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Determining Health Care


Determining Health Care s Future in Texas July 11, 2013 | Dallas, Texas Bobby Hillert Executive Director Texas Orthopaedic Association | 214 ... – PowerPoint PPT presentation

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Title: Determining Health Care

Determining Health Cares Future in Texas July
11, 2013 Dallas, Texas Bobby Hillert
Executive Director Texas Orthopaedic
Association 214.728.7672
Key Issues Facing a Typical Orthopaedic Practice
State Congress/Medicare Industry
  • Benchmarking Effectively Across Practices (Texas
    Surgical Quality Collaborative)
  • Health IT/EHRs/Direct Project
  • Consolidation
  • Increasing Costs
  • Third Party Administrators/Employers Demanding
  • Scope of Practice
  • Commercial Insurance
  • Silent PPO regulation (HB 620)
  • Decreasing OON
  • Pricing Transparency
  • Exchange Tight Network
  • Workers Comp
  • Closed formulary
  • Outpatient functional therapy reporting
  • Medicaid dual eligible Co-pay
  • Medicare Administrative Contractor (Novitas)
  • IPAB
  • SGR fix
  • Site neutral payments
  • Fee-for-service future?
  • Increased Research Data
  • Direct Project (the New Health IT)
  • ICD-10
  • Continuum of Care
  • Physician Hospital VBP
  • Site Neutral Payments
  • Medicare Readmissions

Overview Sample of Industry Issues (July 2013)
  • Industry (Texas)
  • Freestanding cath labs
  • Freestanding ERs/urgent care
  • Consolidation
  • IVF ASCs
  • Medicare/Congressional Issues
  • SGR
  • Employer mandate
  • Hospital Outpatient/Physician Fee Medicare 2014
    proposals (July 8)
  • Kidney care ACO applications (August 10)
  • Psych proposed payment Medicare 2014 (late July)
  • Debt ceiling deadline (fall 2013)
  • ACA open enrollment (October 1)
  • Medicare proposal to use PET imaging for
    Alzheimers Disease (July 3)
  • ESRD bundle rebase 12 Medicare decrease

Health Care Stakeholders in Austin
Providers Non-providers Lawmaker
Senator Charles Schwertner Orthopaedic
Surgeon Senator Bob Deuell Family Practice
Physician Senator Donna Campbell ER
Physician/Ophthalmologist Rep. John
Zerwas Anesthesiologist Rep. Greg
Bonnen Neurosurgeon Rep. JD Sheffield Family
Practice Physician
Tarrant County A Microcosm For the States
Political Future?
2012 Presidential Tarrant County Romney
57.1 Obama 41.4 2008 Presidential Tarrant
County McCain 55.4 Obama 43.7
2012 Presidential State of Texas Romney
57.2 Obama 41.4 2008 Presidential State of
Texas McCain 55.4 Obama 43.7
  • Tarrant only one of six large counties in Texas
    to support Romney.
  • City of Fort Worth one of only four major
    cities to support Romney (Phoenix, Oklahoma
    City, Salt Lake City).

Source Texas Tribune
U.S. Congress 2014 Elections
  • U.S. House
  • Likely to remain in Republican control.
  • Heavy Texas influence within Rules, Energy
    Commerce, and Ways Means Committees.
  • U.S. Senate
  • Biggest impact on health care will be Max Baucus
    retirement (D-Montana).
  • Ron Wyden (D-Oregon) to take Senator Baucus

Slowing Health Care Costs?
  • National health expenditures rose 3.9 in 2011,
    same rate as in 2009 and 2010.
  • Slowest growth in the 52 years that the
    government tracked this spending.

Health Care Consolidation
Industry Issues Rising Expenses
Many private orthopaedic practices may find
significant challenges to maintaining financial
solvency in the future, according to research
presented during the 2013 AAOS Annual Meeting by
Alberto D. Cuellar, MD. Dr. Cuellars Scientific
Poster, The Economic Conundrum of Private
Practice Orthopaedic Surgery, was selected as
the overall best poster by the Central Program
Committee. American Academy of Orthopaedic
Physician Employment in Texas
HB 1700 is signed into law by the governor and
allows rural hospital physician employment. This
includes counties with a population of 50,000 or
less sole community hospitals and critical
access hospitals.
SB 1661 is signed into law and sets up additional
requirements for 5.01(a)s to protect physicians
clinical autonomy.
Other new laws allow employment at county
hospitals in Harris, El Paso, and Bexar counties.
Texas Scottish Rite wins approval, too.
2009 2011 2013 2015
Physician employment should be a quiet issue in
Legislation signed into law allows Parkland
(Dallas) to employ physicians. Rural hospital
legislation is vetoed by the governor.
Could all Texas hospitals ask for employment in
Consolidation Which Specialties Are Entities
  • Orthopaedics 3
  • Hospitalist/Emergency 20
  • Family/Internal 14
  • Multi-specialty 9
  • Neonatology/Pediatrics 9
  • Cardiology 14
  • Other 31

