Transcript Slide 1

What is Current & Next for MI Healthcare
HFMA Spring Conference
May 22, 2014
Marilyn Litka-Klein, vice president, Health Finance
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Michigan Strategic Trends
Pressure on Hospital Margins
• A reduced inpatient pie
– Long-term trend was downward before health reform
efforts with new technologies
– Prevention and care coordination to reduce inpatient
hospital care
– Reduced all cause readmissions
– Shift of care to outpatient/non-hospital settings
• Uncertain outlook for outpatient revenue and volume
– Changing rules with hard-to-forecast impacts: observation
versus inpatient status and short-stay reviews
– Reference pricing
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Strategic Trends - Implications
• Increased emphasis on cutting costs, maximizing
efficiency, reducing variation, possible elimination of
services
• Intense competition for market share based on value
(Some competition may be played out in the public and
private exchanges – e.g., through narrow network
products.)
• Physicians and hospitals are improving quality and
reducing costs
• Different payer pay-for-performance programs
• These system level savings should be shared with
providers through appropriate programs and contracts
with insurers.
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Why Hospital Consolidation?
•
•
•
•
•
Access capital
Reduce administrative expenses
Gain expertise
Retool processes
Increased volume doesn’t equal long-term
success without fundamental changes to
operations
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Hospital Landscape Changing
McLaren Health Care
• Cheboygan Memorial – 2012
• Northern Michigan Regional – 2012
• Barbara Ann Karmanos Cancer Center – 2014
• Port Huron – 2014 effective May 1, 14
Spectrum Health
• Memorial Medical Center West Michigan (Ludington) – 2013
• Mecosta County Hospital (Big Rapids) – 2013
Other
• Catholic Health East (CHE) Trinity – 2013
• Botsford, Oakwood, Beaumont (Pending)
• UM, Allegiance (Pending)
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Hospital Landscape Changing – Cont.
• DMC – Vanguard/Tenet – 2011
• Marquette – Duke/LifePoint – 2012
• Bell Hospital & Portage Health – LifePoint –
2013
• Metro Health – Community Health Systems –
2013
• Garden City – Prime Healthcare Services 2014
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Hospital Average Margins
2010
Patient
MI
-1.3%
-1.1%
-1.6%
2012
Operating
MI
3.4%
US
6.5%
2011
2010
3.3%
2.8%
5.5%
5.5%
2012
2011
US
0.7%
-0.3%
-0.2%
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History of Hospital Volume
Inpatient
Outpatient
2000
Michigan
US
57%
65%
43%
35%
2011
Michigan
US
51%
57%
49%
43%
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Margin – how to find it?
• Median MI outpatient volume is 63
percent
• Statewide Medicare OPPS margin is
negative 10 percent
• Medicaid pays 53 percent of Medicare
OPPS
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Impact of Service Mix
• Hospital operations – split of inpatient and
outpatient – vary by hospital
• Medicare, Medicaid, Commercial also vary
– Reimbursement changes have differing impacts
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Four Way for Answers to Offset Consolidations
• Provider Price and quality – develop
Transparency tool to inform consumers on
varying out-of-pocket costs
• Narrow provider net works
• Reference pricing
• Physician organizations – ACO, to move risk
from insurer to provider
Source: Fierce Health Payer 5/20/14
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Ambulatory Sensitive/Shoppable Services
• Support for review of charge master for media sensitive items – gauze,
OTC medications, diabetes supplies, etc.
• Software programs, either purchased or internally developed, are
utilized by some hospitals to respond timely to requests for information
regarding patient liability for services.
• Hospitals may have individually chosen to adjust prices on selected
ambulatory sensitive services, and see this as a competitive advantage.
• Hospitals have designated a central location where phone calls are
directed.
• Price lists for common items have been provided to staff in the
centralized locations.
• Ongoing concern by hospitals that actual procedure may differ from the
procedure quoted resulting in patient dissatisfaction if their payment
amount is higher.
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Ambulatory Sensitive/Shoppable Services – Cont.
• One of MHA’s roles is to provide media support for hospitals
regarding hospital charges and transparency efforts.
• Impact to hospital financial operations of payor contracts tied to
gross charges. Challenge for hospitals to renegotiate contracts to
minimize negative impact.
• Potential impact to hospital executive contracts if measures are
tied to gross charges.
• A template to estimate financial impact is difficult to develop
based on hospital experience.
• Charge/payment data on hospital websites is limited but
increasing.
• Traffic on hospital websites for charges/payment data has been
limited, but increasing.
