mike lane director, health care finance policy
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State & Federal Legislative Update Keystone AAHAM March 13, 2013. Mike Lane Director, Health Care Finance Policy The Hospital & Healthsystem Association of Pennsylvania. Overview. Hospital Trends State Environment Governor’s 2013-14 Budget HAP Legislative Issues - PowerPoint PPT PresentationTRANSCRIPT
Mike LaneMike LaneDirector, Health Care Finance PolicyDirector, Health Care Finance PolicyThe Hospital & Healthsystem Association of PennsylvaniaThe Hospital & Healthsystem Association of Pennsylvania
State & FederalState & FederalLegislative Legislative
UpdateUpdate
Keystone AAHAMKeystone AAHAM
March 13, 2013March 13, 2013
OverviewOverviewOverviewOverview
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• Admitted more than 1.6 million people; treated nearly 39 million people in an outpatient setting; evaluated 6.0 million people in their emergency departments; and delivered more than 128,000 babies.
• Provided nearly 267,000 full and part time jobs, and ‐ ‐contributed to the economic vitality of their communities, in that they created more than 317,000 additional jobs statewide.
• Contributed $98.9 billion to the state’s economy (total annual direct and ripple effect).
• Advanced quality and patient safety—a Department of Health report showed that infection rates in Pennsylvania’s hospitals were lower than elsewhere in the country.
• Provided $990 million in uncompensated care, reflecting the impact of the growing numbers of uninsured.
Licensed Hospitals in PennsylvaniaLicensed Hospitals in PennsylvaniaLicensed Hospitals in PennsylvaniaLicensed Hospitals in Pennsylvania
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• Fewer acute care hospitals (-11%), and more specialty hospitals (+14%).
• Fewer acute care hospital beds (-13%).
• Fewer inpatient admissions (-3%).
• Shorter acute care lengths of stay (-2%).
Source: Pennsylvania Department of Health, 2002-2011
Pennsylvania Hospital Trends Pennsylvania Hospital Trends Pennsylvania Hospital Trends Pennsylvania Hospital Trends
• More emergency department visits (+17%).
• More community hospitals closing obstetrical services (44).
• Growing shortage of physicians. = One of every four physicians in practice is over the age of 60.= One of every five physicians in practice is under the age of 40.
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Source: HAP analysis of PHC4 data.
Trend in Uncompensated CareTrend in Uncompensated CareTrend in Uncompensated CareTrend in Uncompensated Care
46% increase over 5 years
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State EnvironmentState EnvironmentState EnvironmentState Environment
2013-2014 State Budget
Health Care (Provider Assessment)
Pension Reform
Economic Development
Transportation
Privatization of Liquor Stores
Insurance Reform (Act 94)
Governor’s 2013 “To Do” ListGovernor’s 2013 “To Do” ListGovernor’s 2013 “To Do” ListGovernor’s 2013 “To Do” List
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Governor’s 2013 Budget PrioritiesGovernor’s 2013 Budget PrioritiesGovernor’s 2013 Budget PrioritiesGovernor’s 2013 Budget Priorities
$28.4 Billion spending plan.
$1.8 Billion investment in transportation.
Uncapping the oil company franchise tax.
Level funding for higher education.
$90 Million increase in K-12 education.
Three (3) new state police cadet classes.
Privatize liquor stores.