Source The Health Care Services Acquisition
Report 2007-2012. Irving Levin Assoc, Inc.
Analysis Adam Lynch, Principle Valuation
The Future of Fee-for-service Two Approaches
MedPAC Switch to global payments
Providers Industry Retain a balance
  • Entities Factoring into a New Payment Model
  • Physicians and other providers
  • Facilities
  • Payors
  • Industry (medical devices)
  • Home health
  • New payment models
  • Site neutral payments
  • Tighter networks (commercial side)

Fee-for-service FFSs Death or a Balanced
What will be the balance between productivity
payments and payments for these non-productivity
items or, better yet, these management of care
services? - Michael McCaslin, CPA Somerset
CPAs, P.C.
  • His Prediction
  • The Short Term (Next Three Years)
  • 60 to 70 percent fee-for-service
  • 40 to 30 percent cost management
  • The Mid Term (Four to Seven Years)
  • 50 percent fee-for-service
  • 30 percent cost management
  • 20 percent quality/outcomes

Positives for Global Payments
Positives for FFS
  • MedPAC embraces global payments (evidenced in
    their desire to keep physician ownership of
    ancillary services for coordinated care purpose).
  • Volume not as important (compared to FFS).
  • Does not focus on (and reward) value of care.
  • More volume more data for quality measures.
  • Resource-based relative value scale (RBRVS)
    FFS always around, but RBRVS created in early
    1990s when costs started rising.
  • Hospitals see value in FFS, as evidenced by RVUs
    for hospital-employed physicians (productivity
  • Too many hospitals in certain markets over
  • Physicians have ownership in FFS.
  • Care not withheld for patients.

SGR Replacement Energy Commerce Release (July
Incentive Payment Program (Measured Against Peers)
Traditional SGR
Two Payment Models
  • Threshold/Benchmark Update Incentive Payment
  • All fee schedule providers able to achieve the
    maximum update.
  • Stakeholders will determine benchmarks.
  • Highest composite score will receive the highest
  • Percentile Update Incentive Payment Model
  • Covers all fee schedule providers within a Peer
  • Payment update based on fee schedule providers
    percentile ranking (a comparison).
  • Top performers earn highest update.

SGR Replacement Quality Measures
  • Core Competency Categories (Specialty Societies
    to Determine)
  • Clinical care.
  • Safety.
  • Care coordination.
  • Patient and caregiver experience.
  • Populations health and prevention.

New Payment Models (Medicare Industry) ACOs Bun
dled Payments Gain Sharing Medical
Homes IPAB Third Party Administrators
Capitation Shared Savings Balanced
FFS Traditional FFS
Evolution of Payment Risk
Bundled payments Gain-sharing New
commercial insurance products
Continuum of Care Map for a Hospital Visit
Home health/SNF
SNF vs. home health
Role of social media/patient engagement
  • Readmissions
  • Data collection

