FEBRUARY 2015 Visit us now online at www.NJPhysician.org
Sharp Questions Dominate Supreme Court Oral Arguments Regarding King V. Burwell Study Finds There are Too Many Hospitals In Newark Area Hospitals Learn Individual Impact of Christie’s Charity Cut Budget Cuts
Published by Montdor Medical Media, LLC Co-Publisher and Managing Editors Iris and Michael Goldberg Contributing Writers Beth Fitzgerald Andrew George Beth Kutscher Layout and Design - B&L Printing, Co. Inc. New Jersey Physician is published monthly by Montdor Medical Media, LLC., PO Box 257 Livingston NJ 07039 Tel: 973.994.0068 Fax: 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. No part of this publication may be reproduced or transmitted in any form or by any means without the written permission from Montdor Medical Media. Copyright 2010. Subscription rates: $48.00 per year $6.95 per issue Advertising rates on request New Jersey Physician magazine is an independent publication for the medical community of our state and is not a publication of NJ Physicians Association
Contents
Sharp Questions Dominate Supreme Court Oral Arguments Regarding The Challenge to the Availability of ACA Premium Tax Credits CONTENTS
6
8 Study Finds There are Too Many Hospitals in Newark Area,
Recommends Three Change Their Focus of Care
10 Health Care Community Reacts to Navigant Report on Newark-Area Hospitals 12 Hospitals Learn Individual Impact of Christie’s Charity Care Budget Cuts 14 Velez to Step Down as Department of Human Services Commissioner 16 Aetna, Barnabas Reach Deal, Averting Health Care Coverage Disruption 17 Hackensack UMC is the Only Hospital in NJ, NY and New England
to be Named One of Healthgrades 2015 America’s 50 Best Hospitals for Nine Consecutive Years
18 CentraState Names Chief Operating Officer 18 Prime Dropping Out of Daughters Deal 20 Aetna, Virtua Announce New Accountable Care Pact
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Cover Story
Sharp Questions Dominate Supreme Court Oral Arguments Regarding the Challenge to the Availability of ACA Premium Tax Credits By: J. Peter Rich and Lauren D’Agostino
O
n March 4, 2015, the Supreme Court of the United States heard oral arguments in King v. Burwell, the highest profile challenge to the Affordable Care Act (ACA) since the Supreme Court’s 2012 decision to uphold the law. The oral arguments featured sharp questioning of both sides. A decision is anticipated in June to determine whether the high court will maintain the status quo with respect to the availability of premium tax credits to lower-income exchange customers in all states.
The Issue The plaintiffs in King seek to invalidate a May 2012 Internal Revenue Service (IRS) rule providing that health insurance premium tax credits will be available to all taxpayers nationwide, regardless of whether they obtain coverage through state-based exchanges or federally funded exchanges (FFEs).i The plaintiffs argue that the plain language of the ACA limits the availability of premium tax credits to health care insurance plans purchased through state exchanges. Only 13 states and the District of Columbia have established state exchanges for 2015;ii the other 37 states will use FFEs in 2015.iii The plaintiffs’ argument is based on statutory language providing that premium tax credits are available only for health care plans that are “enrolled in through an Exchange established by the State under section 1311 of the [ACA].”
Case History In 2013, two groups of individual taxpayers brought lawsuits contending that the IRS rule violates the plain language of the ACA. The government successfully defended the IRS rule before the U.S. District Court for the District of Columbia 6 New Jersey Physician
(in Halbig v. Burwell) and the U.S. District Court for the Eastern District of Virginia (in King) by asserting that the plaintiffs’ isolation of a phrase in the statute was inconsistent with the legislative history, structure and purpose of the ACA. The plaintiffs appealed both decisions to the U.S. Court of Appeals for the D.C. Circuit and the Fourth Circuit, respectively. On July 22, 2014, in Halbig, a divided three-judge panel of the D.C. Circuit struck down the IRS rule and held that the plain language of the ACA clearly restricted the availability of premium tax credits to consumers purchasing insurance through state-based exchanges. On that same day, a unanimous panel in the Fourth Circuit upheld the same IRS rule in King, concluding that it must defer to the government’s reasonable interpretation of the ACA reflected in IRS rule under Chevron.v Although the D.C. Circuit agreed to rehear Halbigen banc, which potentially could have rectified the circuit split, the Supreme Court granted the plaintiffs’ petition to hear King.
The Oral Argument at the Supreme Court STANDING BRUSHED ASIDE Although Justice Ginsburg raised the issue of standing within the first few seconds of the argument by Michael Carvin, counsel for the plaintiffs, the issue was brushed aside by the other justices and seems unlikely to be addressed by the Supreme Court. The government did not challenge the plaintiffs’ standing in its brief, and on the record before the Supreme Court there is no question that the challengers have standing. Mr. Carvin, counsel for plaintiffs, represented that there had been no factual change that would affect standing, and the Supreme Court appeared satisfied with his representation.
THE MERITS: QUESTIONS FOR PLAINTIFFS’ under the Chevron case, under which courts defer to reasonable agency interpretations of ambiguous federal statCOUNSEL The questions to Mr. Carvin primarily focused on two issues. First, Justices Breyer, Kagan, Ginsburg and Sotomayor repeatedly questioned Mr. Carvin concerning other provisions in the ACA that the government contends support its interpretation of the statute, read as a whole. In their questions, those justices made clear that they supported the government’s interpretation of the statute. Justice Breyer, in particular, outlined the statutory case in support of the government’s interpretation, noting that Section 1321 of the ACA required the federal government to establish “such Exchange within the state” in those states that did not do so—and that this language effectively meant that the back-up FFEs were “established by the State” for purposes of the Act. Second, Justices Sotomayor, Kagan and Kennedy asked whether the plaintiffs’ interpretation necessarily raised a serious constitutional question; specifically, they inquired whether the ACA (so read) unconstitutionally coerced the states into establishing exchanges in view of the very severe consequences flowing from their failure to do so. If so, that could implicate the doctrine of constitutional avoidance, under which a court—if confronted with two plausible interpretations of a statute—should choose the interpretation that would avoid the potential conflict with the U.S. Constitution.
THE MERITS: QUESTIONS FOR THE SOLICITOR GENERAL Like the questioning of counsel for the plaintiffs, the justices’ questioning of Solicitor General Donald Verrelli focused primarily on the meaning of the statute and whether the plaintiffs’ challenge implicated the doctrine of constitutional avoidance. As to the former, Justices Scalia, Alito and Kennedy expressed—to varying degrees—skepticism regarding the government’s interpretation of the statute. In particular, Justice Scalia repeatedly emphasized that it is not unusual for Congress to enact a poorly designed statute that produces unfortunate results, and that a statute should not be given an unreasonable interpretation in order to avoid unfortunate results. As to whether plaintiffs’ interpretation triggered the doctrine of constitutional avoidance because it resulted in the ACA coercing the states, Justice Alito observed that only six of the states that do not have state-based exchanges had made that argument. In other words, if the ACA were coercive by withholding tax subsidies from the residents of those states failing to establish exchanges, most of the states so coerced were not complaining about it. Justice Kennedy, however, quite directly stated that if plaintiffs’ argument is correct, the ACA coerces states to establish exchanges because declining to do so “is just not a rational choice.” That in turn, he observed, would trigger the doctrine of avoidance. Finally, the solicitor general was questioned by the justices regarding the government’s alternative argument that the IRS’s interpretation of the statute was entitled to deference
utes. Justices Kennedy and Alito observed that applying Chevron deference here would conflict with the Supreme Court’s cases holding that the tax code is to be construed narrowly against tax credits and deductions. Chief Justice Roberts—in his only merits-related statement of the entire argument—observed that, if Chevron applies here, the next presidential administration presumably could reverse course and withdraw tax subsidies for health plans purchased on the FFEs.
Potential Impact of a Ruling for the Plaintiffs The Supreme Court is anticipated to render its decision by late June. If the Supreme Court strikes down the IRS rule as contrary to the ACA, that would have significant financial consequences for millions of U.S. citizens receiving premium tax credits through the FFEs, which would reverberate throughout the entire health insurance market.
POTENTIAL IMPACT IN 2015 The vast majority (87 percent) of individuals selecting health care plans in the 37 states using the FFEs in 2015 qualify for premium tax credits. Insurers are concerned that a Supreme Court ruling that such insureds are ineligible to receive premium tax credits, whether or not it goes into immediate effect, may prompt consumers to drop their coverage mid-year. Insurers are already locked into their rates for 2015 and it is unclear whether insurers would be allowed to withdraw from the FFEs mid-year. During oral argument, Justice Alito noted that the Supreme Court could mitigate some of the immediate impact of such a ruling by delaying its implementation so that the states using the FFEs could set up exchanges, in order to preserve their citizens’ access to premium tax credits.
POTENTIAL IMPACT BEYOND 2015 One study has concluded that, if the Supreme Court rules against the government, about 9.3 million people living in FFE states would no longer receive subsidies by 2016. That study also projects that such a ruling would increase the number of uninsured people by 8.2 million, leaving only less-healthy consumers in the individual insurance marketplace and driving up 2016 average premiums 35 percent, a so-called health insurance “death spiral.” Because the Supreme Court will likely rule after insurers have made their regulatory filings for their 2016 health plans, some insurers are contemplating proposing alternative plan offerings and two different sets of rates—one for each potential outcome—with the intention to drop certain offerings before they are finalized. The Department of Health and Human Services has not publicly discussed any contingency plans. Three Republican senators pledged that they have a plan to provide financial assistance for a transitional period to individuals who may lose subsidies. Nevertheless, one can only speculate about what—if anything—Congress and the administration would do in that event. February 2015 7
Hospital Rounds
Study finds there are too many hospitals in Newark area, recommends three change their focus of care By Beth Fitzgerald
T
here are too many hospitals beds and too much duplication of medical services in the Newark area, where five hospitals lost an aggregate $32 million in 2013, according to a report released late Monday by a health care consultant that recommends Newark’s Saint Michael’s Medical Center and East Orange General Hospital cease operating as in-patient acute care hospitals and instead become state-of the art ambulatory care facilities. The report, produced by Navigant Consulting, proposes expanding University Hospital, the state-owned teaching hospital of the Rutgers New Jersey Medical School in Newark, and integrating it with Newark Beth Israel Medical Center to create “a state of the art regional medical center in Newark.” Following the expansion of University Hospital, Navigant recommends transforming Newark Beth into a “comprehensive ambulatory campus.” The report, commissioned by the state of New Jersey, is expected to help guide state Health Commissioner Mary O’Dowd as she decides whether to approve the sale of Saint Michael’s to Prime Healthcare Services, a for-profit hospital chain based in California. Last August Prime acquired St. Mary’s Hospital in Passaic and is awaiting state approval of its purchase of Saint Clare’s Health System in Denville. The report met immediate push back from both Saint Michael’s and East Orange General. The “Save Saint Michael’s Coalition” scheduled a press conference for Wednesday at 11:45 a.m. in the hospital lobby, but plenty of people were speaking out Monday night, hours after the report was release. Both Saint Michael’s and East Orange General took issue with Navigant and said they should instead complete their planned mergers and continue operating as acute care hospitals “Restricting the hospital’s services to offer only ambulatory care — as the Navigant study commissioned by the state recommends — would greatly limit healthcare access and choice to the city’s most vulnerable residents who need more than emergency and primary care,” St. Michael’s said in a statement. “Furthermore, it would require the hospital to downsize its workforce, negatively impacting many of its approximately 1,400 employees.
“We urge the state to approve the sale of Saint Michael’s Medical Center to Prime Healthcare so it can maintain its current level of emergency, primary, and specialty care, and preserve its nearly 150-year ministry of providing high-quality healthcare.” Prime also took issue. “The recommendations made in the Navigant Report regarding the repurposing of Saint Michael’s into an ambulatory or urgent care facility, if implemented, would be a devastating blow for access to critical care in the Central Ward and greater Newark community,” the hospital said in a statement.
8 New Jersey Physician
“Prime Healthcare has made a commitment to St. Michael’s Medical Center, its patients, physicians and employees, to preserve the hospital as a full-service, acute care facility for future generations of Newarkers. We stand by that commitment.” The Navigant study looked at five hospitals: Newark Beth Israel, University in Newark, Clara Maass Medical Center in Belleville, Saint Michael’s and East Orange General, which has agreed to be purchased by Los Angeles-based Prospect Medical Holdings. According to the Navigant study, without the charity care subsidy provided by the state, the five hospitals would have lost an aggregate $209 million in 2013. The report said the two hospitals that belong to the Barnabas Health system, Newark Beth and Clara Maass, achieved a positive operating margin in 2013. Navigant said the Newark area had 1,495 available hospital beds in 2013, a 224 excess bed supply that they project will rise to 310 by 2019. Joel Cantor, director of the Rutgers Center for State Health Policy, said the findings have merit. “The Newark hospital market is clearly over-bedded, to the detriment of both the financial viability of the hospitals and quality of care for patients,” he said. “While there may be other possible ways to right-size the system, the realignment suggested in the Navigant report appears to be a well-reasoned strategy.” Linda Schwimmer, vice president of the New Jersey Health Care Quality Institute, praised the report. “The report was very well done and contains the type of data and analysis needed to ensure the future health of Greater Newark’s community and of the state budget when it comes to health care facility financing and charity care,” she said. “As the authors noted, doing nothing is the worst decision that could be made. The other options are fraught with obstacles but looking at regional planning to improve patient safety and increase volume of procedures at particular centers of excellence are probably the most easily achievable.” Martin Bieber, interim president and chief executive of East Orange General Hospital, said in a statement that his hospital is already moving forward with many Navigant recommendations. “We are proud to be entering into a partnership, pending state approvals, with Prospect Medical Holdings. Prospect has committed $84 million to invest in the hospital and the communities we service,” he said. Bieber said East Orange General is realigning family health services; expanding ambulatory care; coordinating integrated care with physicians and other providers; increasing access to outpatient care and better aligning services to the needs of the patients we serve. “These are key components of our blueprint for the future with Prospect,” he said. The Navigant report said the university must remain an acute care hospital under the 2013 state law that dismantled the University of Medicine and Dentistry of New Jersey and folded most of it into Rutgers University. Navigant recommended the creation of a public/private partnership between the state-owned University Hospital and Newark Beth Israel Medical Center, which is part of the nonprofit Barnabas Health system. Navigant said carrying out is recommendations will require “substantial” capital investment, but did not estimate the cost. Navigant said the course it recommends would yield a “combined positive operating margin” because the transformation of Saint Michael’s and East Orange into ambulatory facilities and the merger of Newark Beth and University into a more modern facility “substantially decreases the operating expenses associated with caring for the patient population” in the greater Newark area. Navigant Consulting calls itself a specialized, global professional services firm dedicated to assisting clients in creating and protecting value in the face of critical business risks and opportunities, according to its Web site. It has offices all over the world and across the country, listing New York, Chicago, Los Angeles and London as its primary offices. It also has an office in Hamilton. February 2015 9
Hospital Rounds
Health care community reacts to Navigant report on Newark-area hospitals By Beth Fitzgerald
H
ealth care stakeholders raised concerns Tuesday about the potential impact on health care workers and the community of a consultant’s recommendations that three of the five hospitals in the greater Newark area cease operating as full-service acute care hospitals and instead be transformed into modern ambulatory care facilities. The state of New Jersey commissioned the study by Navigant Consulting, which recommends investing more than $1 billion in a major reorganization of health care in the Newark area. Navigant recommends that the state-owned University Hospital be expanded and operate in an integrated fashion as a public/private partnership with Newark Beth Israel Medical Center, which would specialize in ambulatory care. In the report released by the state late Monday, Navigant recommends that Saint Michael’s Medical Center in Newark and East Orange General Hospital also transition to outpatient facilities, with Clara Maass Medical Center in Belleville continuing as an acute care hospital. Barnabas Health, which operates Newark Beth Israel and Clara Maass, has not yet commented on the report. University Hospital, however, responded favorably. Chief Executive James R. Gonzalez said in a statement: “We look forward to discussions with both Rutgers and Barnabas on the creation of a regional medical center on our campus to serve the Newark community and in support of the Newark Agreements.” University is the teaching hospital of the Rutgers New Jersey Medical School in Newark. Donna Leusner, spokeswoman for the state Department of Health, said the report “is a tool for use in making future decisions about the health care delivered to the Newark area.” The Navigant report is a good first step, but more work is needed, said Jeanne Otersen, policy director of the Hospital Professional and Allied Employees union, which represents 1,300 nurses and other professionals at University Hospital, out of a total of about 3,300 hospital workers.
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Otersen said it is critical that Navigant recognized the importance of University Hospital. Navigant noted that the 2013 law that dismantled the University of Medicine and Dentistry of New Jersey, and folded most of its medical education programs into Rutgers University, also required that University Hospital continue to operate as an acute care hospital. “There is significant investment needed to do what the report suggests, and is the state ready do that for the Newark community? That is a very important question,” Otersen said. A key issue, she said, is “how inclusive will the process be — of workers, health advocates, community leaders — to move forward in a way that minimizes disruption and that is transparent and accountable.” Otersen said the report assesses the Newark region’s existing health care system and considers “how we can be more efficient in the future. That’s good, but it doesn’t go far enough. I would have liked to have seen more from the perspective of community needs. I would want to see how you move Newark forward to provide the care that people ready need.” Doug Placa is executive director of JNESO, which represents 500 health care workers at Saint Michael’s Medical Center, which employs about 1,400 people. He said he supports the proposed sale of Saint Michael’s to the California based forprofit hospital company Prime Healthcare Services, which plans to keep the hospital open as an acute care hospital. “I certainly disagree with the (Navigant recommendation) to make Saint Mike’s an ambulatory facility,” he said. “That would certainly limit health care access for the people of Newark.” He said the hospital “has been a vital part of the community for the better part of 150 years. People have come to rely on being able to go to Saint Mike’s for whatever their health care needs are.” He said the jobs at Saint Michael’s “are good-paying jobs, and the workers contribute to the local economy. You can
St. Michaels Hospital
imagine the economic effect it will have on the community if you change its mission as the Navigant report is suggesting.” He said the sale of Saint Michael’s to Prime “would enable Saint Mike’s to continue its mission and move into the next phase of its existence.” Tim Foley is political director of the Committee of Interns and Residents SEIU, the union that represents 500 resident physicians at University Hospital and 125 at Saint Michael’s. He said the residents at Saint Michael’s are being trained as specialists who care for in-patients at the hospital — and he said it’s not clear what would happen to the residency program if Saint Michael’s becomes an ambulatory health care facility. “For us, there are just way too many questions that are not even tackled in the report,” Foley said. Foley said he doesn’t know if the Navigant recommendation “will be good for the physicians supply in the city or bad for physicians supply in the city. We will be looking to the state to clarify (the issues). Ultimately, many of these decisions need to be made by the institutions in the state and we’ll be watching their reaction closely.” A health care stakeholder organization, the Campaign to Protect Community Health Care, said in a statement: “The Navigant report independently verifies what our coalition has been saying — Newark hospitals need to collaborate to survive, not just compete.” The group said that, “Although this report is thoughtful in its analysis, the hows of policy development are largely left unanswered. Even more important, we don’t know how this will be experienced by the patients of Newark. “The largest question of all is whether the New Jersey Department of Health will commit to this vision of Newark health care with both investment and force of will. Will all the necessary services offered by the city’s hospitals be maintained? Will staffing levels and local jobs be maintained? Will the providers bringing this vision to life also keep health care affordable for working families by agreeing to stay in-network with insurers? These are important issues and this report is silent on many of them.”
February 2015 11
Hospital Rounds
Hospitals learn individual impact of Christie’s charity care budget cuts By Beth Fitzgerald
N
ew Jersey hospitals learned Friday how each will be individually impacted by the $148 million cut to charity care funding in Gov. Chris Christie’s 2016 proposed budget, which includes a total of $796 million in hospital funding.
Christie increased funding for graduate medical education, the hospital residency programs where doctors are trained, by $27.3 million to $127.3 million and reduced charity care to a total of $502 million.
Suzanne Ianni, president of the Hospital Alliance of New Jersey, whose hospitals provide most of the state’s charity or uncompensated care, said the cuts will take a heavy toll.
New Jersey Hospital Association spokeswoman Kerry McKean Kelly said the Christie Administration “notes the infusion of Medicaid dollars into the overall health care funding proposal, but we haven’t seen details regarding those Medicaid dollars and their distribution among the hospitals. We need time to look at all of those numbers, in the entirety of this budget, to see how they balance out and to determine the full impact on hospitals and their patients.