Reform public pension program.8
HAPHAP 2013 State Priorities2013 State PrioritiesHAPHAP 2013 State Priorities2013 State Priorities
Medical Assistance Reauthorization of Quality Care Assessment
2013-2014 State Budget
Affordable Care Act Implementation Medicaid Expansion
Insurance Exchange
Other: Institutions of Purely Public Charity; Medical
Liability; Hospital Licensure
Advanced Practice Professionals – BH Setting
PSR/UR Process – Removing barriers
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2013-2014 Total Operating Budget2013-2014 Total Operating BudgetTotal Funds – $66.7 BillionTotal Funds – $66.7 Billion
2013-2014 Total Operating Budget2013-2014 Total Operating BudgetTotal Funds – $66.7 BillionTotal Funds – $66.7 Billion
Source: DPW Budget Overview, 2-5-1310
2013-2014 General Fund Budget2013-2014 General Fund BudgetTotal Funds – $28.4 BillionTotal Funds – $28.4 Billion
2013-2014 General Fund Budget2013-2014 General Fund BudgetTotal Funds – $28.4 BillionTotal Funds – $28.4 Billion
Source: DPW Budget Overview, 2-5-1311
2013-2014 General Fund2013-2014 General FundRevenue SourcesRevenue Sources
2013-2014 General Fund2013-2014 General FundRevenue SourcesRevenue Sources
Source: DPW Budget Overview, 2-5-13
Nearly three-quarters (72%) of General Fund
revenues come from the PIT and Sales & Use tax.
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Federal EnvironmentFederal EnvironmentFederal EnvironmentFederal Environment
OverviewOverviewOverviewOverview
Debt Ceiling
Sequester
2012-2013 Federal Budget
2013-2014 Federal Budget
ACA Implementation
Sustainable Growth Rate (SGR)
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Aug
Sept
OctNov
Dec
JanFeb
Mar
Apr
May
Jun JulAug
Sep
OctNov
Dec
How Did We Get Here?How Did We Get Here?How Did We Get Here?How Did We Get Here?
President signed temporary Payroll Tax Cut Extension.
Temporary hospital extenders passed.
Congress and the President agree to raise the debt ceiling.Every dollar debt ceiling increase must equal amount of deficit reduction. Super Committee formed (sequestration).
Congress passed the Middle Class Tax Relief and Job Creation Act of 2012.
2011 2012
Payroll Tax Extension expired. Hospital extenders expired. Bush/Obama tax cuts expired.So . . . Debt ceiling raised again by passing the
American Tax Relief Act (ATRA) and extendedall of the above.
We hit the debt ceiling.
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
What Lies Ahead?What Lies Ahead?What Lies Ahead?What Lies Ahead?
2013
Continuing Resolution expires. Sequestration begins.
We will AGAIN hit the debt ceiling.
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American Tax Payer Relief Act (ATRA) of 2012American Tax Payer Relief Act (ATRA) of 2012American Tax Payer Relief Act (ATRA) of 2012American Tax Payer Relief Act (ATRA) of 2012
Passed January 1, 2013 to avert the “Fiscal Cliff.”
•Made Bush-era tax cuts permanent for most Americans.
•Delayed by two months, across-the-board cuts to defense and domestic spending.
•Postponed for one year the expected 27% cut in Medicare physician payments.
•Adopted two key hospital extenders supported by HAP.
•Positive provisions were offset in part by Medicare payment cuts to hospitals and
other health care providers. 23
American Tax Payer Relief Act (ATRA) of 2012American Tax Payer Relief Act (ATRA) of 2012American Tax Payer Relief Act (ATRA) of 2012American Tax Payer Relief Act (ATRA) of 2012
Key Provisions – Hospital Extenders:
•Delays for two months the sequester of both domestic and defense spending that was set to begin January 3, 2013. The sequester reduces Medicare payments to providers by 2%. (PA hospital impact: $25 million)
•Replaces the 27% cut in payment to physicians for Medicare services with 0% for 2013. (PA impact: $930 million)
•Extends the Medicare Dependent Hospital program from October 1, 2012, to October 1, 2013. (PA hospital impact: $16.7 million)
•Extends the Low Volume Adjustment payment from October 1, 2012, to October 2013. (PA hospital impact: $6.7 million)
•Extends ambulance add-on payments.