New Payment Models ACOs, Bundled Payments, IPAB,
Medical Homes
Accountable Care Organizations Bundled Payments
The Affordable Care Act requires HHS to develop
a national, voluntary bundled payment pilot
program to provide incentives for providers to
coordinate care. (Effective 2013.) A Medicare
pilot project in the 1990s focused on on heart
bypass surgery at seven hospitals. Medicare
Physician Group Practice Demonstration Project
(Medicare) It includes 10 physician groups
(approximately 500 physicians and 22,000
beneficiaries). MedPAC cited increased quality.
However, it could not quantify cost savings at
this point in time. Acute Care Episode (ACE)
Gain Sharing Competitive bidding, shared
savings. Over 1 million dollars in savings in
San Antonio and sooner than expected
payments. Hillcrest (Tulsa) made a slight
profit on the 415 patients 295 cardiac and 120
orthopedic that it treated through Sept. 30,
2009. Hillcrest officials say their orthopedic
cases are up 2 percent this year and cardiac
cases are up 27 percent, but they dont know
whether thats because of the bonuses or the fact
that the hospital just spent millions to improve
its facilities. Medical Home The Independent
Medicare Advisory Board will test medical home
models. Center for Medicare Medicaid
Innovation Center/Independent Payment Advisory
Board (IPAB) Tests, evaluates, and expands
different payment structures.
New Payment Models Four Rounds of Medicare ACOs
  • July 9, 2012 89 ACOs were announced.  
  • April 10, 2012 Medicare announced 27 new ACOs.
  • Thirty-two ACOs participating in the Medicare
    Pioneer Program were announced in December 2011.
  • Six Physician Group Practice Transition
    Demonstration organizations were announced in
    January 2011.
  • Another round announced January 2013.
  • Start Date July 1, 2012
  • San Antonio - BHS Accountable Care LLC
  • Texas (community health centers) - Essential
    Care Partners LLC
  • Houston - Memorial Hermann Accountable Care
  • Texas (DFW) - Methodist Patient Covered ACO
  • Houston - Physicians ACO
  • Northern Texas/Southern Oklahoma - Texoma ACO
  • Start Date April 1, 2012

January 2013 Round Four of Medicare ACOs
  • The largest set to date, 106, were announced on
    January 10, 2013.
  • New Texas ACOs Include
  • Accountable Care Coalition of North Texas.
    This ACO was developed by Houston-based
    Collaborative Health Systems (CHS) and will
    include 70 physicians. CHSs parent company,
    Universal American, is a Medicare Advantage
  • Amarillo Legacy Medical ACO.
  • Essential Care Partners II, LLC. This is
    another ACO developed by CHS.
  • Integrated ACO.
  • Rio Grande Valley Health Alliance.
  • Scott White Healthcare Walgreens Well

New Payment Models Bundled Payments for Care
  • Several options for hospital/post acute care
  • Delivered by a hospital.
  • Delivered by a post-acute care provider.

As a Model 3 provider, Encompass is entering a
fully at-risk relationship with Medicare for
certain patients. The program includes 180
MS-DRGs, which are then sorted into 48 bundles
with each bundle covering either a 30-, 60-, or
90-day period depending on the providers
selection of duration. Each bundled payment
will cover all the cost incurred from the date of
the homecare admission for the agreed upon
period. Encompass has elected to cover the
90-day bundled period. Any patient that is
discharged from an acute care setting that had
one of the 180 defined MS-DRGs and comes to
Encompass as their first post discharge stop
within 30 days of discharge will be subject to
the bundled payment.
Medicare Spending on Post-acute Care During
90-day Bundle (5 of 2007 2008 claims)
Condition Medical or Surgical of Episodes Mean 25th Percentile 75th Percentile Ratio of 75th to 25th Percentile
Stroke Medical 10,740 20,411 6,856 30,300 4.4
Simple pneumonia Medical 20,780 10,567 2,787 15,082 5.4
Coronary bypass Surgical 2,276 6,539 1,887 7,957 4.2
Heart failure Medical 15,376 9,301 2,319 12,379 5.3
Major small/bowel Surgical 6,180 8,169 2,176 10,528 4.8
Joint Surgical 29,627 9,752 4,006 13,277 3.3
Hip/femur procedures Surgical 7,814 22,052 13,244 30,045 2.3
Fractures hip/femur Medical 2,066 17,392 9,044 23,854 2.6
Kidney/urinary tract Medical 10,133 13,048 3,909 19,771 5.1
Septicemia Medical 4,961 13,532 3,861 20,116 5.2
Average 4.3
Medicare Spending on Bundles SNF vs. HHA vs. IRF
Condition HHA SNF IRF Ratio of IRF to SNF Spending Ratio of SNF to HHA Spending
Stroke 13,344 33,266 40,881 1.2 2.5
Simple pneumonia 12,403 26,597 39,166 1.5 2.1
Coronary bypass 39,708 52,554 60,677 1.2 1.3
Heart failure 13,881 30,984 45,516 1.5 2.2
Major small/bowel 25,658 39,443 48,933 1.2 1.5
Joint 17,712 28,013 32,891 1.2 1.6
Hip/femur procedures 17,177 38,324 40,770 1.1 2.2
Fractures hip/femur 9,980 26,947 32,200 1.2 2.7
Kidney/urinary tract 11,597 27,613 37,739 1.4 2.4
Septicemia 16,516 32,961 47,081 1.4 2.0
Average 1.3 2.1
New Payment Models Bundled Payments for Care
Quality Issues Industry Benchmarking Against
Other Practices Public Policy Medicare VBP for
facilities Physicians
Quality Benchmarking Across Practices A
Negotiation Tool for Physician Practices?
For a number of surgeons, quality benchmarking
data are largely anecdotal and involve a pen and
paper. Increasing a physicians ability to
benchmarking quality data against numerous
sources could enhance the physicians negotiating
power with commercial health insurance plans.
Employer-based Health Plan Consultants Quality
Texas Surgical Quality Collaborative
VBP for Medicare Physicians Quality
Satisfaction Ratings
2015 CMS to adopt VBP by this date VBP for
some pay for reporting for all (EHR, not ACA).
January 2012 CMS to announced VBP measures
reports to physicians regarding comparisons.
2010 Affordable Care Act VBP for physicians
2011 Physician Compare launched
2013 2015 VBP payments will be based on 2013
2017 All physicians will participate in VBP.
Source Press Gainey.
Value-based Purchasing April 23 TOA eConnect
Thoughts from Press Ganey (April 23 TOA eConnect
  • Whats Coming from Medicare
  • 2012 Physician Compare Web site launched.
  • 2013 Data for both quality and patient
    experience are on the verge of being publicly
    reported (PQRS data added to web site in 2013).
  • 2014 PQRS CGCAHPS data publicly reported
    1.5 percent adjustment for failure to report.
  • 2015 Payment adjustments begin.
  • 2017 Full VBP program in place for all
  • Practices preparing for Medicare VBP
  • A large multi-specialty group in Texas will only
    award the previously withheld patient experience
    bonus if a physician meets the 90th percentile
    rank in his or her specialty.
  • Other groups have phased in a patient experience
    component to their compensation plan, and may
    ramp up the required rank over the course of 24
    to 36 months.

