EisnerAmper Blog

An EisnerAmper Health Care Services Blog

Aetna Announces Large Reduction in ACA Exchange Participation

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August 22, 2016

By Tyler Tracewski  

Following in the footsteps of other large insurers UnitedHealth Group and Humana, Aetna announced on August 15 they will be significantly scaling back participation in the Affordable Care Act (“ACA”) insurance exchanges. In 2017, Aetna plans to operate in just 4 States, down from 15 States this year. In Aetna’s press release, CEO Mark Bertolini blames financial losses as the reason for the scale back: 

“Following a thorough business review and in light of a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since January 2014 in our individual products, we have decided to reduce our individual public exchange presence in 2017, which will limit our financial exposure moving forward.” 

However, Aetna’s decision to reduce its presence in the exchanges may be more complicated than these simple financial losses.  

In July of 2015, Aetna announced its planned $37 billion acquisition of Humana, in a deal that could be the largest merger ever in the insurance industry. The Department of Justice responded by filing suit to block the deal over antitrust issues. The DOJ took similar action to the proposed Anthem, Inc. acquisition of Cigna Corp, stating that these mergers involving 4 of the largest insurers in the country would “harm consumers, employers and health-care providers with an unacceptable reduction in competition.”  

In a July 2016 letter, signed by Bertolini to the Justice Department, Aetna responded with a warning saying if the Humana deal was blocked that  “Instead of expanding to 20 states next year, we would reduce our presence to no more than 10 states” and that “it is very likely that we would need to leave the public exchange business entirely and plan for additional business efficiencies should our deal ultimately be blocked.” 

The Aetna pullback from the exchanges, paired with the previous reductions in participation by UnitedHealth Group and Humana, are seen as blows to the ACA.  Not only will hundreds of thousands be forced to change their insurance from Aetna to another plan, the absence of Aetna and other major players in the exchanges reduces competition and choices for consumers.  

Over the next several months, all eyes will be on this legal battle and the widespread implications it may have on the insurance industry and the ACA insurance exchanges. Coincidentally, all of this will take place as President Obama, the champion the ACA, serves his last few months in office. 

Changing Market for Urgent Care Centers

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August 15, 2016

By Bert Orlov  

Our recent client experience shows that Urgent Care Centers (UCCs) are evolving in terms of their underlying business value proposition. UCCs typically offer extended hours from early morning to after-work evening hours, as well as weekends. Compared to Emergency Rooms (ERs), urgent care offers shorter wait times and far lower costs. For example, co-pays for a UCC visit may be $40-$50, while ER visits may range from $150 to $500 or more. In the NY-NJ-CT metropolitan area, we are seeing UCCs, hospitals/networks and private venture funds playing different roles with different objectives. 

Changing Roles 

Historically in our area, most UCCs were small-scale private enterprises which sought profits by providing a superior service (access and speed) at lower costs. They were often linked to primary care practices. Over the past several years, however, we see a more complex array of divergent potential business roles: 

  • Free-standing profit generator, as it has been in the past.
  • Front-door for practices or systems, as an element of a comprehensive primary care network. This may involve de novo development or acquisition of existing players.
  • Cost-reducer vs. ER for risk contracts. With the rise of “value based purchasing” and Accountable Care Organizations (ACOs), the importance of managing costs has grown dramatically—both direct expenses of ER vs. UCC visits, but also risk of admission and need for follow up.
  • ER decanter, to reduce pressure on hospitals’ ERs, because many ERs operate well above planned capacity, with adverse impact on patient service.  

Changing Market

These potential shifts in the role of UCCs are occurring within a context of a changing market. Overall, as noted above, ever more patients are enrolled in some form of value-based purchasing, driving concerns about ER utilization and costs. Further, payors are seeking to move more patients to UCCs, rather than ER, as a cost savings measure; the payors use increasing ER co-pays vs. UCC co-pays as incentive. Furthermore, the UCC market itself is becoming more mature. For example, in a 10-square mile section of Queens, there are now 10 UCCs; where there were few only 5 years ago. In Manhattan, competition has stepped up, to the extent of competing UCCS located on the same block. Similar explosions in number of centers have occurred in NJ and CT. As a result, the market is more challenging. To cite a few notable examples, 3 years ago, CityMD received capital funding of some $90mm for expansion. As a result of such exemplar growth, some of the smaller chains have been sold themselves; for example, the formerly independent Urgent Care Manhattan enterprise (with 3 sites) is now operating under the umbrella of Northwell. 


These shifts in market penetration and roles indicate the importance and changing business realties of UCCs in the region. All health care stakeholders will be impacted: 

  • Investors will need to become more selective about new start-ups and value of established mini-chains.
  • Payors will further consider means to shift patients from ERs.
  • Hospitals/networks will become increasingly involved in the operations of UCCs, including finding effective means of communicating clinical information and managing utilization patterns.
  • Patients will see opportunities to avoid ERs and, over time, greater integration between UCCs and their overall care management.

