NJ Physician Magazine December 2013

JULY2013 2012 DECEMBER Visit us now online at

www.NJPhysician.org

Happy Holidays

Introducing ACO News - A section devoted to the fastest growing segment in Healthcare Also In This Issue: The Top 10 Health Policy Debates of 2013 in New Jersey New Coalition Draws Attention to Plight of Those With Rare Diseases Accountable Care Organizations Reshape Healthcare Delivery

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Publisher’s Letter Dear Readers, Perhaps the fastest growing segment in healthcare is the formation of ACOs. Some operated by groups of physicians in a similar specialty joining together to reduce operating costs while improving care, others started by hospitals covering multiple specialties to increase reimbursement and others started by corporations to manage the business aspects of practicing medicine. In fact, at least seven different business models have been defined as ACOs. This can be confusing to many physicians. At least 50% of the active practices in New Jersey are examining whether this is the best way to continue operating their business. New Jersey Physician’s mission going forward is to assist you in deciding what is best for you by educating our readers on the benefits and risks associated with the membership of an ACO. This will be a monthly section in our publication and we welcome your insight, opinion and anecdotal information regarding participation in an ACO which we will share with our audience. We will also present some of the top experts in the field of creation and operation of ASOs who will be regularly writing for us and will be able to answer your questions about ACO formation and operation.

What are the top 10 health policy debates of 2013 in New Jersey?

Please join us inside to see if you agree about what issues caught our attention this year.

CMS has approved six new NJ Medicare ACOs. The vast majority were started by hospitals to offer physicians the ability to deliver better integrated, more care coordinated care for patients than any healthcare system is accustomed to.

A bill was passed by the state senate recently that establishes a Physician Loan Redemption Program to address the current and worsening physician shortage in this state by providing support to physicians working in the state for more than 10 years.

Finally, the year is coming to completion, there are just a few days left to get your financial house in order. This is a good time to investigate some tax-saving strategies. Steve Barlotta offers some tips on how it’s not too late to make some moves that will help you save some of your tax burden.

Wishing you a most happy and healthy holiday,

Iris & Michael Goldberg

Published by Montdor Medical Media, LLC

Co-Publisher and Managing Editors Iris and Michael Goldberg

Contributing Writers Iris Goldberg Michael Goldberg Andrew Kitchenman Michael L. Diamond Mark Hagland Riza I. Dagli Kevin M. Lastorino John D. Fanburg Carol Grelecki Lani M. Dornfeld Mark Manigan Debra C. Lienhardt Steve Barlotta Burton Eichler

Layout and Design - Nick Justus

New Jersey Physician is published monthly by Montdor Medical Media, LLC., PO Box 257 Livingston NJ 07039 Tel: 973.994.0068 F ax: 973.994.2063 For Information on Advertising in New Jersey Physician, please contact Iris Goldberg at 973.994.0068 or at igoldberg@NJPhysician.org Send Press Releases and all other information related to this publication to igoldberg@NJPhysician.org Although every precaution is taken to ensure accuracy of published materials, New Jersey Physician cannot be held responsible for opinions expressed or facts supplied by its authors. All rights reserved, Reproduction in whole or in part without written permission is prohibited.

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Contents

To All of Our Healthcare Friends

Happy Holidays

Iris & Michael

Goldberg

CONTENTS

4 12 17

Healthcare NJ ACO News Accountable Care Organization’s Innovative Approach Gets Results

2 New Jersey Physician

19 22 26

Health Law Update Year End Tax Planning Brach Eichler Press Release

Talk to Bollinger about your Professional Liability …

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Healthcare NJ

The List: The Top 10 Health Policy Debates of 2013 in New Jersey Andrew Kitchenman

New Jersey’s role in the launch of the Affordable Care Act remains in the No. 1 spot With key features of the Affordable Care Act going into effect January 1, 2014, the impact of the law was at the center of New Jersey’s health policy debates throughout 2013.

Gov. Chris Christie struck a middle course compared with other Republican governors, opting to participate in a Medicaid expansion that was ardently supported by healthcare advocates, while otherwise taking a hands-off approach to the law.

While public health advocates expressed frustration with the state deciding against actively promoting the federal health insurance marketplace, or exchange, they were pleased with the outcome of other policy debates, including Christie’s decision to back a law intended to avoid overdose deaths from heroin and other drugs.

Not all of these debates were concluded this year, and the state’s role in relation to the ACA promises to remain a hot topic among policymakers and analysts well into the future.

1. New Jersey expands Medicaid When U.S. Supreme Court Justice John Roberts decided that each state would choose for itself whether it would participate in the expansion of Medicaid in 2012, he also opened up a policy debate that lasted until Christie’s announcement to expand coverage to an additional 104,000. Another 130,000 who were already eligible for the program are expected to sign up due to the media attention to the ACA. Along with the coverage expansion, the decision saved the state $227 million over the next six months, since the federal government will now pay 100 percent of the costs for many adults who are already in New Jersey Family Care, the state’s Medicaid program.

2. “Good Samaritan Law” enacted after Christie’s initial veto A bill granting protection from drug possession arrests to drug overdose victims and those who call emergency aid didn’t seem likely to draw support from former federal prosecutor Christie. And when he issued a conditional veto, calling for an 18-month study of the issue, it appeared like it wasn’t going anywhere.

But advocates for the bill, including the families of deceased OD victims, never gave up hope. Their personal appeals, as well as those of rock star Jon Bon Jovi and New Jersey First Lady Mary Pat Christie, for the governor to reconsider the bill ultimately helped sway Christie. The administration worked with Sen. Joseph Vitale (D-Middlesex) on a compromise bill that also includes protections for administering a heroin overdose antidote.

3. No federal-state partnership for ACA marketplace While Christie vetoed legislation to have a state-operated health insurance exchange in 2012, it wasn’t until mid-February that he chose not to have a state-federal partnership. The decision frustrated advocates for expanding healthcare access, since states were seen as playing a key role in advertising and engaging consumers in purchasing insurance through the marketplace.

The decision didn’t end advocacy over the issue, as the New Jersey for Health Care coalition pressed for the state to spend $7.6 million the federal government had given to establish an exchange. While these advocates want the state to spend the money on advertising the marketplace, state officials have other plans for the money and remain in talks with federal officials about how it will be spent.

4. For-profit hospital expansion prompts union concerns Prime Healthcare’s plans to purchase St. Mary’s Hospital in Passaic and Saint Michael’s Medical Center in Newark prompted opposition from the Health Professionals and Allied Employees union that raged through much of the year. This led to some

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intra-labor tussling, when JNESO -- the union for St. Mary’s workers -- reached an agreement with Prime and criticized HPAE officials for getting involved in the sale.

Union and legislative leaders also were concerned with other for-profit hospital operations, including Meadowlands Hospital Medical Center owner MHA LLC’s handling of hospital finances and the refusal of Memorial Hospital of Salem County owner Community Health Systems to negotiate with the union.

5. Medical marijuana’s sluggish rollout For much of 2013, medical marijuana remained unavailable in New Jersey, more than three years after the law allowing pot prescriptions was enacted.

While there were several suspected culprits behind the delays, the combination of towns being unwilling to host marijuana treatment centers and few doctors choosing to register for the program have helped slow its implementation.

However, Gov. Chris Christie -- who opposed the program while running for office -- and the Legislature reached agreement on a law that allows children to receive medical marijuana in an edible form, and for treatment centers to grow more strains of the plant. While the opening of more treatment centers may allow greater access, it appears that Christie has signaled that he will stop any further expansion in eligibility to the program.

6. Safety-net, other hospitals battle over tax New Jersey’s safety-net hospitals are worried about looming cuts to federal funding for charity care as part of ACA, since there remains uncertainty about how many low-income residents will enroll in Medicaid or the insurance marketplace and offset the charity-care cuts. That’s one reason why they support a local hospital tax that would give safety-net hospitals greater federal funding.

But their position is staunchly opposed by hospitals that aren’t in urban areas, which say it would set a precedent for greater taxes on hospitals. The issue wasn’t resolved in December, and the two sides continue to spar over the tax.

7. Extension of individual, small group plans October was a rough month for the new insurance marketplace, beginning with the faltering launch of the website and ending with complaints from individuals and small businesses that their existing insurance plans were being cancelled. This prompted President Barack Obama to ask state insurance commissioners and insurers to extend these expiring plans. While New Jersey Commissioner of Banking and Insurance Kenneth Kobylowski allowed insurers to make the decision, Horizon Blue Cross Blue Shield of New Jersey opted out of the extension.

Policy analysts said ending the current plans will likely make the marketplace stronger by forcing healthy residents who currently have plans to share the costs of the new plans. But Obama’s promise that those who were happy with their plans would be able to keep them will remain unfulfilled for those with canceled plans.