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Medicare Hospitals Value-Based Purchasing
July 1, 2009 March 31, 2010 Baseline
Calculation Period
October 1, 2012 1st Inpatient VBP Payments
July 1, 2011 March 31, 2012 Comparison Period
30 of VBP Texas Patient Experience of Care
Source CMS HCAHPS patients who had overnight
stays from July 2009 June 2010 updated April
11, 2011.
70 of VBP Texas Clinical Process of Care
Source CMS HCAHPS patients who had overnight
stays from July 2009 June 2010 updated April
11, 2011.
December 2012 CMS VBP Report
Hospital Location Change in Pay
1. Treasure Valley Hospital Boise, Idaho .83
2. Lincoln Surgical Hospital Lincoln, Nebraska .78
3. Baylor Medical Center at Trophy Club Trophy Club, Texas .78
4. TOPS Surgical Specialty Hospital Houston, Texas .75
5. Marlboro Park Hospital Bennettsville, South Carolina .74
6. Baylor Medical Center at Uptown Dallas, Texas .74
7. Irving Coppell Surgical Hospital Irving, Texas .73
8. Surgical Hospital at Southwoods Youngstown, Ohio .73
9. Indiana Orthopaedic Hospital Indianapolis, Indiana .72
10. Baylor Heart and Vascular Hospital Dallas, Texas .72
Source American Medical News. Physician-owned
hospitals seize their moment. April 29, 2013.
EHRs One Central Texas Practice Experience
  • 2012 468,000
  • 26 physicians received Year 1 payment
  • 2013 240,000
  • 20 physicians received Year 2 payment
  • 5 are now completing Year 2 in 2013,
  • 1 didnt meet criteria
  • (Payments received after April 1st are subject to
    the 2 sequestration adjustment.)

