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2019 Healthcare Industry Outlook: What Providers Need to Know

January 16, 2019Chris Emper, JD, MBAEmper Healthcare Advisors, LLC


Your Presenter

Chris Emper, JD, MBAPresident, Emper Healthcare Advisors, LLC

Chris Emper, JD, MBA, is the founder and President of Emper Healthcare Advisors, a government affairs and healthcare consulting firm in Washington, D.C. that specializes in helping healthcare providers and technology companies successfully navigate complex regulations and new value-based reimbursement models. Prior to forming Emper Healthcare Advisors in 2016, Chris was Vice President of Government Affairs at NextGen Healthcare (NASDAQ: QSII) and Chair of the Electronic Health Record Association (EHRA) Public Policy committee.

An expert in The Patient Protection and Affordable Care Act (ACA or Obamacare) and The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Chris is a frequent speaker at industry conferences and has written or appeared in articles in publications such as Politico, Health Data Management, Accountable Care News, and Medical Economics. Chris also currently serves as Chair of the HIMSS Government Relations Roundtable, a leading coalition of health IT government affairs professionals.

Prior to joining NextGen Healthcare in 2013, Chris served as a Domestic Policy Advisor for former Massachusetts Governor Mitt Romney’s 2012 Presidential Campaign, where he advised the campaign on policy issues including healthcare, technology, and innovation. He holds a law degree and an MBA from Villanova University and a BA from Boston College.


Agenda

• Legislative updates

• Midterm election results & impact analysis

• Regulatory updates

• Summary

• Questions

Legislative Updates

BUDGET DEAL & OPIOIDS LAW


-Alex Azar sworn in as new HHS Secretary in January 2018

2018 Began with New Priorities & New Leadership

The Bipartisan Budget Act of 2018A Budget Law with a Healthcare Focus


• February 2018 bipartisan budget compromise ended a series of short-term gov’t shutdowns• March omnibus spending bill funded the government at these

increased budget levels through September 30

• Increased top-line federal budget caps for 2018 and 2019 from previous sequestration levels set in 2013• FY 2018 increase of $80 billion for defense funding and $63

billion for non-defense domestic funding

• FY 2019 increase of $85 billion for defense funding and $68 billion for non-defense domestic funding

• 377 of 652 pages in law are healthcare-focused!

The Bipartisan Budget Act of 2018A Budget Law with a Healthcare Focus


• Targets chronic disease treatment in Medicare

• Expands reimbursement for telehealth in Medicare

• Merit-based Incentive Payment System (MIPS) reforms

• Medicare Advantage reforms focused on value-based models & supplemental benefits

• Extended various expiring Medicare & Medicaid payment provisions

• Extended community health center federal grant funding for two-years & CHIP funding for 10 years

• Reduces 2019 Physician Fee schedule (PFS) annual update from 0.50% to 0.25%

New Bipartisan Opioids Law

The SUPPORT for Patients & Communities Act

• 393-8 House vote on September 28, 2018

• 98-1 Senate vote on October 3, 2018

• President Trump signed into law on October 24, 2018

• 660-pages in length & includes over 50 provisions intended to combat the opioid crisis

• Provisions focused on prevention, enforcement, treatment, & recovery

“In rare bipartisan accord, House and Senate reach compromise on opioid bill”

“House overwhelmingly passes final opioids package”

“Bill to fight opioid epidemic heads to Trump’s desk after bipartisan Senate approval”

“President Trump signs bipartisan bill to fight opioid crisis”


The SUPPORT for Patients & Communities Act

• Requires e-prescribing of controlled substances under Medicare & PDMP use before prescribing controlled substances in Medicaid starting in 2021

• Requires HHS to establish a standard, secure electronic prior authorization system for Medicare no later than January 1, 2021

• Requires Medicaid providers to check a prescription drug monitoring program (PDMP) before prescribing a controlled substance starting in October 2021