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Hospital Pricing Examples
• TIME article
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–
–
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$7 alcohol prep pad
$18 diabetes test strips
$24 niacin pills
$77 gauze pads
• Other over-the-counter items that have charges
unrelated to cost, due to nature of charge master
pricing development
– These draw ire of the general public and are difficult
to defend
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Media Sensitive – Partial List
• Over-the-counter drugs
– Aspirin, Tylenol, Benadryl, etc.
• Retail supplies
– Gauze, ace bandage, etc.
• Some medical equipment
– Crutches, oxygen, patient supplies upon
admission, etc
• Others?
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Shoppable Services
• Increase in patients with high deductible health
plans
– Exchange
– Employer sponsored
• Patients responsible for first $2,000 - $5,000 will
begin searching for lowest cost option for
ambulatory items (lab, radiology, physical
therapy, outpatient surgery)
– High quality, patient safety scores, and distance
may diminish as considerations in lieu of financial
savings
– Providers with highest price may lose volume
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Shoppable Services – Partial List
• Radiology – X-Rays, CT, MRI, PET, Ultrasound,
Echocardiogram, Mammogram, Bone Density
• Surgical Procedures – ACL Repair,
Arthroscopy, Breast Biopsy, Colonoscopy,
Hernia, Gall Bladder, Endoscopy,
Hysterectomy, Knee Replacement, DeliveriesVaginal & C-Section
• Others?
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Potential Financial Impact
Inpatient
• PPS – patients that are DRG-based payment may not impact
margin. May impact Medicare, Medicaid, Blue Cross and
other payors that are charge-based
– Charge-based patients will have negative impact
• Critical access hospitals may have some impact, depending on
their payor mix
Outpatient
• PPS – Reduction to charges may not impact fee-screen payor
– Charge-based patients will have negative impact
• CAH – depending on payor mix, may impact reimbursement.
Also, hospital may need to review contracts to modify
reimbursement, if charge-based
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Price Transparency
• 2013 – CMS publishes prices for 100 common
hospital procedures
• 2014 – CMS publishes physician payments
• 5/14 – Obama administration OK’s use of
reference pricing
– Requesting comments through FAQ
• Center for Studying Health System Change
study that price transparency would save
Americans $10 billion annually
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Public Relations Impact
• Potential patient calls asking for pricing
information
– Where are calls directed?
– Do other employees know where to redirect?
– Or, take information and call per back to avoid
multiple transfers
• Template for items to be included in media
statement
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Hospital Initiatives to Implement
• Switchboard operators
– Know where to direct calls
• Admitting/registration
– Price list for shoppable services
– Price for patients that are insured with high deductible – may be
insurance payment vs. hospital charges
• Insurance payment data not readily available
– Uninsured < 250% of FPL – know that Medicare plus 15% is
maximum
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Hospital Initiatives to Implement – Cont.
• Patient Financial Services
– Price list for shoppable services
– Price for patients that are insured with high deductible – may be
insurance payment vs. hospital charges
• Insurance payment data not readily available
– Uninsured < 250% of FPL – know that Medicare plus 15% is
maximum
• Reimbursement
– Calculate potential financial impact
• Public Relations
– Media inquiries
– Website update
• Others?
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National Median Income
• $52,100, down 6% from 2007 high of
$55,200
• $3,100 less to spend on routine expenses,
cars, healthcare expenses
• Impact of higher deductible health plans
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High Deductible Health Plans (HDHP)
• Michigan ranks 5th in enrollment with 578,000
• Illinois & Texas at 900,000
• Ohio 4th, Minnesota 6th, Indiana 10th
– IN 92% HDHP for state employees
• Nationally 58% of small firms with > $1,000
– 28% of large firms
Source: Kaufman Hall
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Patients with Higher Deductible are Increasing
• Public insurance exchange (272,000 as of May 1)
• Private exchanges (70,000 enrolled with Michigan
employers as of March 1)
• Private exchanges with national employers
(Applebee’s, Petco, Walgreens, Sears Holdings,)
• Other Michigan-based companies (Meijer, law firms,
etc.)
• Individual coverage through BCBSM and other
insurers ($10,000 or $14,000)
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Castlight Health
• Transparency tools to large self-insured
employers
• Encourages cheaper sites of care
• 2014 – 56% of employer groups provide price
and/or quality transparency tools
• Clients include Wal-Mart, Kraft, Safeway,
Honeywell, Esterline
• Esterline employees saved 33% in medical
spending vs. non-Castlight shoppers
Source: Kaufman Hall
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Healthy Michigan
• Enrollment as of May 19th was 259,000
• All counties have achieved enrollment
• Top Counties by % of Population Enrolled:
• Genesee, Ogemaw, Muskegon, Lake, Otsego
• Top Counties by # People Enrolled:
• Wayne, Macomb, Oakland, Genesee, Kent
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DSH Payments and Audits
• Beginning with FY 2011 DSH payments:
• payments will be recalculated and redistributed
using actual hospital data during Step 2.