Competitive dynamics are changing in local markets; we’re advising all clients to pay attention. 


Phase 2 -- HIPAA Security Audit Program

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August 10, 2016

By Steven Bisciello, MBA, CMPE  

In June and July of 2016, the Office for Civil Rights (“OCR”) had notified a number of health care covered entities (“CEs”) and their respective business associates (via notification letters/emails) that they will next be performing individual audits of said entities/associates through their Phase Two HIPAA Security Audit Program. 

The goal of this audit program is “to examine mechanisms for compliance, identify best practices, and discover risks and vulnerabilities” to ensure compliance with HIPAA privacy/security, protected health information, and breach notification guidelines. In short, this audit will take place to ensure the CEs/business associates have documented, provided training, and implemented HIPAA Privacy and Security Compliance Plans within their organization.   

The audits are scheduled to begin in the fall of 2016. The CEs to be audited will be selected by the OCR through random sampling. As stated above, the CEs to be audited have been/will be sent notification letters/emails from the OCR (example letter), addressed to the respective CE’s primary contact person. The respective CE will have 14 days to respond to the notification letter. The notification letter/email will provide the CE’s contact person a link to a pre-screening questionnaire  to be filled out; the responses will be saved.  

In preparation for these upcoming audits, the OCR also released, on July 27, 2016, their Phase Two HIPAA Audit Guidance. The guidance is to assist CEs in preparation for OCR’s upcoming entity audits and answers questions in regards to preparation for said audits, timing of the audits, explanation of the audit process and next steps upon completion. 

CEs to be audited include: 

  • Both individual and organizational providers of health care services
  • Health insurance plans
  • Clearinghouses
  • A “range” of business associates for the CEs  

CEs will be asked to identify their current business associates for the auditors to review. The auditors will and then select business associates from this list for individual audit. The audits will be performed in both “desk audit” and “onsite audit” versions. 

The OCR states “covered entities that are the subject of an audit must submit requested information via OCR’s secure portal within 10 business days of the date on the information request. All documents are to be in digital form and submitted electronically via the secure online portal.”

Upon receipt of these requested documents, “the auditor will review the information submitted and provide the auditee with draft findings. Auditees will have 10 business days to review and return written comments, if any, to the auditor. The auditor will complete a final audit report for each entity within 30 business days after the auditee’s response. OCR will share a copy of the final report with the audited entity.” 

For more information on these audits and HIPAA in general for CE’s, please visit hhs.gov.

CMS Reports $42 Billion in Savings

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August 1, 2016
By Nancy Clark, CPC, COC, CPB, CPMA, CPC-I 

CMS recently announced that their Center for Program Integrity’s activities are beginning to save money for the Medicare program, potentially reaping rewards for taxpayers and beneficiaries.  Analysis of dates spanning October 1, 2012 through September 30, 2014 indicates that each dollar invested towards these efforts saved $12.40 for the program .

Multiple initiatives contribute to these savings:
  • Provider enrollment and screening standards
    • Utilization of the Affordable Care Act’s tools  to allow for better screening of providers and suppliers that may be at risk for committing fraud
    • Increasing site visits to enrolled providers and suppliers
    • Enhanced address verification via the Provider Enrollment, Chain, and Ownership System (“PECOS”) software
    • Deactivation of providers and suppliers that have not billed Medicare in the last 13 months  
  • Predictive analytics to prevent fraud, waste, and abuse 
    • Implementation of a Fraud Prevention System using data connections with public and private analytics experts to identify issues and take corrective action
    • Predictive analytics technology contributed to more than $1 billion in savings from 2014 to 2015.
    • Predictive analysis allows CMS to proactively deny claims that may not be appropriately reimbursable, and therefore saves the expense and time of “going after” the provider to return the inappropriate monies.  In fiscal year 2013, savings from these preventive actions represented about 68% of total savings.  In 2014, the savings rose to nearly 74%. 
    • Analyses are run on 4.5 million Medicare claims daily.
    • CMS is now working on a next-generation predictive analytics system with improved efficiency.  
  • Coordination of anti-fraud efforts with federal and external partners
    • CMS provides a forum for information exchange between federal, state, and private partners, receiving and disseminating data that will both reduce duplication of efforts and identify potential fraudulent activity across multiple payers.
    • The Office of Inspector General Work Plan continues to identify additional areas in which CMS is reviewing claims.
    • CMS contractors, state Medicaid agencies, and law enforcement partners offer and receive assistance in fraud prevention.
CMS estimates that the CPI has saved nearly $42 billion since inception.  They continue to seek out more comprehensive and expansive ways to fight incorrect and fraudulent payments. 

The Department of Justice sues Anthem and Aetna

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July 22, 2106

By Michael J. McLafferty, CPA, MBA, FACHE, FHFMA, FACMPE

Anthem and Aetna representatives have been meeting with members of the Department of Justice (“DOJ”) for months. The purpose of these discussions was to develop business deals that would satisfy the DOJ’s antitrust concerns.  The announcement that the DOJ plans to sue both firms indicates that the configuration of the current business deals has not accomplished the goal of reducing antitrust concerns.

Anthem is in the process of a $48 billion merger with Cigna. Aetna is working towards a $37 billion merger with Humana. If these mergers go forward, the current 5 largest insurance companies would be reduced to the 3 largest insurance companies. The DOJ believes these mergers will raise prices and reduce access to care for consumers.

Three of the 4 companies are in the process of fighting the DOJ lawsuit. Cigna said that it is reviewing its options before it decides if it should enter a challenge to the DOJ.

The current administration has consistently focused on the need for competition in the insurance industry. We have observed that premiums are lower for consumers in the state exchanges where there is insurance competition.


Merit-Based Incentive Payment System

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May 18, 2016

Michael J. McLafferty CPA, MBA, FACHE, FACMPE, FHFMA  

The Centers for Medicare and Medicaid (“CMS”) issued a proposed rule featuring information related to the Merit-Based Incentive Payment System (“MIPS").

The following is an overview of some key areas: 

  1. The targeted effective date is 1/1/2017.
  2. Eligible providers who report using claims-based reporting will have an increased threshold from 50% to 80%. 
  3. Eligible providers who report using a registry will have an increased threshold from 50% to 90%. 
  4. Most Medicare-enrolled providers will be considered eligible for MIPS.
  5. The one exception to a provider being eligible is to have fewer than 100 Medicare patients and bill less than $10,000 in 2017.
  6. One scorecard will replace the current 3 quality-reporting programs of (1) meaningful use, (2) physician quality reporting system (“PQRS”) and (3) the value-based modifier (“VBM”).
  7. Providers’ performance can result in either an incentive payment or a penalty, either of which could range from 4% to 9% per year.
  8. There are 4 new reporting categories:
    • Quality – replaces PQRS – 50% of total performance score.
    • Advancing clinical information – 25% of total performance score.
    • Value-based modifier – 10% of total performance score.
    • Clinical practice improvement activities – 15% of total performance score. 
  9. The new clinical practice improvement activity category relates to practice improvement activities (e.g., expanded practice access, population management, care coordination, etc.). 

The MIPS program will have a significant and enduring impact on how health care is delivered in our society. We will continue to update you on any changes to this important proposal. 

Proposed Rule Continues Shift to Value-Based Care

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April 22, 2016

By Nancy Clark, CPC, COC, CPB, CPMA, CPC-I

On April 18, the Centers for Medicare and Medicaid Services released a fact sheet  on the proposed rule for the 2017 Hospital Inpatient Prospective Payment System (“IPPS”).  If adopted, the changes would affect patients discharged on or after October 1, 2016.  

IPPS reimburses hospitals for services using a national base payment rate that is adjusted for the geographic market and patient’s condition. The current objectives include moving towards a measurable set of quality goals and no longer focusing on the quantity of care given to patients.

Proposed changes would increase payment by .9% for those acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting (“IQR”) program and are meaningful electronic health record (“EHR") users. However, those who do not successfully participate in the Hospital IQR Program and do not submit quality data will receive a reduction in reimbursement.

Highlights of the proposed rule include: 

Hospital Acquired Conditions (“HAC”) Reduction Program
  • This program creates an incentive to reduce hospital-acquired conditions by imposing a negative adjustment to the poorest performing hospitals. Proposed measures would change the existing ranking system to a continuous scoring methodology and incorporate additional patient safety standards.       
Hospital Readmissions Reduction Program (“HRRP”)
  • Under this program, a reduction is applied to the hospital’s base operating Diagnosis-Related Group (“DRG”) payment for excess readmissions with selected medical conditions, including heart failure and attacks, pneumonia and chronic lung disease, hip and knee replacement and artery bypass grafts.        

Notification Procedures for Outpatients Receiving Observation Services

    • The Notice of Observation Treatment and Implications for Care Eligibility act (“NOTICE”), enacted in August of 2015, requires facilities to notify individuals who are receiving observation services for more than 24 hours. Under NOTICE, the patient will be given the Medicare Outpatient Observation Notice (“MOON”) and both the reason for and possible financial and post-hospitalization consequences of his observation status will be explained. 

IQR Program

  • IQR is a pay-for-reporting program that was established by the Medicare Prescription Drug, Improvement and Modernization Act.  As part of the proposed modifications, additional electronic clinical quality measures (“eCQMs”) will be adopted and the validation process will be changed. 

The proposed rule can be found in the Federal Register Here

EisnerAmper is an independent member of Allinial Global.
EisnerAmper is an independent member of EisnerAmper Global.