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Quality or Value-based Incentives
  • Document Process measures (SCIP, PQRI)
  • NQF endorses quality measures to select
  • Appropriate Use Criteria from societies
  • Clinical Practice Guidelines Evidence Levels

Medicare Inpatient Policy Considerations Medicar
e Readmissions Medicare Administrative
Contractor (Novitas)
Medicare Hospitals Readmissions
According to the Centers for Medicare Medicaid
Services (CMS), in 2009, more than seven million
Medicare beneficiaries experienced over 12.4
million inpatient hospitalizations. One in seven
Medicare patients will experience some adverse
event such as a preventable illness or injury
while in the hospital. One in three Medicare
beneficiaries who leave the hospital today will
be readmitted within a month.
  • Starting in October 2012, hospitals subject to
    penalties of up to 1 percent for patients with
    primary condition of AMI, HF, or PNEU.
  • In the FY 2014 IPPS proposed rule, CMS proposes
    to apply an algorithm to account for planned
  • In addition, a proposal to add THA, TKA, and COPD
    for FY 2015.
  • Beginning in October 2013, the penalty increases
    to 2 percent and 3 percent in October 2014.

Lowering Readmissions June 2013 MedPAC Report
Condition Readmission Rate With Readmission (Mean) W/o Readmission (Mean) Readmissions to w/o Readmissions Readmissions as of Total Episode Cost
Stroke 16 38,078 19,824 1.9 26
Simple pneumonia 17 24,974 9,722 2.6 42
Coronary bypass 18 55,591 38,840 1.4 22
Heart failure 28 24,900 10,003 2.5 26
Major small/bowel 14 38,297 21,095 1.8 32
Joint 8 40,172 21,313 1.9 27
Hip/femur procedures 15 49,517 32,707 1.5 24
Fractures hip/femur 13 34,550 20,335 1.7 27
Kidney/urinary tract 18 25,511 11,183 2.3 38
Septicemia 20 33,985 15,447 2.2 36
Average 17 2.0 30
NQF Endorsed Quality MeasureFor THA/TKA CMS
Validation Contract - June 2012
  • 30 Day Risk-Standardized Readmission Rate (RSRR)
    to check transitions Outpatient Coordination of
  • Medicine Reconciliation
  • Discharge planning
  • Medicare 2008-2010 Part A claims
  • Mean 30 day RSRR 5.7
  • 5th percentile, 4.6
  • 95th percentile, 7.0

Source Marc DeHart, MD Austin, Texas
NQF Endorsed Quality MeasureCMS Validation
Contract - June 2012
  • Risk-standardized complication rate (RSCR)
  • following elective primary THA and/or TKA mean
  • Surgical Site Complications
  • Surgical site bleeding 30 days
  • Mechanical complications 90 days
  • Periprosthetic joint infection/wound infection
    - 90 days
  • Death 30 days
  • Medical Complications
  • Acute myocardial infarction 7 days
  • Pneumonia 7 days
  • Pulmonary embolism 30 days
  • Sepsis/septicemia/shock 7 days

Source Marc DeHart, MD Austin, Texas
  • Not finding and reporting comorbidities will cost
    the readmission score
  • Not maximizing medical comorbities will hurt
    the complication and readmission score.

Source Marc DeHart, MD Austin, Texas
Medicare MAC Audits Case Study 1
  • Case Study 1
  • A Large Texas Hospital System
  • January December 2012
  • 908 DRG 470 Cases
  • 163 claims denied after record review/audit.
  • 105 claims denied were successfully appealed.
  • 58 claims denied are waiting an administrative
    law judge hearing.
  • Typically Associated with Documentation Errors
  • Insufficient documentation.
  • Failure to demonstrate conservative treatment.
  • Insufficient duration of conservative treatment.
  • Lack of medical necessity.
  • Denial rate 25 percent.
  • No audits in the last quarter of 2012.
  • 887,000 in billed hospital services withheld and
    under appeal.

