Month: June 2017

What You Need to Know About Health Savings Accounts

Health Savings Accounts

According to the Treasury Department, Health Savings Accounts or HSAs were created in 2003 so that individuals covered by high-deductible health plans could receive tax-preferred treatment of money saved for medical expenses. This new vehicle was part of the Medicare Modernization Act, which gave seniors and disabled Americans a new prescription drug benefit under Medicare.

“A Health Savings Account is a tax exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA. No permission or authorization from the IRS is necessary to establish an HSA. You set up HSA with a trustee. A qualified HSA trustee can be a bank, an insurance company, or anyone approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. The HSA can be established through a trustee that is different from your health plan provider.” Employers may also have additional information on HSAs.

To qualify for an HSA, one must meet the following requirements:

  • You are covered under a high deductible health plan on the first day of the month
  • You have no other health coverage except what is permitted under other health coverage by the IRS
  • You aren’t enrolled in Medicare
  • You can’t be claimed as a dependent on someone else’s 2016 tax return

The IRS has laid out a few benefits that one more enjoy from establishing an HSA:

  • You can claim a tax deduction for contributions you, or someone other than your employer, may make to your HSA even if you don’t itemize your deductions on a Schedule A (Form 1040)
  • Contributions to your HSA made by your employer may be excluded from your gross income
  • The contributions remain in your account until you use them
  • The interest or other earnings on the assets in the account are tax free
  • Distributions may be tax free if you pay qualified medical expenses
  • An HSA is “portable.” It stays with you if you change employers or leave the workforce.

While there are many benefits to an HSA, the question is whether this is a helpful tool for consumers to use? “Prescription drug costs for Americans under 65 years old are projected to jump 11.6 percent in 2017, or at a quicker pace than the 11.3 percent price increase in 2016, according to consulting firm Segal Consulting. Older Americans won’t get much of a break: Their drug costs are projected to rise 9.9 percent next year, compared with 10.9 percent in 2016. By comparison, wages are expected to rise just 2.5 percent in 2017.” With the combined factors of higher drug prices for improved patient outcomes, along with the increased amount of FDA approvals, this trend shows no signs of slowing down.

A recent survey below conducted by Devenir showed that since inception, HSAs have grown to an estimated $34.7 billion in assets and 18.2 million accounts for the period ending June 30, 2016.

At Frier Levitt Government Affairs, our focus is to show companies trends and their options for overcoming adverse priorities via our solutions. For the time period that we are currently in, it seems that the trend favoring consumer driven healthcare has returned with the Republican controlled Congress and Administration. As long as the Republican Party maintains control, we expect to hear this message resonate, especially with the debate surrounding the legislation designed to replace the Affordable Care Act (ACA). While health savings accounts are still in the early stages of adoption, it may be safe to assume that HSAs will see greater use, even though this vehicle may not provide total complete relief in a world that is witnessing faster prescription drug price increases. Contact us today for more information.

What is the Current Status of the Comprehensive Care for Joint Replacement Model (CJR)

Joint Replacement

On July 25, 2016, the Department of Health and Human Services (HHS) released its proposed new models that demonstrate the Administration’s continued transition from quantity into quality of care. In this case, HHS was proposing incentives for hospitals to improve patient outcomes at a reduced cost to the healthcare system. The proposal, titled Medicare Program; Advancing Care Coordination Through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the Comprehensive Care for Joint Replacement Model (CJR), seeks to have hospitals collaborate with other providers in order to prevent hospital patient readmissions and avoid costly complications. On May 19, 2017, CMS announced that it is delaying the start date of this program to January 1, 2018 to allow additional time to prepare. For those that are wondering what this rule is, we figured we would outline what was previously proposed.

When it comes to the cardiac rehabilitation services of the proposal, CMS seeks to accomplish a few things. First, this will be geared toward patients that have been “hospitalized for a heart attack or bypass surgery, which would be based on beneficiary utilization of cardiac rehabilitation and intensive cardiac rehabilitation services in the 90-day care period following hospital discharge.” Secondly, CMS discussed model specifics. Hospitals may use this incentive payment to coordinate cardiac rehabilitation and support beneficiary adherence to the cardiac rehabilitation treatment plan to improve cardiovascular fitness. These payments would be available to hospital participants in 45 geographic areas that were not selected for the cardiac care bundled payment models as well as 45 geographic areas that were selected for the cardiac care bundled payment models. This test will cover the same five-year period as the cardiac care bundled payment models. Standard Medicare payments for cardiac rehabilitation services to all providers of these services for model beneficiaries would continue to be made directly to those providers throughout the model.

