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3/27/2018 1 THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner [email protected] Michael J. Engle Partner [email protected] March 28, 2018
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Page 1: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

3/27/2018

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THE HEALTH CARE PLAYBOOKStrategies for the 2018 Season

Joseph M. WattPartner

[email protected]

Michael J. EnglePartner

[email protected]

March 28, 2018

Page 2: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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• Participate in entire webinar• Answer polls when they are provided• If you are viewing this webinar in a group Complete group attendance form with

• Title & date of live webinar• Your company name• Your printed name, signature & email address

All group attendance sheets must be submitted to [email protected] within 24 hours of live webinar

Answer polls when they are provided

• If all eligibility requirements are met, each participant will be emailed their CPE certificates within 15 business days of live webinar

TO RECEIVE CPE CREDIT

• Recent Health Care Changes & Trends

• Tax Cuts and Jobs Act Impact on Health Care Industry

• Emerging Health Care Industry Trends, Challenges & Strategies

HEALTH CARE PLAYBOOK – INSIDE ADDITION

Page 3: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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Health Care Spending

Politics/ Government Regulations

Competition

Consumerism Patient Care Innovation

INDUSTRY ENVIRONMENT AT A GLANCE

FEDERAL SPENDING MEDICARE BENEFITS

Page 4: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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Outside Influencers

LEAGUE INFLUENCES – POLITICS & GOVERNMENT

• President of the United States• Democrat & Republican

Initiatives• Health & Human Services Centers for Medicare & Medicaid

Services Office of Inspector General

Page 5: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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Line of Scrimmage & Downfield

LEAGUE INFLUENCES – COMPETITION & CONSUMERISM

• Traditional competitors

• New competitors

• Patients vs. consumers

• Listen to consumers

• Watch for drones

Tax Cuts and Jobs Act

Page 6: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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Excise Tax on Executive Compensation in Excess of $1M• Follows corporate rate (21%)• Five highest-paid employees• Excludes professional medical services• Parachute payments greater than three times the five-year salary

average • Includes nonqualified deferred compensation from ineligible deferred

compensation when there is not substantial risk of forfeiture (457(f))• Taxable compensation

NEW LEAGUE RULES: TAX CUTS AND JOBS ACT

• Unrelated Business Income (UBI) 21% flat corporate tax rate

Corporate alternative minimumtax repealed

NOL deduction 80% taxable income

No entertainment deductions

NEW LEAGUE RULES: TAX CUTS AND JOBS ACT

Page 7: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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• Unrelated Business Income UBI increased for certain fringe benefits

• Qualified transportation fringe benefit Employer-provided parking

Transit passes

• On-premises athletic facility

NEW LEAGUE RULES: TAX CUTS AND JOBS ACT

Unrelated Business Income Silo income/loss by activity

Effective for tax years beginning after December 31, 2017

Net operating loss carryforwards prior to January 1, 2018, are not

subject to this provision

NEW LEAGUE RULES: TAX CUTS AND JOBS ACT

Page 8: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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• Repeal of advance refunding bonds Refunding bonds that are issued

more than 90 days before redemption• Interest subject to tax on advance

refunding• Increase the cost of debt

NEW LEAGUE RULES: TAX CUTS AND JOBS ACT

• Charitable Contributions Increase in standard deduction

Increase estate tax exclusion to $10M

Decrease in charitable contributions?

NEW LEAGUE RULES: TAX CUTS AND JOBS ACT

Page 9: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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Emerging Health Care Industry Trends, Challenges & Strategies

EMERGING TRENDS, CHALLENGES & ISSUES

Health Care

Provider

501(r)

Mergers & Acquisitions

Information Technology

Alternative-Based

Payments

Government Regulations

Consumerism & Innovation

Page 10: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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• Oversight required by the ACA IRS required to review Schedule H of every hospital once every three

years As of 9/30/16, the IRS had completed 968 reviews & referred 363 of

those hospitals for examination (more than 37%); reasons include• Lack of a community health needs assessment (CHNA)

• No financial assistance policy or emergency medical policy

• Noncompliance with billing & collection requirements

In our experience, this trend has continued

501(R)

501(R)

• What is triggering the examinations? Missing documents (or documents too

difficult to find) on hospitals’ websites• CHNA• Financial assistance policy (FAP) & related

documents• Billing & collection information

Schedule H red flags

Page 11: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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• On 8/4/17, a redacted adverse determination letter was posted by the IRS at https://www.irs.gov/pub/irs-wd/201731014.pdf

• Hospital was a “dual status” hospital & not required to file Form 990

• Revoked for failure to conduct a CHNA• Hospital management stated they really did not need

501(c)(3) status• Letter does not specify how many years of the

$50,000 excise tax the hospital was responsible for

501(R)

• Complete FAP AGB information Provider list

• Financial assistance application• Plain language summary of the FAP• Billing & collection information• Translations if required• Current & one prior CHNA• Implementation strategy (either on the website or attached to Form

990)

WHAT DOCUMENTS SHOULD BE MADE AVAILABLE?