Outpatient vs. Inpatient Policy
Considerations Site Neutral Payments (total
savings of 900M/year gt 140M/year beneficiary
cost sharing savings) Ancillary
Services Physician Ownership
MedPACs June 2013 Annual Report Consolidation
Growth of Hospital Employment of Physicians
Leads to Higher Spending by Private Plans and
Their Enrollees. The growth of hospital
employment of physicians is leading to higher
spending by private plans outside of Medicare
and higher cost sharing for their enrollees
(Alexander et al. 2012, Dutton 2012, Kowalczyk
2013a, Kowalczyk 2013b, Mathews 2012). In one
example, a patient found that his insurance plan
paid 1,605 for an echocardiogram after his
cardiologists practice was acquired by a
hospital systemmore than four times the amount
paid by the plan when the practice was
independent (Mathews 2012). The patients share
of the bill was about 1,000. According to the
patient, Nothing had changed, it was the same
equipment, the same room. In another example, a
patient who received a 20-minute exam in a
hospital-owned practice was charged a 500
facility fee in addition to the physicians 250
professional fee (Kowalczyk 2013a). In some
cases, private plans have stopped paying the
additional facility fee for routine office
visits provided in hospital-owned entities
(Kowalczyk 2013a, Ostrom 2012).
MedPAC Site-Neutral Payments
  • Round 1 EM Site-neutral Payments
  • 2012 MedPAC discussions focused on limiting HOPD
    payments for EM services at the physician fee
  • Round 2 Ambulatory Payment Classification (APC)
  • MedPAC believes these procedures do not require
    an inpatient facility and an ED. As a result, it
    may recommend significant payment cuts.
  • Of a sample of 100 of the most negatively
    impacted hospitals, over half were specialty
    hospitals and those with low ED rates.
  • First group of 25 APCs (diagnostic tests bone
  • Performed in physician office more than 50
  • Rarely provided during ED visits (less than 10
  • Minimal differences in patient severity.
  • Similar packaging as the physician fee
  • Second group of 61 APCs
  • More packaging ancillaries than the PFS.
  • Payment could be set at sum of PFS for the
    primary service and the packaged ancillary

Source Initial MedPAC analysis in 2012.
MedPAC Inpatient Moved to Physician Rates June
2013 APC Groups Examined (Group 1)
  • Mostly diagnostic tests (Group 1)
  • Level II echocardiogram w/o contrast (APC 269)
  • Level II extended electroencephalography (EEG),
    sleep, and cardiovascular studies (APC 209)
  • Bone density axial skeleton (APC 288)
  • Level II neuropsychological testing (APC 382)
  • Procedural APCs
  • Level II eye tests and treatments (APC 698)

MedPAC Inpatient Moved to Higher Rates June
2013 42 APC Groups Examined (Group 2)
  • Sample (Group 2)
  • Level III echocardiogram w/o contrast (APC 270)
  • Level I debridement and destruction (APC 12)
  • Small intestine endoscopy (APC 142)
  • Cardiac computed tomographic imaging (APC) 383
  • Level IV pathology (APC 344) - tests

MedPAC Inpatient APC Rates Moved to ASC June
2013 APC Groups Examined
APC APC Description Reduction (million)
137 Level V skin repair 26.5
203 Level IV nerve injections 13.2
207 Level III nerve injections 147.5
233 Level II anterior segment eye procedures 3.9
234 Level III anterior segment eye procedures 9.9
239 Level II repair and plastic eye procedures 1.3
240 Level III repair and plastic eye procedures 16.4
241 Level IV repair and plastic eye procedures 5.2
244 Corneal and amniotic membrane transplant 9.5
245 Level I cataract procedures w/o IOL insertion 0.2
246 Cataract procedures with IOL insertion 341.2
247 Laser eye procedures 13.6
Total 588.4
Ancillary Issues PT Imaging
Stark In-office Ancillary Exemption Threatened
to be removed in Washington. Physical Therapy
Settings in Medicaid Move all down to the lowest
rate regardless of setting. Imaging in
Medicaid 2013 state appropriations provision
would take a hard look at ancillary imaging in
Medicaid and find ways to decrease this cost.
Imaging Ownership
Washington, DC Stark in-office ancillary
exemption under review by Congress for additional
savings. 2007 Budget Deficit Act led to first of
a series of major cuts to in-office
imaging. 2009 Medicare bill led to additional
in-office cuts and created in-office imaging
credentialing (The Joint Commission). 2010
Affordable Care Act led to more in-office cuts.
  • Austin, Texas
  • Past efforts by the radiologists to require
    registration unlikely.
  • HB 1809 (2009) led by the Coalition for Ethical
    Imaging would have created
  • Accreditation and registration system.
  • Study comparing physician-owned imaging to
  • 2011 attempt to create a license (facility fee)
    for freestanding imaging and pain fluoroscopy
    clinics failed.