• Requires HHS to improve the efficiency and use of PDMPs by addressing intrastate interoperability and EHR integration issues

• Authorizes the CMS Innovation Center to launch a program testing incentive payments for behavioral health providers for the adoption and use of certified EHRs

• Requires state Medicaid programs to report annually on the behavioral health quality measures included in CMS’s adult core set starting in 2024

• Directs HHS to issue guidance within 1 year on state options for federal Medicaid reimbursement for substance use disorder services using telehealth & on best practices for reducing barriers to telehealth substance use disorder services for Medicaid children


2018 Midterm Elections

RESULTS & IMPACT ANALYSIS

115th House

116th House

Total Republicans 235Total Democrats 193

Vacancies 7


Races Not Called (*12/16/18) 1

*Democrats flipped control of the House by gaining 40 seats

House Midterm Election Recap


Senate Midterm Election Recap

115th

Senate116th

Senate



* Republicans increased their Senate majority by 2 seats


Nebraska, Utah, & Idaho passed ballot initiatives supporting Medicaid expansion

Maine & Kansas elected Governors who support Medicaid expansion

Gubernatorial Election Recap


Exit Polls: Healthcare was #1 Issue for Voters

Healthcare, 41%

Immigration, 23%

Economy, 22%

Gun Policy, 10%

Healthcare Immigration Economy Gun Policy

Most important issue facing the country

Source: CNN

Major changes,

69%

Minor changes,

24%

No changes, 4%

Major changes Minor changes No changes

Healthcare in the U.S. needs


Healthcare Policy Agenda of the 116th Congress

How will Congressional Democrats prioritize political opposition to the President, relative to substantive legislative wins?

What similarities will emerge between the 2019-2020 House Democrat majority and the Tea Party impact on the House Republican majority in 2011-2012?

How much political latitude will the new House Majority have to compromise with Republicans?

To what extent will “Medicare for All” be a legislative priority for Congressional Democrats and/or a litmus test for 2020 presidential aspirants/candidates?

For the ACA, will there be a renewed interest in individual market stabilization, or any other “fixes”?

How will Leader McConnell and Senate Republicans approach opportunities to work with House Democrats on bipartisan health care issues like drug pricing?

What is the realistic window for thoughtful governing, before the chaotic politics of the 2020 cycle become all-consuming?

Key questions to consider…


Top Healthcare Issues for Voters


Top Healthcare Issues for Voters

1) Cost

2) Quality

3) Access


Regulatory Updates

A YEAR OF ACTION IN 2018

The Trump Administration Pivots2018: New Year, New Leadership & New Healthcare Priorities


Secretary Azar has pivoted from ACA repeal to four new priorities:

1. Combating the opioid crisis

2. Bringing down the high price of prescription drugs

3. Addressing the cost and availability of insurance

4. Value-based transformation of America’s healthcare system

The Trump Administration Pivots2018: New Year, New Leadership & New Healthcare Priorities


Secretary Azar has pivoted from ACA repeal to four new priorities:

1. Combating the opioid crisis

2. Bringing down the high price of prescription drugs

3. Addressing the cost and availability of insurance

4. Value-based transformation of America’s healthcare system

Sec. Azar’s Vision for Value-Based Care


Fee-for-Service(FFS)

Payment is triggeredby service delivery

with no link to quality or

efficiency.

Fee-for-Servicelinked to value

Payment is triggered by service delivery,

but 5–10% of payment depends on quality or

cost.

Alternative payment models

Payment is still triggered by service delivery, but varies

based on managing a population or an episode of care.

Fee-for-Value(FFV)

Payment is not triggered by

service delivery; payment is population-

or condition-based, tied to quality.

“So today, I want to lay out four particular areas of emphasis that will be vital to laying down new rules of the road, accelerating value-based transformation, and creating a true market for healthcare…(1) Giving consumers greater control over health information…;(2) Encouraging transparency from payers and providers;(3) Using experimental models in Medicare and Medicaid to drive value and quality…;(4) Removing government burdens that impede this transformation.”

