles), $425,000 (heads of households) or $450,000 (married filing jointly) will be subject to the top pre-2001-tax-law mar-ginal tax rate of 39.6% on taxable income in excess of the applicable threshold.

In addition, the act allows the scheduled 2013 return of the limits on certain itemized deductions and the personal exemptions to take place. For these limits, it sets thresholds of $250,000 (singles), $275,000 (heads of households) and $300,000 (married filing jointly).

On the long-term capital gains front, ATRA makes per-manent the 2012 rates of 0% and 15%. But, beginning in 2013, taxpayers with taxable income that exceeds $400,000 (singles), $425,000 (heads of households) or $450,000 (mar-ried filing jointly) will face the pre-2001-tax-law long-term gains rate of 20%.

The act also makes permanent long-term capital gains treatment for qualified dividends. This means, however, that taxpayers with taxable incomes exceeding the applicable in-

come thresholds may face a rate increase from 15% to 20% on qualified dividends. But they’ll avoid the significantly larger increase that would have applied if such dividends had been allowed to return to being taxed at ordinary-income rates, as had been scheduled for 2013.

ATRA also makes some changes that will affect taxpayers’ 2012 tax bills, including reviving AMT relief, making it not only permanent, but retroactive to January 1, 2012. Without such relief, many more taxpayers could have found themselves owing AMT when they filed their 2012 tax returns.

Finally, the act extends (also in some cases retroactively to January 1, 2012) various other tax breaks for individuals, such as:

• The deduction for state and local sales tax in lieu of state and local income tax,

• Variouschild-andeducation-relatedcreditsanddeduc- tions, and

• The ability of taxpayers age 70½ or older tomake a direct tax-free rollover from an IRA to charity.

Extensions of certain home and energy-related breaks may also benefit individual taxpayers.

ESTATE TAXES

Under ATRA, estate taxes also will increase somewhat in 2013, but not as much as they would have without the legisla-tion. For 2013 and future years, the top estate tax rate will be 40%. This is a five percentage point increase over the 2012 rate, but significantly less than the 55% rate that was sched-uled to return for 2013.

The estate tax exemption will continue to be an annually inflation-adjusted $5 million, so for 2013 it will likely increase slightly from the $5.12 million 2012 exemption. This will provide significant tax savings over the $1 million exemption that had been scheduled to return for 2013.

Dave Springsteen


Focus 43

BUSINESSESIf your business is a partnership, limited liability company

or S corporation, the income tax law changes discussed here may have a major impact on your business. But whether it’s a flow-through entity or C corporation, it could benefit from the extension of various tax breaks for businesses, such as:

• Bonusdepreciation,• EnhancedSection179expensing,• Accelerated depreciation for qualified leasehold, retail

and restaurant improvements,• TheWorkOpportunitycredit,and• The research and development credit.

Extensions of certain energy-related breaks may also ben-efit businesses.

HOW WILL YOU BE AFFECTED? We have provided only a broad overview of the tax impact

of the fiscal cliff deal. The act includes other provisions that may affect you or your business.

It is also important to keep in mind that some other tax increases are going into effect in 2013, namely the additional 0.9% Medicare tax on wages exceeding certain levels and the new 3.8% Medicare tax on some or all net investment income if modified adjusted gross income exceeds certain levels. This could have a major impact on your 2013 tax liability.

If you have questions about how the various tax law changes may affect your situation, please contact Dave Springsteen, Practice Leader of WithumSmith+Brown’s National Tax Ser-vices Group at 609.520.1188 or [email protected].

Audit | Accounting | Tax | Business AdvisoryParenteBeard.com | 732.388.5210 | 856.330.8100© ParenteBeard LLC

Healthcare is a complex industry – a balancing act of meeting patient demands while managing costs. When you work with ParenteBeard, that balancing act becomes a little easier. By understanding all of your short and long term goals we can identify success factors that will both meet your needs and set you apart from the competition.

That’s confidence through clarity.

They had the right mix of industry knowledge and client service to keep us ahead of the curve and get the focus back on our patients.

See what we can do for you.


44 Focus

new jersey chapter

Dear Fellow HFMA Members:

Each year the NJ Chapter awards an education scholarship to a member, member’s spouse or member’s dependent based on defined criteria. I am pleased to invite you to apply for this years’ 2013 HFMA Scholarship. The New Jersey Chapter of HFMA will award at least one scholarship of up to $3,000. You, your spouse or dependent may be eligible for the scholarship if you meet the following criteria:

•Member,ingoodstanding,oftheNewJerseyChapterforthelasttwoyears.

•Spouseordependentofamember,ingoodstanding,oftheNewJerseyChapter,forthelasttwoyears.

•Enrolledinanaccreditedcollege,university,nursingschoolorotheralliedhealthprofessionalschool.

Preference will be given to applicants pursuing degrees in finance, accounting, healthcare administration or a healthcare re-lated field of study. Tuition not paid by an employer or other scholarship will qualify for the HFMA scholarship.

We make our selection based on merit, academic achievement, civic and professional activities, course of study and content of your application and essay. We do not use income in our selection process. To apply, please submit a completed Scholarship Application no later than April 1, 2013. Members of the Board of Directors, Officers and Advisory Council and their spouses or dependents are not eligible for scholarships.

We will announce the recipients of the 2013 NJ HFMA Scholarship at our bi-monthly meeting on June 11, 2013. If you have any questions or wish to receive additional applications, please contact me at (973) 877-2853 or Laura Hess at [email protected].

We look forward to receiving your application and wish you success in your academic endeavors.

Respectfully submitted,

Michael Alwell, MPA, FHFMA Chairperson, 2013 Scholarship Committee


Focus 45

new jersey chapter

ASSOCIATION MEMBER’S

ANNUAL SCHOLARSHIP APPLICATION

MEMBER INFORMATION Member Name ________________________________________ Member Address _______________________________________ ____________________________________________________ Membership # ________________________________________

Years in HFMA ______ # Years in NJ Chapter______ Member Employer _____________________________________

APPLICANT INFORMATIONPART 1 - PERSONAL DATA

Applicant Name ______________________________________ Address _________________________________________________________________________________________________ Relationship to Member_________________________________ College ______________________________________________ ____________________________________________________ Course (s) to be taken ___________________________________ ____________________________________________________ Matriculated Student YES ________ NO ___________ Degree/Program Pursued ________________________________ Anticipated Graduation Date ____________________________ Major _________________ Annual Tuition ________________ Amount of Employer Support ____________________________Amount of Other Scholarships Awarded ____________________

(Documentation must be provided supporting tuition, employer’s reimbursement policy and enrollment in school.)

SIGNATURE ____________________________________ DATE ___________

Please return completed package no later than Michael Alwell, MPA, FHFMA April 1, 2013 to: Chair Scholarship Committee, NJHFMA Healthcare Financial Mgmt. Assoc. - NJ Chapter

PO Box 6422 Bridgewater, NJ 08807

PART 2 – EDUCATION BACKGROUNDHighest Level of Education Attained ________________________School ____________________________________________________________________________________________________GPA ______ Degree______ Major __________(Documentation must be provided documentingGrade Point Average)

PART 3 – PROFESSIONAL CAREEREmployment History(List employment history as Attachment A.)

PART 4 – COMMUNITY AND PROFESSIONAL ACTIVITIES

Please describe your civic and professional activities and contributions to your community, profession, HFMA or other organization. (Please label as Attachment B.)

PART 5 - ESSAY

Please submit an essay describing your educational and professional goals and how this scholarship will assist you in achieving such goals. (Please label as Attachment C.)

PART 6 - REFERENCES

Please furnish three formal reference letters(Please label as Attachment D.)


46 Focus

WHEN

ACTIONSSPEAK LOUDER THAN WORDSCoding, compliance, reimbursement and revenue solutions infused with intelligence and delivered through our consulting, software, publications and webcasts to more than 4,000 U.S. providers in 2011.

MedLearn is now Panacea™ panaceahealthsolutions.com

MedLearn | RACmonitor | ICD10monitor

Meet A New Member!Who is your employer, and what is your position?

What was your first job as a teen?

What do you like best about your work responsibilities?

A job I would enjoy doing without pay is...

My favorite place is...

I will not eat...

If I’m not at work, you will find me...

Wilentz, Goldman & Spitzer, P.A - attorney

The Sports Authority - Sales Associate

The client interaction

Manager of a major league baseball team

San Diego

Nuts

Running

Glenn P. Prives, Esq.

Focus 47

Fox Rothschild's Health Law Practice reflects an intimate knowledge of

the special needs, circumstances and sensitivities of providers in the

constantly changing world of health care. Because of our significant

experience and comprehensive, proactive approach to issues,

health care providers — including institutional, group and individual

practices of all types and sizes — turn to us to successfully meet

the challenges of their competitive, highly regulated environment.

After all, we're not your ordinary health care attorneys.