Page 12: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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Provide the basis for calculating amounts charged to patients under the FAP

Provide written documentation supporting what actions the hospital may

take in the event of nonpayment

Provide committee minutes describing the hospital’s actions in regard to widely

publicizing the FAP as well as documentation supporting the publicity

of the plain language summary

Describe how the hospital notifies & informs patients of the availability of

financial assistance

SAMPLE IRS INFORMATION REQUESTS

• Provide a sample application & instructions for applying for financial assistance

• Provide a copy of any translated documents. Also, describe the methodology used to ensure that any limited English proficiency (LEP) populations served by the hospital organization have access to these translated documents

• Provide a copy of the resolution from the authorized body of the hospital facility that establishes the date the emergency medical care policy (EMCP) was adopted

SAMPLE IRS INFORMATION REQUESTS

Page 13: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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• Provide a representative patient billing statement

• Please make available for interview a person with knowledge of the hospital’s billing & collection practices

• Please provide copies of any complaints, including legal complaints, in which a patient alleged that the hospital either failed to follow its FAP or did not comply with the requirements of 501(r)(4)

SAMPLE IRS INFORMATION REQUESTS

• Hospital & health systems consolidation Strong with strong? Moderate? Weak? Moderate with moderate? Weak with ?

• Insurers with Insurers Providers

• Physicians with Physicians Health system Insurers

• Commercial business with Insurers Providers

LEAGUE LANDSCAPE

CVS and Aetna Say Merger Will Improve Your Health Care. Can They Deliver?

Page 14: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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Current Industry Trends & Market Activity

453

562636 598

746

935 935988

2010 2011 2012 2013 2014 2015 2016 2017

Health Care Services Mergers & Acquisitions

Total Transactions by Year

7785

10087

133

10291

79

2010 2011 2012 2013 2014 2015 2016 2017

Hospital Mergers & AcquisitionsTotal Transactions by Year

Long-Term Care30%

Other21%

Physician Medical Groups17%

Hospitals8%

Home Health & Hospice5%

Laboratory, MRI, Dialysis6%

Behavioral Health5%

Rehabilitation5%

Managed Care3%

2017 Health Care Services Deal Volume

972 Health Care

Services Deals

Long-Term Care36%

Other21%

Physician Medical Groups13%

Hospitals10%

Home Health & Hospice6%

Laboratory, MRI, Dialysis4%

Behavioral Health4%

Rehabilitation4%

Managed Care2%

2016 Health Care Services Deal Volume

944 Health Care

Services Deals

Current Industry Trends & Market Activity

Page 15: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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• Electronic medical record

• Mobile devices

• Internet health care

• Capital costs Hardware Software Human

INFORMATION TECHNOLOGY

Tec

hn

olog

y

Big Data & Analytics Transparency

Care Delivery

New Models Incentivizing

Behavior Change

Price for Care

Consumerism

Page 16: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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NEW OFFENSE: ALTERNATIVE-BASED PAYMENTS

• Accountable care organizations & bundled payments will continue to evolve

• Direct to employer contracts

• Value- & outcomes-based payments

1960s

Cost-Based

1990s

Fee-for-Service

2000s

Boom

2010+

Value-Based

PAYMENT DRIVES BEHAVIOR

Page 17: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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• Fee for service vs. pay for performance Operating in two payment environments

• Decreased federal health care program payments

• Medicare DSH/Charity Care payments –Worksheet S-10

• 340B discount pricing

DEFENSE: GOVERNMENT REGULATIONS

Drug costs – largest expense expected to grow

• Drugs purchased under 340B priced at average sales price – 22.5%

Effective January 1, 2018

• No requirement to report use of savings• Clear intent of program not defined• HRSA lacks regulatory authority to clarify program requirements• Growing trend toward prescribing more expensive drugs to Medicare Part B patients

House Energy & Commerce Report

DEFENSE: 340B DRUG DISCOUNT PROGRAM

Page 18: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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“ ”“He played about the way I would have thought; you talk about a baptism in this league. They bring the ranch; they blitz and they blitz and they blitz, and it paid dividends. We were sacked six times today. It’s pretty hard to be efficient when that happens.”

Marty Schottenheimer – Former Kansas City Chiefs Football Head Coach

• Consumerism & innovation are here to stay Could be a disruptor to traditional care Amazon, Berkshire Hathaway, JP Morgan

• Patients are paying attention to cost & quality

• Patients want convenience & timely service Mobile device care

BLITZ: CONSUMERISM & INNOVATION

Page 19: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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• Futbol or football?

• Innovation may be used to solve problems

• Innovative partners – choose strategically

• Big & small innovations

• Let the millennials loose

BLITZ: CONSUMERISM & INNOVATION

“ ”“Champions are champions not because they do anything extraordinary but because they do the ordinary things better than anyone else.”

Chuck Noll – Former Pittsburgh Steelers Head Coach & Four-Time Super Bowl Championships

Page 20: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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• Embrace health care industry changes

• Call the audible – Be the innovator

• Understand what your competition looks like

• Consumerism is here to stay• Listen to your patients

CHAMPIONS OF HEALTH CARE

QUESTIONS?

Page 21: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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CONTINUING PROFESSIONAL EDUCATION (CPE) CREDITS

BKD, LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

The information contained in these slides is presented by professionals for your information only and is not to be consideredas legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered.

• CPE credit may be awarded upon verification of participant attendance

• For questions, concerns or comments regarding CPE credit, please email the BKD Learning & Development Department at [email protected]

CPE CREDIT

Page 22: THE HEALTH CARE PLAYBOOK - BKD€¦ · THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season Joseph M. Watt Partner jwatt@bkd.com Michael J. Engle Partner mengle@bkd.com March 28,

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THANK YOU!FOR MORE INFORMATION

Michael J. Engle, Partner [email protected]

Joseph M. Watt, [email protected]


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