-Alex Azar, March 2018

Sec. Azar’s Vision for Value-Based Care



Payment is triggeredby service delivery

with no link to quality or

efficiency.


Payment is triggered by service delivery,

but 5–10% of payment depends on quality or

cost.


Payment is still triggered by service delivery, but varies

based on managing a population or an episode of care.

Fee-for-Value(FFV)

Payment is not triggered by

service delivery; payment is population-

or condition-based, tied to quality.

“It will require some degree of federal intervention — perhaps even an uncomfortable degree. That may sound surprising coming from an administration that deeply believes in the power of markets and competition.

But the status quo is far from a competitive free market in the economic sense of the term, and healthcare is such a complex system, that facilitating a competitive, value-based marketplace is going to be disruptive to existing actors.”

-Alex Azar, March 2018

Key 2018/19 Federal Regulations


2019 Medicare Physician Fee Schedule (PFS) & Quality Payment Program (QPP) proposed and final rules

• Proposed regulation released in June; final regulation released on November 1st

• Includes key 2019 changes for Medicare physician payment system & MACRA Quality Payment Program

Medicare Shared Savings ACO Program proposed rule• Proposed regulation released in August; final regulation expected this winter• Proposed overhaul of regulations governing Medicare’s largest ACO program

21st Century Cures Act interoperability proposed rule • Proposed rule expected to include Cures Act updates to health IT certification program, information

blocking, and trusted exchange framework and common agreement (TEFCA)

“Interoperability & Patient Access” proposed rule• Proposed rule expected this winter

2019 Final Physician Fee Schedule (PFS) & Quality Payment Program (QPP) Regulation

• 2,378 page regulation released by CMS on November 1, 2018

• Follows 1,473 page proposed regulation released by CMS in July and the close of the public comment period in September

• Finalizes 2019 policies for both Medicare Physician Fee Schedule & MACRA QPP


New 2019 Payment & Policies to Promote Telehealth & Virtual Care

New codes added to the list of covered telehealth services• GO513 and GO514 pay $67 for 30 mins of prolonged preventive services

$15 for virtual patient check-ins*• 5-10 minute medical discussion initiated by an established patient (G2012)

$13 for remote evaluation of video and/or pictures*• Remote evaluation of recorded video and/or images submitted by a new or

established patient including interpretation with verbal follow-up with patient (G2010)

Payment for interprofessional internet or phone consults• Requires patient consent & must be performed for benefit of patient, not

practitioner

Expanded payment for types of remote patient monitoring• e.g. ECG, blood pressure, glucose monitoring digitally stored and/or transmitted

by the patient to the physician requiring a minimum of 30 minutes of analysis

Key Obstacles*• Requires Medicare’s 20% patient co-pay• Requires patient consent• Cannot result from or lead to an E/M office visit

CMS has released separate policies to promote telehealth in/for FQHCs, ACOs, MA, & Medicaid in 2019


2019 Evaluation & Management (E/M) Outpatient Office Visit Documentation Reforms

CMS finalized the following policies for 2019 in an effort to reduce clinician documentation burdens associated with Medicare E/M office/ outpatient visits:

• For established patient visits, when relevant information is already contained in the medical record, clinicians can focus their documentation on what has changed since the last visit rather than having to re-document information.

• For new and established patient visits, clinicians may simply review and verify information on the patient’s Chief Complaint and history that has already been entered in the medical record by ancillary staff or the beneficiary (rather than re-enter it in the medical record).

• For visits furnished by teaching physicians, potentially duplicative requirements for certain notations in medical records that may have previously been documented by residents or other members of the medical team are eliminated.

• For home visits, the requirement to document the medical necessity of a home visit in lieu of an office visit is eliminated.