8. Participation in the state Prescription Monitoring Program A growing focus on abuse of prescription drugs caught the attention of policymakers and was highlighted by a State Commission of Investigation report that found some doctors have been involved in criminal schemes to bilk Medicaid and hand out illegal prescriptions.

One potential answer, advocated by First Assistant Attorney General Thomas Calgagni and former Gov. James E. McGreevey, is to have every doctor in the state participate in the New Jersey’s Prescription Monitoring Program, which tracks when every opiate prescription is filled out and sold. This would aid doctors in knowing if a patient has been shopping around for prescriptions and help law enforcement investigate both patients and doctors involved in criminal schemes. But proposals to make participation mandatory are raising concerns among some doctors, who question whether it will be necessary for those doctors who rarely prescribe powerful painkillers.

9. Proposal for mandatory paid sick leave Supporters of mandatory sick leave argue that it will be better for both workers and employers, since it would cut the transmission of infectious illnesses in the workplace. The effort led to Jersey City becoming the first municipality to pass an ordinance mandating the practice.

But business community leaders argue that there is no evidence of a problem and that it will be a costly administrative burden for employers. A bill is advancing in the closing days of this legislative session.

10. Increased state supervision of emergency medical services Professional EMS workers have been pushing for increased state regulation of ambulance squads, including requiring state licensure and criminal background checks of emergency medical technicians and paramedics.

Christie rejected two bills on the issue, taking the side of volunteers who see the legislation as part of a broader effort to make it more difficult for them to continue to serve.

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N.J. lets insurers renew canceled policies Michael L. Diamond

Price hikes are likely in Obamacare fix.

President Barack Obama announced Thursday, Nov. 14, 2013, that canceled insurance plans would be renewed for a year.

The Affordable Care Act has been beset by problems with the HealthCare.gov website and policy cancellations for millions of people.

Health insurance companies can decide for themselves whether to renew the policies of thousands of consumers who previously were told the policies didn't meet federal standards under Obamacare and would be canceled, New Jersey regulators said late Tuesday.

The decision by the state Banking and Insurance Commissioner Ken Kobylowski probably will change little for consumers who bought policies on the individual insurance market, mainly because insurers still would need to make so many changes to the policies to comply with the law that the price would rise substantially.

But it may provide relief — at least temporarily — to small-business owners.

"Given the federal requirements to modify current products, we are assessing the impact to our members," Horizon Blue Cross Blue Shield of New Jersey, the state's biggest insurer, said in a statement. "Our initial sense is that this decision may still provide some relief for our small employer customers."

The much-anticipated ruling affects 800,000 New Jersey residents who are covered through policies bought either on the individual market or small-employer market that is dominated by Newark, N.J.-based Horizon. It's a group that had been directed to the federal government's website, HealthCare.gov, to shop for a new policy.

The decision came nearly two weeks after President Barack Obama tried to douse a political fire caused by comments he made asserting that consumers who liked their health insurance could keep it — only to see some policyholders this fall receive notices from their insurance carriers that their policies didn't meet requirements set by the Affordable Care Act and wouldn't be renewed.

Higher prices The notices caused an outrage, mainly because the former plans might not have been very comprehensive, but were less expensive than the new products — sometimes substantially so. Brokers said their small-employer clients were getting notices from Horizon that premiums were increasing anywhere from 25% to 90%.

“Given the federal requirements to modify current products, we are assessing the impact to our members. Our initial sense is that this decision may still provide some relief for our small employer customers.”

— Horizon Blue Cross Blue Shield of New Jersey The problem was only exacerbated when the federal government's health insurance exchange website fizzled out of the gate, preventing many consumers from seeing their options.

Obama left it to state insurance regulators to decide whether to allow companies to sell the former policies at least for another year. The decision left insurance industry experts skeptical.

The reasons: • Logistics. Insurers have spent as many as three years rewriting their policies to ensure they cover the services the law requires. And those policies were approved by the state. It was unlikely that insurers could dust off the former policies, price them again, get them approved by regulators and bring them back to the market — with only six weeks left in the year.

"The administrative challenges associated with implementing the federal government announcement and (Tuesday's) state announcement are significant," said Wardell Sanders, president of the New Jersey Association of Health Plans, which represents health insurers.

• Economics. An insurance exchange only works if the young and healthy are grouped with the older and sicker, spreading out the risk. It was likely, experts said, that the young and healthy bought the less comprehensive, cheaper policies. If they were allowed to do that again, it would leave only the older and sicker buying policies in the exchange. Premiums could soar.

It forced Kobylowski to be the bearer of bad news. Even when pledging to work with insurers if the companies wanted, "the fact is that many plans cannot be renewed in their current form," he said.

Underlying all of it is a nasty political fight. Gov. Chris Christie, a Republican, announced in 2012 that New Jersey would not create a state-run exchange because, he said, he couldn't get a straight answer on how much it would cost. That left New Jersey to use the federal exchange.

Christie's comments in recent days about the law have been more pointed — he called it a "disaster" and a "train wreck" Monday during his monthly "Ask the Governor" radio show.

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Insurance companies said they would review Kobylowski's ruling.

But, Horizon said in its statement, that allowing individuals to renew their old policies wasn't a viable option; the new plans would cost substantially more anyway. Only small businesses may see relief.

Legislature Takes Another Look at Database of Health-Insurance Claims Andrew Kitchenman

Industry lobbyist questions bill’s benefits while advocates tout transparency, efficiency Assembly Health and Senior Services Committee Chairman Herb Conaway Jr. (D-Burlington) is interested in creating an insurance claims database.

Six months after state officials decided against building a database that would include a record of all health insurance claims, the Legislature is gearing up to explore the issue again.

Supporters contend that it is needed to make healthcare more transparent and efficient by pulling together information about how much each health service costs, enabling policymakers to find ways to improve the quality of healthcare and providing useful information for consumers who are picking up more and more of the tab for medical costs.

Opponents contend that the usefulness of such databases in states where they exist has not been proven. And they say it would create unnecessary costs for both state government and insurers – in fact, New Jersey officials cited projected operating costs when they decided against pursuing federal funds to help establish a database.

The issue of differences between prices charged by healthcare providers was highlighted earlier this year when the Centers for Medicare and Medicaid Services released a database of hospital charges.

Private claim data also is being gathered by private groups like FAIR Health.

Assembly Health and Senior Services Committee Chairman Herb Conaway Jr. (D-Burlington) said he is interested in including an all-payer claims database in a bill that would also address healthcare quality and efficiency.

While Conaway said he isn’t ready to introduce such sweeping legislation, he recently held a hearing on a more limited bill, A-1834, that would require insurers to report every claim they handle. The committee discussed the bill on December 12, but didn’t take action.

Conaway said the database would help determine how much different healthcare services should cost.

“If you don’t measure and analyze (claims), one thing I do know is that we will never have a good understanding of what costs ought to be,” said Conaway, who is a primary care doctor.

Conaway said the claims information could also be used for targeted anti-smoking campaigns or other public health efforts.

Wardell Sanders, president of the New Jersey Association of Health Plans, an insurance industry trade group, had a number of objections to Conaway’s plan.

He said health insurers already use claims data in a wide variety of ways, such as analyzing inappropriate prescribing patterns for opiates. Sanders said the 13 states with all-payer claims databases have yet to produce evidence that the information helps control healthcare costs.

“The creation of these databases, the running of these databases, costs money,” Sanders said, adding that it could cost the state $1 million annually, with additional costs for each insurer.

Sanders pointed out that the Affordable Care Act requires insurers to pay 80 percent to 85 percent of their premiums in claims. The administrative costs of gathering and submitting information to a claims database would cut into their remaining premium revenue, he said.

Sanders also expressed concern that states have been requiring more and more data to be included in the databases, without having plans for how to use the extra information. Insurers would like to see all states have the same standards for the information they require, Sanders said.

“You really need to figure out how can we use this, how do we plan to use that, and then execute that plan,” Sanders said. He also raised a concern that some states have sought information from insurers that the insurers aren’t even tracking, such as geographic and racial demographics of healthcare providers.

Sanders also raised a more technical concern about how the bill was written, describing it as being “tacked on” to current state regulations that require insurers to pay claims promptly.

Conaway said doctors are willing to address insurers’ concerns about providers who are “outliers” in charging unusually high amounts. He said the database would help in gathering that information.

The New Jersey Hospital Association supports the database bill.

December 2013

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Christie Opposes Import of Medical Marijuana, But Democrats Still Push Bill Andrew Kitchenman

Measure would allow patients to acquire medicinal pot from sources in other states Assemblywoman Linda Stender (D-Middlesex, Somerset and Union).

