Brock Slabach, MPH, FACHE

Senior Vice President for Member Services

National Rural Health Association

May 25, 2016

The Evolving Landscape of Rural Health

Oklahoma Rural Health Conference

Improving the health of the 62 million who call rural America home.

NRHA is non-profit

and non-partisan.

National Rural Health Association Membership

Destination NRHA Plan now to attend these upcoming events.

Quality Clinical Conference – Jul. 13-15, 2016 • Oakland, CA

RHC/CAH Conference – Sept. 20-23, 2016• Kansas City, MO

Policy Institute—February 6-9, 2017• Washington, DC

Annual Conference—May 9-12, 2017• San Diego, CA

Rural Hospital Innovation Summit—May 9-12, 2017• San Diego, CA

Visit RuralHealthWeb.org for details and discounts.

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A History (short) of Rural Health

• War on Poverty in the 60’s

• Community Health Centers, created in the War on Poverty

• Rural Health Clinics –38 Years Old (1978), 4,100 nationwide

• Result of PPS 1983: 440 hospital closures

• Policy Response 1992-2003:

– State Office of Rural Health (SORH

– Medicare Dependent Hospitals (MDH)

– Critical Access Hospital (CAH) 1997

– Medicare Rural Flexibility Program (1997)

– Low-Volume Hospital (LVH) Adjustment (2003 and 2010)

• Patient Protection and Affordable Care Act (ACA) 2010

• Medicare Access and Chip Reauthorization Act (MACRA) 2015

Rural Hospital Closures: 1983-97

We’re not finished yet…

Rural differentiation:

“Rural Americans are older, poorer and sicker than their urban

counterparts… Rural areas have higher rates of poverty,

chronic disease, and uninsured and underinsured, and millions

of rural Americans have limited access to a primary care

provider.” (HHS, 2011)

Disparities are compounded if you are a senior or minority in rural America

We’re not finished yet…

Health Equates to Wealth:

People who live in wealthy areas like San Francisco,

Colorado, or the suburbs of Washington, D.C. are likely to be

as healthy as their counterparts in Switzerland or Japan, but

those who live in Appalachia or the rural South are likely to be

as unhealthy as people in Algeria or Bangladesh.

--University of Washington, July, 2013

Rural counties have the highest rates of premature death, lagging

far behind other counties, RWJF Report, March, 2016

Rural counties have had the highest rates of premature death for many

years, lagging far behind other counties. While urban counties continue to

show improvement, premature death rates are worsening in rural counties.

18 have closed in 2015, Already Ten closed in 2016

CLOSED

Closure Analysis

• Most closures in South

• Annual number of closures increasing

• Most are CAHs and PPS hospitals (vs MDH and

SCH)

• Most are in states that have not expanded Medicaid

• Patients in affected communities are probably

traveling between 5 and 28 more miles to access

inpatient care

• Most hospitals closed because of financial problems --Sheps Center for Rural Health, University of

North Carolina, 2016

2015 Rural Hospital Financial Status

Rural Hospital Financial Status

Provider Type Profitable Switch Unprofitable Total

CAH 358 27 917 1302

Medicare

Dependent

54 7 138 199

Sole Community 94 2 156 252

Standard Rural

PPS

52 1 101 154

1312 1907 69%

Source: iVantage Health Analytics

Rural Hospital Closures and Risk of Closures

35% Percent Vulnerable X

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73 Hospitals have closed since 2010. The VULNERABILITY INDEX™ identifies 673 Rural Hospitals Now Vulnerable or At Risk of Closure 210 hospitals are most vulnerable to closure, while an additional 463 are less vulnerable

RURAL Hospital Closures Escalating

673

since 2010

73 Rural hospitals closing where health disparities are the greatest.

Rural Hospital Closures on the RiseThe rate of closure is six times higher in 2015 than in 2010

0

5

10

15

20

25

2010 2011 2012 2013 2014 2015 2016 2017

ClosuresAt this rate, 25% of rural hospitals will shut down in

less than 10 years .

The Impact of Rural Hospital Closures

The Vulnerability Index™ identifies 673 rural hospitals statistically

clustered in the bottom 2 tiers of performance.

