On March 12, 2012, the U.S. Department of Health and Human Services (HHS) released the long-anticipated Final Rule and Interim Final Rules (the "Rules") on the Patient Protection and Affordable Care Act's (ACA) state health insurance exchanges ("Exchange(s)"), a key element of President Obama's healthcare reform plan. Set to go into effect on January 1, 2014, the goals of the Exchanges are to enhance competition, improve availability of affordable health insurance options and allow small businesses the same purchasing power that large businesses currently enjoy. As described in the Rules, the Exchanges will operate as competitive marketplaces, allowing individual consumers and small businesses to directly compare pricing and quality of health insurance options, among other factors.

The Final Rule incorporates two proposed rules originally published in mid-2011 that together implement what HHS refers to as the Exchange establishment and eligibility rules that address the eligibility, enrollment and plan function of the Exchanges. Affording substantial discretion to states in the design and operation of the Exchanges, the Final Rule details minimum federal standards for the establishment and operation of the Exchanges, minimum standards that health insurers must meet in order to participate in the Exchange and offer a qualified health plan, and standards of participation for the Small Business Health Options Program.

Read the full text of the Duane Morris Alert.

It is not too early for nursing facilities to plan for success under the Patient Protection and Affordable Care Act.  Hospitals under financial pressure to prevent readmissions and manage post-acute care services will be seeking “preferred providers” of nursing facility and home care services.  Those providers who know how to manage key conditions and demonstrate a low hospital readmission rate will be in the best position to win contracts with hospitals and accountable care organizations (ACOs).  There may also be opportunities to share risk for bundled post-acute care services. 

The following are steps nursing facilities should be taking now:

• Identify the right hospital partner that is geographically close and well positioned to bid for bundled services or to become an ACO. 
• Implement Electronic Health Records that are interoperable with the hospital’s and its physicians.
• Make sure you have physicians from the hospital practicing in your facility.
• Modernize your physical plant.
• Develop a great rehabilitation program.
• Enhance clinical capabilities by developing outcome-driven care pathways.
• Select a medical director who specializes in nursing facility care.
• Get set up to perform procedures on site.
• Work to make certain the transition from hospital to nursing facility is seamless.
• If you will be sharing risk, get to know your costs.

Nursing facilities that contract for post-acute care services will eventually require 24/7 physician or nurse practitioner coverage and 24 hour RN’s.  You can expect your post-acute care patients and families to be more educated and more demanding.  Customer-centered services will become the norm.

With the emphasis on pay for performance, nursing facility stays may be shorter but market share will be higher.  Meanwhile, with Medicaid squeezing rates, the most successful facilities will want to continue to maximize their Medicare participation. 

The Conference got off to exciting start with the opening cocktail party in the exhibit hall and the "by invitation only" dinners in evening.  Many of the people I met night were eager to talk about where they were looking to invest or where their clients were looking to invest.  No surprise that when most people found out that my area of expertise was health care and specifically, health care reform, the conversation quickly changed from the usual pleasantries to specific questions like is the bill going to be overturned?  How will these changes impacting existing investments---will reimbursement be reduced? What will happen with electronic medical records and the health care IT space?  It was pretty clear that most of the investors that I spoke with were interested in investing in the health care industry, but  had not been regular investors in the industry.  Health care is now becoming the hot sector for investment again.

One of the companies that I met last night was HealthFusion, whose CEO is Dr. Sol Lizerbram, is a veteran physician entrepreneur who after 13 years of hard work has developed a state of the art electronic medical record.  This company gets the health care IT space from the doctor's perspective, has received a number of awards including a JD Power and Associates award for user satisfaction and is priced for the small primary care physician market ---one to ten physicians. Dr. Lizerbram in expanding his marketing staff trying to quickly to ramp his sales. 

My view about most EMR systems for physicians is that they are either done off of legacy systems, are too expensive and complex to use.  This product was truly designed with doctors in mind.

Recent discussions with some private equity players have targeted non-profit hospitals assuming that the recent transactions in Rhode Island are indications of things to come. Many hospital systems are currently starved for long term capital and see private as a new viable source to monetize the value of their real estate.