HCA Holdings 2012 Annual Report Download - page 35

formula. The states then distribute the DSH funding among qualifying hospitals. Although federal Medicaid law
defines some level of hospitals that must receive Medicaid DSH funding, states have broad discretion to define
additional hospitals that also may qualify for Medicaid DSH payments and the amount of such payments. The
Health Reform Law will reduce funding for the Medicaid DSH hospital program in federal fiscal years 2014
through 2020 by the following amounts: 2014 ($500 million); 2015 ($600 million); 2016 ($600 million); 2017
($1.8 billion); 2018 ($5 billion); 2019 ($5.6 billion); and 2020 ($4 billion). The Jobs Creation Act and the
American Taxpayer Relief Act of 2012 provide for additional Medicaid DSH reductions in federal fiscal years
2021 and 2022 estimated at $4.1 billion and $4.2 billion, respectively. How such cuts are allocated among the
states, and how the states allocate these cuts among providers, have yet to be determined.
ACOs. The Health Reform Law requires HHS to establish the MSSP, which promotes accountability and
coordination of care through the creation of ACOs. The MSSP allows certain providers and suppliers (including
hospitals, physicians and other designated professionals) to voluntarily form ACOs and work together along with
other ACO participants to invest in infrastructure and redesign delivery processes to achieve high quality and
efficient delivery of services. The program is intended to produce savings as a result of improved quality and
operational efficiency. ACOs that achieve quality performance standards established by HHS will be eligible to
share in a portion of the amounts saved by the Medicare program. HHS has significant discretion to determine
key elements of the program. In 2011, CMS, the OIG and certain other federal agencies released a series of rules
and guidance further defining and implementing the ACO program. These rules and guidance provide for two
different ACO tracks, the first of which allows ACOs to share only in the savings under the MSSP. The second
track requires ACOs to share in any savings and losses under the MSSP but offers ACOs a greater share of any
savings realized under the MSSP. As authorized by the Health Reform Law, the rules and guidance also provide
for certain waivers from fraud and abuse laws for ACOs. CMS has approved over 200 ACOs to participate in the
MSSP.
Bundled Payment Pilot Programs. The Health Reform Law created the Center for Medicare and Medicaid
Innovation with responsibility for establishing demonstration projects and other initiatives in order to identify,
develop, test and encourage the adoption of new methods of delivering and paying for health care that create
savings under the Medicare and Medicaid programs while improving quality of care. One initiative announced by
the Center for Medicare and Medicaid Innovation is a voluntary bundled payment initiative involving over 400
participants that will link payments to participating providers for services provided during an episode of care. In
addition, the Health Reform Law requires HHS to establish a five-year, voluntary, national pilot program on
payment bundling for Medicare services beginning no later than January 1, 2013. Under the program, providers
will agree to receive one payment for services provided to Medicare patients for certain medical conditions or
episodes of care. HHS has discretion to determine how the program will function, including what medical
conditions will be included in the program and the amount of the payment for each condition. The Health Reform
Law also provides for a five-year bundled payment pilot program for Medicaid services. HHS may select up to
eight states to participate based on the potential to lower costs under the Medicaid program while improving care.
State programs may target particular categories of beneficiaries, selected diagnoses or geographic regions of the
state. The selected state programs will provide one payment for both hospital and physician services provided to
Medicaid patients for certain episodes of inpatient care. For both pilot programs, HHS will determine the
relationship between the programs and restrictions in certain existing laws, including the Civil Monetary Penalty
Law, the Anti-kickback Statute, the Stark Law and the HIPAA privacy, security and transaction standard
requirements. However, the Health Reform Law does not authorize HHS to waive other laws that may impact the
ability of hospitals and other eligible participants to participate in the pilot programs, such as antitrust laws.
Ambulatory Surgery Centers. The Health Reform Law reduces reimbursement for ASCs through a
productivity adjustment to the market basket similar to the productivity adjustment for inpatient and outpatient
hospital services. In addition, CMS has established a quality reporting program for ASCs under which ASCs that
fail to report on required quality measures will receive a 2% reduction in reimbursement beginning with the
calendar year 2014 payment determination.
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