JULY2014 2012 JULY Visit us now online at www.NJPhysician.org
In This Issue: Healthcare Fraud Investigations Good Security Is Good Business Twelve New Jersey Hospitals Save $113M in Gainsharing Pilot; Second Program Underway Leapfrog Hospital Safety Survey Results Released
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Contents
CONTENTS
4
Healthcare Fraud Investigations
6
Good Security is Good Business
10
Hospitals Saved $113M in Gainsharing Pilot; Second Program Underway
12
Leapfrog Hospital Safety Survey Results Released
13
Doctors’ Employment Contracts Due for Renewal-and Revamp
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United Healthcare Teams Up With Accountable Care Organization
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Aetna, Lourdes Team Up for Accountable Care Organization
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Top 50 Health Care Power Players in New Jersey.
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Health Commissioner O’Dowd in Transparency Report: For Profit Hospitals Should Be Required to Release Financial Report
17
University Hospital Makes Strides Since Restructuring, But Faces New Challenges
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ACA Challenges, Opportunities: Where Newark’s University Hospital Stands Amid the Chaos
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Healthcare Reform Brings New Risk. Boynton Healthcare Can Help You Understand the Change and Find Solutions.
Changes in the healthcare law have created new risks for Physicians, Hospitals and Accountable Care Organizations. Boynton Healthcare is a recognized leader in healthcare insurance and risk management and can limit your exposure and help you navigate this new environment through innovative insurance products and services.
For more information Call 800-822-0262 or 732-747-0800 Visit our website www.boyntonhealthcare.net Email us at JBisbee@boyntonandboynton.com
HEALTHCARE FRAUD INVESTIGATIONS “I am a physician in a practice employing more than a dozen Health Care Professionals. Without notice, a few minutes ago, two FBI agents arrived at my office demanding to talk to me about a grand jury subpoena for our practice’s records. I don’t know what this is about. As far as I know, I’ve done nothing wrong but I am concerned about talking to them. I am also concerned about what they will think if I refuse to talk to them. They said they just have a few questions and I have nothing to worry about. Is the investigation focused on me or my practice? What should I do? Specialists in white collar criminal defense routinely receive inquiries of this nature. The appearance of government agents at one’s door can be a daunting experience. What is the appropriate response for a Health Care Professional (HCP) in this situation? In order to frame a response, it is useful to understand the process behind service of a grand jury subpoena and the roles of those involved in a grand jury investigation. Grand Jury Investigations Over the last decade, there has been an explosion of federal and state health care fraud investigations and prosecutions. Since forming a stand-alone health care fraud task force in 2010, the United States Attorneys Office in New Jersey has recovered more than $550M in health care fraud fines, restitution, forfeiture and settlements on behalf of the federal government. Scores of individual HCPs have been convicted of health care fraud and most were sentenced to serve prison terms without possibility of parole. In addition to serving prison terms, they paid fines and restitution, forfeited assets, lost licenses and/or were excluded from billing Medicare or Medicaid. New Jersey has maintained pace with the federal government in aggressively pursuing health care fraud. Just last month, the N.J. Attorney General and the Office of Insurance Fraud Prosecutor announced the arrest of 13 HCPs who were accused of paying hundreds of thousands of dollars in kickbacks to physicians in exchange for patient referrals. Currently, an unspecified number of additional physicians and their practices are the subject of the State’s on-going kickback investigations. At any moment in time, there may be multiple simultaneous state and federal health care fraud grand jury investigations under way in New Jersey. In addition to the U.S. Attorney and N.J. Attorney General, there are numerous state and federal agencies and departments with jurisdiction to conduct health care fraud investigations in our state, including: a nationwide Federal Task Force under the direction of the U.S. Department of Justice, the U.S. Health and Human Services Administration, the Federal Bureau of Investigation, the U.S. Postal Inspection Service, the Office of Inspector General (HHS), and the Criminal Investigations Division of the IRS, to name a few. Grand Jury Secrecy A grand jury investigation is one of the ways that the government prosecutors collect evidence of suspected unlawful activity within its jurisdiction. The grand jury proceedings are protected by strict rules of secrecy. A grand jury investigation is routinely commenced when a prosecutor, state or federal, issues a subpoena(s) and authorizes an agent to serve it. Most subpoenas issued require the production of documents, electronically-stored data, and other physical evidence as opposed to testimony. The grand jury is uninvolved in this aspect of the process and, in most fraud investigations, it will never see the vast majority of subpoenaed documents or data. Instead, the prosecutor will present summaries of documents and data through the testimony of agents. Agents may also testify about the other aspects of their field work, including interview of witnesses, subjects and targets. Ultimately, the grand jury may be asked to determine if there is sufficient evidence to warrant the return of an indictment charging individuals with criminal violations. Generally speaking, the first time any member of the public becomes aware of a grand jury investigation is as a result of receiving a grand jury subpoena. During this investigatory phase, prosecutors have no obligation to give notice to “subjects” or “targets” of their investigation. A subject is broadly defined as anyone whose conduct is within the scope of the investigation. A “target” is someone who, in the opinion of the prosecutor, will be indicted. A grand jury subpoena does not identify subject or targets. It does not disclose whether the subpoena recipient is under scrutiny. Grand jury subpoenas do not directly reveal the purpose or scope of an investigation. In most cases, grand jury subpoenas will require the production of categories of records relating to a specified period of time. In most instances, the subpoena “requests” production of records to an agent or agency in lieu of having to appear before the grand jury. Of course, if you fail to comply with this “request,” you will have to endure the expense and time commitment of appearing before the grand jury to produce the records under oath. It might seem an attractive option to simply comply with a subpoena and produce the requested records to the agency specified in the subpoena. Most defense attorneys would advise against this. A grand jury subpoena presents an opportunity to determine your status and whether you or your practice may be a subject or a target of the investigation. Since prosecutors and government agents are in investigatory mode, subpoenas tend to be over-inclusive, describing broad categories of documents over a lengthy period of time. Literal compliance can be burdensome, time-consuming and expensive to the recipient. By the same token, prosecutors want to avoid being overwhelmed with volumes of irrelevant documents when a more limited number would suffice. Limiting the subpoena to more specific categories of records and timeframes reduces the government’s workload. This presents an opportunity to initiate conversation with a prosecutor to limit the scope of the subpoena, set a schedule for
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production, arrange for an acceptable format (almost all production is electronic) and, most importantly, obtain insight on the scope of the investigation which is otherwise secret. To expedite the process, prosecutors will often provide guidance, if asked, on whether the entity under subpoena, including its principals and employees, are subjects of the investigation. While these representations are not binding, since subsequent developments in evidence may change these prosecutorial evaluations, they are important in determining how proactive you need to be in tracking the investigation and preparing possible defenses. Regardless of your status in the grand jury investigation, the subpoena requires a response. Essentially, you have three options: you produce the records specified in the subpoena, begin to work out an agreement with the prosecution to limit the production, or file a motion to quash or modify the subpoena. In my experience, the vast majority of cases involve successful negotiations and agreement with the prosecutor. In most instances, the production will be made to the specified agency, rather than the grand jury.
Responding to Interview Requests Prior to serving the subpoena, the serving agent may attempt to gather information by interviewing the subpoenaed recipient. Most attorneys will advise you to decline the invitation and refer the agent to your attorney. There is no benefit to agreeing to be interviewed or volunteering information at this point and there is significant potential downside. Many people feel emotionally compelled to answer questions fearing their refusal looks suspicious. Agents are trained to exploit this reaction. Regardless of anything the agent may say or imply, right now he or she is not your friend. It is the agent’s job to acquire as much information from you as possible and make a report of your statement. Even honest mistakes and innocent omissions may be viewed as purposely misleading by the prosecutor and the grand jury. The agent may tell you that you are not a subject and providing information will only help you. Agents, unlike prosecutors, lack authority to make representations with respect to your status in the investigation. Should you choose to do so, you can offer to make a statement after the subpoena compliance issues have been resolved. Routinely, these statements are made directly to the prosecutor, in the presence of your counsel, when you have a better understanding of the scope of the investigation and your status. Unlike an interview by the agent, these statements are subject to a written agreement called a “proffer,” which prohibits the government from using your statements against you. It is important to keep in mind that the service of the subpoena is only the beginning of the investigatory process. As the investigation proceeds, prosecutorial judgments frequently change. While subjects can become targets facing the probability of an indictment, they can also become government witnesses or drop off the prosecutor’s radar entirely, while the prosecutor pursues higher value subjects. Conclusion Receiving a grand jury subpoena for your practice’s records is a sobering event. To place it in perspective, however, it is not an indictment, arrest or search warrant and it does not necessarily portend an indictment. Indeed, not every subpoena recipient is a subject of an investigation, which might be readily established in discussions with the prosecutor. With a deliberate and thoughtful response, there are a number of options which can be explored to maximize the possibility of a resolution without criminal consequences. Peter B. Bennett, Esq. Chair, Government Investigations/White Crime Law Department (Former Federal Prosecutor) Giordano, Halleran & Ciesla, P.C. 125 Half Mile Road, Suite 300 Red Bank, New Jersey 07701 (732) 741-3900 Pbennett@ghclaw.com July 2014
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GOOD SECURITY IS GOOD BUSINESS HIPAA security rules detail the methodology used to protect electronic Protected Health Information (ePHI). These rules apply to Health Care providers, clearing houses, health plans or Covered Entities (CE) that utilize individually identifiable health information. How much time have you spent considering these safeguards? If you are like most providers with a small to medium-sized practice, as little as possible. After all, you primary concern is the care of your patients. But is it important? Let us go through a few statistics. New Jersey Medical Data Breaches 2010-2014 29% of breached ePHI data - due to disgruntled or dishonest employees. 29% of breached ePHI data - due to portable device loss or theft. 14% of breached ePHI data - due to accidental disclosure 14% of breached ePHI data - due to hacking of systems containing ePHI data 7% of breached ePHI data - due to physical theft of office equipment such as PCs or Servers 7% of breached ePHI data – due to loss or exposure of paper records *Source – Chronology of Data Breaches – Privacy Rights Org as of July 18th, 2014 Why is this important to your practice? Beyond the moral obligation of protecting your patients, preventing data breach is, quite simply, good for your bottom line. Data breaches are expensive. HIPAA rules are not the only rules that apply. Your practice is a business entity governed by the State of New Jersey and state’s privacy rules apply. Let’s create a reasonable scenario and see what the impact could be. You travel to a remote location to work with nursing home patients. You bring a laptop containing 1,000 patient records and update the patient’s records seen on that visit. The visit completed, it’s time to return to the office with a quick stop for lunch. The laptop is stolen from the car in the parking lot. You may be thinking that at least it wasn’t your wallet or purse, but you may very well wish it was. When your credit cards are stolen, you are protected by the banks and credit cards companies to limit liability. When that laptop is stolen, your practice is the company and your practice is limiting the liability to the patients. Does the data contain Social Security Numbers? Your state may require credit reporting services for multiple years. Since the laptop in our example contained records for 1,000 patients it exceeded the 500 threshold of HHS for immediate reporting. That requires a report to each individual whose data was breached. If your contact information is incomplete or incorrect for more than 10 individuals you must put out a public notice of the breach on your web site or through the media. The notification must be done within 60 days. You must notify the Secretary of HHS within 60 days through their reporting mechanisms on their web site. Your breach will become public record. Now let’s estimate what that breach may cost your practice. Assuming 10 minutes per phone call and assuming all your contact information is up-to-date, 1,000 calls will take 100 hours of phone time for an employee. Assuming a $30,000 salary and a standard 2,087 hour work year, that is $2,395 of employee time for notifications. If Social Security numbers or other pertinent personal identifiable information are in the records New Jersey has adopted New Jersey Fair Credit Reporting Act ("NJFCRA") and "Identity Theft Prevention Act." This will require reporting to the State Police and the freezing of credit on all impacted individuals through reporting to Consumer Reporting Agencies. You must also notify each person that the report has been made to the Consumer Reporting Agencies. Your practice may also be liable for a fee to remove the freeze at a later date. Consumer reporting agencies have Data Breach services for a fee. Fees vary on the number of individuals and the services required. Assuming another 100 hours of staff time to arrange the records and work with the Consumer reporting agencies the practice will incur another $2,395. A quick check of Consumer Reporting agencies web sites show an average fee of $9.95 for a month of monitoring. Although this price may be reduced through negotiation of services, in our example, let’s use one month to freeze the accounts of the patients breached: $9,950. You will most likely seek legal advice before filing the breach report with HHS. A conservative estimate of $250 per hour and 36 hours results in $9,000 in legal costs. The financial impact of reputational damage due to a data breach is unknown. Total loss to the practice in conservative terms is $23,740, plus the cost of the laptop. But there is more. You may be subject to a fine from the HHS Office of Civil Rights. Below are a few very resent settlements:
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June 23rd, 2014 Parkview Health Systems, Inc. left records unattended - $800,000
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May 8th, 2014 New York and Presbyterian Hospital and Columbia University – Server modification left patient data exposed - $4.8 million
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April 22nd, 2014 - Concentra Health Services – Unencrypted laptop stolen. Breach report led to an audit of HIPAA security practices - $1,725,220
The simplest and least expensive way to avoid a serious breach is to use Encryption. If the laptop from our example is encrypted and meets the guidelines, you may still have to report to HHS and State police in New Jersey but if it is reasonable that the information cannot be discerned you have a very different requirement to meet. You may have lost a laptop but not your practices reputation as well. Encryption of laptops, USB drives and other portable media is important to the protection of your practice. In addition, encryption within your office of PCs, Servers and backup systems is essential to protect patient information. Business Associates Recently, as required by law, the Secretary of Health and Human Services (HHS) reported to congress on the state of ePHI breaches. The information in the 2014 report covers years 2011-2012. This report is best summarized by a chart from the report:
Theft is not the only concern to your practice. As part of your everyday activities your practice may deal with medical billing companies, collections companies, accountants, etc. As the next chart from the HHS congressional report shows, this may result in a different type of ePHI breach; one from a business associate.
July 2014
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Business Associates are Covered Entities and have responsibility for protecting your patient information. But without a Business Associate Agreement you may not be in compliance. Business Associate Agreements are listed as required under the HIPAA Organizational Requirements 164.314. As the chart shows, 25% of data breaches come from entities other than the practice. Does your practice have Business Associate Agreements? HIPAA HIPAA security rules are broken into three sections: •
Administrative Safeguards – These rules assign responsibility within the practice, formulate policies, establish training for the workforce and set up risk management policies.
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Physical Safeguards – controlling access to the facility, workstations and various devices.
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Technical Safeguards – The IT portion of the rules that cover data access, logging, auditing and transmission.
Our experience has shown that most small to medium practices assign HIPAA security compliance to the Practice Manager. The assignment is somewhat overwhelming when you add this to the multitude of other responsibilities most Practice Managers already have. This normally leads to seeking out a consultant. Most IT consultants understand systems well, but not the HIPAA security rules. Most HIPAA consultants understand the rules but don’t understand the IT systems. Some consultants perform penetration scans on the outside of the office, send questionnaires to the compliance contact, and claim the office secure. This simply places the burden back on the Practice Manager to answer questions that led to hiring a consultant in the first place, and do nothing for the administrative and physical security portions of the rule. Here are some questions to ask when considering a consultant to help with HIPAA security: •
Do you have a checklist to review all of the safeguards listed in the rules?
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Can you help with any of the policies and procedures required such as media disposal, sanctions policy, breach policy, a computer use policy, etc.?
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Have you ever written a disaster recovery policy?
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Do you use automated scanners and do they understand HIPAA rules?
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Will you scan inside our network as well as outside our network?
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How do you report your findings? Are the HIPAA rules sited in the reports?
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Do you explain your results in plain English?
To assist your practice ArchTech Medical has placed a free brief checklist on our website for you to review. You may download it at http://www.archtechmedical.com/Checklist. This checklist asks the questions, in plain English, that will start the process of your evaluation of the HIPAA security safeguards. ArchTech Medical is an Archimedes Technologies, LLC Company providing consulting services since 2001.
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Hospital Rounds
Hospitals saved $113M in gainsharing pilot; second program underway By Beth Fitzgerald Twelve New Jersey hospitals achieved $113 million in health care savings during a three-year pilot project that encouraged hospitals and physicians to work together to provide more efficient, high-quality care, according to the New Jersey Hospital Association, which led the New Jersey Care Integration Consortium, also known as the “gainsharing” program. The Medicare pilot program gave physicians financial incentives based on their performance on quality and efficiency metrics. The program reduced costs per admission by roughly 8.5 percent. Of the total savings of nearly $113 million, about 17 percent (nearly $19 million) was paid out as physician incentive payments. “In an environment where there are significant pressures downward on government revenue, and Medicare is a big part of any hospital’s business, this was an opportunity for the hospitals to coordinate care delivery with the doctors and for those doctors that performed and improved the quality of care to receive a modest financial bonus to do so,” said Sean Hopkins, NJHA’s senior vice president of health economics. He said that, when the program ended in 2012, the Centers for Medicare and Medicaid Services launched a new program that built on the success of the New Jersey gainsharing pilot: “To a great extent, New Jersey hospitals have really been on the forefront of care coordination, improving the dialogue with all the providers.” The new program, the CMS Bundled Payments for Care Improvement Initiative Model 1 Gainsharing Program, enrolled a new group of 16 New Jersey hospitals and is still ongoing, Hopkins said. Under that program, now in its second year, the hospitals are required to accept a reduction in the Medicare reimbursement in order to participate in gainsharing. The Medicare reduction was 0.25 percent in the first year and rose to 1 percent this year. “Traditional Medicare protocols pay hospitals and physicians in different ways,” Hopkins said. “Hospitals receive a set rate for each patient case, regardless of how long a patient is hospitalized, while physicians are paid ‘a la carte’ for each test, procedure or patient day in the hospital. The gainsharing philosophy makes hospitals and physicians partners in identifying more efficient ways to deliver quality health care.” The gainsharing pilot was featured by the U.S. Agency for Healthcare Research and Quality as an example of new models that are reforming the nation’s healthcare delivery system, according to NJHA. “Healthcare is changing – no question – and New Jersey hospitals are committed to being leaders in that change,” said NJHA President and CEO Betsy Ryan. The 12 original pilot hospitals were:
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AtlantiCare Regional Medical Center, Atlantic City
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CentraState Medical Center, Freehold
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Holy Name Medical Center, Teaneck
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Hunterdon Medical Center, Flemington
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Jersey Shore University Medical Center, Neptune
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JFK Medical Center, Edison
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Monmouth Medical Center, Long Branch
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Our Lady of Lourdes Medical Center, Camden
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Overlook Medical Center, Summit
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St. Francis Medical Center, Trenton
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Robert Wood Johnson University Hospital Somerset, Somerville (formerly Somerset Medical Center)
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The Valley Hospital, Ridgewood
Hopkins said the original gainsharing program “was limited by CMS to 12 hospitals and 12 hospitals only. Many other New Jersey hospitals requested the opportunity to get in on the original demonstration. The Model 1 program provided many of these hospitals with their first opportunity to initiate the gainsharing program.”
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The 16 hospitals in the new program are:
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Capital Health Medical Center – Hopewell
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Capital Health Regional Medical Center
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Robert Wood Johnson University Hospital
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Robert Wood Johnson University Hospital Hamilton
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Robert Wood Johnson University Hospital Rahway
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Saint Clare’s Hospital (Denville)
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Saint Clare’s Hospital (Dover)
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Saint Michael’s Medical Center
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Saint Peter’s University Hospital
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Inspira Medical Center Elmer
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Inspira Medical Center Vineland
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Inspira Medical Center Woodbury
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St. Joseph’s Regional Medical Center
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St. Joseph’s Wayne Hospital
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St. Mary’s Hospital Passaic
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University Medical Center of Princeton at Plainsboro
Visit us now online at www.NJPhysician.org
July 2014
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Leapfrog Hospital Safety Survey results released By Beth Fitzgerald Hospitals voluntarily participate in the annual hospital safety survey by the Leapfrog Group, which was founded in 2000 to promote the safety, quality and affordability of health care. In New Jersey, 59 of the state’s 71 acute care hospitals participated in the 2014 Leapfrog survey. In the fall, Leapfrog will issue another report giving each hospital a letter grade — A to F — for safety. That Safety Score report card includes information from the 2014 Leapfrog survey and other national hospital safety databases. With its 83 percent response rate, New Jersey ranked third in the nation for hospital participation in the 2014 Leapfrog survey, behind Maine and Massachusetts, according to the New Jersey Health Care Quality Institute. Consumers can look up individual New Jersey hospitals on the Leapfrog report and see how they fared in such areas as staffing in the intensive care unit; maternity care; hospital-acquired conditions like infections, injuries and pressure ulcers; and high-risk surgeries like aortic valve replacements. Linda Schwimmer, vice president of the New Jersey Health Care Quality Institute and member of the Leapfrog Group’s board of directors, commended the high rate of participation by New Jersey hospitals. “At the close of the 2013 Survey we had 59 hospitals reporting and to see that same amount participate is encouraging,” Schwimmer said. Horizon Blue Cross Blue Shield of New Jersey awards bonuses to hospitals of up to $250,000 a year based on their performance on the Leapfrog survey. “It’s a perfect example of how the survey can be used to benefit all players involved,” Schwimmer said. “Hospitals are incentivized and rewarded for providing higher quality care, patients benefit from receiving better care and payers are getting more value for their dollars; everybody wins.” Kerry McKean Kelly, spokeswoman for the New Jersey Hospital Association, said Leapfrog is one of several hospital report cards available to the public.
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"It can be a helpful source of information, but not every hospital participates in the Leapfrog survey," she said. "That doesn’t mean the hospital scored well or scored poorly – it simply means the hospital did not participate in that particular survey." Other sources of hospital quality information are the federal government’s Hospital Compare website and the State of New Jersey’s annual Hospital Performance Report, she noted. "Our best advice to patients and health care consumers is to take advantage of the wide array of health care quality information that’s out there," Kelly said. Leah Binder, president and CEO of the Leapfrog Group, said, "New Jersey hospitals as a whole do very well on Leapfrog." She said the 83 percent participation rate in New Jersey is good, but "we'd like to see 100 percent." Binder said consumers making decisions about hospitals should look at how hospitals perform on the "hospital conditions" section, which focuses on safety, as well as how they perform on specific procedures, such as maternity care and heart surgery. Consumers can see if "the hospital is making the kind of effort you would expect to maintain a safe environment." Leapfrog also looks at the hospital's nursing workforce. Binder said: "Nursing is pretty important. It's most of the care delivered in the hospitals." She said there are differences among hospitals when it comes to overall safety and how they perform on certain procedures, "so it definitely merits a few minutes of your time to take a look." Leapfrog's hospital safety scores — the A to F letter grades — will be released this fall, probably in October, Binder said. "We grade them on the safety of the hospital," she said. "It is very important; we think safety should come first." Binder said Leapfrog looks at whether the hospital has a computerized system for managing its medications: "That can cut medication errors by 75 percent; it's very important." Binder noted that employers and health plans incorporate Leapfrog data in their "pay-for-performance" contracts with hospitals. "All the national health plans use the Leapfrog data as part of their pay-for-performance programs, which are programs where they pay hospitals differential payments at contracting based on how they are doing," she said. "Leapfrog is a very important data set for employers directly and for health plans they work with." She said the Horizon bonus program has contributed to improvements in New Jersey hospitals. "It is an excellent program." She said she is puzzled why some hospitals don't participate in Leapfrog, which she said is a prominent quality metric in New Jesey and where the hospitals who participate can get bonus payments from Horizon. The Leapfrog Group was founded in 2000 by a group of employers, initially supported by the Business Roundtable, and is supported by its members and by the Robert Wood Johnson Foundation. Leapfrog said its goals are "mobilizing employer purchasing power to alert America's health industry that big leaps in health care safety, quality and customer value will be recognized and rewarded." Employer members of Leapfrog include Verizon, UPS and Boeing, and members also include organizations of health care purchasers, including the Northeast Business Group on Health, which includes New Jersey.
Doctors’ employment contracts due for renewal —and revamp By Andis Robeznieks Physician employment contracts with hospitals that were signed in the early days of healthcare reform are coming up for renewal. Experts say the expectation of payment reform requires that these new deals include the flexibility to adapt to expected and unforseeable changes. “We're seeing a fair amount of handwringing in terms of these deals,” said Max Reiboldt, president and CEO of the Coker Group, an Alpharetta, Ga.-based healthcare consultant. “We are changing the paradigm of how doctors are being paid. It's not 100% (relative value unit) productivity anymore.” That said, the predominant payment system has not changed yet and probably won't before contracts expire. So Reiboldt said many new employment contracts are including automatic renegotiation triggers if, for example, 20% of a hospital system's reimbursement starts to involve pay-for-value metrics. “Most hospitals have not yet experienced the change themselves but they anticipate it,” Reiboldt said. Future value-based payments will be similar to capitation models of the past, he said. But he noted that capitation typically involved individual doctors negotiating their own deals. But with pay-for-value, “all providers are in this Related Articles July 2014
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In contract renewals, Reiboldt said “money is always the biggest issue.” But with reimbursements down and future revenues uncertain, one way to mitigate economic concerns is to work doctors into an organization's governance structure. They don't necessarily have to be business partners, but physicians need to have a role as “functional decision makers,” he said. “You have to treat your doctors like partners. Most hospitals get it, some don't. You still have a few old-school CEOs who think that doctors are indentured servants and not partners.” The other key issue affecting contract renewals is clinical integration. Having doctors involved in governance and decisionmaking can make the process smoother while also helping to identify areas where integration and reimbursement issues intersect. Once they become employed, doctors never again have the leverage they had during negotiations to sell their practice, said Bob Collins, managing partner of the Medicus Firm, a Dallas-based physician recruitment firm. But they're finding ways to make up for it. “The biggest change is that physicians are becoming much wiser in the use of data for their own benefit,” he said. “They can come to the table showing they made this metric or that metric while showing how much direct and indirect revenue they generated.” One sticking point that may arise in renewing an employment contract is that hospitals may decide they no longer need every physician who was part of a group practice they acquired. A hospital system may decide they only need 12 of the 15 physicians they hired when acquiring a 15-physician specialty group. “If it's a good deal for 12 and a bad deal for three, (the doctors) are going to wish those three well,” Collins said. “The smaller the group, the greater the loyalty and the tendency to say 'All of us or none of us.' But the larger the group, the easier it is to say majority rules.” Collins added that the most frequent disconnect in negotiations between doctors and hospitals is over the value of the physician practice. Doctors may want to include intangibles such as community goodwill in the value of the practice while hospitals only want to include the cold bottom line. He advised doctors, “Don't take it personally.” It often takes them some time to “get over the sticker shock.” Contracts for newly hired physicians are also in a state of flux. Travis Singleton, senior vice president at Irving, Texas-based physician recruiter Merritt Hawkins & Associates, said organizations struggle to find the “Goldilocks Zone” where they offer physicians the right mix of a base salary and quality incentive payments. This struggle is reflected in his company's recent review of its physician searches, which found that fewer clients now are offering quality incentives to new recruits. Between April 2013 and April 2014, Singleton said the number of Merritt Hawkins clients offering quality incentives to new doctors fell from 39% to 24%. “Clients are putting the brakes on this until they figure out how to do it,” he said. But those that still offer quality incentives are basing a growing percentage of compensation on those quality metrics. In 2011, organizations that used quality incentives kept the level at around 5% of their compensation packages. That figure has increased to nearly 15%.
UnitedHealthcare teams up with accountable care organization By Beth Fitzgerald Summit-based Optimus Healthcare Partners, an accountable care organization, and the health insurer UnitedHealthcare announced Wednesday they are working together to provide coordinated health care. Their goal: improving quality and reining in costs for New Jerseyans enrolled in UnitedHealthcare's employer-sponsored and Medicare health plans. Optimus Healthcare Partners is one of more than a dozen ACOs that have taken shape across New Jersey in the wake of national health care reform. ACOs get physicians, hospitals and other health care providers to work in tandem with health insurers, Medicare and other health plans. In April, UnitedHealthcare announced an ACO partnership with the Atlantic Health System. Optimus includes more than 550 physicians – more than 170 primary care physicians and 380 specialists – who coordinate care and are accountable for quality, cost and patient satisfaction for the health care they provide.
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The more than 17,000 people enrolled in UnitedHealthcare’s employer-sponsored and Medicare plans who currently receive care from Optimus providers will not have to do anything differently to get the benefits of the ACO. In fact, some have already experienced them: The Optimus ACO program became available for UnitedHealthcare Medicare Advantage enrollees April 1, and for UnitedHealthcare’s employer-sponsored health plan participants July 1. UnitedHealthcare said its members who have a doctor-patient relationship with an Optimus physician will have all aspect of their care coordinated by care teams with the goal of providing the right care in the right place at the right time. “Optimus Healthcare Partners’ patient-centered approach to health care focuses on care coordination and helps patients navigate through the complex health care system,” said Dr. John Vigorita, chief executive of Optimus Healthcare Partners. “UnitedHealthcare continues to work with care providers statewide to help enhance health services and improve coordination of care for patients,” said Michael McGuire, CEO of UnitedHealthcare of New York and New Jersey. “We believe our collaboration with Optimus Healthcare Partners will deliver enhanced quality, better outcomes and greater efficiency for our health plan customers in New Jersey.” The Optimus ACO includes the Optimus physicians and six hospitals: Morristown Medical Center, Overlook Medical Center, Newton Medical Center, Somerset Medical Center, St. Barnabas Medical Center and Warren Hospital
Aetna, Lourdes team up for accountable care organization Aetna announced Monday that the Lourdes Health System in Camden is its latest New Jersey accountable care organization partnership. Numerous such partnerships have been launched statewide by regional health care systems and doctors in recent years. They can give providers financial incentives to work collaboratively to improve patient care — and to get away from the traditional “fee-for-service” model that pays for medical care regardless of whether it improves patient health. The Aetna agreement with LHS Health Network, an affiliate of Lourdes Health System, begins July 1 and will cover 20,000 Aetna members in Camden, Burlington and Gloucester counties. In addition, Aetna and LHS Health Network will begin a new Medicare provider collaboration serving more than 2,000 Aetna Medicare members. ACOs are alliances of physicians, hospitals and other providers. They are known as “patient-centric” organizations where clinicians assume responsibility for improving the quality of patient care and lowering costs through better coordination and preventive care. John Lawrence, president, Aetna – New Jersey, said the company “will work closely with LHS Health Network to find opportunities to share specific, useful health information. In turn, the physicians will use this information to improve care for members, close gaps in care and reduce waste. We are creating a loop of improved information to drive better care. By working together, we can help bring better health, better care and better cost to thousands of Aetna members.” Aetna said 135,000 of its members in New Jersey now are in various types of “value-based” collaborative arrangements, including ACOs, and its goal is to reach 215,000, or nearly 20 percent of its New Jersey membership, by year-end. Aetna has ACO agreements with Atlantic Health, parent of Morristown and Overlook Medical Centers; the Hunterdon Healthcare System; and Summit-based Optimus Healthcare Partners, a physician-led ACO. Aetna said that, nationally, more than 1.5 million of its members are covered by these new health care models. LHS Health Network is a group of health care providers who coordinate care and are accountable for cost, quality and patient satisfaction for the health care they provide, and includes 90 primary care physicians. “Our new collaboration with Aetna makes sense, given Lourdes’ position in the southern New Jersey market as a high-value provider offering members quality health care services in the most efficient manner,” said Alexander J. Hatala, chief executive of Lourdes Health System and the LHS Health Network. Under the agreement with LHS, Aetna also is implementing a Medicare Provider Collaboration model to improve care to more than 2,000 Aetna Medicare Advantage members, who may have complex health care needs. July 2014
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Top 50 health care power players in New Jersey Health care — it's all about health care in 2014. Who's providing it, who's paying for it, and who is finding the ways to make the system work better. With that in mind, NJBIZ has selected the 50 biggest industry power players in the state. There are hospital executives (11 CEOs made the list, led by Atlantic Health's Joseph Trunfio and Barnabas Health's Barry Ostrowsky) and insurance leaders (Horizon's Bob Marino and QualCare's Annette Catino were obvious picks). There are academics (see Rutgers' Bob Barchi and Brian Strom) and thought leaders (including Joel Cantor, David Kostinas and Jeff Brenner).
There are key figures from doctors groups (such as Summit Medical Group's Jeff LeBenger, Advocare's John Tedeschi and Partners in Care's Ralph Tang) and associations (we like Jeanne Otersen and Ward Sanders). And you have to have a lawyer or two (we'll take Scott Kobler and Mark Manigan), along with the ultimate power player (George Norcross). Of course no list would be complete without elected and appointed officials, people such as Mary O'Dowd and Lou Goetting. And the No. 1 pick is Jennifer Velez, who runs the Department of Human Services.
Health Commissioner O’Dowd in transparency report: For-profit hospitals should be required to release financial report By Beth Fitzgerald Mary O'Dowd For-profit hospitals should disclose their annual financial statements to the public, just as nonprofits do, and all hospitals should make their quarterly financials public, State Health Commissioner Mary O'Dowd said in a major “hospital financial transparency report” issued Friday evening. For-profit hospitals have been acquiring what one would consider "troubled" New Jersey hospitals in recent years, and thus far as private enterprises have not had to disclose their finances. Last year Gov. Chris Christie vetoed legislation requiring financial disclosures by for-profit hospitals. The governor told O’Dowd to come up with recommendations on the kind of information for-profit hospitals should disclose. In a cover letter to Christie along with her report, O’Dowd said her recommendations are designed to ensure, “the department gets the information it needs to be an effective regulator in its role protecting the public’s interest and access to health care.” If the hospitals do not voluntarily follow her recommendations, O’Dowd said her department can issue rules requiring this increased level of reporting. State Sen. Joseph F. Vitale, chair of the Senate Health Committee and co-sponsor of the for-profit disclosure bill, welcomed O’Dowd’s recommendation. He said the commissioner is “taking the right leadership role in addressing the issue. There is a lot of opposition by the for-profit hospital industry.” Vitale said information that must be disclosed by nonprofit hospitals “should be a requirement of for-profits. The public and the Legislature and policy makers need this knowledge and information.” A hospital license “is a privilege, not a right,” and for-profit hospitals depend on public money in the form of charity care, Medicaid and Medicare, and financing via tax-exempt bonds, Vitale said. He said the disclosure of financial information by all hospitals is
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needed “so we can track and understand their viability and their health.” O’Dowd’s recommendations could require rule making by her department if they are to take effect, and Vitale said that could take time, but “this is a good step in the right direction.” New Jersey Hospital Association spokeswoman Kerry McKean Kelly said the group is concerned about requiring disclosure of quarterly financial statements. “They are internal working documents with proprietary information. Sharing that information, especially in an unaudited fashion, could confuse consumers and pose risks to the hospital's business operations and plans. We also would note that the report focuses solely on hospitals, while there are many other segments of health care, such as insurance companies, that should be held to the same level of responsibility,” Kelly said.
Health Commissioner O’Dowd
Kelly said, “We're committed to working with the state on enhanced transparency. We know health care is very complex and can be confusing to consumers, and we want to help provide them with useful information. We're still reviewing details of the report, but we applaud the department for this effort and pledge to work with the state in new areas such as the task force on hospital boards.” O’Dowd made several other recommendations, including that hospitals report to the department when they sell their facilities and then lease them back. O’Dowd said, “There is a possibility that either the owner can evict the hospital operator tenant or the tenant can terminate its lease on little or no notices ... (l)eaving the surrounding community with less access to hospital care.” Jeanne Otersen, policy director for the Health Professionals and Allied Employees union, said the recommendations “make real improvements in access for consumers to basic financial information on our hospitals and add deadlines for hospitals to submit the information.” But she would go further: “There is still much more information that for-profit hospitals will not have to provide that would tell a more complete picture on how our health care dollars are being spent.” And while hospitals will be required to disclose saleleaseback arrangements, “(w)e also will not get information on the terms of sale-leaseback deals that have the potential to put control over our hospitals into the hands of real estate companies.” And she called for “additional enforcement mechanisms, which we believe are essential.”
University Hospital Makes Strides Since Restructuring, But Faces New Challenges Andrew Kitchenman
CEO aims to eliminate deficit in three years, make case for preserving hospital’s major role in northern New Jersey healthcare University Hospital in Newark has completed its first year as a standalone, state-owned facility – a momentous change that has seen the hospital remake its administrative structure, open a new federally qualified health center, and reduce an unsustainable deficit. But the hospital faces a new set of challenges, including a regional study that could lead to the consolidation of inpatient Newarkarea hospitals; an ambitious goal of eliminating a remaining $27 million deficit in three years; and a large number of needed upgrades to its building, including new intensive-care units, operating rooms and emergency power generators. Hospital President and CEO James R. Gonzalez describes it as an “exciting” time for the hospital, which was separated from the former University of Medicine and Dentistry of New Jersey on July 1, 2013, as part of the legislation that merged UMDNJ with Rutgers University. It hasn’t been a clean break for the hospital, which still is nearly entirely dependent on the clinical faculty of neighboring New Jersey Medical School – which is now a part of Rutgers -- to serve as the hospital’s medical staff. “We were one happy family and then we had a legal divorce, so now we’re sorting through those issues,” Gonzalez said, adding that the “divorce” was “amicable.” The hospital has absorbed many of the administrative staff and functions that were previously part of UMDNJ, but it’s still linked to the school’s physical infrastructure. University Hospital’s future will hinge on the state’s plans for healthcare in the Newark area – seven of the 11 positions on the July 2014
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hospital board were appointed by Gov. Chris Christie, while the other four are Rutgers University leaders who serve on the board in an ex-officio capacity. The hospital board chairman is former Gov. Donald T. DiFrancesco. A key factor in determining the hospital’s near-term future will be the study that the New Jersey Health Care Facilities Financing Authority has hired consulting firm Navigant to complete. The report could recommend consolidating or regionalizing medical services in the Newark area, if it determines there is duplication or overcapacity in the city. But regardless of what steps Navigant recommends, Gonzalez is confident about the hospital’s prospects. “We will be part of that future,” said Gonzalez, noting the hospital’s role as an academic medical center and regional trauma center. “I’m hoping that study will bring out the fact that there are too many in-patient beds and the capacity is beyond what is truly needed,” he said. “And that someone will come with a plan or strategy to restructure healthcare in the city of Newark, determining where the centers of excellence are, where they should remain, and what services could be integrated or shared with the other facilities within the region.” He’s also hoping that the study takes into account the best use of the hospital’s facilities. Gonzalez said the hospital needs a variety of expensive upgrades – the facility, opened in 1979, is becoming dated. “Do you retrofit what you have now or consider building brand-new?” Gonzalez said. If the state decides a new building is needed, the existing facility could be transformed into an ambulatory surgical center or put to some other outpatient use, he added. Gonzalez touted major successes in the past year, foremost among them reducing a projected $37 million deficit by roughly $11 million by cutting costs and making the hospital more efficient. The effort has been aided by Barnabas Health, which has been consulting with the hospital on management issues since October. Gonzalez said the involvement of Barnabas has helped reduce costs and improve the quality of care at the hospital.
“A deep dive was done to understand the expenses for each department, for each service,” with an eye toward shifting staff and funds toward the departments that are attracting more patients, Gonzalez said. There are some expenses the hospital can’t cut, such as those related to its status as the only Level I trauma center in northern New Jersey. Of the 95,000 emergency department visits the hospital has each year, more than 6,000 are for trauma, Gonzalez said. In addition, University serves the largest number of uninsured, underinsured and Medicaid patients of any hospital in the state. The hospital’s ambulance squad provides emergency medical services for the city and Newark Liberty International Airport. The hospital has strengths that contribute toward its financial stability, including strong neurosurgery and orthopedic departments. It also is one of two liver transplant centers in the state. The hospital has taken steps to relieve some of the pressure on its emergency department, including signing up patients for health insurance offered through the federal Affordable Care Act. The goal is to have more newly insured patients seek care in primary-care settings, avoiding unnecessary medical emergencies. One place where they could receive this outpatient care is across the driveway from the hospital’s main building, where a new clinic operated by the city’s federally qualified health center recently opened. The center has a “patient navigator” based in the emergency department who signs up patients for appointments at the clinic. “It was a challenge because many of them were coming to the emergency room and it was becoming an overcrowding situation,” Gonzalez said, adding that reducing wait times will improve patient satisfaction. In addition, the hospital opened an “observation” unit in the middle of June. This second-floor unit allows hospital staff to monitor patients that the hospital doesn’t expect to stay for more than 24 hours – this should help the hospital avoid unnecessary inpatient admissions, Gonzalez said. University Hospital also is aiming to finalize contract talks with more commercial insurers. It also has been working to attract more doctors from outside of the medical school faculty – which could also attract more patients and revenue to the hospital. For all of these changes, the ongoing cooperation of Rutgers New Jersey Medical School will be essential. The separation of the
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school and hospital added a layer of bureaucratic complexity, as the federal government required a series of steps to adhere to the Stark Law, which limits physician referrals to prevent doctors from profiting from those referrals. “There’s a lot more documentation about the time and effort that physicians are spending providing services for the hospital,” said Dr. Kendall R. Sprott, senior associate dean for clinical affairs for the medical school, who oversees the clinical relationship between the school and the hospital. Sprott said the school is keeping an eye on whether a new hospital building is needed in Newark, noting that hospitals in Newark and across the country have had to adjust to an increase in the number of empty inpatient beds as the healthcare system increasingly focuses on outpatient care. “One of the challenges we have is that we have a relationship that’s defined by a series of contracts,” which are designed to be permanent, Sprott said. “This relationship is really a relationship of codependency.” The medical school faculty members “need a place” to practice, Sprott said, while University Hospital officials “need a staff. We are that staff.” Sprott added that the school and hospital have been able to work cooperatively to overcome challenges during the past year. Another partnership that’s important to the hospital’s future is with the Greater Newark Healthcare Coalition, a regional organization that includes officials from each of the major hospitals and health centers near the city. University Hospital is participating in an application to be a Medicaid Accountable Care Organization, which is expected to encourage unprecedented cooperation between longtime rival institutions in an effort to better coordinate patient care, particularly for frequent hospital patients. “Competing with each other isn’t going to work any longer,” Gonzalez said.