Physician-owned Distributors (PODs)
2013 HHS OIG Work Plan Physician-Owned
Distributors- High Utilization of Orthopedic
Implant Devices Used in Spinal Fusion
Procedures We will determine the extent to which
physician-owned distributors (POD) provide spinal
implants purchased by hospitals and are
associated with high utilization of such
implants. PODs are business arrangements
involving physician ownership of medical device
companies and distributorships. PODs distribute
orthopedic implants, such as devices used in
spinal fusion procedures. However, PODs appear to
be quickly growing into other areas, such as
cardiac implants. Congress has expressed concern
that PODs could create conflicts of interest and
safety concerns for patients. (OEI 01-11-00660
expected issue date FY 2013 work in progress)
Commercial Insurance Industry Policy
Considerations Insurance Exchanges New State
Products Narrow Networks
2013 Texas Legislature A Brief Health Care
Commercial Insurance Key Issues
Washington, DC Industry
Changes Austin
Affordable Care Act State exchanges Allied
health mandate
OON referral attacks (leg regulatory) Usual
customary standards (OON) Network adequacy
standards Silent PPOs Pricing
transparency EPOs Balance billing Assignment
of benefits
TPAs employers active Consolidation Discouragi
ng OON Declining reimbursement rates Provider
agreements with plans Tighter networks Assignmen
t of benefits
State Health Insurance Exchanges Analysis of the
  • Steps to determine eligibility
  • Must have an income between 133 and 400 of FPL.
  • Employees who are offered coverage by an employer
    are not eligible for premium credits unless a)
    the employer plan does not have an actuarial
    value of at least 60 or b) if the employee share
    of the premium exceeds 9.5 of income.
  • If you meet the top two requirements, a premium
    is available on a sliding scale. (The credit is
    directly to the insurance company.
  • You must purchase a Silver plan in order to be
    eligible. The premium credit is the lesser of the
    following amounts a) Total monthly premium for
    qualifying health plan or b) The excess of
    adjusted monthly premium for the applicable
    second-lowest-cost Silver plan.

FPL (Family of 4) of Income Monthly Premium Actuarial Value
133 150 3 4 74 - 110 94
150 200 4 6.3 110 - 232 87
200 250 6.3 8.1 232 - 372 73
250 300 8.1 9.5 372 - 524 70
300 350 9.5 524 - 611 70
350 400 9.5 611 - 698 70
State Health Insurance Exchanges What It Looks
  • All plans must offer basic services.
  • A plan with an actuarial value of 70 means
    that the insurance plan will pay 70 of typical
    medical costs while the beneficiary is
    responsible for 30 of the costs.
  • Catastrophic coverage available for individuals
    under age 30.
  • The Office of Personnel Management will
    contract with private insurers to offer at least
    two national or multi-state plans to be offered
    in each state.
  • How many plans will actually participate? At
    first, it will be limited to plans that currently
    offer individual and small group coverage.
  • Will TDI work on the exchange?
  • The insurance networks will be very tight.
    Providers will see decreased reimbursements.
  • Catastrophic Plan
  • Under age 30
  • Bronze Plan
  • 60 actuarial value
  • Silver Plan
  • 70 actuarial value
  • Gold Plan
  • 80 actuarial value
  • Platinum Plan
  • 90 actuarial value

Insurance Choices Forecast of Insurance Coverage
SOURCE The Joint Committee on
Taxation/Congressional Budget Office
Medicaid 42M
Medicaid 50M
Medicaid 40M
Medicaid 49M
Employer 150M
Employer 172M
Employer 169M
Employer 168M
Uninsured 50M
Uninsured 18M
Uninsured 18M
Uninsured 23M
Medicare 55M
Medicare 60M
Medicare 47M
Medicare 52M
Ind 27M
Ind 24M
Ind 23M
Ind 24M
State Health Insurance Exchanges Health Plan
  • Those plans currently engaged in the small group
    and individual markets are expected to play the
    greatest role.
  • Begin selling in fall 2013 for January 1, 2014
    start. Expected to have 11 million to 13 million
    enrollees, which would create 50 billion to 60
    billion in revenue (PwCs Health Research
  • BCBS of Texas has prepared a product with a
    tighter market. Already advertising.
  • UnitedHealth will look at 10 to 25 exchanges.
  • Aetna will be in about 15 exchanges.
  • Humana targeting 10 states.
  • Cigna will likely participate in the 10 states
    where it already offers individual plans.
  • Other entities that offer local plans and
    Medicaid plans are likely to participate.

