THE HEALTH CARE PLAYBOOK

Transcription

1 THE HEALTH CARE PLAYBOOK Strategies for the 2018 Season March 28, 2018 Michael J. Engle Partner Joseph M. Watt Partner 1

2 TO RECEIVE CPE CREDIT 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 & address All group attendance sheets must be submitted to training@bkd.com within 24 hours of live webinar Answer polls when they are provided If all eligibility requirements are met, each participant will be ed their CPE certificates within 15 business days of live webinar HEALTH CARE PLAYBOOK INSIDE ADDITION Recent Health Care Changes & Trends Tax Cuts and Jobs Act Impact on Health Care Industry Emerging Health Care Industry Trends, Challenges & Strategies 2

3 INDUSTRY ENVIRONMENT AT A GLANCE Health Care Spending Politics/ Government Regulations Competition Consumerism Patient Care Innovation FEDERAL SPENDING MEDICARE BENEFITS 3

4 LEAGUE INFLUENCES POLITICS & GOVERNMENT Outside Influencers President of the United States Democrat & Republican Initiatives Health & Human Services Centers for Medicare & Medicaid Services Office of Inspector General 4

5 LEAGUE INFLUENCES COMPETITION & CONSUMERISM Line of Scrimmage & Downfield Traditional competitors New competitors Patients vs. consumers Listen to consumers Watch for drones Tax Cuts and Jobs Act 5

6 NEW LEAGUE RULES: TAX CUTS AND JOBS ACT 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TAX CUTS AND JOBS ACT Unrelated Business Income (UBI) 21% flat corporate tax rate Corporate alternative minimum tax repealed NOL deduction 80% taxable income No entertainment deductions 6

7 NEW LEAGUE RULES: TAX CUTS AND JOBS ACT 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 Effective for tax years beginning after December 31, 2017 Unrelated Business Income Silo income/loss by activity Net operating loss carryforwards prior to January 1, 2018, are not subject to this provision 7

8 NEW LEAGUE RULES: TAX CUTS AND JOBS ACT 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? 8

9 Emerging Health Care Industry Trends, Challenges & Strategies EMERGING TRENDS, CHALLENGES & ISSUES 501(r) Consumerism & Innovation Government Regulations Health Care Provider Mergers & Acquisitions Information Technology Alternative- Based Payments 9

10 501(R) 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) 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 10

11 501(R) On 8/4/17, a redacted adverse determination letter was posted by the IRS at 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 WHAT DOCUMENTS SHOULD BE MADE AVAILABLE? 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) 11

12 SAMPLE IRS INFORMATION REQUESTS 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 12

13 SAMPLE IRS INFORMATION REQUESTS 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) LEAGUE LANDSCAPE 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 CVS and Aetna Say Merger Will Improve Your Health Care. Can They Deliver? 13

14 Current Industry Trends & Market Activity Health Care Services Mergers & Acquisitions Total Transactions by Year Hospital Mergers & Acquisitions Total Transactions by Year Current Industry Trends & Market Activity 2016 Health Care Services Deal Volume 2017 Health Care Services Deal Volume Managed Care 2% Rehabilitation 4% Behavioral Health 4% Long-Term Care 36% 944 Health Care Services Deals Laboratory, MRI, Dialysis 4% Other 21% Home Health & Hospice 6% Physician Medical Groups 13% Hospitals 10% Managed Care 3% Rehabilitation 5% Behavioral Health 5% Long-Term Care 30% 972 Health Care Services Deals Other 21% Physician Medical Groups 17% Hospitals 8% Home Health & Hospice Laboratory, MRI, Dialysis 5% 6% 14

15 INFORMATION TECHNOLOGY Electronic medical record Mobile devices Internet health care Capital costs Hardware Software Human Technology Big Data & Analytics Transparency Care Delivery Price for Care New Models Incentivizing Behavior Change Consumerism 15

16 NEW OFFENSE: ALTERNATIVE-BASED PAYMENTS Accountable care organizations & bundled payments will continue to evolve Direct to employer contracts Value- & outcomes-based payments PAYMENT DRIVES BEHAVIOR 1960s 1990s 2000s Cost-Based Fee-for-Service Boom Value-Based 16

17 DEFENSE: GOVERNMENT REGULATIONS 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 B discount pricing DEFENSE: 340B DRUG DISCOUNT PROGRAM Drug costs largest expense expected to grow Effective January 1, 2018 Drugs purchased under 340B priced at average sales price 22.5% House Energy & Commerce Report 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 17

18 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 BLITZ: CONSUMERISM & INNOVATION 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 18

19 BLITZ: CONSUMERISM & INNOVATION Futbol or football? Innovation may be used to solve problems Innovative partners choose strategically Big & small innovations Let the millennials loose 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 19

20 CHAMPIONS OF HEALTH CARE 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 QUESTIONS? 20

21 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: The information contained in these slides is presented by professionals for your information only and is not to be considered as 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 CPE credit may be awarded upon verification of participant attendance For questions, concerns or comments regarding CPE credit, please the BKD Learning & Development Department at training@bkd.com 21

22 THANK YOU! FOR MORE INFORMATION Michael J. Engle, Partner Joseph M. Watt, Partner