Here's what changed for hospitals on Oct. 1

How to prepare for major ACA provisions

The health exchanges are open. The government is closed. And a slew of other major provisions that affect hospital operations take effect today.

What do you need to know about the ACA’s exchanges, new readmissions penalties, and other planned payment cuts that have just gone live? Here’s a quick review of five major changes tied to Oct. 1, and what your organization can do to be prepared.

Opening day for health insurance exchanges

The Affordable Care Act (ACA) will reach a major milestone on Tuesday: its health insurance exchanges open for enrollment.

The online marketplaces are set up to sell private policies for individuals and small businesses and establish common rules regarding the design and prices of the coverage options. Millions of Americans who are unable to cover the cost of premiums will be eligible for federal subsidies.

Don't judge the exchanges' fate too soon: Join us for a conversation on November 15 as our experts perform a pulse check on Obamacare.

Coverage purchased through the exchange will formally begin in January 2014, and the exchanges are expected to cover 24 million Americans by 2016.

According to the Advisory Board's Tom Cassels, "there are two big ticket items" for hospital leaders to track across the next six months of open enrollment.

"How effective will the Navigators' ground game be?” Cassels added. “And what kinds of trade-offs will individuals make—price versus network choice, brand names over new market entrants, and so on—when shopping in either public or private exchanges?"

Check out these resources to learn more:

  • Your Guide to Health Insurance Exchanges: This webconference from the Health Care Advisory Board lays out the mechanics of the exchanges—how they work, who they cover, and their implications for providers.
  • Navigating Health Insurance Exchanges: To help health systems capture millions of newly insured customers, our white paper lays out answers to eight key questions.
  • Three ways to prepare for the health insurance exchange tsunami: Being ready for health insurance exchanges will be the difference between 24 million challenges and 24 million opportunities. Watch the video to learn how to prepare for the exchange "tsunami."
  • Which states will have the most uninsured residents in 2016? About 30 million U.S. residents are expected to remain uninsured after the full rollout of the ACA. But where will these residents live? We've mapped out the uninsurance rates for 2016.

Additional background on the insurance marketplaces:

Medicare readmissions program armed with bigger fines

Under the ACA's program to incent hospitals to reduce readmissions, Medicare will raise the maximum penalty for excess patients who return to the hospital within 30 days of discharge to 2% of total revenue, from 1% in fiscal year 2013.

Additionally, the number and types of planned readmissions that will not be considered as "excess" readmissions in the penalty program will be expanded.

A recent analysis of CMS data suggest that 2,225 hospitals spanning 49 states will lose up to 2% of their Medicare reimbursement this year.

Check out these resources to learn more:

  • Customized Readmissions Penalty Estimator: Access a facility-specific estimate of your organization's penalty under CMS's Readmissions Reduction Program and view the underlying readmissions rates driving suboptimal performance.
  • Preventing Unnecessary Readmissions: guide to the development of a comprehensive readmissions reduction strategy for promoting seamless transitions both within and beyond the four walls of the hospital.
  • All-Site Readmissions Mapping Tool: Understand current post-discharge relationships with acute care partners to elevate care quality and reduce market costs.

Additional background on Medicare's readmissions program:

Value-based purchasing changes

Under Medicare’s Hospital Value-Based Purchasing (VBP) Program, providers are incented—through penalties and bonuses—to perform better on certain quality measures and on patient experience surveys. Starting today, CMS has readjusted the reimbursement.

Check out these resources to learn more:

  • Customized Medicare Value-Based Purchasing Impact AssessmentAccess a facility-specific estimate of your incentive payment under CMS's Hospital Inpatient Value-Based Purchasing program and identify underlying quality measures driving suboptimal performance.
  • The Future of Value-Based Purchasing: Review updates to the value-based purchasing program through 2015, including changes to quality measures, CMS's scoring methodology, and the estimated financial impact based on Advisory Board analysis.

Additional background on the VBP program:

DSH payment cuts to deal a tough blow

Medicaid disproportionate share hospital (DSH) payment cuts will proceed as planned, despite objections by safety-net hospitals in states that have opted not to expand Medicaid.

Under the ACA, CMS must reduce DSH payments by $18.1 billion from fiscal years 2014 to 2020, with $500 million in reductions this year. The agency plans to revisit the way it calculates Medicaid DSH payments and issue new rules in 2016 and beyond.

Check out these resources to learn more:

  • Customized Medicare Inpatient Payment Assessment: Assess the impact of CMS's IPPS final rule on your organization’s inpatient Medicare revenues.
  • Four takeaways from the proposed rules for Medicare and Medicaid DSH cuts: Coverage expansion should reduce the need for DSH payments—but will providers realize the benefits from health insurance exchange rollout before these DSH cuts are implemented?
  • Alleviating the burden of uninsured care: Christopher Kerns discusses key strategies for reducing bad debt brought on institutions by their uninsured population—including increasing coverage through government and private programs, triaging patients to lower-cost care, and principled pricing strategies.
  • Reducing bad debt from the underinsured patient population: Learn innovative best practices for reducing bad debt brought on by underinsured patients.

Additional background on the DSH cuts:

Three-month relief on 'two-midnight' rule

Meanwhile, the controversial "two-midnight" rule under the fiscal year 2014 Medicare Inpatient Prospective Payment System will proceed as planned, with a few caveats. The final rule instituted a time-based presumption period for medically necessary inpatient care. Under the rule, an admission is assumed to be appropriate for a Medicare Part A payment if a physician expects a beneficiary's treatment to require a two-night hospital stay and admits the patient under that assumption.

However, CMS announced last week that government recovery auditors would delay scrutiny of the "two-midnight" rule by three months, while providers get acclimated to the new policy.

Check out these resources to learn more:

Here's some additional background on the two-midnight rule:


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