1. Feb. 4, 2011 Southwest Nephrology Conference Phoenix, AZ Mark Neumann Charlie Thomas, LCSW,ACSW

2. September 2009: CMS releases the draft for the bundle August 2010: Final proposal unveiled November 2010: Opting out or opting into the bundle @ 100%, OR accept blended payment of 25% per year until 2014 January 2011: New payment system took effect July 2011: GAO report on impact of oral drugs in bundle (regs for including oral drugs underway in 2013) (regs for including oral drugs underway in 2013) January 2012: Quality Incentive Program begins (impacts 2% of bundled rate) January 2014: 100% of dialysis community @ bundled rate

3. Clinic Managers: the economic heart of the bundling engine will need to understand the calculations will need to understand the calculations properly bill outlier payments, case mix adjusters, apply the wage adjustment, monitor lab testing, watch drug usage, and document! properly bill outlier payments, case mix adjusters, apply the wage adjustment, monitor lab testing, watch drug usage, and document! Physicians/Medical Directors: consistent anemia management, lab testing are key roles. What will be the impact on joint venture arrangements? Nurses, Dietitians, Hemodialysis Technicians, Social Workers: on the front line of patient care. Conditions for Coverage requirements will become a bigger part of quality improvement (QIP), tied to pay- for-performance. New CPMs on the way, too.

4. What CMS gives: $165.02 (composite rate; includes treatment, labs, overhead) Plus: payment for drugs, supplies, support services, oral meds What CMS takes away: -2% (Congressionally mandated spending cut) -1% (payment to cover cost for outliers) Base rate: $229.62 (CMS pays 80%) But there’s more… -3.1% (to cover Program $$$ lost during transition) - up to 2% (if Quality Incentive Program goals aren’t met) -.50 for ESRD Networks

5. Helping the bottom line case-mix adjusters Reduced from 18 to a more managable 11 (including the originals: age, BMI, BSA), but you must document! wage adjuster Could help or hurt depending on where you are home training services …but not in the first 120 days outlier payments formula is complex

6. Rules for Quality Incentive Program finalized Rules for Quality Incentive Program finalized 2011 Medicare Fee Schedule includes mandatory 2011 Medicare Fee Schedule includes mandatory physician visit – with exceptions physician visit – with exceptions MedPAC: proposes 1% increase in composite rate for 2012 MedPAC: proposes 1% increase in composite rate for 2012 National coverage decision for ESAs? National coverage decision for ESAs? Funding for state Medicaid programs stressed Funding for state Medicaid programs stressed One year-delay on Medicare pay cuts for physicians One year-delay on Medicare pay cuts for physicians …and what about health care reform?

7. ARIZONA FY 12 BUDGET Jason Bezozo Senior Program Director, Government Relations Charlie Thomas, LCSW, ACSW Banner Good Samaritan Transplant Center

8. ARIZONA’S FISCAL FUTURE Structural Deficit: The difference between on-going revenue and on-going expenditures Surplus/ Shortfall (in millions) 1 ¢ sales tax expires in FY 14

9. THE DEFICIT Legislature –FY 11:$530 million –FY 12:$975 million Governor –FY 11:$764 million –FY 12:$1.15 billion

10. PROBLEM Since FY 2004 –K-12 system has added 121,500 students and more than $1.0 billion in costs. –Enrollment in state universities has increased by 18,000 students and $394 million in costs. –Corrections has added 10,800 prisoners and $405.4 million in costs. –AHCCCS has added 475,000 new members and $1.5 billion in costs.

11. ARIZONA’S BUDGET: State General Fund FY 07 FY 11 AHCCCS has grown to 29% of state general fund spending

12. AHCCCS: ARIZONA’S MEDICAID PROGRAM Health insurance for 1.3 million Arizonans Total Medicaid spending in Arizona is $11 billion –Federal portion is $7 billion (which equates to 3% of the state’s personal income) AHCCCS represents between 3% and 64% of individual hospital revenues (depending on the hospital) AHCCCS is, on average, 61% of nursing home revenues

13. PROP. 204: AHCCCS EXPANSION Prop. 204 expanded AHCCCS to include all residents with incomes at or below 100% FPL The expansion population is approximately 400,000 people State cost approximately $900 million Six other states that cover this population – Delaware, Hawaii, Massachusetts, Maine, New York, and Vermont

14. HEALTH CARE REFORM Prop. 204 is voter-protected PPACA included maintenance of effort requirement Beginning 1/1/2014, PPACA requires all states to cover residents at or below 133% FPL

15. FY 11 CUTS Eliminated $43 million for physician residency programs Cut $16.9 million in DSH from safety net hospitals Eliminated almost all non-Medicaid funding for behavioral health services –State will only cover medication management and crisis services for individuals who do not qualify for AHCCCS Eliminated optional AHCCCS services including certain transplants, emergency dental services, podiatry care, insulin pumps, orthotics, gastric bypass, wellness exams, and select durable medical equipment Attempted to eliminate Prop. 204 & Kids Care –Kid Care enrollment frozen, 22,000 lost coverage, 50% drop

16. GOVERNOR’S FY 12 RECOMMENDATIONS Spending plan is $8.9 billion based on revenue of $7.4 billion Rollback Prop. 204 on October 1: ($541 million state + $2 billion federal) –250,000 childless adults and 30,000 parents would lose coverage –Would continue coverage for 30,000 aged, blind or disabled persons (SSI) and 90,000 parents –5,200 adults with SMI –Legislature last week authorized Gov. Brewer to request a temporary waiver from MOE requirement 5% rate reduction on April 1 –AHCCCS: ($74.9 million) but total loss is ($236 million) –ADHS: ($14.1 million) but total loss is ($89 million) Establish $151 million uncompensated care pool Create $10.3 million fund for drug coverage –Prop. 204 rollback affect 5,200 SMIs Freeze health plan capitation rates Transfer CRS from ADHS to AHCCCS

17. Limited Options Governor and Legislative leaders have ruled out tax increases or other revenue enhancement Other options and “gimmicks” tapped out Further tax cuts to revive the economy Cuts inevitable Law suits Hospital bed tax*

18. QUESTIONS? Thank You!

19. Thank you!