Source Wall Street Journal. January 18, 2013
UnitedHealth Weighs in on New Exchange Option.
Network Adequacy Rule
  • Increased Disclosure for Facility-based
  • Out-of-network Physician referring a patient to
    a facility and the facility would have to
  • Notify the uninsured of the possibility that
    out-of-network providers may provide treatment.
  • Notify the insurer that surgery has been
    recommended so that the insurer can coordinate
  • Notify the insurer of the facility that has
    been recommended.
  • Disclosure of Payment Estimates
  • You have the right to obtain advance estimates
  • Of the amounts that the providers may bill for
    projected services, from your out-of-network
  • Of the amounts that the insurer may pay for the
    projected services, from your insurer.

Out-of-network, EPOs, Tighter Networks
  • Out-of-network Issues
  • 2009 Austin legislation concerning out-of-network
    co-pays. Fierce debate.
  • Aetnas discussions regarding out-of-network
    referrals to physician-owned facilities during
    the 2012 regulatory process.
  • Exclusive Provider Organization Benefit Plans
  • Created by the 2009 Legislature at the urging of
    one commercial plan.
  • PPO with no out-of-network benefits.
  • Tighter Networks The Future of Insurance?
  • Out-of-network attacks, EPOs, and the state
    health insurance exchanges are all part of a
    health plan trend towards tighter networks.
  • Health plans already indicated that they will
    offer plans with smaller networks to be
    competitive in the health insurance exchange.
    BCBS of Texas example.
  • Assignment of Benefits
  • Some health plans have started sending entire
    out-of-network facility payment to the patient.
    The patient is then expected to reimburse the
  • 2013 legislation would allow for direct payment
    to providers and bypass assignment of benefits

Balance Billing
  • Key Concepts in Austin
  • State lawmakers and regulators cannot control
    ERISA plans. Therefore, regulate providers and
    balance billing practices, which could then
    translate to all health plans, including ERISA.
  • Physician groups believe that the latest Texas
    Department of Insurance PPO network adequacy rule
    will solve balance billing problems by labeling
    hospitals based on their networks.
  • HB 2838 (2013 Legislature) would require
    providers to provide a price that will be
    accepted in full 48 hours prior to a service.
    (Focused on facility-based physicians.)

Pricing Transparency
Common theme Require providers to reveal their
prices on Web sites. Several bills were written
by physician lawmakers and key Insurance
Committee leaders.
  • Third Party Administrators 2012 2013
  • Texas Center for Health Transformation
  • 2013 Legislature
  • HB 3020 Require hospitals and ASCs to list
    their top 25 prices and require physicians to
    list their top 10 prices on a Web site. State
    Rep. JD Sheffield, DO.
  • HB 2360 HB 2359 would also require
    transparency standards and usual and customary
    standards. State Rep. Greg Bonnen, MD.

Usual Customary
  • Usual Customary
  • FAIR Health
  • Latest network adequacy proposal called for
    health plans to reimburse using a usual and
    customary standard for out-of-network services
    provided when no in-network provider is available.

Fair Market Value UC
Tied to Medicare
Scope of Practice Key Issues
Issue Past Action Outlook
Physical Therapy (direct access) carve out for
doctorates Podiatry ankle foot Chiropractor
s Optometry U of H Higher Education
Advanced Practice Nurses
Likely House hearing. Abilene court case
podiatrists looking at insurance
issues. Unlikely to move far. Failed to
secure Senate sponsor. Medicine and nurses
Larger effort failed in 2011. Podiatrists
rejected TOA proposal in 2011. Filed 11
bills. Looked to expand scope. PR efforts
negotiations with medicine
Medicaid 2013 TX Legislature
  • Waste, Fraud, Abuse
  • Several bills.
  • DSH IGT Hospitals
  • FY 2013
  • State provides 138 million.
  • Large, transferring hospitals provide 318
  • Smaller public hospitals will provide more for
    the IGT to become fully funded or close to 90
    95 percent.
  • FY 2014
  • State provides 160 million.
  • Large, transferring hospitals provide 300
  • FY 2015
  • State provides 140 million.
  • Large, transferring hospitals provide 285

2011 Legislature Reshaping Medicaid
Medicaid 1115 Waiver
Medicaid 1115 Waiver
Past UPL Payments
UC Pool Uncompensated Care Costs of care
provided when third party coverage unavailable.
DSRIP Pool Delivery System Reform Incentive
Payments Quality bonus payments for coordinated
care improvements.
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