Gov. Chris Christie has expressed opposition to a bill allowing New Jersey patients to bring in medical marijuana from other states, but that hasn’t stopped Democratic legislators from pressing forward with the measure.

Assemblywoman Linda Stender (D-Middlesex, Somerset and Union) emphasized yesterday that the bill, A-4537/S-3108, wouldn’t expand eligibility for use of the substance, which is the grounds that Christie gave earlier this month for rejecting the bill.

Christie has said he is “done” expanding the medical marijuana program, alleging that supporters are seeking to ultimately legalize marijuana in New Jersey.

As recently as September, Christie signed a measure that expanded the number of plant strains treatment centers can grow and allowed children to take an ingestible form of medical marijuana.

But he also vetoed an earlier version of the bill that would have reduced the number of doctors that must approve use of the substance by juvenile patients. And he appears unwilling to go further in shoring up a program that he opposes but has been forced to implement.

Access to medical marijuana continues to be problematic nearly four years after former Gov. Jon S. Corzine signed the New Jersey Compassionate Use Medical Marijuana Act into law the day before Christie took office.

While Greenleaf Compassion Center became the first treatment center in the state when it opened in Montclair a year ago, it was closed for much of this year.

However, Compassionate Care Foundation has now opened a center in Egg Harbor and Compassion Care Center of America has begun registering patients at a facility in Woodbridge.

Stender contended that the pending legislation doesn’t expand access, but just establishes a reciprocal relationship with other states that allows New Jerseyans to get medical marijuana in other states and for approved patients from other states to get the substance in New Jersey.

“The bill in front of you does nothing to expand eligibility as to who can be in this program,” Stender told the Assembly Health and Senior Services Committee during a hearing on the bill yesterday.

Stender has been a proponent of expanding access to the program for children, citing the example of 2-year-old Vivian Wilson, whose family has said a strain of marijuana dispensed in Colorado could benefit their daughter. Vivian has Dravet syndrome, a condition that causes seizures. Her family has run into challenges finding edible marijuana in the state that could benefit her.

“Our program is not functioning properly – it has been very slow, it’s new territory, there are challenges with it,” Stender said. “But as a result, that child (Wilson) and other children are not getting the medicine they need.”

Stender said a 15-month-old baby recently died from complications from Dravet syndrome while waiting for approval for medical marijuana. While Stender said she doesn’t know whether this baby would have benefited from an out-of-state marijuana strain, the situation heightened the urgency to take action.

“There are real serious issues for people who need this medicine and this will help them to get it,” Stender said.

She added that any family with a child approved for medical marijuana should be able to bring it from another state “and not be concerned that as you get off the airplane, having brought medical marijuana in from another jurisdiction, that you are going to be arrested and have your child taken away from you.”

The state chapters of the National Association of Social Workers and the Drug Policy Alliance support the bill.

The Assembly Health and Senior Services Committee released the bill on a party-line 7-4 vote. The Senate version of the bill has been referred to the Senate Health, Human Services and Senior Citizens Committee.

New Coalition Draws Attention to Plight of Those with Rare Diseases Andrew Kitchenman

Attitudes, costs, finding effective treatments and tracking down specialists among obstacles Julie Raskin, among those involved in creation of the NJ Rare coalition, speaks at health policy forum focused on rare diseases.

New Jersey pharmaceutical companies, healthcare providers and patient advocates are working together – in a newly-formed group called NJ Rare -- to solve the vexing challenge of finding treatments for diseases that affect relatively few people and therefore are the focus of less research.

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People with rare diseases face a wide range of challenges, including having few in-network doctors who specialize in treating their conditions; waiting for medications approved to treat their conditions; expenses for both treatments and existing drugs, and even waiting years to even receive a diagnosis. ) Julie Raskin has been active in the effort to launch NJ Rare, which is a project of the nonprofit National Organization for Rare Disorders. Speaking yesterday at a health policy forum focused on rare diseases, she said the the group should expand its reach beyond patient advocacy groups to include pharmaceutical companies, healthcare providers and insurers.

NJ Rare is advocating for increased attention to rare diseases among health policymakers.

“We need some sort of hub where we can all work together,” said Raskin, whose son Ben was born with a congenital hyperinsulinism, a rare disorder that leads to severe and prolonged low blood-sugar levels. Her son’s condition led her to become executive director of Congenital Hyperinsulinism International, which advocates for patients with the disorder.

Dr. Swati Sathe, director of inpatient neurology at St. Joseph’s Regional Medical Center in Paterson, proposed a series of steps to encourage treatment of rare diseases, including establishing more centers of excellence focused on single disorders and, when that’s not practical, to address a group of disorders that affect the same systems of the body.

Other steps would include discouraging broad “panel” testing that tests all of a person’s chromosomes, which can lead to unnecessary expenses when a patient’s family history can point to a limited number of chromosomes that need to be tested.

A third step would be working to increase awareness of rare diseases in both the general population and among healthcare providers, including providing more education on such disorders in medical schools.

Raskin noted that while there are many rare diseases – roughly 7,000 diseases affect fewer than 200,000 Americans – the patients share certain experiences, including shortages of specialists familiar with their ailment and trying to find successful treatments.

Taking part in a panel discussion at the forum, which was hosted by the pharmaceutical trade association the HealthCare Institute of New Jersey at the Forsgate Country Club in Monroe Township in Middlesex County, Raskin cited some potential benefits of the 2010 Affordable Care Act for patients with rare diseases, including the law’s prohibition on discriminating against people with pre-existing medical conditions.

But she said much remains to be done to help people with rare ailments, including finding ways for them to travel to medical “centers of excellence” that treat their specific disease.

Other panelists noted that most health plans available through the new health insurance marketplace in New Jersey have limited provider networks, which could make it more difficult to find providers who specialize in a specific disease – for example, the specialist might be out-of-network and even located in another state.

The cost of treatments poses another challenge For example, patients can find it difficult to get their insurance to cover medications that doctors use to treat rare diseases but which haven’t been approved by the Food and Drug Administration for that specific use.

In addition, Raskin noted that while the insurance marketplace provides subsidies to buy coverage for families with incomes up to $94,200, a family of four at the New Jersey average income of roughly $99,000 could struggle to pay the combination of insurance premiums – which could be more than $2,000 per month for a family plan that includes a wider network of providers -- and out-of-pocket expenses, which are capped at $12,700 per year for a family.

Dr. Swati Sathe, director of inpatient neurology at St. Joseph’s Regional Medical Center in Paterson, said it’s a challenge for patients with rare disorders to even get a diagnosis. She said young doctors are less likely than older doctors to order tests to determine whether a patient has a rare disease. That’s because there’s been a change in how doctors are trained, with an increased focus on diagnosing illnesses can be treated with existing medication, while many rare diseases cannot be addressed with available treatments, she said.

“That’s just human nature – you want to make a diagnosis that you can do something about,” Sathe said, adding that testing for rare diseases can be expensive. She also said some doctors fear lawsuits if test results contradict an earlier diagnosis.

However, Sathe said, the skills applied when diagnosing rare diseases can have wider applications. “If you can diagnosis rare disorders it will make your life diagnosing more common disorders much easier,” she said.

She added that patients with rare diseases can suffer for decades without ever knowing the cause of their condition. She cited the example of one of her patients, a 78-year-oldwho doggedly pursued a diagnosis after 26 years of physical decline. It turned out that the patient had Pompe disease, a rare disorder that causes progressive muscle weakness. The patient decided against receiving treatment, content to know her diagnosis. “Most of these disorders are extremely underdiagnosed,” said Sathe.

Dr. Tanya Pagan Raggio-Ashley, an official with the regional office of the U.S. Department of Health and Human Services, highlighted the potential benefits of the ACA in combating rare diseases, including making healthcare more accessible through Medicaid expansion.

The keynote speaker at the event was John Crowley, chairman and CEO of Amicus Therapeutics, a biopharmaceutical company December 2013

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focused on rare genetic diseases.

Crowley has two children with Pompe disease and helped lead the effort that successfully developed treatments for the disorder. While he said the work on Pompe’s disease is an example of the successes that can occur through research on rare diseases, it was an incomplete success since the treatment isn’t a cure.

“Rarely do we develop a medicine, if ever, where’s it’s that silver bullet, that cure where you can kinda put up the banner ‘mission accomplished’ and go home and pat each other on the back,” Crowley said.

But Crowley also noted that research in rare diseases can have large implications, citing the example of statins, a type of cholesterol medication that was originally developed to treat a rare disease, hypercholesterolemia.

“By understanding genetic medicine and rare diseases, we will open the gateway to treatments and cures for much more prevalent, non-rare disorders,” Crowley said.