“Our 17 member safety net hospitals represent 25 percent of New Jersey’s acute care hospitals, but are being asked to absorb 50 percent of the total cuts,” when both charity care and funding for graduate medical education are considered, Ianni said. In the budget statement last week, the Christie administration pointed to the success of the Medicaid expansion under the Affordable Care Act, saying it has increased the state’s NJFamilyCare (Medicaid) enrollment by 390,000, and reduced the need for hospitals to deliver uncompensated, or charity care. Another 252,000 New Jerseyans have purchased health plans online via HealthCare.gov under the ACA, where most get subsidies to defray the costs. “While we acknowledge that the number of uninsured has decreased in New Jersey, an important consideration has been missing in this debate,” Ianni said. “While Medicaid expansion is a good thing for patients in New Jersey, it increases the financial burden on safety net hospitals.” She said that’s because Medicaid reimburses hospitals about 70 percent of the costs for each patient claim, and Medicaid patients are more likely to access hospital services when they have a Medicaid card versus when they were uninsured. Last week, five hospital groups issued a joint statement saying that New Jersey still has about 1 million uninsured residents and Christie’s budget “doesn’t recognize the ongoing challenges hospitals face as they provide excellent care for all.” 12 New Jersey Physician
“There are obviously significant reductions to New Jersey hospitals contained in this new information, and we need to ensure that the overall dollars (charity care, graduate medical education, Delivery System Reform Incentive Payment program and Medicaid) are adequate to support the important missions of our hospitals to provide care to all, regardless of their ability to pay.” In a statement, Barry H. Ostrowsky, chief executive of the state’s largest hospital system, Barnabas Health, said, “We are appreciative of Gov. Christie’s recognition of the importance of hospitals in the state of New Jersey during these challenging financial times for the state, as demonstrated in the fiscal year 2016 proposed budget which is supportive of graduate medical education and teaching hospitals.” The combined impact of charity care and GME funding varied widely throughout the state. St. Joseph’s Medical Center in Paterson, one of the largest providers of charity care in the state, saw roughly $10 million in charity care reductions, from $73.1 million this year to $63.3 million for the 2016 fiscal year that begins July 1. However, St. Joseph’s will also see an increase in GME from $9.2 million to $12.3 million. Among the hospitals getting less charity care is Jersey City Medical Center, with a $9.3 million reduction; however, its
Hospital Rounds GME will increase, for a net reduction of $7.9 million. Newark Beth Israel Medical Center will see charity care reduced by $7.9 million to $28 million while GME increases $2.7 million to $16.2 million. University Hospital, which is owned and operated by the state and is the teaching hospital of the Rutgers New Jersey Medical School, will see a $12.7 million cut in charity care, to $54.5 million, while GME will rise $3 million to $19.2. Cooper University Hospital in Camden will see a $3.2 million charity care reduction, to $34.1 million, while GME will increase by $2 million to $14.3 million. In a statement, New Jersey Health Commissioner Mary E. O’Dowd said, “Nationally our health care system is going through a fundamental transformation with the driving factors being payment methodology changes, em-
phasis on value, reduced cost and wellness. The results include less need for inpatient services and increased need for outpatient services and wellness initiatives.” O’Dowd said the state “is using this budget to support the transformation of the health care system to better serve our communities and buy more of what we want.” She said the increase in GME “reflects the governor’s ongoing commitment to the growth of New Jersey’s medical schools and the expansion of hospitalbased teaching programs. “ The health department said that since the beginning of this administration, Christie has more than doubled the amount of funding dedicated to GME, from $60 million to $127.3 million. The number of hospitals receiving this funding has also grown to 42, up from 22 hospitals. In the proposed budget, Christie also increases by $45 million
funding to physicians who treat Medicaid patients, providing greater access to care for the Medicaid population. O’Dowd said, “Providing $502 million in charity care funding will allow for a reasonable transition for hospitals while also giving the state the opportunity to invest in other programs such as the future of our health care workforce, which is necessary to support the changing healthcare landscape.” Ianni of the Hospital Alliance of New Jersey pointed out that charity care is funded by both the state and the federal government; hence the $148 million cut to charity care will cost the state $74 million. “And while it is a positive to add more funding for Graduate Medical Education and specialty physicians, Graduate Medical Education funding is for future doctors, while Charity Care funding is for current patients.”
February 2015 13
Hospital Rounds
Velez to step down as Department of Human Services commissioner By Andrew George Jennifer Velez
G
ov. Chris Christie announced Tuesday that state Department of Human Services Commissioner Jennifer Velez will step down from her post later this month to become the senior vice president of strategy and planning for Barnabas Health in West Orange. First appointed to the position by Gov. Jon Corzine in 2007, Velez was reappointed by Christie in 2010 and is the department’s longest-serving commissioner. “Serving this department under the governor’s leadership has been one of the most gratifying and fulfilling roles I’ve ever had,” Velez said. “I have worked alongside an incredibly talented team of subject-matter experts who really understand and are committed to positive reforms that improve the lives of some of New Jersey’s most vulnerable residents. I’m grateful to have been a part of this administration and to have enjoyed unwavering support from the governor.” In a statement, Christie said that Velez has been “one of the smartest and most dedicated people I have had the honor of knowing during my time as governor.” “She has been a tremendous advocate in our efforts to deliver effective, cost-efficient and highquality services to the most vulnerable New Jerseyans and has done so with a genuine fervor and compassion to help make people’s lives better,” Christie said. “I thank Jen for her service and for the passion and effort she has poured into this job for nearly a decade, and wish her well as she moves on to her next endeavor.” Department chief of staff Elizabeth Connolly, who has spent 26 years working within the department across various roles, will take over for Velez in an interim role as acting commissioner. Christie will look to make a nomination for the position “at a later date.” During her tenure, Velez oversaw the closing of a state psychiatric hospital, the settling of Olmstead and Waiting List lawsuits and focused on matters pertaining to behavioral health reform. Velez held the top spot in last year’s NJBIZ Health Care Power 50 list, and was ranked No. 63 on this year’s NJBIZ Power 100 list.
14 New Jersey Physician
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February 2015 15
Hospital Rounds
Aetna, Barnabas reach deal, averting health care coverage disruption By Beth Fitzgerald
T
he health insurer Aetna and Barnabas Health, New Jersey’s largest health care provider, announced Thursday they have reached a new, two-year contract, effective March 1, thus averting any disruption for Aetna members who use the Barnabas system. Earlier this month, as negotiations came down to the wire, Aetna started notifying New Jersey customers that they would need to find new health care providers if the two sides couldn’t reach an agreement before the current contract expired March 1. Aetna said about 18,000 of its New Jersey members receive health care from Barnabas. Thursday’s announcement said Aetna members who use Barnabas Health hospitals and facilities, or receive care from physicians of the Barnabas Health Medical Group, will continue to be covered at the innetwork level of benefits. “This agreement means that Aetna members will continue to have uninterrupted access to care at all previously participating Barnabas Health facilities and physicians,” said Michael Costa, Aetna vice president, New Jersey Network. “We look forward to continuing to work with Barnabas Health and building on our solid relationship and shared goals of excellent quality and affordable health care.” “Barnabas Health and Aetna are very pleased to have reached an agreement to extend our contract, avoiding any disruption to the care of our patients who are insured by Aetna,” stated John Doll, senior vice president of finance, Barnabas Health. “Barnabas Health is committed to providing the highest quality care to our patients and, by continuing and strengthening our relationship with Aetna, we look forward to offering the finest care to all Aetna subscribers, as we always have done.” The only Barnabas hospital that is not part of this new Aetna deal is Jersey City Medical Center, which Barnabas acquired June 1, 2014. Barnabas spokeswoman Ellen Greene said Jersey City Medical Center is expected to become part of the Aetna network in June 2015. 16 New Jersey Physician
It’s not unusual for contract talks between hospitals and insurers to hit a snag. New Jersey’s largest health insurer, Horizon Blue Cross Blue Shield of New Jersey, announced earlier this month that Christ Hospital in Jersey City, part of CarePoint Health, had terminated its relationship with Horizon and would exit the insurer’s network June 1. However, top executives of Christ and Horizon said they hoped to reach a deal before the current contract expires May 31. CarePoint spokesman Jarrod Bernstein said Thursday that “we are hopeful we are come to a resolution before the deadline.” He said CarePoint’s two other Hudson County hospitals, Bayonne Medical Center and Hoboken University Medical Center, will remain in-network with Horizon “regardless of the outcome of the negotiations” between Christ Hospital and Horizon. The new agreement with Barnabas applies to all Aetna health plan products, including Student Health and Medicare. Hospitals covered by the agreement are: •
Saint Barnabas Medical Center in Livingston;
•
Newark Beth Israel Medical Center in Newark;
•
Clara Maass Medical Center in Belleville;
•
Monmouth Medical Center in Long Branch;
•
Monmouth Medical Center Southern Campus (formerly Kimball) in Lakewood;
•
Community Medical Center in Toms River; and
•
Barnabas Health Behavioral Health Center, Toms River.
The agreement also includes outpatient services at Barnabas Health facilities including the Barnabas Health Ambulatory Care Center in Livingston, statewide services of Barnabas Health Behavioral Health Network and hospice, home care and infusion services.
Hospital Rounds
HackensackUMC is the Only Hospital in NJ, NY and New England to be named one of Healthgrades 2015 America’s 50 Best Hospitals for Nine Consecutive Years H
ackensackUMC is pleased to announce that it has received the Healthgrades 2015 America’s 50 Best Hospitals Award™ for the ninth year in a row—the only hospital in New Jersey, New York and New England to do so. The distinction makes HackensackUMCone of the top 1 percent of more than 4,500 hospitals nationwide for its consistent, year-over-year superior clinical performance as measured by Healthgrades, the leading online resource for comprehensive information about physicians and hospitals. “We are tremendously proud to be ranked among the top 50 hospitals in America,” said Robert C. Garrett, president and chief executive officer, Hackensack University Health Network. “We remain focused on providing clinical quality and excellence, and Healthgrades’ ranking affirms this level of commitment. Patients and healthcare consumers are more involved and informed in their care than ever, and healthcare ratings agencies help guide them to the most appropriate provider with the best clinical outcomes.”
From 2011 through 2013, Healthgrades America’s 50 Best Hospitals Award recipients, as a group, had a 25 percent lower risk adjusted mortality rate across 19 procedures and conditions where in-hospital mortality was the clinical outcome, compared to all other hospitals. During this same period, if all other hospitals performed at the level of America’s 50 Best Hospitals Award recipients across these 19 procedures and conditions, 168,239 lives could potentially have been saved. For example, patients treated at a hospital that has achieved the America’s 50 Best Hospitals Award had, on average, a 26.6 percent lower risk of dying from heart failure than if treated at a hospital that did not receive the award. Variation in hospital performance exists locally as well as nationally. For example, in the New York, NY area, there were two hospitals out of 10 eligible hospitals for the America’s 50Best Hospitals Award. HackensackUMCis among the hospitals in the New York City area with some of the best quality care across at least 21 of 32 common inpatient conditions and procedures
evaluated by Healthgrades during a period of at least six years. “The Healthgrades analysis shows that not all hospitals perform equally, so it is important that consumers do their homework when selecting a hospital,” said Evan Marks, chief strategy officer, Healthgrades. “Those hospitals that have achieved the Healthgrades distinction have demonstrated a commitment to exceptional clinical quality care over an extended period of time.” The 50 recipients of the America’s 50 Best Hospitals Award™ stand out among the rest for overall clinical excellence across a broad spectrum of care. During the 2015 study period (20112013), these hospitals showed superior performance in clinical outcomes for patients in the Medicare population across at least 21 of 32 of the most common inpatient conditions and procedures —as measured by objective performance data (risk-adjusted mortality and in-hospital complications). To learn more about how Healthgrades determines America’s 50 Best Hospitals Award ™ recipients, please visit www.healthgrades.com/quality. February 2015 17
Hospital Rounds
CentraState names chief operating officer Thomas W. Scott has been named CentraState Healthcare System chief operating officer and senior vice president. In his role as COO, Scott will be responsible for integrating the strategic plan of the organization, providing day-to-day management oversight for the development of high-quality, costeffective, and clinically integrated programs within the medical center and senior services, as well as ensuring efficient services designed to meet the needs of patients, physicians, the public and staff. Thomas W. Scott Scott comes to CentraState from Chilton Medical Center in Pompton Plains, now part of the Atlantic Health System, where he had served as COO since 2008. He was also previously vice president of ambulatory services and executive director of operations and clinical effectiveness at Stamford Hospital in Stamford, Conn.: assistant vice president of operations and director of business advisory services at St. Joseph’s Regional Medical Center in Paterson; and director of business development, manager of organizational design, and strategy and marketing analyst at Saint Clare’s Health Services in Denville. Scott earned a bachelor of science in biology at St. Lawrence University, and a master of health administration at Cornell University.
Prime dropping out of Daughters deal By Beth Kutscher
P
rime Healthcare Services is abandoning its bid for Daughters of Charity Health System in Los Altos Hills, Calif., citing “onerous and unprecedented conditions” from the California attorney general.
California Attorney General Kamala Harris approved the controversial $843 million deal in late February but set more than 300 conditions that went beyond the original transaction terms. Critics of the deal—including a number of elected officials and the Service Employees International Union-United Healthcare Workers West—had put pressure on Harris to reject the takeover. In its decision, Ontario, Calif.-based Prime called Harris’ terms “the most extensive and overreaching conditions in history.” “In essence, the attorney general is telling Prime Healthcare to operate the hospitals exactly as DCHS has and expect different results,” Prime General Counsel Troy Schell said in a news release. The conditions filled 78 pages. They included, for instance, the requirement to maintain the majority of services at Daughters’ hospitals for 10 years, or twice as long as Prime had committed to in the takeover agreement. Prime also stressed that the requirement was twice as long as other hospital transactions approved in the state. The conditions also required Prime to maintain current insurance contracts, which the chain argued were well below fairmarket value and neighboring hospital rates.
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Hospital Rounds
The deal would have been the largest acquisition to date for Ontario, Calif.-based Prime, which has traditionally grown by adding one hospital at a time but has been expanding rapidly across the country. It also was the largest hospital acquisition ever reviewed by the California attorney general. Prime has come under fire from opponents such as the SEIU-UHW, which has criticized its dealings with union employees, raised allegations of insurance overbilling and challenged its safety record. The chain, in turn, says it has been the victim of a smear campaign designed to force it to unionize its workforce, and is suing the SEIU chapter for its aggressive tactics. Daughters of Charity Health System last month also sued the SEIU-UWH and its hand-picked suitor, private equity firm Blue Wolf Capital Partners, for conspiring to interfere with the sale process. The Daughters of Charity system is running low on cash and has warned bondholders that it may not be able to continue operating without facing bankruptcy. “We are disappointed that Prime Healthcare has decided not to go forward with the purchase of our hospitals,” the sixhospital system said in a statement. “We strongly disagree with Prime’s position on the attorney general conditions. We are confident that Prime could successfully turn around the DCHS hospitals. We remain committed to finding the best solution for our patients, communities we serve, physicians, employees, retirees and creditors.” The SEIU-UHW, which counts 2,600 Daughters employees among its members, called on the system to “immediately designate another buyer.” It pointed out in a statement that a number of other parties remain interested in purchasing the hospitals, though not necessarily as a single entity. The deal’s terms allow Daughters to receive a $5 million termination fee if Prime walks away from the transaction due to unacceptable conditions from the attorney general. Daughters chose Prime in October from a field of four bidders. Its financial advisers understood the risks the deal could face but believed Prime was the only one with the financial strength to close the transaction. The $843 million price tag included a $394 million cash consideration and $449 million for assumption of the system’s debt. Prime also pledged to fund the system’s pension plan, including $280 million in underfunded liabilities.