RESPONDING TO AN INDUSTRY IN TRANSITION

California Connecticut Delaware District of Columbia Florida Nevada New Jersey New York Pennsylvania

A Pennsylvania Limited Liability Partnership

ATTORNEY ADVERTISING

Elizabeth G. Litten, Esq. [email protected]

Princeton Pike Corporate Center997 Lenox Drive, Building 3Lawrenceville, NJ 08648-2311

www.foxrothschild.com

48 Focus


Advertiser FocusPlease consider supporting our sponsoring companies

Since 1986, BESLER Consulting has been assisting healthcare providers in enhancing revenue, gaining operational efficiencies and achieving compliance. BESLER Consulting clients benefit from a team of highly experienced, dedicated professionals. They bring to each engagement in-depth knowledge in a wide range of financial, operational and compliance issues. Telephone 1.877.4BESLER • Web site Beslerconsulting.com

Established in 1973, McBee Associates, Inc., one of the nation’s largest, independent health care consulting practices, provides managerial and financial consulting services to health care organizations. The firm’s consultants maintain an extensive array of financial and managerial expertise, enabling them to resolve any financial chal-lenge that faces a health care provider today. Visit: www.mcbeeassociates.com

For over twenty-five years, CBIZ KA Consulting Services has provided customized financial solutions to healthcare providers. Our staff blends industry knowledge and practical experience to provide services in the fields of reimbursement optimization, Medicare and Medicaid recovery, managed care, decision support, benchmarking and clinical resource management. For informa-tion, visit www.kaconsults.com.

ParenteBeard is the Mid Atlantic’s leading regional certified public accounting and con-sulting firm with over 1,200 employees serv-ing middle market and small business clients

across the region. The 170 partner firm has 24 offices located in Pennsylvania, New Jersey, New York, Maryland, Delaware and Texas. The firm is ranked among the Top 20 firms in the USA and is an independent member of Baker Tilly Inter-national. For more information, please visit ParenteBeard at www.parentebeard.com.

Founded in 1974, WS+B is one of the largest regional accounting and consulting firms in the mid-Atlantic area with office locations in New Jersey, New York, Pennsylvania and Maryland. With over 375 employees, the firm ranks among the top 35

CPA firms nationwide. WS+B services hundreds of health care providers in the areas of accounting & auditing, consulting, tax, corporate governance and risk management. Contact Scott Mariani at [email protected] or 973.898.9494. www.withum.com

Ranked among the 200 largest law firms in the country, Fox Rothschild is a full-service firm that provides a complete range of legal services to public and private business entities, charitable, medical and educational institutions and indi-viduals. The firm has three locations in New Jersey and offices across the country in New York, Pennsylvania, Delaware, Washington, DC, Florida, California, Nevada and Colorado. www.foxrothschild.com

Panacea Healthcare Solutions, Inc. has pro-vided coding, compliance, reimbursement and revenue solutions infused with intelligence

and delivered through our consulting, software, publications and webcasts to more than 4,000 U.S. providers in the past year. Each one is rooted in Panacea’s extensive frontline experience in healthcare finance, coding and compliance. For more information, visit www.PanaceaHealthSolutions.com or Contact Mike Kennedy at 1-866-926-5933 x702.

new jersey chapter

Liberty is a preferred hospital revenue cycle firm specializing in converting accounts re-ceivable into cash and scrubbing accounts until they reach a zero balance. Established in 1989, Liberty has served over 100 clients in the New Jersey/New York Metro-politan area. Our key staff have held various leadership positions in hospital patient accounting and revenue cycle functions and is recognized as a high quality, high service firm with a reputation for flawless account work. Call us at 973.872.1497 or visit us at www.libertybilling.com.

NJ SmartStart Buildings is the commercial and indus-trial component of the NJ Clean Energy Program, offer-ing technical assistance, design support and financial incentives for energy-efficient equipment in new con-struction and retrofits in New Jersey.

Visit NJ SmartStart Buildings online at www.njsmartstartbuildings.com or call us toll free at 866-433-4479 for more information.

Save the Date!

Annual NJ HFMA Golf Outing

Tuesday, May 7, 2013

Fiddler’s Elbow Country Club Far Hills, NJ

Sponsorship opportunities are available. Contact Laura Hess at [email protected]

new jersey chapter - HFMA NJ · 2013. 4. 18. · Whether with tax, audit or consulting, ... the...

Documents

Transcript of new jersey chapter - HFMA NJ · 2013. 4. 18. · Whether with tax, audit or consulting, ... the...