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10 New Jersey Physician

ACO NEWS

Explainer: Accountable Care Organizations Reshape Healthcare Delivery Andrew Kitchenman

Advocates say patients benefit from emphasis on cost-cutting and efficiency Accountable care organizations (ACOs) have been a rising force in how healthcare is organized and delivered, both in New Jersey and nationally. They seek to reduce the growth in healthcare costs while improving the quality of care that patients receive.

They are similar in some ways to health maintenance organizations (HMOs), the major health insurance trend of the 1980s and 1990s, which ultimately proved unpopular – but there are significant differences.

Bringing providers together: ACOs are groups of providers who agree to be held accountable for the cost and quality of care they provide to a group of patients. They generally do this by having a portion of their payments depend on how they perform. For example, in Medicare Shared Savings ACOs, providers are paid more if they are able to keep costs down while meeting agreed-upon standards for providing quality care.

How this is done: The central feature of ACOs is a focus on greater coordination of care. ACOs generally employ care coordinators, such as a registered nurse, who is responsible for ensuring that patients receive appropriate care from a range of specialists. They do this both by helping patients to schedule appointments and by following up with patients to make sure that they are taking the right medications. This can be particularly important for patients with a high-risk of readmission to hospitals, such as patients with diabetes who have difficulty managing their blood-sugar levels.

Cost-cutting incentives: While there are variations in how providers are compensated in ACOs, in the Medicare Shared Savings model , for example, doctors, hospitals and other providers receive a portion of their payments through a fee-forservice model and a portion based on whether they achieve savings compared with their projected costs.

After the first three years, providers face penalties if the care they provide is more expensive than projected. The government is using a variety of measurements to ensure that providers don’t achieve the savings by reducing the quality of care.

Coordinating and communicating: The focus on care coordination is intended to address one of the chief problems with the U.S. healthcare system: the inefficiencies caused by poor communication between various providers and patients, leading to unnecessary tests and hospital stays, as well as an inability in some cases to manage chronic conditions.

The range of ACO programs: Both private and government insurance programs are contracting with providers to form ACOs. Medicare ACO programs were included in the 2010 Affordable Care Act, in one of the provisions of the law that focused on how healthcare is delivered rather than on expanding access to health insurance.

Federal officials have been authorizing a growing number of Medicare ACOs in the state, including a recent agreement between Barnabas Health, which is the state’s largest healthcare system, and Horizon Blue Cross Blue Shield of New Jersey, its largest insurer. Private insurers also have been working to increase the number of providers in ACOs. What about New Jersey? New Jersey plans plans to launch a Medicaid ACO pilot program next year. It will involve a high proportion of all providers in geographic areas with large numbers of low-income residents. Healthcare experts, including Dr. Jeffrey Brenner of Camden, have said the state program could become a national model if it’s successful.

Similarities and differences with HMOs:Health maintenance organizations were the first great experiment with shifting from the healthcare system’s traditional reliance on paying fees for each service that providers give.

In an HMO, providers agreed to receive payments for each patient they served rather than for the services they provided, which was known as capitation. While ACOs also include capitation, there are some major differences with HMOs. Unlike HMOs, ACOs do not require patients to stay within the ACO’s network of providers. In addition, advances have been made in how to measure the quality of care that patients receive, which in turn have been incorporated in ACO payment systems.

What’s next? The portion of New Jerseyans whose healthcare providers are in ACOs has been rising steadily. Nationally, 14 percent of patients Americans were served by ACOs as of February, according to management consulting firm Oliver Wyman.

The focus on better care coordination has also increased pressure on doctors to join their practices with larger groups or hospital systems. That change is rapidly remaking how many New Jerseyans receive healthcare.

CMS approves six new N.J. Medicare ACOs From NJBIZ The Centers for Medicare and Medicaid Services announced Thursday 106 new Medicare Accountable Care Organizations have been formed and approved by the government. In New Jersey, six were approved across the state.

Accountable care organizations are groups of providers working together to streamline care coordination for populations of patients while making care better and more affordable. The Medicare demonstration ACOs allow hospitals, physicians and December 2013

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other providers to share savings accrued by working together.

Dr. Adam Jarrett, chief medical officer at Holy Name Medical Center in Teaneck, is now the executive director of the newly approved HNMC Hospital/Physician ACO. He said the hospital's ACO group is partnered with 150 staff physicians to implement the ACO. "We think this is a good experiment that we wanted to be involved with, with Medicare, so we could understand how the ACO world works," Jarrett said.

He added that he's excited because for the first time, providers will be able to see the services provided by other health care providers for Medicare patients. Jarrett added that, while Holy Name has been able to work on keeping costs down within the walls of the building, the program allows collaborative efforts to keep costs down in the community.

Barnabas Health added a second Medicare ACO to its stable. The first was centered around hospitals and physicians in the northern part of the state; the ACO approved today is based around the company's Central Jersey providers plus CentraState Healthcare System's facilities and providers.

Also in Central Jersey, Meridian was approved to begin its ACO. Dr. Richard Scott, the executive in charge of implementing the program for the system, said the approval helps Meridian move forward with the recently announced Richard Hader Institute for Clinical Integration.

"The ACO is a big piece of that, it really continues the theme of delivering better integrated, more coordinated care for patients than certainly any health care system was used to," Scott said. "It certainly fits in with Meridian's overall strategy."

Scott said more than 500 clinicians affiliated with Meridian have signed on to participate in the ACO, including staff at each of the hospitals and at each provider facility in the system.

Scott said he's looking forward to rolling out increased IT and population management tools to the affiliated physicians through the ACO, so they have better information on patient risks and patient satisfaction.

In South Jersey, the Summit Health-Virtua ACO was approved Thursday, as well as the Atlanticare Health Solutions group.

Steven Blumberg, an senior vice president of AtlantiCare Health Solutions, said the addition of the CMS ACO to the system enhances the coordinated care programs already available through the system's employee program and Medicare Advantage.

"Being included in the Medicare shared savings program is a big leap forward for us," Blumberg said, adding that the model is gaining steam as more evidence is found that ACOs demonstrate the kind of quality improvements and cost savings suggested when originally proposed.

The sixth ACO, Accountable Care Network of New Jersey LLC, is one of three networks established by Walgreens, the national retail pharmacy chain. Walgreens established ACOs in Florida and Texas in addition to New Jersey. A call to Walgreens for comment was not returned before publication.

Four of the six ACOs contracted with QualCare Inc. to help with the application process. QualCare is in the process of spinning off the branch of the company that specializes in ACO applications into a separate company called Health-Lynx. AtlantiCare and Walgreens did not use QualCare.

In addition to the Barnabas North ACO, Atlantic Health, Hackensack University Medical Center and Optimus Healthcare Partners LLC had accountable care organizations approved by CMS in 2012.

ACO Development in New Jersey: One CMO's Learnings from First-Stage Efforts

by Mark Hagland The West Orange-based Barnabas Health is the largest integrated health system in New Jersey, encompassing seven acutecare hospitals, two children’s hospitals, a freestanding behavioral health center, ambulatory care centers, geriatric centers, the state’s largest behavioral health network, and comprehensive homecare and hospice programs. In May, it signed a definitive agreement for Jersey City Medical Center in Jersey City to become a member of the health system, with completion of the transaction scheduled for this fall.

Barnabas Health has created two accountable care organizations (ACOs) and three ACO programs. Barnabas Health ACO North encompasses three acute-care hospitals and 400 physician partners, and currently serves about 10,000 Medicare beneficiary lives. The Central New Jersey ACO consists of three Barnabas Health hospitals, as well as the participation of CentraState medical Center, a non-Barnabas hospital. That ACO encompasses 200 doctors and serves about 20,000 Medicare lives. Both Barnabas Health ACO North and Central New Jersey ACO are Medicare Shared Savings Program (MSSP) ACOs (with the program being sponsored by the federal Centers for Medicare & Medicaid Services, or CMS), with Barnabas Health ACO North joining the MSSP in July 2012 and Central New Jersey ACO joining in January 2013. Barnabas Health also recently announced a relationship with Horizon Blue Cross and Blue Shield of New Jersey to create Medicare Advantage program together.

What’s more, Barnabas Health ACO North’s collaboration in NJ-HITEC, the state’s regional extension center and a statewide

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health information exchange (HIE), has been so successful that it was cited by National Coordinator for Health IT Farzad Mostashari, M.D., in a statement he gave on July 17 to the U.S. Senate Finance Committee. The Piscataway, N.J.-based IGI Health has been providing software platforms for both the ACO and the REC. Recently, Anthony Slonim, M.D., vice president and chief medical officer at Barnabas Health, spoke with HCI Editor-in-Chief Mark Hagland regarding all these initiatives and the broad strategies and the implications for U.S. healthcare of these types of collaborations. Below are excerpts from that interview.