673

NRHA Analysis of Rural Hospitals

Target solutions for three cohorts of rural hospitals:

• At high-risk of closure (n=210)

• Stable with strategically sound fundamentals

(n=1,437)

• High-performers or first movers (n=208)

Impact of Sequestration

7,200 jobs lost in rural hospitals and

communities (sustained over 10

years)

30 rural hospitals shifting from

profitable to unprofitable

-0.6% off the bottom line

$2.8 billion lost in rural Medicare

reimbursement (over 10 years)

2% cut

Impact of cuts in Bad Debt Reimbursement

2,000 rural healthcare jobs lost

$5.3 billion loss to GDP

(over 10 years)

2,600 rural community jobs lost

$1 billion lost in bad debt reimbursement

(over 10 years)

35% cut

Save Rural Hospitals Act, HR 3225

Rural hospital stabilization (Stop the bleeding)

Elimination of Medicare Sequestration for rural hospitals;

Reversal of all “bad debt” reimbursement cuts (Middle Class Tax Relief and Job Creation Act of 2012);

Permanent extension of current Low-Volume and Medicare Dependent Hospital payment levels;

Reinstatement of Sole Community Hospital “Hold Harmless” payments;

Extension of Medicaid primary care payments;

Elimination of Medicare and Medicaid DSH payment reductions; and

Establishment of Meaningful Use support payments for rural facilities struggling.

Permanent extension of the rural ambulance and super-rural ambulance payment.

Rural Medicare beneficiary equity. Eliminate higher out-of pocket charges for rural patients (total charges vs. allowed Medicare charges.)

Regulatory Relief

Elimination of the CAH 96-Hour Condition of Payment (See Critical Access Hospital Relief Act of 2014);

Rebase of supervision requirements for outpatient therapy services at CAHs and rural PPS See PARTS Act);

Modification to 2-Midnight Rule and RAC audit and appeals process.

Future of rural health care (Bridge to the Future)

Innovation model for rural hospitals who continue to struggle.

Future Model:

Community Outpatient Hospital

• 24/7 emergency Services

• Flexibility to Meet the Needs of Your Community

through Outpatient Care: • Meet Needs of Your Community through a Community Needs

Assessment:

• Rural Health Clinic

• FFQHC look-a-like

• Swing beds

• No preclusions to home health, skilled nursing, infusions services

observation care.

• TELEHEALTH SERVICES AS REASONABLE COSTS.—For

purposes of this subsection, with respect to qualified outpatient services,

costs reasonably associated with having a backup physician available via

a telecommunications system shall be considered reasonable costs.”.

• “The amount of

payment for

qualified

outpatient

services is equal

to 105 percent of

the reasonable

costs of providing

such services.”

• $50 million in

wrap-around

population health

grants.

New Grants Available to CAHs

and Rural PPS Hospitals

• $12 million appropriated annually for Quality

Improvement and Compliance Grants.

• $15 million appropriated annually for rural

population health needs.

• $ 2 MILLION EMS GRANT FUNDING — to develop

EMS programs to meet community needs,

address workforce and funding problems.

• For COHs - $50 million in grant funding.

Rep. Sam Graves (R-MO) – 7-27-15 Rep Abraham, Ralph Lee [LA-5] - 11/18/2015 Rep Bustos, Cheri [IL-17] - 2/9/2016 Rep Clarke, Yvette D. [NY-9] - 1/5/2016 Rep Conaway, K. Michael [TX-11] - 2/12/2016 Rep Cramer, Kevin [ND] - 12/7/2015 Rep Farenthold, Blake [TX-27] - 11/16/2015 Rep Grothman, Glenn [WI-6] - 9/9/2015 Rep Harper, Gregg [MS-3] - 2/1/2016 Rep Hastings, Alcee L. [FL-20] - 10/28/2015 Rep Hinojosa, Ruben [TX-15] - 11/30/2015 Rep Huffman, Jared [CA-2] - 12/1/2015 Rep Kind, Ron [WI-3] - 10/2/2015 Rep Kirkpatrick, Ann [AZ-1] - 11/5/2015 Rep Loebsack, David [IA-2] - 7/27/2015 Rep Lucas, Frank D. [OK-3] - 2/3/2016 Rep Neugebauer, Randy [TX-19] - 11/16/2015 Rep Peterson, Collin C. [MN-7] - 10/22/2015 Rep Pocan, Mark [WI-2] - 11/16/2015 Rep Ribble, Reid J. [WI-8] - 11/17/2015 Rep Stewart, Chris [UT-2] - 9/28/2015 Rep Stivers, Steve [OH-15] - 2/11/2016 Rep Takai, Mark [HI-1] - 2/3/2016 Rep Thompson, Glenn [PA-5] - 2/23/2016 Rep Thornberry, Mac [TX-13] - 10/8/2015 Rep Walz, Timothy J. [MN-1] - 11/18/2015 Rep Williams, Roger [TX-25] - 12/3/2015 Rep Young, David [IA-3] - 9/30/2015

UNC Research Projects

• Prediction of Financial Distress among Rural Hospitals

• Geographic Variation in Risk of Financial Distress among Rural Hospitals

• CAH Financial Indicators Report: Summary of Indicator Medians by State

Under Pressure…

Threats of more cuts and current issues…

• Helping Hospitals Improve Patient Care Act (H.R. 5273): SES and REACH

• OIG Challenges • Necessary Provider Report

• Swing Bed Report

• CMS Challenges • Exclusive Use of Provider-Based Clinics

• Re-certification Requirements for CAHs

• Opioid and Heroin Crisis

• MedPAC June Rural Report

• ACA Update

• JAMA Article on Rural Surgery

• EHR Meaningful Use

MedPAC upcoming report

Preserving access to emergency care in rural areas

(Jeff Stensland, Zach Gaumer)

• MedPAC will promote new model for rural communities

• Big change in MedPAC approach

• 24/7 emergency care services will be provided

Concerns: sustainability.