• hospitals subject to DSH payment recoveries if
audits indicate DSH payments exceeded their
actual DSH limits.
• May 28 recoveries begin
• Tax-funded DSH - 60 hospitals additional $11.6
million, 57 hospitals have recovery
• GF $45M – 42 hospitals $19.7, 26 hospitals
recovery
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Integrated Care Demonstration Project
• Phased-in implementation of pilot project expected
to begin Jan. 1, 2015, although a delay may occur.
• Hospitals responsible to negotiate payment
parameters in their contracts.
• Regional implementation
– 4 regions comprised:
– 8 SW counties
Macomb County
– UP
Wayne County
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Integrated Care Project – Cont.
• In December, the MSA announced the names of plans
selected to serve as ICOs with plans currently conducting
readiness reviews.
• Simultaneously, CMS approve a MOU to specify the
conditions of Michigan’s wavier.
• Two separate capitation rates
– Medicare, developed by CMS
– Medicaid, developed by MSA
• Hospitals required to negotiate contractual terms with
individual plans.
– Default payment rates for non-contracted hospitals not yet defined.
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Integration of Individuals Dually Eligible for
Medicare and Medicaid
• Michigan one of 15 states
• Pilot in Macomb, Wayne, UP, 8 SW MI Counties
• Statewide potential enrollment
Male
Female
Under 65
43,000
50,000
65 +
30,000
77,000
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Medicare/Medicaid Dually Eligible Statewide
Current Funding (in millions)
Medicaid
Inpatient hospital
Outpatient hospital
Physicians
Long-term-care
Behavioral health
RX
Other
$
Medicare
40
20
$1,700
530
20
2,170
860
20
230
840
370
530
470
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Medicare Then
• Inpatient and outpatient, mainly inpatient
• Annual market basket updates
• Additional payments for graduate medical education, indirect
medical education, DSH, capital, bad debts
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Medicare Now
• Inpatient and outpatient, mainly outpatient for many hospitals
• Managed care – contracting, administrative burden
• Annual market basket updates, offset by negative coding
adjustments
• Threats of same site payment adjustments, IME and GME
reductions, special payment status (SCH & CAH)
• RAC audits
• Quality reporting
• Penalties for readmissions, healthcare acquired conditions,
electronic health record usage, value based purchasing
• Short stays
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Existing Legislative Medicare Cuts – Michigan
Impact (in millions)
Existing Legislative Medicare Cuts
ACA Cuts (all provider settings)
($6,265)
Sequestration Cuts (all provider settings)
($1,342)
Bad Debt Payment Cuts (all provider settings)
($118)
Coding adjustment Cuts (inpatient hospital ) and
Radiosurgery Payment Cut (outpatient hospital)
($442)
Existing Regulatory Medicare Cuts
Coding Adjustment Cuts (Inpatient/home health)
Total Impact of Existing Cuts
Existing Cuts as a Percent of
Total Medicare FFS Revenue
($840)
($9,007)
-10.8%
(10 year summary Value)
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Additional Medicare Cuts Under
Consideration – Michigan Impact (in millions)
OPD/Physician Payment Equalization-E/M Services
($609)
OPD/Physician Payment Equalization-Targeted Services
(465)
OPD/ASC Payment Equalization-Targeted Services
(351)
Indirect Medical Education Cuts (inpatient hospital)
(3,276)
Direct Medical Education Cuts (inpatient hospital)
(802)
Bad Debt Payment Cuts (All provider settings)
(948)
SCH Program Elimination (inpatient hospital)
(809)
CAH Payment Cuts (inpatient/outpatient hospital)
(670)
Total Impact of Cuts Under Consideration
($7,930)
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Insurance Exchange Premium Payments
• CMS “guidance” that hospitals shouldn’t pay
premiums on behalf of patients
• AHA advocacy opposing
• BC of NJ won’t accept third party payments.