I understand that you’ve been exceptionally involved in IT implementations and initiatives as a CMO. Yes; I’ve done 16 EHR [electronic health record] implementations in my career: eight each with Cerner and Epic [the Kansas City-based Cerner Corporation and the Verona, Wis.-based Epic Systems Corporation].

I did the design-and-build for Cerner for Children’s Hospital Medical Center, Washington, D.C., when I was there [2003-2005, 18-month implementation]; I then supervised the design-and-build at Carilion Clinic in Roanoke, doing an eight-hospital install using Epic, when I was CQO [chief quality officer] there in 2007-2009. And here, we’ve been on a journey for about two years, and I’ve been here about two-and-a-half years altogether; and we’ve just implemented our last ED. So we’re now live in six acute-care hospitals and a behavioral health center—EMR [electronic medical record], CPOE [computerized physician order entry], and EDs [emergency departments], using Cerner. And we’re also on a journey to use Cerner ambulatory among our employed physician practices. And at Barnabas Health, the CIO actually reports to me.

How many people does your CIO have in IT? The IT division is system-wide, and we have over 200 employees. It’s the one department that’s system-wide, across all seven hospitals and the behavioral hospital.

What have been the biggest strategic learnings overall, around ACO development, to date?

You experience several key learnings as you start up an ACO. And I’ve often been quoted as saying, when you’ve seen one ACO, you’ve seen one ACO; they’re all structurally different. In the first year, we spent time hiring people, setting up committee structures, creating data linkages, and to make sure we had the appropriate structure for analytics. And ultimately, this leads into the IT discussion, because we decided that rather than building new infrastructures, we would find partners. So we decided to work with IGI to help us with connectivity, analytics, and other aspects. It’s a consulting company that works with us in depth, to help us advance our infrastructure, connectivity, and data warehouse structure. They’re a partner with us, as are NJ-HITEC, the HIE, and Advantis International, the IT staffing company, which helps to facilitate data analytics and integrity for multiple ACOs. Once you get up and running, what are the biggest challenges in ACO operations in the first year or two?

Putting the infrastructure together, making sure we had seamless connectivity and communications, and making sure we had a portal infrastructure to make sure we could allow the providers to communicate with one another. And We had a major deliverable for CMS, to make sure we were submitting our performance reports on time.

Have you had any challenges around supporting quality measure reporting?

There are 33 quality measures in the MSSP program. They fall into three major buckets: clinical, patient satisfaction, and utilization measures; and CMS puts them into four different domains. And those 33 quality measures are objective measures of quality. They tend to focus as diabetes, CAD, and CHF. And the data bundles that CMS prescribes are actually pretty clear and well-represented measures of those disease states. They’re tried, true and tested measures.

Have there been any biggest challenges working with CMS? I hesitate to be too critical of CMS for a variety of reasons, and one is that everybody in the program is learning, which is good.

It’s all about everybody learning together; and CMS hasn’t actually done a program like this before. And they’re bringing people in from around the country, and it’s about learning, not criticisms.

What have the main strategic IT challenges been?

Well, I think the IT challenges are made more difficult if you go about building the IT infrastructure yourself. We decided we would partner with a consulting team to get the show up and running. While we were focused on getting the ACO put together, they were focused on putting together the infrastructure and analytics elements.

What are other ACO leaders saying to you, and what are you saying to them, at this stage?

I was actually interviewed as part of a group of five ACO leaders, and there were amazing similarities. We all recognize how important data is to advancing the quality of care. And so ensuring that your IT infrastructures and analytics are as robust as possible, is incredibly important, because you need to be able to improve the care that those measures represent.

Do you think some of the trade press coverage has given an impression that is darker than the reality?

The coverage is valuable, because we’re all learning together. And because of that, you get disparate information, right? I try to be as concrete and clear as possible. And no one’s ever done this before. If healthcare had already been fixed, and it was December 2013

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running like a smooth engine, we wouldn’t even be dealing with these challenges. But we are dealing with them, because healthcare is largely inefficient, and we have the opportunity to improve value through improving care quality at the same or lower costs.

What do you see happening for your own two ACOs and ACOs across the country, in the next two years?

We’re all going to get a lot better. We have never as an industry had our hands around data that rates the performance on specific measures outside the hospital. This is revolutionary. And if you don’t have the data, you can’t get your arms around that challenge. And we’re getting our arms around the data. So where will we be? And critics have suggested that ACOs will be gone in two years when the program is retired. But the value proposition is here to say. We have to figure out how to get rid of the estimated one-third of the cost of healthcare that is wasteful. And so the conversation will persist long after the term “ACO” is gone.

I got a call from someone not long ago who’s a graduate student and who said to me, “Dr. Slonim, I’ve decided that my career in healthcare is in ACOs.” And I said, “Well, you may have a very short career, but on the other hand, if you focus on how we improve quality, improve patient satisfaction, and lower costs, you’ll have a very long career.”

And to the extent that CMS is driving us to think about these issues, via the ACA [Affordable Care Act] legislation—to the extent that healthcare reform is driving us to think creatively about solutions and to be able to innovate—that’s good for healthcare. And while the CMS MSSP program is just one program, we now have private payers, like Horizon, coming to us, to do the same thing. And it won’t be long before the states, through Medicaid, and the health insurance exchanges, come to us as well. And they’ll continually up the ante in terms of the deliverables. But CMS started the conversation; and congratulations to them to advance the conversation on a national level, and we all have to continue it.

And even at the local, Region 2, level of CMS, I give great credit to our partners. And I’ve been to the White House. And I think people are continuing to reach out to us.

And this morning, we just kicked off our optimization initiative, to take a clinical lens to how the information system works and meets the needs of providers. And rather than look at this through an informatics lens, I want to look at this through a clinical lens.

Friendly, Compassionate Staff to Serve the Urban Patient The Smith Center for Infectious Diseases and Urban Health was developed to address infectious diseases in the inner city.

This non-profit center, which is initially focusing on HIV, recognizes that inner city patients face many unique challenges in their daily lives. These challenges interfere with treatment of infectious diseases and foster an environment where infectious diseases are easily spread.

When you treat a person with HIV, you greatly reduce the chances of transmission and treat the whole community. In the past 10 years there have been incredible advances in HIV treatment. We at the Smith Center believe that by using novel approaches we can rid New Jersey of HIV. We have designed programs to incentivize patients to continue their medications. We have created a personal atmosphere, where each patient is known by her or his first name. We work with our patients to ensure that we are providing the best service possible.

Dr. Stephen Smith - named a Top Doctor of New Jersey by Castle Connolly 310 Central Avenue, Suite # 307 • East Orange, NJ 07018 Phone: 973-809-4450 Fax: 973-395-4120 • www.smithcenternj.org

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Healthcare NJ

Accountable Care Organization's Innovative Approach Gets Results Andrew Kitchenman Hackensack ACO is first in NJ to gain accreditation for taking steps to cut costs while still improving quality of care Accountable care organizations could be a vehicle for reducing the growth in healthcare costs while improving the quality of care, so the early success of a northern New Jersey ACO in achieving those goals is an encouraging sign.

HackensackAlliance Accountable Care Organization recently became the first such organization in the state to receive accreditation from the National Committee for Quality Assurance, the only national group that accredits ACOs. The Alliance estimates that it saved roughly $10 million in treating 12,000 Medicare patients between April 2012 and April 2013.

The Alliance says it did that while also boosting the the quality of care by employing such techniques as providing some patients with tablet computers that remind them to take their medications.

ACOs are groups of healthcare providers that agree to be held accountable for the cost and quality of care they provide, generally by agreeing to have a portion of their payments depend on their performance.

HackensackAlliance was named a Medicare Shared Savings ACO, a program launched under the 2010 Affordable Care Act in which providers are paid more by the federal Centers for Medicare and Medicaid Services if they are able to keep costs down while meeting agreed-upon standards for providing quality care.

Dr. Morey Menacker, the ACO’s president and CEO. believes the accreditation demonstrates that HackensackAlliance is upholding its commitment to more coordinated care. He said other organizations have claimed ACO status without backing that up with results.

“The problem is that anyone can call themselves an ACO,” Menacker said. “Whether or not they’re doing anything differently is basically determined by A, the data they can supply, or B, the recognition that they get.”

NCQA is a Washington, D.C.,-based nonprofit that accredits both healthcare providers and insurance plans. It bases its ACO accreditation standards on an organization’s ability to achieve three goals: lower costs, high-quality care and positive patient experiences.

Menacker said HackensackAlliance, which is the seventh ACO in the country to be accredited by NCQA, sought accreditation because it’s a way of validating the work it has been doing.

“It’s not just an application that you fill out, it’s also providing evidence that the policies and procedures exist and are being utilized,” said Menacker, who has an internal medicine practice in Paramus.

