Temporary $87 billion Federal Medical Assistance Percentage Increase
Expansion of Benefits for Banks Purchasing Tax-Exempt Bonds
Adoption of Certified Health Information Technology (HIT)
Prevention and Wellness Fund
Long-term Care Hospital (LTCH) Relief
Health Professional Training
Home and Community Based Services (HCBS)
Community Health Center (CHC) Modernization
Temporary $87 billion Federal Medical Assistance Percentage Increase
Provision(s):
The act provides nearly $87 billion in temporary Federal Medical Assistance Percentage (FMAP) funding with 67% of funds allocated to all states and one third allocated to states with higher increases in unemployment rates. Three types of assistance to states are available from the beginning of FY 09 through December 31, 2010. They are:
1. Hold Harmless – States that are at risk for a decline in their FMAP due to formula issues would be held harmless.
2. Uniform FMAP Increase – All states will have their FMAP increased by 6.2 percentage points.
3. FMAP + Bonus – States with large increases in unemployment will receive an additional increase in FMAP related to the increase in the state’s unemployment rate.
Impact:
This provision, combined with a 60% subsidy for COBRA premiums for up to nine months for laid-off workers, should help people maintain their health coverage and continue to access needed healthcare.
Ultimately, this provision should help hospitals in states with current and future budget deficits caused by the recession to, at a minimum, maintain current Medicaid payment rates, which should prevent the Medicaid portion of hospital revenues from decreasing. However, this could potentially decrease hospital/SNF revenue if the patient/resident was commercially insured and changed to Medicaid.
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Expansion of Benefits for Banks Purchasing Tax-Exempt Bonds
Provision:
For 2009 and 2010, the provision raises the amount of Bank Qualified bonds that can be issued from $10 million to $30 million. Furthermore, the $30 million cap will provide additional flexibility by not being subject to the government or conduit issuer, but instead the borrower. When tax-exempt bonds are Bank Qualified, banks purchasing the bonds are able to deduct 80% of their cost of buying and carrying the bond. Banks pass along the savings to borrowers by way of a reduced interest rate.
Impact:
With capital slow to return to the hospital related bond markets, the expansion of the Bank Qualified limits will increase demand from Banks for tax-exempt bonds. Utilizing certain financing structures, hospitals can take advantage of the increased Bank investor demand to obtain capital funding at reasonable interest rates.
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Adoption of Certified Health Information Technology (HIT)
Provision(s):
A total of $19 billion through Medicare and Medicaid to help physicians and hospitals adopt health information technology (HIT)
Each Inpatient PPS hospital that meaningfully adopts HIT systems is authorized Medicare incentive payments based on a formula which provides each hospital a base amount of $2 million plus an additional amount related to the number of discharges. Specifically, a PPS hospital will receive $200 for each discharge for discharges starting with its 1,150th and continuing through its 23,000th discharge. PPS hospitals that do not meaningfully adopt HIT by FY 2016 will receive reduced payments for reimbursement.
Each Critical Access Hospital (CAH) that meaningfully adopts HIT systems is authorized Medicare incentive payments of $1.5 million. The CAH is able to depreciate the cost of the HIT system on its cost report. As with a PPS hospital, a CAH that does not meaningfully adopt HIT by FY 2016 will receive reduced payments for reimbursement.
Physicians using certified EHR technology with e-prescribing, information exchange, and quality measure reporting will receive 75 percent of estimated allowed charges per year for all covered professional services from the Part B Trust Fund, limited to maximums over a five-year period that begin in Year 1 at $15,000 and end in Year 5 at $2,000. The first eligible year is 2011.
If EHR technology is adopted in 2011 or 2012, the maximum yearly incentive is increased to $18,000. For example, if adopting in 2011, the maximum amount available over 5 years is $44,000. If adopting in 2014, the maximum amount available over 5 years is $26,000. If a professional is serving in a designated rural health professional shortage area, payments are increased 10 percent.
Physicians not implementing by 2015 are not eligible to receive funds. If physicians are not using EHRs by 2015, fee schedule amounts are reduced 1 percent. The fee schedules will be reduced by 2 percent in 2016 and 3 percent in 2017. In 2018 and after, the Secretary may further reduce payments up to 2 percent if less than 75 percent of professionals have adopted HIT. If the first payment year is 2014, the payment for that year will be the same as if the first year had been 2013. No payments will be made after 2016. Hospital-based physicians who furnish substantially all services in a hospital setting and use the facilities of the hospital and equipment, including computer equipment, are ineligible to receive funds under this provision.
Impact:
CAH and Inpatient PPS hospitals that adopt meaningful HIT systems in the next seven years will receive full benefits from depreciating the expense on their cost reports. Many physicians will benefit under the plan as well.
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Prevention and Wellness Fund
Provision(s):
This provision allocates $1 billion to create a "prevention and wellness fund." Among other programs, the fund provides $650 million to carry out evidence-based clinical and community prevention and wellness strategies to address chronic disease rates, and $50 million to states to implement health care-acquired infection reduction strategies.
Impact:
This provision could help lower the incidence of chronic diseases such as diabetes, obesity and heart disease, which could lower the cost of treating these diseases. If that is the case, this could possibly impact hospital revenues over time by allowing hospitals to focus on more serious, higher acuity medical issues.
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Long-term Care Hospital (LTCH) Relief
Provision(s):
Adds the LTCH’s that were excluded from the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA’s) 25% Rule relief by changing the effective date to cost reporting periods beginning on or after October 1, 2007 and July 1, 2007, depending on the type (location) and grandfathered status of the LTCH.
This provision also extends the exceptions to MMSEA’s three-year LTCH moratorium to LTCH bed expansions that were approved by state certificates of need (CON's) issued between April 1, 2005 and December 29, 2007.
Impact:
The provision basically increases the number of LTCH’s that are eligible for Medicare payments by pushing back the moratorium on LTCH new construction and expansion and closes gaps that existed between the LTCH’s cost reporting periods and the start dates of the relief from the 25% rule.
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Health Professional Training
Provision(s):
The act provides $500 million to fund scholarships, loan repayment and grants to training programs. This provision also allocates $300 million to the National Health Services Corps program, which includes $75 million available through September 30, 2011 for extending contracts. $200 million is allocated for nurse and physician training.
Impact:
This provision helps address key shortages in the health care workforce.
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Home and Community Based Services (HCBS)
Provision(s):
This section provides $100 million for senior meal programs, including $65 million for congregate nutrition services and $32 million for home-delivered nutrition services.
Impact:
This provision should, at minimum, replace donations and other revenue so that these programs can continue to serve current clients, and possibly expand to serve additional clients.
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Community Health Center (CHC) Modernization
Provision(s):
The act provides $1 billion for CHC modernization in the form of renovation, construction, equipment and technology. Community health centers provide health care to the underserved and uninsured. Nationwide there are over 1,200 community health centers which offer primary and preventive health care, lab and dental services, as well as mental health services and case management.
Impact:
Modernized CHC’s will improve the level of care received by uninsured and underserved rural and urban populations.
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