2021 Evaluation & Management (E/M) Outpatient Office Visit Documentation Reforms

• Beginning in 2021, CMS will allow for flexibility in how visit levels are documented for E/M office/outpatient levels 2 through 5 visits:

• 1) current 1995 or 1997 documentation guidelines

• 2) medical decision-making (MDM)

• 3) time (with medical necessity)

• For E/M office/outpatient level 2 through 4 visits, CMS will require information to support a level 2 visit code for history, exam and/or medical decision-making when using MDM or the current framework to document the visit

• When time is used to document, clinicians will document the medical necessity of the visit and that the billing clinician personally spent the required amount of time face-to-face with the beneficiary


2021 Evaluation & Management (E/M) Outpatient Office Visit Billing & Payment Reforms

• Single payment rate for level 2-4 visits: CMS would pay a single rate for level 2-4 visits, but providers would only need to document a level 2 visit

• New primary care & non-procedural specialty care add-on codes for level 2-4 visits: $13 add-on codes that describe the additional resources inherent in visits for primary care and particular kinds of non-procedural specialized medical care would be reportable with level 2-4 visits

• New extended visit code add-on code for level 2-4 visits : $67 “extended visit” add-on code to account for the additional resources required when practitioners need to spend extended time with the patient would be reportable with level 2-4 visits

• Existing prolonged services code for level 5 visit: an additional $133 available under the current prolonged service code which describes 60 minutes of additional time, but is billable after 31 minutes of additional time, would be reportable with level 5 visits

Payment Rates for New Patient Office Visits

Level HCPCS Code

2018 Non-facility Payment Rate


Proposal

1 99201 $45 $44

2 99202 $76$1303 99203 $110

4 99204 $167

5 99205 $211 $211

Level HCPCS Code



Proposal

1 99211 $22 $24

2 99212 $45

$903 99213 $74

4 99214 $109

5 99215 $148 $148

Payment Rates for Established Patient Office Visits


“We acknowledge that there is a great deal of work to do to further modernize the payment structure for office/outpatient visits and associated documentation requirements. We are committed to getting this right in order to reflect the evolving nature of clinical practice, respect the work of physicians and other clinicians, and support the best experience of care for every patient.

A two-year delay for the payment and coding changes will give clinicians more time to integrate changes in workflow that may be required. In addition, the extra time will allow CMS to continue working with the clinician community on this effort.”

-CMS Administrator Seema Verma, 11/8/18


MU ACI PI



PI = 15 yard penalty


MIPS: Advancing Care InformationPromoting Interoperability (PI)

CMS has renamed the category Promoting Interoperability (PI)

Maintains transition to 2015 Edition certified EHRs & a 90-day reporting period for 2019

Eliminates the ACI base, performance, and bonus scoring system

% of Overall MIPS Score

2017 2018 2019+

25% 25% 25%

Measure Status 2019 Promoting Interoperability (PI) MeasureMeasures retained with no modifications

• E-Prescribing

Measures retained with modifications

• Send a Summary of Care (Supporting Electronic Referral Loops by Sending Health Information)

• Provide Patient Access (Provide Patients Electronic Access to Their Health Information)

• Immunization Registry Reporting

• Syndromic Surveillance Reporting• Electronic Case Reporting• Public Health Registry Reporting• Clinical Data Registry Reporting

Removed measures • Request/Accept Summary of Care• Clinical Information Reconciliation• Patient-Specific Education

• Secure Messaging• View, Download or Transmit• Patient Generated Health Data

New measures • Query of Prescription Drug Monitoring Program (PDMP) (*optional for 5 bonus points)

• Verify Opioid Treatment Agreement (*optional for 5 bonus points)

• Support Electronic Referral Loops by Receiving and Incorporating Health Information


MACRA Quality Payment Program (QPP)Rules for Medicare’s value-based physician payment program continue to evolve