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American Tax Payer Relief Act (ATRA) of 2012American Tax Payer Relief Act (ATRA) of 2012American Tax Payer Relief Act (ATRA) of 2012American Tax Payer Relief Act (ATRA) of 2012
Key Provisions – Hospital Reductions:
•Coding adjustment as a result of the transition to Medicare Severity Diagnosis Related Groups. (PA hospital impact: $450 million)
•Extension of the Medicaid disproportionate share hospital reductions for an additional year. (PA preliminary estimated impact: $277 million)
•Extension of hospital outpatient therapy caps from January 1, to December 31, 2013. (PA impact unknown)
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Source: “The Negative Employment Impacts of the Medicare Cuts in the Budget Control Act of 2011,” Tripp Umbach for the American Hospital Association (AHA), American Medical Association (AMA), and American Nurses Association (ANA), September 2012
Impact on Jobs U.S. Pennsylvania
Job Losses in 1st Year: 2013 496,429 24,201
Jobs Lost by 2021 766,808 37,382
Impact on Hospital Payments2 U.S. Pennsylvania
Funding Cuts in 1st Year: 2013 -$3.3 billion -$126 million
Total Funding Cuts through 2021 -$31.3 billion -$1.4 billion
Impact of Sequestration of Medicare SpendingImpact of Sequestration of Medicare Spending11
Budget Control Act (BCA) of 2011Budget Control Act (BCA) of 2011Impact of Sequestration of Medicare SpendingImpact of Sequestration of Medicare Spending11
Budget Control Act (BCA) of 2011Budget Control Act (BCA) of 2011
1Utilizing baseline spending by sector affected by Medicare payments. Sectors are: hospital IP and OP care, SNF, physician offices, home health, prescription drugs, insurance administrative component of Medicare Advantage, and other services which include hospice, DME, ambulance, lab services, Part B prescription drugs and other services.
2Reflects 2% reductions (sequester) of Medicare fee-for-service (FFS) hospital payments only. Additional cuts will impact hospitals under Medicare Advantage (managed care).
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• Medicaid ($100 billion)– Provider taxes/assessments– Blending rates/FMAP
• Medicare– IME ($14 billion)– Bad Debt ($14–26 billion)– Rural adjustment cuts ($14–16 billion)– Post-acute care services ($50 billion)– Medicare IPPS coding adjustments ($4 billion)– Expansion of IPAB
• Other– Increase retirement age ($125 billion)– Means-testing ($38 billion)– Reform and increase copayments for Part A & B ($110 billion)– Medigap restrictions ($53 billion)– Home health copayments ($40 billion)– SNF copayments ($50 billion)
More Deficit Reduction OptionsMore Deficit Reduction OptionsMore Deficit Reduction OptionsMore Deficit Reduction Options
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March 1 Sequester
March 27 Continuing Resolution
Budget Resolution
Other “Noise”• Guns• Immigration
Looking Ahead . . .Looking Ahead . . .Looking Ahead . . .Looking Ahead . . .
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What are the challenges?What are the challenges?What are the challenges?What are the challenges?
Forces Increasing Costs
•Labor
•Life-saving technology/Rx
•Older, sicker patients
•Redundant regulation
•Liability insurance
•Information technology
•Emergency readiness
Forces Decreasing Revenue
•Government underpayment
•Private payer pressure
•New payment penalties (VBP)
•Uninsured and under-insured
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• Supreme Court ruled 5 – 4
• Commerce Clause out –Constitutional under Tax Clause.
• Insurance Exchanges
• Medicaid Expansion
= Governor Corbett “Pennsylvania May Opt-Out.”
= Conservative estimate predicts additional 482,000 would be eligible for Medicaid1 at 138% of FPL.
Status of ACAStatus of ACAStatus of ACAStatus of ACA
1Kaiser Commission on Medicaid & The Uninsured, Medicaid Coverage and Spending in Health Reform: National and State-by-State Results for Adults at or Below 133% FPL,” May 2010.
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The Hospital & Healthsystem Association of PennsylvaniaMarch 2013
Questions/Discussion Questions/Discussion Questions/Discussion Questions/Discussion
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