Healthcare

Non-profit hospitals should take notice of changes the IRS has made in its Draft 2014 Form 990 Schedule H. The IRS is trying to make its Schedule H more closely mirror requirements in the Affordable Care Act, section 501(r). In particular, the updated draft form requires more commentary so that the IRS can get quicker visibility into whether hospitals are living up to the true purpose of the Community Health Needs Assessment (CHNA) regulations. Here are some key points to note in the updated form:
 
More specificity in check-the-box questions
 
501(r) details that a hospital must adopt an implementation strategy to meet the needs identified in the CHNA by the end of the same taxable year in which the CHNA was conducted. The Draft Schedule H now asks for the tax year in which the CHNA was adopted and either a link to or a copy of the implementation strategy. This updated draft also provides clarity to the IRS about allowable exceptions that might be missed in a simple review of previous forms.

Have you taken a look lately at the statistics that tell the story of the future of health care in the U.S.? It’s sobering. The outdated payment model is just one part of the challenge. Between baby boomers retiring and overloading the system with aging patients that need more care, and the doctor pipeline dwindling, there is a fundamental need to change the delivery model before it crashes. 

A report released last summer from a private foundation that studies health care systems ranked the U.S. last overall among 11 of the wealthiest nations on the planet. Where do we rank first? Cost of care – ours is the most expensive health care system in the world. Unfortunately, a bigger spend does not produce better patient outcomes. The U.S. underperforms in many areas like access, choice, efficiency, and effective care. 

Take a look at the health care stats and trends in our infographic below that tell the story. What’s that great saying about the future? The only way to predict the future is to create it. Knowing the facts can help you prepare for the changes that are coming your way. Knowing the facts can start getting you out of survival mode and into a proactive approach that helps you and your patients thrive in a new and better model. There is no “riding out” the changes. Staying in status quo mode puts your health care facility at risk. 

In the continuing evolution of hospital/physician relations, new and more complicated pay arrangements find their way into the market each year. However, overpayment of physicians can run afoul of regulatory requirements for fair market value and commercial reasonableness. Having more than one paid service or compensation arrangement between parties increases the risk that aggregate compensation is more than FMV. While the compensation terms outlined in each agreement may represent FMV, when taken together, total compensation in some cases can exceed FMV. The following scenarios show some of the ways that pay arrangements can be “stacked,” placing the parties at higher risk:

A major change to pension plan reporting takes place in fiscal year 2015 that could become a significant headache for governmental hospitals if they don’t get started now preparing for it. The ramifications of GASB 68 are substantial enough without the stress of waiting too long to prepare. Here’s why: 

While non-physician providers already play a large role in providing health care in the U.S., it is expected that in the near future NPPs will begin to take on a larger role because more individuals will have access to health insurance and there is an existing shortage of physicians. Most state laws require some level of physician supervision over the services of NPPs—specifically physician assistants and nurse practitioners which are the two types of NPPs that are commonly employed in the physician practice setting and are more generally associated with broad patient care services.

Compensating physicians for supervising NPPs normally involves two types of supervision and two compensation structures, however each case must be analyzed as the amount of supervision varies and the resulting compensation must conform to the fair market value of the services performed. 

Hospitals are investing more in creating outpatient service departments to meet rising patient demand while simultaneously reducing inpatient surgical procedures and generating new sources of revenue. In many cases, the creation of these departments involves the acquisition of private physician practices’ ancillary service lines. Often, the hospital enters into an employment arrangement with the physicians of the once physician-owned private medical practice.

As discussed in a previous post, Practice "Bifurcation" Can be Risky Business, the Stark law is implicated in these post-acquisition employment arrangements because physician compensation is required to be consistent with fair market value.

Leadership at health care organizations is being tested like never before. The move away from fee-for-service (FFS) to a patient outcome based model means management has to get clinical care teams collaborating in a whole new way. Your leadership style and the culture you help create within your organization will be the deciding factor in determining whether your facility survives, and potentially thrives, in this new dynamic.

So, no pressure. Just the success of your organization riding on your shoulders.

The good news is that if you are reading this it means that you recognize the importance of being a great leader and seek out information to build your skills. Half the battle is being aware that you have a management style and committing to building on what is working and improving what is not.

On August 14, 2014, the U.S. Department of Justice reported a $1.3 million settlement between New York Heart Center, a New York cardiology group practice, and the United States government to resolve allegations that the practice violated the Physician Self-Referral (Stark) Law and the False Claims Act by "knowingly compensating its physicians in a manner that violated federal law."

The unique nature of services furnished by health care professionals and the possible conflicts of interest arising from financial arrangements between providers has resulted in laws and regulations that differ dramatically from other industries, like the Stark Law. The law was intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives that encourage internal referrals of certain services known as Designated Health Services for Medicare patients.

For twenty years, the 340B program administered by The U.S. Department of Health and Human Services administration (HHS) has helped safety-net providers to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services. Over the past few years, with the passing of the Affordable Care Act (ACA), the number of qualifying health care entities (and patients) has grown. So have the number of contract pharmacies that can disperse 340B drugs to patients.

The program expansion has caused pharmaceutical companies to lobby for changes and clarifications to 340B. This has resulted in much political upheaval and the promise of mega changes to the program that were supposed to materialize this summer. That didn’t happen. But the program is definitely under scrutiny, so that means it’s important to document your 340B  transactions and understand the compliance requirements around this program.

Here’s what you need to know now about 340B to make sure your hospital or clinic is in compliance:

Are you wondering about the status of your Medicare Disproportionate Share Hospital (DSH) payments in light of the recent Allina DSH court ruling? You’re not alone.  An April 2014 ruling from a U.S. Court of Appeals for the District of Columbia Circuit upheld a previous ruling that a Health and Human Services (HHS) rule change in 2004 (codified in 2007) was procedurally defective. The lawsuit had to do with a rule change the HHS made to determine DSH payments in 2007. The hospitals claimed there was not proper notification. Although the court ruled favorably for the hospitals, what happens next is still unknown. 

The appeals court included instructions in the ruling that gave the HHS room to reach the same policy decision through administrative adjudication. The bad news for providers is that adjudicatory findings can be applied retroactively. The Centers for Medicare and Medicaid Services (CMS) has not yet issued a definitive guideline on how to retrofit the reimbursement fractions for the years in question. 

Given the continued flurry of activity in hospital-physician financial arrangements and increased enforcement activity, hospital system CEOs and in-house and outside counsel all have a vested interest in getting optimal value from the working relationship between the health care valuation analyst and legal counsel.

Most hospital system acquisitions of physician practices are structured as asset purchases, with the former physician-owners and employed physicians of the acquired practice subsequently employed by the purchasing hospital or a hospital-controlled entity. Because of the financial and referral relationships in arrangements such as these, the Stark law and federal anti-kickback statute are nearly always implicated, and compliance with these laws dictates that the financial arrangements be consistent with fair market value. Exceeding fair market value can expose the parties to potentially staggering fines and penalties if found liable as part of a qui tam or government enforcement action. Yet, as discussed in a recent post, New White Paper Doesn't Settle the Workforce Valuation Debate, diversity of opinion exists on certain valuation issues in these types of transactions. 

Now that we have easier access to Electronic Health Records (EHR), it should be easier than ever to use data to find best practices and reduce variations in care that hurt patient outcomes. Right? 

In theory, that’s right. In practice, it’s a whole other ballgame. EHR is a great repository of information but it does not magically perform analytics. Also, how do you grade the usefulness of data and how and when it is collected? 

Here are 3 areas to evaluate whether the data you are accumulating can drive better health care decisions for the patient and improved processes and efficiency for hospitals and providers: