the health care playbook - bkd€¦ · the health care playbook strategies for the 2018 season...
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3/27/2018
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THE HEALTH CARE PLAYBOOKStrategies for the 2018 Season
Joseph M. WattPartner
Michael J. EnglePartner
March 28, 2018
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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
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Health Care Spending
Politics/ Government Regulations
Competition
Consumerism Patient Care Innovation
INDUSTRY ENVIRONMENT AT A GLANCE
FEDERAL SPENDING MEDICARE BENEFITS
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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
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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
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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Corporate alternative minimumtax repealed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
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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
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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
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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
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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
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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?
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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
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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?
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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
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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
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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
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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
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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
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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
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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?
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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
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THANK YOU!FOR MORE INFORMATION
Michael J. Engle, Partner [email protected]
Joseph M. Watt, [email protected]