CMS proposes establishing a two-part cardiac rehabilitation incentive payment that would be paid retrospectively based on the total cardiac rehabilitation use of beneficiaries attributable to participant hospitals

  1. The initial payment would be $25 per cardiac rehabilitation service for each of the first 11 services paid for by Medicare during the care period for a heart attack or bypass surgery
  2. After 11 services are paid for by Medicare for a beneficiary, the payment would increase to $175 per service paid for by Medicare during the care period for a heart attack or bypass surgery

Based on Medicare coverage, the number of cardiac rehabilitation program sessions would be limited to a maximum of two one-hour sessions per day for up to 36 sessions for as many as to 36 weeks, with the option for an additional 36 sessions over an extended period of time if approved by the Medicare Administrative Contractor. Intensive cardiac rehabilitation program sessions would be limited to 72 one-hour sessions, up to six sessions per day, over a period of up to 18 weeks.

According to HHS, cardiac care should be a great target for cost containment. In 2014, more than 200,000 Medicare beneficiaries were hospitalized for heart attack treatment or underwent bypass surgery, costing Medicare over $6 billion. But the cost of treating patients for bypass surgery, hospitalization, and recovery varied by 50% across hospitals, and the share of heart attack patients readmitted to the hospital within 30 days varied by more than 50 percent. And, while harder to quantify, patient experience also varies.

Note: The chart below shows the first nationwide prevalence study of hip and knee arthroplasty shows 7.2 million Americans living with implants

Source: Mayo Clinic

While this proposal is geared toward hospitals, specialty providers should take notice for three reasons.

  1. Since this rule was put into place by the Obama Administration, there is undoubtedly uncertainty with the Trump Administration as far as whether this rule will survive intact. One certainty is that cost in this sector must be controlled and specialty has tools to help.
  2. Proposals such as these represent an opportunity for specialty. Since your business model is about helping patients improve outcomes, your unique position in the supply chain places you at the center of payer, provider, and manufacturer strategies
  3. Because many of the patients you treat may have underlying chronic conditions, cardiac issues may be among those you have to combat and knowing how HHS plans to reimburse this particular disease state will be key for your profitability.

Gone are the days in which providers can operate in a fee-for-service reimbursement silo. Now providers must adapt to working with each other in order to demonstrate value and maintain network viability. If you are looking for assistance in realizing how your firm can capitalize on policy and marketplace changes either by lobbying and advocacy or by simply needing to know how to advance your priorities regardless of what is happening, contact us.

Mental Health and Substance Abuse

Mental Healh

The uncertainty in health coverage continues to grow, so does the spotlight on mental health care. 1 in 5 Americans have a mental health disorder. Mental health conditions are the most expensive medical condition in the U.S., costing over $200 billion a year. Adding to the concern of mental health is its correlation with substance abuse.

The Substance Abuse and Mental Health Services Administration (SAMHSA) reports that Americans with mental health disorders are twice as likely to report a substance abuse issue compared to the general population, with a total of 8.9 million Americans living with co-occurring disorders.

Depending on the person, mental health may pre-date the substance abuse or the other way around, making it imperative that each person seek specialized treatment to determine how both mental health and substance abuse affect one another.

There is no generalized prescription or plan of care that can be labeled as a “cure” for those who suffer with mental health and substance abuse. Each person’s methods of treatment and ongoing care is different. While one plan of care may lead to recovery for one person, it may worsen another’s condition. For instance, a psychiatrist treating a patient’s anxiety disorder may prescribe anti-anxiety medication. If the patient has been known to suffer from substance abuse or an addictive disorder, there is a risk of abusing the same drug prescribed for the anxiety which would only create further mental health and substance abuse issues.

The unique circumstances surrounding those with both mental health and substance abuse disorders requires comprehensive rehabilitation. The sad reality is that only 7.5% of Americans with co-occurring disorders obtain treatment.

For those that do seek treatment, some of the most effective methods to recovery are cognitive and behavioral therapy, dialectical behavior therapy, interpersonal and family therapy, prescription medication, and ongoing counseling and psychiatric care. These methods require a variety of professionals including but not limited to psychiatrists, counselors, general physicians, specialized physicians, nutritionists, and life coaches.

Treatment for the co-occurring issues can become complex and expensive. Currently the Affordable Care Act (ACA) requires most health insurances, including all of those sold on the Marketplace, to provide coverage for 10 essential benefits, including mental health and substance abuse disorders. In addition, it requires compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA) where mental and substance abuse coverage cannot be more restrictive than medical and surgical coverage. Medicare and Medicaid also currently provide a variety of covered services for mental health and substance abuse disorders. While the ACA began a journey towards expansion of these services, the future of the ACA is unstable.

The passing of the American Health Care Act (AHCA) by the House has raised concerns regarding continued coverage. The AHCA would eliminate the federal requirement to cover the 10 essential benefits including mental health and substance abuse services and instead would refer to the states to make the determination of what is required in health care coverage. The AHCA would also cut $839 billion of funding to Medicaid over the next 10 years. These changes create concern over the future of treatment. However, nothing is finalized at this point. The AHCA still has hurdles to jump before becoming law. The AHCA will head to the Senate where any changes made will then send it back to the House and then back to the Senate before heading to the President.

The provisions in the AHCA, and/or any other health care legislation, will determine if and how Americans receive treatment. While the future is unclear we can assume the need for mental health and substance abuse treatment will continue as will the concern over coverage. Contact us today for more information.