• Likely will be PPS reimbursement (with small grant)

• No cost-based funding

• Significantly limit the number of facilities to qualify

• MedPAC failed to notice that the negative 9% Medicare margins are impacting rural hospitals (blamed volume)

Is ACA Working?

CDC May 17, 2016: U.S. Uninsured Rate at 9.10%, Lowest in Eight-Year Trend

But let’s dive in closer…

“More than 1 million ObamaCare exchange customers have likely dropped out since open enrollment, Feb. 1”

State Case in Study: Colorado

• Colorado: Number of paying individuals has dropped 23% this year from last (150,769 to 115,890). Why?

• Co-Op failure - - covered 69,000 lives

• Premium increases Rate Hikes - Customers who don’t qualify for subsidies are paying 34% more for catastrophic and 21% for bronze

• Rather pay the penalty.

Opioid Crisis in Rural American

All states have demonstrated an increase in nonmedical prescription opioid

mortality during the past decade, however, the largest areas of abuse are

concentrated in states with large rural populations, such as Kentucky, West

Virginia, Alaska, and Oklahoma.

Rural Health Clinics (RHC)

• HCPCS Codes on RHC Claims April 1, 2016

• First Qualifying Visit List (QVL) was limited

• Second QVL was expanded to include a broad list of

procedure only codes…unable to bill procedures on

this list until October 1, 2016

• Stay tuned…the drama continues

• Don’t Forget: Annual Wellness Visits and Chronic

Care Management Reimbursement—Let us know of

billing issues on these codes

• Transforming Clinical Practice Initiative (TCPI): have

you joined a Practice Transformation Network

(PTN)?

CMS Star Rating Program

• CMS to allow 30 day preview of the July update starting May

6, 2016. Click here for link to see your hospital’s Star Rating.

Star

Rating

Number of hospitals

(percent of hospitals rated)

One Star 142 (4%)

Two Star 716 (20 %)

Three Star 1881 (52%)

Four Star 821 (23%)

Five Star 87 (2%)

Total Hospitals in Hospital Compare Data Set: 4604

Met Reporting Threshold: 3647 (79%)

Did not meet reporting threshold: 957 (21%)

CMS Star Rating System

Outcome Measures Process of Care Measures

Mortality (N=7, 22%

weight)

Safety of Care (N=8,

22% weight)

Readmissions (N=8,

22% weight)

Effectiveness of Care (N= 16, 4%

weight)

Timeliness of Care (N=7 , 4% weight)

Patient Experience (N=11, 22%

weight)

Efficient Use of Medical Imaging

(N=5, 4% weight)

To meet the minimum threshold to have a star rating calculated

hospitals must have at least three measures, in at least three groups,

with at least one outcome group.

CMS Star Rating System

“The idea that dying and being readmitted to

the hospital are equally important to patients

seems funny to me,”

Ashish Jha, M.D.

Harvard Medical School

JAMA Article on Rural Surgery

• Journal of the American Medical Association (JAMA) Released

May 17, 2016

• Conclusions and Relevance:

Among Medicare beneficiaries undergoing common

surgical procedures, patients admitted to critical access

hospitals compared with non–critical access hospitals had

no significant difference in 30-day mortality rates,

decreased risk-adjusted serious complication rates, and

lower-adjusted Medicare expenditures, but were less

medically complex.

Senate Bill on EHR

Meaningful Use

• NRHA Supported Legislation introduced by Sens.

Thune and Alexander

• Provisions:

• Remove all or nothing approach to meaningful

use

• Set a 75% threshold for meeting objectives and

measures

• 90 Reporting Period in 2016 and later years

• Flexibility in applying hardship exceptions

• MACRA – MIPS and APMs • CMS Quality Measure Development Plan – NRHA Comments Submitted March 1

• Regulations expected around May (rule must be finalized by November 1)

• Healthcare Payment Learning & Action Network (HPCLAN) – NRHA Comments submitted March 7

• Patient Attribution

• Financial Benchmarking

• ACO – benchmarking regulation – comments were due March 28

• IPPS Rule 2016—NRHA Preparing Comment Letter • Two-midnight changes

• Medicare outpatient observation notice (MOON) requirements

• Next slide

Regulatory Update

Notification Procedures for

Outpatient Observation

• Implements the NOTICE Act effective August 6, 2016 for all

hospitals and CAHs as a condition of participation.

