Becker's Hospital Review

14 Sign up for the COMPLIMENTARY Becker's Hospital Review CEO Report & CFO Report E-Weeklies at www.BeckersHospitalReview.com or call (800) 417-2035 The Year Ahead: 10 Challenges That Will Shape Hospital Strategy (continued from page 1) 1. Remaining uncertainty regarding the PPACA With President Barack Obama's reelection in November, most health systems and hospitals have accepted that the Patient Protection and Affordable Care Act is, for the most part, here to stay. In fact, right after the election, only 33 percent of people supported repealing the act, the lowest that number has been since the act was signed in 2010, according to a Kaiser Family Foundation poll. However, there are still some items in the PPACA that are up for repeal, and if House Speaker John Boehner (R-Ohio) and other Republican Party members have their way, the entire Act would be repealed. Some Republicans are calling for compromise, not an all-out repeal. Florida Gov. Rick Scott, for example, has asked for a partial expansion of Medicaid, less than what was proposed in the PPACA. With Republicans controlling the House of Representatives and Democrats controlling the Senate, hospitals and health systems will have to wait and see if the talk of compromise actually produces any in Congress' next session. One area of uncertainty is if individual states will implement health insurance exchanges or refuse, leaving the formation of the state's exchange to the federal government. Some states, such as Ohio and Wisconsin, have already announced that they will not set up state-based exchanges. Right now, no one is sure exactly what the health insurance exchanges will look like when they go live in 2014, especially because many states have opted to set up their own model of exchanges. With these deadlines approaching, 35 percent of hospital and health system executives have still not discussed with payors about participation in exchanges, according to a ReviveHealth survey. It will be a challenge for hospitals and payors to work together and navigate this new territory. 2. Medicare funding When it comes to Medicare funding, hospitals and health systems have little control. CMS controls the reimbursement rates for inpatient services, outpatient departments, physicians, home health services and other areas — and hospitals can only hope the funds stay intact as much as possible. Medicare funding challenges greatly outnumber Medicare opportunities for hospitals in 2013. First and foremost is the issue of sequestration. Sequestration has tormented the hospital and healthcare industry for the past year, putting billions of dollars in Medicare reimbursements at risk every year for the next decade. Based on the negotiations at the end of 2012, largescale Medicare cuts will be a continual threat for the foreseeable future. Hospitals also have to brace for more Medicare cuts from the PPACA. Hundreds of millions of dollars will be siphoned away from hospitals due to the Medicare Hospital Value-Based Purchasing Program, Hospital Readmission Reduction Program, erosion of disproportionate share hospital payments and other provisions. On an individual basis, hospitals could lose anywhere from a couple hundred thousand dollars to millions. Teaching hospitals and academic medical centers also have to brace for graduate medical education cuts. In 2012, the government's proposed budget slashed Medicare indirect medical education payments by $9.7 billion over 10 years — or 10 percent. This is, of course, on top of the fact that Medicare funding for GME has been capped since the Balanced Budget Act of 1997, the same piece of legislation that installed the sustainable growth rate for physician payments. When it comes to Medicare opportunities, hospitals and physicians have their backs against the wall and can only play with the hand they are dealt. Focusing on limiting readmissions, achieving high patient satisfaction scores and honing in on quality incentive programs are the best bets for hospitals to limit reductions to their Medicare funds. Hospitals are also exploring creative ways to break even on Medicare by looking into bundled payment programs for specific services (e.g., orthopedics or cardiovascular) or revamping throughput strategies for costly Medicare procedures in the operating room and emergency department. 3. Medicaid funding Subscribe Today! Becker's Hospital Review CEO Report E-Weekly Guidance, analysis and best practice information on hospital leadership, operations and management issues for top hospital and health system executives Each E-Weekly, sent every Tuesday, contains the most popular feature articles covering business and legal issues, CEO profiles and benchmarking and statistical data to immediately inform your decision-making To subscribe to the FREE E-Weekly, visit www.BeckersHospitalReview.com and click on the "E-Weekly" tab or call (800) 417-2035 Medicaid reimbursements short-change hospitals and health systems almost as much, if not more in some cases, than Medicare. The American Hospital Association said hospitals received average payment of only 93 cents for every dollar they spent caring for Medicaid patients in 2010, and that figure is as low as 70 cents on the dollar in some states. In 2013, those figures will not change much as many states have implemented austerity plans to their Medicaid budgets. The states that have made or are about to make cuts to Medicaid programs include Alabama, California, Colorado, Florida, Illinois, Louisiana, Maine, New Hampshire, Wisconsin and many others. Louisiana and Illinois, in particular, created quite a stir when they passed their Medicaid budgets. Louisiana's Department of Health and Hospitals announced some of the biggest cuts, indicating the state will cut $859.2 million from the state Medicaid program for fiscal year 2013. Hospitals will bear a big portion of those cuts, perhaps none bigger than Louisiana State University Health System. LSU Health System's budget for FY 2013 will be slashed 24 percent, while disproportionate share hospital funds will be cut by $122 million. Illinois Gov. Pat Quinn signed a Medicaid budget into law that will result in $1.6 billion in Medicaid cuts next year, including hundreds of millions of dollars in slashed hospital and health system reimbursements. Massachusetts Hospital Association President Lynn Nicholas denounced Medicaid reimbursement cuts over the summer as "the continued practice of shifting government costs onto providers," a stance that other state hospital associations have echoed. However, there are still some opportunities for providers when it comes to Medicaid funding. For example, advocating for provider taxes — or the renewal of provider taxes — raises

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