Doctors affiliated with Hackensack University Medical Center formed the alliance. It started with only 40 doctors in order to ensure that each was fully committed to such changes as using technology to increase communication with other providers, Menacker said.

“When we decided to create our organization it was intentional that we started with a small number of physicians, because we wanted doctors who understood that changes needed to be added,” he said.: “This is a start in the ability of physicians to be able to manage patients on a day-to-day basis rather than on a intermittent-visit basis.”

The Alliance has since then been carefully adding doctors in reaching the current number of roughly 100 members, Menacker said.

“This isn’t a group that just getting together so that we can have drinks on Friday nights,” he said.

Registered nurse Noreen Hartnett, who serves as a care coordinator for the ACO, sees the organization as a way of bringing Hackensack University Medical Center’s standards out into the community, both in the offices of local providers and in patients’ homes.

“We’re trying to empower the patient to take better care of themselves,” particularly those with chronic conditions, Hartnett said. This includes teaching patients about how to eat well, how to monitor their symptoms, and how to reach out to care coordinators before a problem becomes a crisis.

“They know to call me first,” Hartnett said, “so I’m their little lifeline before they’re admitted and oftentimes we can fix” problems before an emergency-room trip.

An example of the new tools that the ACO is using is the 10 tablet computers that it has been providing to certain patients who frequently use emergency rooms due to their difficulty in managing chronic conditions.

Hartnett gives the tablet computers to patients who are interested in using them and who are both alert enough to use the tablets and have the dexterity to handle them. They receive notices through a web-based application about when to take their medications, eat their meals and monitor their weight, blood pressure and blood sugar levels. If a patient doesn’t log in that December 2013

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they’ve taken medication, or if a test comes back with troubling results, a notice is sent directly to Harnett’s cell phone.

She pointed to the case of a patient, 86-year-old Louis Ferreira of Fair Lawn, who has congestive heart failure and gained seven pounds in two days – a sure sign that he was retaining fluid. It turned out that he had eaten a meal at a family gathering that contained a higher level of salt than was appropriate, leading to the fluid retention that is a chronic problem for patients with congestive heart failure. Hartnett then was able to adjust his medication levels.

“In the past, he would have gone to the emergency room because he was so short of breath, but we were able to catch it before he became uncomfortable -- we saved an admission” to the hospital, Hartnett said.

Ferreira said in a phone interview that he was grateful for the tablet, which provides hourly notices about which medication he should take.

“When the alarm goes off, you know your medicine is due,” said Ferreira, a retired bus driver.

Prior to receiving the device, “my wife was having a problem with (tracking medication), I was having a problem with it,” Ferreira said. “It’s the best thing we ever did – having this tablet.”

Ferreira said every patient in his position should have a similar device.

“I don’t think the older people should go without it,” he said.

Hartnett cited another example of a patient who took a trip to Hawaii and brought their tablet computer– allowing the care coordinator to track the patient’s symptoms (which were fine) throughout the trip.

HackensackAlliance’s progress is receiving notice elsewhere in the state.

Jeff Brown, executive director of the Affiliated Accountable Care Organizations, credited the ACO with seeking the accreditation, since it requires collecting data covering a wide variety of measures related to both clinical quality and cost. The AACO is an initiative of the nonprofit New Jersey Health Care Quality Institute. It aims to help develop ACOs to treat Medicaid patients.

Brown, who recently became the AACO executive director, said these ACOs could look to HackensackAlliance for inspiration.

He added that its affiliation with Hackensack University Medical Center is a strength for the Alliance.

“Hopefully other organizations can learn from Hackensack – and follow in their footsteps,” Brown said.

He added that he was impressed with the use of tablet computers to aid patients.

“That’s an example of an intervention that could be effective and it’s an intervention of how technology and data are allowing us to expand the things we could do and give a level of accountability and help to needier patients we couldn’t have done before,” Brown said.

NCQA Assistant Director Catherine Leape, who oversees accreditation programs for the organization, said the process demonstrates to both public and private payers, as well as employer groups, that an organization is meeting the standards set by an outside organization for improving health outcomes, reducing costs and improving the patient experience.

HackensackAlliance achieved the first of three levels of accreditation. This status will last two years, at which time it plans to apply for a higher-level accreditation. The different levels reflect the amount of evidence that an organization has compiled that show that it is meeting its goals.

“It definitely sets a high bar and it is the gold standard for demonstrating the capabilities of the ACO,” Leape said.

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HEALTH LAW UPDATE

Health Law Update

FEDERAL UPDATE

OIG Issues Strategic Plan for Fiscal Years 2014–2018

The U.S. Department of Health & Human Services, Office of Inspector General (OIG) recently released its Strategic Plan for Fiscal Years 2014 through 2018. The plan focuses on four goals: (1) fight fraud, waste and abuse, (2) promote quality, safety and value, (3) secure the future, and (4) advance excellence and innovation. To fight fraud, waste and abuse, OIG plans to build on existing enforcement models such as the Medicare Fraud Strike Force teams, refine its protocols for self-disclosure of wrongdoing, and continue to work through the Health Care Fraud and Abuse Control Program to identify and recover improper payments. To promote quality, safety and value, OIG will expand its portfolio of work on quality of care, particularly in nursing facilities and home- and community-based settings, and continue to prioritize fraud investigations that involve public safety. To secure the future, OIG will conduct reviews and recommend changes to existing safeguards to maximize overall value and foster better health outcomes, and will promote the secure and effective use of data and technology. Finally, to advance excellence and innovation, OIG plans to recruit, retain and empower a diverse workforce and leverage tools and technology to maximize its returns on investments.

For more information, contact: Riza I. Dagli / 973.403.3103 /rdagli@bracheichler.com Kevin M. Lastorino / 973.403.3129 / klastorino@bracheichler.com

OIG Issues Anesthesiology Related Advisory Opinion With Far-Reaching Implications The U.S. Department of Health and Human Services, Office of Inspector General (OIG) recently published an Advisory Opinion (AO 13-15) wherein OIG concluded that an anesthesia service provider’s proposal to contract with a psychiatry practice to provide anesthesia services in connection with electroconvulsive therapy (ECT) procedures at a hospital could potentially generate prohibited remuneration under the federal Anti-Kickback Statute (AKS). The requestor of the Advisory Opinion is an anesthesia group that contracted to provide anesthesia services at a hospital on an exclusive basis, except that anesthesia services for ECT procedures will be provided by a physician who is affiliated with a psychiatry practice that works out of the hospital. The anesthesia group’s contract with the hospital also provided that if the psychiatry group determines that an additional anesthesiologist is required to cover ECT procedures at the hospital, the anesthesia group and the psychiatry group will negotiate in good faith to provide those services, and if there is no agreement, the psychiatry group may bring in a third party anesthesiologist to provide those services.

The psychiatry group notified the anesthesia group that an additional part-time anesthesiologist is required for ECT procedures at the hospital, and proposed the following arrangement: The anesthesia group will provide the additional anesthesiologist, the anesthesia group will reassign its right to bill for that anesthesiologist’s services to the psychiatry group and the psychiatry group will pay a per diem fee to the anesthesia group for those services. The psychiatry group will keep the difference between the amount billed and the per diem rate. According to the anesthesia group, the per diem fee is below fair market value and is below what it would receive if the anesthesia group billed for the services directly.

The OIG determined that the proposed arrangement could potentially generate prohibited remuneration under the AKS. The per diem fee the psychiatry group would pay to the anesthesia group would not qualify for any AKS safe harbors because, among other things, the aggregate compensation is not set forth in advance or consistent with fair market value. In addition, the AKS safe harbors only protect payments between a principal (the psychiatry group) and an agent (the anesthesia group), but no safe harbor protects payments to a principal. Therefore, the proposed arrangement appears to be designed as an indirect arrangement for the psychiatry group to receive remuneration for referring patients to the anesthesia group, and would violate the AKS. This Advisory Opinion has implications for any medical practice or ambulatory surgical center that engages anesthesiologists or anesthesia groups and bills the Medicare/Medicaid Programs for such anesthesiology services.

All such arrangements should be carefully reviewed in light of this Advisory Opinion.

For more information, contact: John D. Fanburg / 973.403.3107 / jfanburg@bracheichler.com Carol Grelecki / 973.403.3140 / cgrelecki@bracheichler.com December 2013

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Hospital “Sticker-Prices” Drive up Medicare Payments Last month, the U.S. Department of Health & Human Services, Office of Inspector General (OIG) issued a report on Medicare hospital outlier payments (OEI-06-10-00520). Outlier payments, unlike the predetermined payment amounts for most Medicare hospital claims, are directly influenced by actual hospital charges. These payments are intended to protect hospitals from the “financial losses resulting from extraordinarily costly cases.” For the four years reviewed (2008-2011), Medicare hospital outlier payments totaled approximately $4 billion per year.