• Standardized written notice called the Medicare Outpatient

Observation Notice (MOON) explaining:

• the individual was an outpatient—not an inpatient

• the reason for outpatient status (i.e., the individual doesn’t currently need

inpatient services but requires observation to decide whether to admit or

discharge)

• the implications of receiving observation services as an outpatient (i.e.

cost-sharing and eligibility for skilled nursing facility care)

• Provide the explanations in plain language Include a blank for

additional information

• Include a dedicated signature area to acknowledge

receipt and understanding of the notice

Rural Innovation

Volume to Results: A major leap

Transformation to Population

Health Management

Novelty Trending Reality 2011 2013 2016

40

Payment Framework

41

2016

30%

85%

2018

50%

90%

Target percentage of payments in ‘FFS linked to quality’ and ‘alternative payment models’ by 2016 and 2018

2014

~20%

>80%

2011

0%

~70%

Goals Historical Performance

All Medicare FFS (Categories 1-4)

FFS linked to quality (Categories 2-4)

Alternative payment models (Categories 3-4)

MACRA of 2015: Quality

Payment Program

Incentivizes movement to alternative payment models

(APM) or Participate in MIPS

• APMs • Patient Centered Medical Homes

• Accountable Care Organizations

• Bundled Payments

• Episodes of Care

• Yet to be Invented

• Revenue Requirements • 2018-19 25% of Physician Revenues through APMs

• Receive 5% Fee Schedule Bonus

• Revenue threshold increases each year

MACRA of 2015: Quality

Payment Program

Merit-based Incentive Payment System (MIPS)

• Minimal FFS yearly increase next 10 years of 0.5%, then

0%

• MIPS (eventually -4% to +27% adjustment)—Based on

quality, resource use and clinical practice improvement

activities

• 41% payment difference between highest and lowest

performing physicians

44

The Health Care Payment Learning and Action Network (LAN) was launched to accelerate adoption and align methods of APMs

Medicare alone cannot drive sustained progress towards alternative payment models (APM)

Success depends upon a critical mass of partners adopting new models

More than 50 organizations have committed support, including AARP, Anthem, Humana, National Partnership for Women & Families, Partners Healthcare, Rite Aid, Walgreens, Walmart, States of MA and NY

Network Objectives

• Match or exceed Medicare alternative payment model goals across the US health system

-30% in APM by 2016 -50% in APM by 2018

• Shift momentum from CMS

to private payer/purchaser and state communities

• Align on core aspects of alternative payment design

4,800 registered participants + {

{

Work and Affinity Groups

Work Groups:

• APM Framework

• Clinical Episode Payments

• Population Based Payments

• Payment Reform Evaluation Hub

Affinity Groups:

• Consumer and Patient

• Purchasers/Employers

• State Engagement Group

NRHA Request:

• Rural Affinity Group

46

LAN Communications

https://publish.mitre.org/hcplan

Join work group affiliated communities to provide input on work group products PaymentNetwork@MITRE.org http://innovationgov.force.com/hcplan

Visit the LAN website to learn more and find resources

NRHA APM/DSR SIG

Alternative Payment Model/Delivery System Reform Special

Interest Group

• Leadership Team meets to review published rules and white

papers from the HCPLAN

• Daylong preconference at NRHAs Policy Institute

• Innovation Summit in Minneapolis May 10-13, 2016

• Dedicated APM/DSR Track at RHC/CAH Sept. 20-23, 2016

• Committed to spreading best practices on innovation

CMS RFI on Global Budgeting

Request for Information (RFI) from the Centers for Medicare and Medicaid Services Innovation (CMMI) Center:

• Population Health

• Next Generation Rural Payments: What’s after ACOs?

• Focused on Global Budgeting

• Submissions Were Due May 13, 2016

• NRHAs APM/DSR SIG Leadership Team drafted a response

49

Counties are ranked within states and split into quartiles with equal numbers of counties in each quartile

Adult Obesity Population View

Prevalence of Medicare Patients with 6 or more Chronic Conditions

Chronic Disease

Growth Projections

Source: State of Healthcare 2010

53

County

Health

Rankings

Model

First Things First

Care Redesign

• PCMH

• Clinical Integration

• Care Management

• Post-acute Care

• EHR

• Data Analytics

Care redesign should not outpace

Changes in payment

New Payment Arrangements

• Care Transformation Costs

• Care Management Payments

• Shared Savings

• Episodes of Care Payments

• Global Payments

Population

Health

Transformation

Brock Slabach, MPH, FACHE

Senior Vice President for Member Services

National Rural Health Association

bslabach@nrharural.org

T H A N K Y O U