ACA challenges, opportunities: Where Newark’s University Hospital stands amid the chaos By Beth Fitzgerald
As he marks today's first anniversary of the breakup of UMDNJ, Newark's University Hospital Chief Executive James R. Gonzalez is coping with the financial challenges and opportunities of the Affordable Care Act, while at the same time welcoming a major state study of how best to provide health care service in a city and region with surplus hospital beds. Since 2011 Gonzalez has led University Hospital, which became the teaching hospital of Rutgers Biomedical and Health Sciences when Rutgers took over UMDNJ’s medical schools in Newark and New Brunswick on July 1, 2013. In its first year as a free standing state of New Jersey facility, University Hospital provided care to about 17,000 inpatients and 170,000 outpatients. Much of the patient care is provided by 450 attending physicians and faculty from Rutgers, assisted by about 600 residents who rotate during the year through University Hospital as they complete their medical education. Gonzalez said he wants more community-based physicians to affiliate with University Hospital and send their patients there. “Our goal is to reach out into the community and invite other community physicians and specialists to join our staff and bring their patients to our facility,” he said. To that end, University Hospital is negotiating new contracts with several health insurance companies so it has “more ability to attract doctors whose patients are insured” by them, he said. Right now just less than 12 percent of hospital revenue comes from commercial insurance carriers, and Gonzalez wants that to increase. The ACA is a doubled edged sword for University and most other hospitals statewide. While Medicare reimbursements are declining under the ACA, the law has also gotten more people covered by health insurance, thus potentially providing hospitals a more stable revenue source. Gonzalez said University Hospital is eager to compete for the newly insured who have more options when it comes to deciding where to seek medical care. To help get the uninsured on board, University Hospital reached out into the community to help Newark residents sign up for Medicaid, which New Jersey is expanding under the ACA, and for government-subsided commercial health insurance sold on the HealthCare.gov portal. He said the hospital helped about 2,000 people get covered, about a third through Medicaid. July 2014
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James R. Gonzalez
Gonzalez said the Medicaid expansion in particular is good for University Hospital: “Medicaid is a very strong insurance plan for us in terms of meeting our costs.” University Hospital also is a “safety net” hospital that provides a major share of the medical care to low-income residents of Newark and Essex County. “That becomes an enormous challenge because many of the folks we care for are uninsured or undocumented.” He is concerned, however, about the new ACA health insurance policies where patients pay low premiums but are responsible for high co-pays and deductibles. He is concerned they won’t be able to pay their share of the bills and if that happens, “It will drive our bad debt up in the future and we will have a crisis two or three years down the road.” The era of belt-tightening ushered in by the ACA “is a huge challenge for us as an academic medical center,” with higher operating costs than the typical hospital, Gonzalez said. In addition, “We are a level one trauma center, which means that we provide all the high-end specialty services that a trauma center is required to have, 24/7. So all of our specialists must be at the hospital in support of any type of disaster or trauma that comes through our doors.” University has about 3,000 employees and its $600 million budget comes from state revenues, Medicaid, Medicare, and commercial insurance. In its first standalone fiscal year that ended June 30, University Hospital was projecting a $27 million loss; Gonzalez said that loss came in about $11 million less than projected and the hospital is forecasting continued financial improvement in the current fiscal year which will end June 30, 2015. Last week a state agency awarded a contract to the Navigant health care consulting firm to study potential consolidation or regionalization of health care services in the greater Newark area. The study will look at five hospitals, three of them in Newark: University Hospital, Newark Beth Israel Medical Center and Saint Michael’s Medical Center, as well as Clara Maass Medical Center in Belleville and East Orange General Hospital. The study will also include several publicly-funded health centers. Gonzalez said he welcomes the Navigant study, which is to be completed by Nov 15. In addition to excess hospital beds in greater Newark, there is a need to invest hundreds of millions of dollars “to upgrade the infrastructure to the current status of where health care is, particularly in the technology arena,” Gonzalez said. “I think it’s a great idea to have an outside, objective point of view to look at the assets and see where the centers of excellence lie, and try to organize a system to provide the level of care that is needed.” There is a long tradition of competition among New Jersey hospitals. Gonzalez said “People have to set aside their egos for the common good and try to piece together a plan that is going to provide more efficient care and at the same time quality care.” He said the excess hospital space not needed for inpatient care could find other uses. It could emerge that “we have enough space to do not only health care but to address community needs. If not health area, maybe we can use the space in some of these facilities for social services, for outreach or patient education. By taking a global perspective of all the assets in the city, someone can come up with a plan and a strategy that will look at all the components of how we can best deliver health care and provide better community outreach for the entire city.”
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