OIG found that a small number of hospitals received a large proportion of all outlier payments. These high-outlier hospitals received an average of $25.9 million in outlier payments during the four years studied, compared to $3.9 million on average for the other hospitals. OIG also concluded that certain Medicare Severity Diagnosis Related Groups (MS-DRGs) triggered outlier payments more frequently than all other MS-DRGs. High-outlier hospitals typically charged Medicare substantially more for the same MS-DRGs, compared to all other hospitals, yet had similar lengths of stay. OIG did not analyze why certain hospitals routinely charged more than other hospitals for the same services, but did raise concerns about this issue.

OIG recommends that Centers for Medicare & Medicaid Services take the following actions: • Instruct Medicare contractors to increase monitoring of outlier payments • Include information about the distribution of outlier payments with other publicly reported hospital data • Examine whether MS-DRGs associated with high rates of outlier payments warrant coding changes or other adjustments.

For more information, contact: Riza I. Dagli / 973.403.3103 / rdagli@bracheichler.com Lani M. Dornfeld / 973.403.3136 / ldornfeld@bracheichler.com

House Passes “Keep Your Health Plan” Act On November 15, 2013, the House passed a bill (H.R. 3350) authorizing the “Keep Your Health Plan Act of 2013” that will permit a health insurance issuer that has health insurance coverage in effect in the individual market as of January 1, 2013, to continue offering such coverage for sale for a period of one year, even if such plans do not satisfy the minimum requirements of the Affordable Care Act (ACA). The act treats such coverage as a grandfathered health plan for purposes of a person satisfying the individual mandate provision of the ACA, to become effective January 1, 2014. The ACA, as enacted in 2010, would have required that such plans be discontinued. President Obama has promised to veto this bill if it ever reaches his desk because he believes it undermines the ACA. The Republican-sponsored bill was approved by thirty-nine (39) Democrats, many of whom felt that the bill was a common sense solution to the problem of cancelled insurance policies. We will continue to monitor the progress of this bill.

For more information, contact: Mark Manigan / 973.403.3132 / mmanigan@bracheichler.com Debra C. Lienhardt / 973.364.5203 / dlienhardt@bracheichler.com

CMS Issues Additional Guidance on Two-Midnight Rule Centers for Medicare & Medicaid Services (CMS) recently issued additional guidance regarding the hospital inpatient prospective payment system final rule that took effect on October 1, 2013 (commonly called the “Two-Midnight Rule”). CMS will delay for three months the conduct of post-payment patient reviews regarding whether a hospital stay should be treated as an inpatient claim or an outpatient claim.

Specifically, CMS has expanded the probe and educate period for an additional three months until March 31, 2014. During

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the period from October 1, 2014 until March 31, 2014, Medicare Administrative Contractors (MACs) and Recovery Auditors will not retroactively review Part A claims spanning two or more midnights after formal inpatient admission has commenced for appropriateness of inpatient admission. During this same time period, Recovery Auditors will also not retroactively review inpatient admissions of less than two midnights after formal inpatient admission has occurred. Instead, MACs will conduct prepayment sample reviews of between 10 and 25 claims, depending on the size of the hospital, on Part A inpatient hospital claims spanning less than two midnights. If claims at a hospital are determined to be improper, CMS will conduct educational outreach with that hospital in order to correct issues going forward. Since the reviews are performed pre-payment, the hospitals will be able to re-bill the claims under Part B. Despite the grace period being extended until March 31, 2014, CMS reminds hospitals that they should still be making inpatient admission decisions based on the final Two-Midnight Rule.

The time a patient spends receiving outpatient services in the hospital will count in determining whether the two-midnight benchmark has been satisfied. While the time spent as an outpatient before formal admission will not be considered inpatient time, it will be considered for determining whether the two-midnight benchmark is met. However, the clock does not start ticking until a patient receives medical treatment. A patient in the emergency room at midnight who has not received medically necessary services would not be considered to have qualified for the first midnight. A patient receiving medically necessary services at midnight would be considered qualified for the first midnight.

For more information, contact: Carol Grelecki / 973.403.3140 / cgrelecki@bracheichler.com Kevin M. Lastorino / 973.403.3129 / klastorino@bracheichler.com

NJ Bills May Affect Health Care Providers A4399, introduced on November 18, 2013, amends the law governing temporary guardianship by providing that a temporary guardian may be authorized to arrange for temporary placement of an alleged incapacitated person in a more appropriate, less restrictive and more cost-effective environment than the person’s current environment. The placement would include, but not be limited to, a nursing home, assisted living facility, group home or some other supervised living arrangement that provides for access to care and services necessary for the safety and continued well-being of the person.

A4430, introduced on November 18, 2013, prohibits health care facilities and health care professionals from charging any amount for: (1) a health care service unless certain disclosures have been provided to the health care consumer prior to providing the service; and (2) medical supplies in excess of the amount originally paid by the facility or professional for the supplies.

S162 passed the Senate on November 18, 2013. The bill establishes a Physician Loan Redemption Program to address the current and worsening physician shortage in this State by providing support to physicians working in the state for more than 10 years.

S3026, introduced on November 7, 2013, requires that each pharmacy practice site and each prescriber distribute, for every prescription drug dispensed, a copy of a notice prepared by the Division of Consumer Affairs in the Department of Law and Public Safety and posted on its website, to advise patients about: the availability of drug take-back programs sponsored by a local, State or federal government agency; and how to obtain information from those programs concerning where unused prescription drugs may be dropped off for safe, secure, efficient, and environmentally sound disposal.

S3027, introduced on November 7, 2013, provides for the establishment of a Statewide trauma care system plan, which will include all health care facilities in the State providing care to injured patients in the State, to the extent that their resources and capabilities allow.

A732, signed into law as P.L. 2013, c.168 on November 7, 2013, makes criminal the unauthorized practice of psychology, chiropractic, and social work, as well as representing oneself to be a State-certified psychoanalyst without such valid certification.

For additional information, contact: John D. Fanburg / 973.403.3107 / jfanburg@bracheichler.com Mark Manigan / 973.403.3132 / mmanigan@bracheichler.com

Visit us now online at www.NJPhysician.org December 2013

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Year End Tax Planning

YEAR END TAX PLANNING Year-End Tax Planning - Part I

By Steve Barlotta, CPA Well, it’s that time once again. With December upon us, it’s a good idea to look into some last minute tax-savings strategies.

Part I of our year-end tax planning letter will focus on the individuals that were impacted by the several tax increases that went into effect for 2013.

As we have discussed throughout the year, high-income earners were hit with a combination of federal tax increases for 2013. The top marginal tax rate was increased from 35 percent to 39.6 percent. The tax rate on long-term capital gains and dividends went from 15 percent to 20 percent. And two Obamacare taxes were instituted as well; a 3.8% Obamacare surtax on investment income and a .9% levy on earned income. On top of this, limits on exemptions and itemized deductions for upperincome taxpayers went into effect for 2013. When you take into account state tax rates, certain earners in New Jersey and New York could see their total effective rates increase close to 50%.

It’s safe to say that many of these individuals will be startled when they realize the amount of additional taxes they are paying for 2013. Here are a few ideas that might alleviate the tax bite for 2013: • Because of the new top rates, some taxpayers will no longer be subjected to the alternative minimum tax. Individuals that are not affected by the AMT, can pre-pay state income taxes or real estate taxes before December 31st.

• Increasing your charitable donations is another strategy. Taxpayers with unrealized gains in publicly traded stocks and bonds can donate them to a public charity. The charitable donation would be equal to the fair value of the security on the date of the contribution. In addition, individuals 70 1/2 or older can give as much as $100,000 to a qualified charity directly from their individual retirement accounts. By making these types of donations, long-term capital gains at the higher rates would be lessened.

• If you’re anticipating a significant amount of capital gains because of stock sales or long-term capital gains distributions from your mutual fund company, consider selling some investments in your portfolio that are losses to help mitigate the impact of the long-term capital gains tax. In addition, if you have any investments that are determined to be worthless, these too can used to lower your capital gains.

• Continue to maximize contributions to your retirement plans. If you own a business, consider setting up a defined benefit plan before the end of 2013. Many defined benefit plans allow the owners of a business to contribute pension dollars in excess of the maximum allowed amounts for defined contribution plans ($51,000 for 2013).

• Individuals can also defer investment income by investing in non-qualified fixed or variable annuities. You need to be careful with these types of products; be certain that the amounts invested won’t be needed in the short-term and be aware of the surrender charges of the policy in the event that you liquidate the annuity early.

Looking ahead to 2014, high-income taxpayers with substantial investments should consider adding tax-exempt bonds to their portfolio. Also, think about converting some of your retirement savings to Roth accounts. Remember when putting money into a Roth IRA and Roth 401(k), taxes must be paid upfront on the conversion, but you’ll be able to withdraw the money out later tax-free.