BC of TN close to finalizing policy
• BCBSM no position yet
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Health Care Top Earners
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•
•
•
•
•
•
•
Health Insurer
Hospital CEO
Hospital Administrator
General Physician
Family Practice Physician
Physical Therapist
Staff Nurse
Emergency Medical Technician
$584,000
$386,000
$237,000
$185,000
$165,000
$ 78,000
$ 62,000
$ 27,000
Source: NYT 5-18-14
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Physician Employment
• 60% of Family practice
• 60% of pediatrician
• 25% of surgical subspecialties
Source: NYT 2/13/14
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Diabetic Patients
• Rates of heart attack & death from high blood sugar
dropped by 60% from 1990 to 2010
– Medications to control blood sugar, cholesterol & blood
pressure
– Patient education to monitor themselves
– Provider tracking & follow-up
• Number of diabetes cases have more than tripled to
26 million over the same time period
– 79 million Americans have pre-diabetes
• Annual cost $176 billion
Source: NYT 4/16/14
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Diabetes & Diet
• Low income diabetic hospitalizations were
27% higher at end of month than the
beginning
• Could hospitals track their diabetic admissions
& determine if proactive efforts could assist
• Financial impact of reduced admissions
Source NYT 1/6/14
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Health Toll of Immigration
• Hispanic immigrant health status declines the longer
they live in US
• Adoption of US behaviors – smoking, drinking, highcalorie diets, sedentary lifestyles
• Fast food sign of success vs. cooking at home
• Economics of supersize
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Medicaid Surgery Patients
• Medicaid patients arrived in worse health,
more complications, longer LOS, higher cost
than privately insured
• MI Surgical Quality Collaborative, 14,000 pts
at 52 hospitals
7/12 – 6/13
• More emergency surgeries – despite having
Medicaid
Source: NYT 5/17/14
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Cost of Treatment May Influence Doctors
• American Society of Clinical Oncology – guidelines for
decisions based on drug cost or treatments at end of
life
• Study scheduled for fall 2014 release
• Cardiology & Heart Association both recently
announced they would use cost data to rate value of
treatment
• 2013 study found 17 of 30 clinical guidelines for
physician societies explicitly integrated cost
• New drug for Hepatitis C - $84,000
Source: NYT 4/17/14
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Health Insurance Benefit Changes
• UPS to end spousal benefits for white collar workers that
have other insurance option
• Xerox and Teva Pharmaceuticals have surcharges for
spousal coverage
• City of Terre Haute, Ind. adopted a “spousal carve-out”
so that working spouses would not be covered under its
health plans
• 6 percent of companies with 500 or more employees
excluded coverage for spouses in 2012 if their spouses
could obtain coverage through their own employer,
double the percentage in 2008
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Hospitals as both Provider & Employer
• Potential increase to volume is opportunity
– Medicaid outpatient fee screens 53 percent of
Medicare OPPS, MI hospitals have 10 percent
negative margin on Medicare OPPS
– Cost control ever increasing focus
• Employee benefit & relationships
– $3,000 penalty cost vs. $15,000 family coverage cost
– Who cares for the employee’s best interest?
• Most value health insurance at time of accident or serious
illness
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Area Employer Benefit Changes
• Proactive efforts with employers on healthcare
coverage considerations
– Deductible
– Network
• One locality had large employer select insurer that did
not have contracts with many/most local physicians
• Employee dissatisfaction
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When There is No Local Family
• Advanced directives
• Post-discharge care
• Rx
• Physician appointments
• Activities of daily living
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Water vs. Soda
• Bottled water sales grew more than 20% every
quarter from 1993 to 2005
• By 2019, sales of bottled water will exceed
carbonated soft drinks
• Considering tap water, water consumption exceeded
soda in mid – 2000s
• Challenge for Coke & Pepsi profitability
– Both sell bottled water
• Filtered water fountains at airports & bottle stations
Source: NYT 12/25/13
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MHA Keystone - Results
Quality and Best Information
Intervention
Percent Improvement
Central Line-Associated Bloodstream
Infection
12%
Ventilator Associated Pneumonia
15%
Readmission
6%
Pressure Ulcers
12%
Early Elective Deliveries
60%
Avoidable NICU admissions
7%
Catheter-Associated Urinary tract Infection
8%
MHA Resources
•
Monday Report is available FREE to anyone and is distributed via email each
Monday morning.
– Go to website and select “Newsroom”, then Monday Report
•
MHA Monday Report – electronic publication issued weekly
•
Request password if you don’t have one.
– Email Donna Conklin at [email protected] to obtain MHA member ID
number
•
Advisory Bulletins – Extensive communications available only to MHA
members, as needed. (Require password to obtain from website).
•
Hospital specific mailings as needed for various impact analyses, etc.
•
Periodic member forums
•
See mha.org for other resources.
•
Monthly Financial Survey provides free benchmarking of financial and
utilization statistics.
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???Questions???
Marilyn Litka-Klein
Vice President, Health Finance, Policy & Health Delivery
Michigan Health & Hospital Association
110 West Michigan Avenue, Suite 1200
Lansing, MI 48933
Phone: (517) 703-8601
Fax: (517) 703-8637
email: [email protected]
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