2017 2018 2019 2022+Quality 60% 50% 45% 30%

Cost 0% 10% 15% 30%

Advancing Care Information Promoting Interoperability

25% 25% 25% 25%

Improvement Activities 15% 15% 15% 15%

Merit-based Incentive Payment System (MIPS) Scoring System

MIPS Performance Benchmark & Payment AdjustmentsPerformance

YearPerformance Benchmark

(0-100) Payment Year Maximum

NegativeAdjustment

Maximum Positive

Adjustment2017 3/100 2019 -4% +12%2018 15/100 2020 -5% +15%2019 30/100 2021 -7% +21%2022+ National average 2024+ -9% +27%

CMS made relatively minor revisions to reporting requirements & measures for 2019

2017 QPP Performance Results

MIPS eligible clinicians subject to MIPS 1,057,824

Qualifying APM Participants (QPs) 99,076


Real Medicare Physician Payment Rates Declining

• 2019 Medicare physician payment rates will receive a 0.11% increase

• 2017 MIPS scores will also impact 2019 Medicare payment rates (+ or -)

• MACRA provides ZERO payment increase for the next six years (2020-2025)

CY 2018 Conversion Factor 35.99MACRA Statutory Update +0.50%

2018 Budget Act Update -0.25%

CY 2019 PFS Adjustments -0.14%

CY 2019 Conversion Factor 36.042019 Medicare FFS code payment = code value x geographic adjustment x CY 2019 conversion factor


Alternative Payment Model (APM) Update

Expansion of APMs under Trump Administration

Primary Care Medical Homes: Comprehensive Primary Care Plus (CPC+) round two launched in January 2018 & CMS is exploring a “direct provider contracting” model

Bundled Payments for Episodes of Care: CMS cancelled expansion of its mandatory bundled payment programs in 2017, but also launched a new voluntary “BPCI Advanced” program in October 2018

Accountable Care Organizations (ACOs): Medicare Shared Savings Program ACO Track 1 Plus & Next Generation ACO program round two launched in January 2018; new MSSP ACO regulations released in August 2018...

CMS Innovation Center headed in ”new direction”

Areas of focus for CMS Innovation Center

Consumer directed care & market innovation Physician specialty models Medicare advantage models Prescription drug models State-based innovation Behavioral health models Direct provider contracting*

-Adam Boehler was appointed in April 2018 as the new Director of the Center for Medicare and Medicaid Innovation (CMMI) & HHS senior adviser for value-based transformation and innovation


607-page proposed regulation released by CMS on August 9, 2018

Proposed rule was open for public comment until October 16

Final rule expected likely in winter 2019

ACOs would apply in early 2019 for a July 1, 2019 start in new program

CMS Proposes “Pathways to Success”, an Overhaul of Medicare’s ACO Program

561 MSSP ACOs currently serve over 10.5 million Medicare fee-for-service beneficiaries

82% of those ACOs are still in Track 1 (upside-only) & only 18% are in Tracks 1+, 2 and 3


Pathways to Success - 3 Major Areas of Change

1. New participation options & path to risk

2. Revised benchmark methodology

3. Regulatory flexibility

“We look forward to reviewing comments and working with stakeholders on our proposal to reframe the Shared Savings Program to deliver results for patients and taxpayers. ACOs can be an important component of the move to a value-based system, but after six years of experience, the program must evolve to deliver value. The time has come to put real ‘accountability’ in Accountable Care Organizations.”