Year-End Tax Planning - Part 2 Part II of our year-end tax planning letter will focus on small business owners. The good news is there’s still time to implement some strategies in the next few weeks. As we discussed in our first tax planning letter, there are a myriad of new tax increases and limitations on deductions that went into effect for 2013. In this environment, it is imperative that a small business owner be proactive in maximizing their deductions and minimizing potential tax liabilities.

Many of the tax-planning strategies of a small business centers around depreciation. There are different rules depending on what type of asset is purchased. But the bottom line is if used effectively depreciation planning can help you maximize your deductions for the current year and years to follow.

Section 179 Depreciation In 2013, the maximum Section 179 depreciation deduction for certain new or used assets is $500,000. This $500,000 limit applies to new or used assets like office furniture, computer and software, machinery and equipment, and qualifying “heavy” vehicles that are over 6,000 pounds and used over 50% for business.

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Until recently, real property expenses were ineligible for the Section 179 deduction. For 2013, a business can utilize the Section 179 deduction up to $250,000 on the following types of real property expenditures: interiors of retail buildings, restaurant buildings, and interiors of leased nonresidential buildings.

Even though they are limited, there are Section 179 deductions available for vehicles that can really add up for a small business. For those “heavy” vehicles over 6,000 pounds that don’t qualify for the full Section 179 write-off, an immediate $25,000 deduction is allowed. This limitation would apply to vehicles like heavy SUVs. For trucks, vans and SUVs lighter than 6,000 pounds, the maximum write-off is $11,360. The deduction is further limited to $11,160 for passenger vehicles.

Remember that a Section 179 deduction cannot create or increase a business tax loss. So before considering any Section 179 deduction, you should have a handle on your current net income. At the present date, the Section 179 dollar limitation for 2014 will be reduced from its current amount of $500,000 to $25,000. If I had to guess, I think Congress will extend the current amount or increase it substantially from the planned $25,000 limit for 2014.

50% Bonus Depreciation Even though bonus depreciation is scheduled to end in 2013, there’s still a good chance that Congress will renew this feature for 2014. Keep in mind that bonus depreciation is over and above the available Section 179 deduction discussed above.

Under this election, a business is entitled to the full 50% bonus depreciation regardless of when during the year the asset was purchased. The rules haven’t changed since last year; it is only available for new property like equipment, software and certain qualified leasehold improvements. Unlike the section 179 deduction, there is no cap or business income limitation on 50% bonus depreciation deductions. So, bonus depreciation write-offs can be used to create a net operating loss in 2013 for your business.

Defer Income & Accelerate Expenses If you expect your 2014 business net income to be comparable or lower than 2013, consider deferring income into next year and accelerating expenses into this year. But, if you expect income to increase significantly next year and be in a higher tax bracket in 2014, you might want to take the opposite approach; accelerate income into 2013 and postpone deductible expenditures until next year.

Most small businesses use the cash-basis of accounting for tax purposes. This gives them the flexibility to manage their 2013 and 2014 net income in order to minimize taxes over that two year period. If your business uses the cash-basis and expects net income will be taxed at the same or lower rate next year, here are some year-end suggestions that will help mitigate the tax bite in 2013: • Prepay some expenses that are due in 2014. Some examples: prepay your office insurance for the first six months of next year, prepay the first three months of your office rent or vehicle lease.

• Charge business expenses on your credit card in late December. Even though the credit card bill won’t actually be paid until 2014, you can still claim a deduction for 2013.

• If your business was planning on purchasing an asset like a computer or office furniture in the first quarter of 2014, consider buying it in December. These items can be charged on your credit card as well.

• In terms of income, plan on billing your customers in late December. This will defer the income until 2014 because you won’t get paid until early next year. Under the cash-basis, businesses don’t have to report income until it is constructively received.

Year-End Tax Planning - Part 3 In the last part of your year-end tax planning letter, we will focus on some tax-planning strategies that were not covered in our first two articles. I know most of you are rushing around and trying to get ready for the holidays, but I just want to leave you with some ideas before we head into 2014.

Bump Up Your 401(k) Contribution For 2013, you can contribute up to $17,500 to a 401(k) plan, or $23,000 if you’re 50 or older. Remember these are pre-tax dollars, so think about talking to your plan administrator about making a one-time catch-up contribution if you have not already reached the maximum amounts.

Prepay Your State Estimated Taxes I know the fourth payment on your estimated state income taxes are not due until January 15th. But, think about sending the money in before the year ends. This will increase your 2013 itemized deductions on your federal return but will decrease your 2014 deduction. Consider making this payment before year end if you expect 2014 income to be the same or lower in 2014, and you will not be affected by the alternative minimum tax in 2013.

Take Required Distributions From IRAs If you own an IRA you must take annual required minimum distributions starting at age 70 1/2. You have until April 1 of the year after you turn 70 1/2 to take the first distribution. But after that, you must take your annual distribution by the end of the December 2013

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year or face penalties. Remember these distribution rules don’t apply to Roth IRAs. If you own a non-spousal inherited IRA you must take your required minimum distribution by the end of the year, as well. Keep in mind this is true whether you own a traditional IRA or a Roth.

Sell Loser Stocks If you have had capital gains throughout the year from the sale of stocks, consider selling some of your losing investments to lower your gain and possibly even generate a capital loss deduction. But, you can’t deduct more than $3,000 of capital losses in any given year. Also, look out for the “wash sale” rule, which says you can’t claim a capital loss on a stock if you buy it back within 30 days after the sale.

Make Yearly Gifts You can make a tax-free gift to anyone up to $14,000 annually without eating into your life time exemption from gift or estate tax. A married couple can combine this annual exclusion to $28,000 if they give the gift jointly. Remember to make sure the transaction is completed by December 31st. That means the receiver of the gift must deposit or cash the gift by year end.

Utilize The Energy Tax Credit The bad news is that the $1,500 credit for residential expenditures on items like windows and doors is no longer available. But a tax credit of up to $500 for residential energy property is still available if prior years’ credits were not taken.

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Brach Eichler Press Release

Brach Eichler Presents ‘Burton L. Eichler Award’ to St. Barnabas Medical Center’s Dr. Ernani Sadural

Fourth Annual Eichler Award Honors Legacy of Healthcare Law Pioneer Burton Eichler Brach Eichler L.L.C. presented the “Burton L. Eichler Award” to Ernani Sadural, M.D., F.A.C.O.G, clinical chief of the Department of OB/GYN at St. Barnabas Medical Center in Livingston, NJ. As a sponsor of “New Jersey’s Top Docs” for 2013, Brach Eichler recognized Sadural for his efforts to help the underserved around the world at New Jersey Monthly’s Top Doctors reception, which was held for all Top Doctors honorees at The Short Hills Hilton in Short Hills, NJ, on November 25, 2013.

Dr. Sadural received a check in the amount of $1,000 to be donated to a medically related non-for-profit of his choice. Sadural designated LIG Global, a New Jersey-based non-profit charitable organization whose mission is to deliver humanitarian relief to people around the world and to bring together medical and non-medical volunteers, supplies and technology, which he co-founded with his wife, Sarah.

“Burton Eichler’s name is synonymous with the practice of hospital and healthcare law in New Jersey; he was at the cutting edge of changes in New Jersey’s health care law. But he was also a man of enormous integrity. For example, for more than three decades, Eichler was deeply committed to Cerebral Palsy of North Jersey, and he served as a member of the board of directors of Newark Beth Israel Medical Center,” explained John D. Fanburg, health law practice chair and managing member of Brach Eichler. “The Burton L. Eichler Award is our way of honoring his legacy of leadership and in the spirit of the way he gave tirelessly to the community.”

On behalf of his work for LIG Global, Sadural has personally led 13 medical and surgical teams to eight different countries, including one to Haiti following the 2010 earthquake. He recently returned from Grenada and will lead a group of 70 individuals to the Philippines next month to aid in the disaster recovery efforts there following the recent typhoon. His organization, LIG, also participates in local community outreach programs such as with the United Way. Sadural is also a board member for the Marian Rose World Mission where he conducts community outreach programs in the Philippines. Locally, he volunteers his time at the St. Barnabas Women’s GYN Clinic.

Committed to medical education, he serves on the Departmental Advisory and Resident Education Committees at St. Barnabas and has twice been honored with the Annual Teaching Award given by the graduating OB/GYN resident physicians there.

Sadural has been featured in a Discovery Channel documentary entitled, "From conception to birth," as well as "A Baby story" on TLC. Sadural is a board-certified obstetrician-gynecologist. He received his bachelor's degree in biology from Northwestern University and his M.D. from Northwestern University Medical School. He resides in East Hanover, NJ.

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