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Insurance Issues
Aetna, Virtua announce new accountable care pact By Beth Fitzgerald
T
he movement toward “value-based” health care, in which health care providers are compensated for better managing cost, quality and the patient experience, moved forward Tuesday with the announcement of a new accountable care agreement between the health insurer Aetna and the Virtua Medical Group in southern New Jersey. Aetna said the accountable care organization, or ACO, expands on the current Medicare collaboration with Virtua that has served about 2,000 Aetna Medicare Advantage Members since July 2012. The new ACO aims to improve the coordination and delivery of patient care, and provide a better patient experience, for more than 16,000 Aetna commercial members in Camden, Burlington and Gloucester counties. The Virtual Medical Group primary care practices in the agreement include more than 95 physicians and other care providers. The practices are recognized as “patient-centered medical homes” by the National Committee for Quality Assurance, which awards the PCMH designation to medical practices that provide coordinated medical care to improve population health. The VMG primary care practitioners are supported by Virtua specialty physicians and by the three-hospital Virtua health care system. Aetna members who receive care from VMG primary care physicians will be served under the new agreement. VMG will be accountable for cost, quality and patient satisfaction for the health care they provide. Aetna nurse case managers will work with physicians and the hospitals to assist in care coordination, outreach and follow-up services for Aetna members. The goal is to provide more highly coordinated care, particularly for those patients with chronic or complex conditions. “We are delighted to expand our existing Medicare collaboration with Virtua under this new agreement, and to bring the benefits of this value-based model of care to our members in southern New Jersey and southeastern Pennsylvania,” said John Lawrence, president, Aetna – New Jersey. He said Aetna looks forward to expanding the agreement even further over the coming months. Lawrence said the ACO “aligns with the federal government’s recently announced goal of expanding value-based agreements to more people over the next several years.”
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Richard P. Miller, Virtua chief executive, said, “Virtua and Aetna share a common vision for providing a continuum of care for our patients in a value-based delivery model that emphasizes clinical excellence and effectiveness, coordinated access, and excellent customer service.” Miller said the expanded relationship with Aetna “is a demonstration of our overall mission to help patients be well, get well and stay well.” Aetna members who have been treated by VMG affiliated physicians over the past 24 months will be covered by the ACO. Their benefits will not change, but they will receive highly coordinated, personalized care. The agreement went into effect Jan. 1 for fully insured customers and will be effective May 1 for self-insured customers. The agreement includes a shared savings model that rewards Virtua physicians for meeting certain quality and efficiency measures, such as: • The percentage of Aetna members who receive recommended preventive care and screenings; • Better management of patients with chronic conditions such as diabetes and heart failure; •
Reductions in avoidable hospital readmission rates; and
•
Reductions in unnecessary emergency room visits.
Aetna said it is working with health care organizations nationwide to develop products and services that support value-driven, patient-centered care. The company said that, nationwide, about 3.2 million Aetna members now receive care from doctors committed to the value-based approach, and 28 percent of Aetna claims payments go to doctors and providers who practice value-based care. Aetna said it is committed to increasing that to 50 percent by 2018 and 75 percent by 2020. Aetna said that, in New Jersey, about 21 percent of its members, or nearly 230,000 members, are in value-based collaborative arrangements, including ACOs. Aetna said its goal is to increase that to 35 percent, or 400,000 of its New Jersey members, during 2015.
Princeton’s Premier Senior Health Campus The Pavilions at Forrestal campus features two comprehensive centers that combine to deliver unparalleled senior care services. Our campus is home to post acute care and assisted living centers. Both offer a variety of on-site amenities and services specially designed to meet the needs of patients, residents and their family members. The Pavilions at Forrestal provides post acute, long term, Alzheimer’s / dementia and hospice care as well as rehabilitation and respite care, all under one roof. We offer state-of-the-art programs for physical, occupational, speech, respiratory and other therapies and our staff of licensed therapists is available seven days a week. Innovative supervised recreational activities in art, music, crafts and our exercise programs encourage social interaction and significantly enhance patients’ rehabilitation and quality of life. The Pavilions at Forrestal Assisted Living offers the independence of a private apartment and all the comforts of home with a host of convenient amenities and hospitality services. Residents enjoy delicious meals in a restaurant-style dining room, energizing fitness and wellness programs and a diverse range of cultural and social activities. The center also offers concierge service, weekly housekeeping services, courtesy van transportation, and much more. We take great pride in the care we deliver at both centers and our compassionate, experienced staff is focused on creating a warm environment that supports healing.
Pavilions at Forrestal Care Center
Pavilions at Forrestal Assisted Living
5000 Windrow Drive, Princeton, NJ Ph: 609-987-1221 | Fax: 609-987-8310
1000 Windrow Drive, Princeton, NJ Ph: 609-514-9111 | Fax: 609-419-1326
www.atriumhealthusa.com February 2015 21
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