–CMS Administrator Seema Verma


New Participation Options & Path to Risk -BASIC & ENHANCED Tracks

BASICENHANCED

Level A Level B Level C Level D Level E

Based on Current Model

Track 1 N/A Track 1+ Track 3

Type of Risk Upside Only Two-sided Two-sided Two-sided Two-sided

Savings Rate 25% x quality score 30% x quality score 40% x quality score 50% x quality score 75% x quality score

Max Gain 10% of benchmark 10% of benchmark 10% of benchmark 10% of benchmark 20% of benchmark

Loss Rate 0% 30% 30% 30% 40-75%

Max Loss 0% 2% of FFS revenue or 1% of benchmark

4% of FFS revenue or 2% of benchmark

8% of FFS revenue or 4% of benchmark 15% of benchmark

MACRA QPP Impact

MIPS APM Advanced APM Advanced APM

Participation agreements for both tracks last 5 years, but ACOs can drop out before any year without penalty

BASIC Track ACOs automatically advance to the next level of risk each year but can also skip ahead levels

Maximum amount of time an ACO can stay in an upside only model is reduced from six to two years

Special rules further restrict participation options for inexperienced, low-revenue, and re-entering ACOs


Medicare Advantage (MA) Enrollment Continues to Grow & the Program Continues to Evolve


Source: Kaiser Family Foundation

Since the ACA was passed in 2010, MA enrollment has grown 71 percent

~Half of new Medicare enrollees chose MA

MA enrollment is projected to continue to grow, rising to 41 percent of all beneficiaries by 2027

Trump Administration’s Focus on MA

CMS issued a final 2019 rule that provides more flexibility to provide supplemental benefits and a 3.4% average increase in 2019 payments to insurers• ”…by promoting innovation and empowering MA

and Part D sponsors with new tools to improve quality of care and provide more plan choices for MA and Part D enrollees.” –CMS

CMS announced a 2019 expansion and changes to the MA Value-based Insurance Design (VBID) Model• Model supports improved outcomes and cost

savings through patient cost sharing and other health plan design elements that encourage enrollees to use high-value clinical services

CMS is considering including MA as an advanced APM option for MACRA’s QPP

• Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI) Demonstration waives MIPS requirements for certain MA participants

Medicaid Reforms Focus on Flexibility, Accountability, Program Integrity

Medicaid reform strategy is centered on 3 key pillars:

Flexibility: streamline and improve 1115 demonstration, state plan amendments, and 1915 waiver processes

Accountability: creation of first-ever state and federal Medicaid and CHIP scorecards

Integrity: focus on program integrity and efforts to combat fraud & abuse


U.S. Health Insurance Coverage

Individual7% Uninsured

9%

Employer 50%

Medicaid20%

Medicare14%

~Half of Americans are Covered by Employer- sponsored Health Plans


Commercial Market Continues to Move Toward High-deductible Plans

0

10

20

30

40

50

60

70

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Employer-sponsored insurance: percentage of workers with > $1000 deductible

Average deductible in 2018 is $1,573 per individual in employer sponsored coverage

26% of workers in employer sponsored plans have a deductible of > $2,000

Since 2013, the average annual deductible among covered workers has increased 53%

Source: Kaiser Family Foundation

High co-pays and deductibles are forcing providers to confront more patient payment responsibility!


Commercial Payers Moving Toward Value-based Care


56.5%


15.2%


26.6%

Fee-for-Value(FFV)

1.7%

*Commercial payer data represents 135,532,277 covered lives, which is 63.5% of the national commercial market, and shows the following for payments made to providers in CY 2017.

Source:


SUMMARY

2019 INDUSTRY OUTLOOK

Summary & Key Takeaways

• 2017 focused on legislative activity and 2018 on regulatory activity…2019 is likely to focus on the implementation of key regulations & policy changes

• CMS is trying balance accelerating the transition to value-based reimbursement with reducing regulatory burdens on physicians

• Industry activity has accelerated post-ACA repeal efforts of 2017

• The midterm election results have produced a divided Congress which is unlikely to produce any major legislative changes in the new two years

• Providers should continue to focus on building a practice that can compete on cost, quality, and access!


Questions?

Contact Information

Chris Emper, JD, MBA


Email: [email protected]

Twitter: @ChrisEmper

Thank You!

Contact Information

Chris Emper, JD, MBA


Email: [email protected]

Twitter: @ChrisEmper

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