Employer On-Site Clinics as Medical Homes

Payors, Plans, and Managed Care Practice Group

Mid-Year Luncheon

November 8, 2010

PRESENTERS:

Richard M. Luceri, M.D. Elise Dunitz Brennan

VP of Health Care Services Partner

JM Family Enterprises Inc. Doerner Saunders Daniel & Anderson LLP

120 Jim Moran Blvd. 320 S. Boston Avenue, Suite 500

Deerfield Beach, FL 33442 Tulsa, OK 74103

Telephone: (954) 363-6068 Telephone: (918) 591-5214

Fax: (954) 363-4258 Fax: (918) 925-5214

Email: richard.luceri@jmfamily.com Email: ebrennan@dsda.com

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Overview of the Presentation

Defining medical homes and why on-site clinics are appropriate for medical homes

Describing why corporate clinics are proliferating

Legal issues

Ways JM Family Enterprises provides chronic care management and functions as a medical home

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Definition of Medical Homes

Continuity of care

Clinical information systems

Delivery system design

Decision support

Patient/family engagement

Coordination of care across providers and settings

Improved access to care

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Typical Characteristics of Medical Homes Are Easily Provided at Employer On-Site Clinics

Open scheduling

Expanded access hours

Email communication

Patient tracking

Chronic care management

Personal health assessments and wellness initiatives

Performance reporting and improvement

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Increased Emphasis on Medical Homes

PPACA

Medicaid Demonstration Programs

Medicare Home Demonstration from Tax Relief and Healthcare Act

of 2006 and Medicare Improvement for Patients and Provider Act

of 2008

NCQA accreditation standards in existence

The Joint Commission accreditation standards are forthcoming

PPACA’s Emphasis on Employer Wellness Programs Promotes On-site Clinics as Medical Homes

Grants to small employers to provide comprehensive workplace wellness

programs for FY2011-2015.

Comprehensive workplace programs include health awareness initiatives

such as HRAs, efforts to maximize employee involvement, initiatives to

change unhealthy behaviors, and workplace policies to encourage healthy

lifestyles.

CDC to study and evaluate employer wellness programs including

comprehensive workplace chronic disease management and health

promotion programs.

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Why Corporate Clinics are Proliferating

Healthcare costs are out of control

Healthcare delivery system is broken

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Employers View of Costs Associated with Reform

7.0%8.0%

8.9% 8.3%

Mean Median Mean Median

(2010 Sample Size=61; 2011 Sample Size=38)Source: National Business Group on Health, Large Employers’ 2011 Health Plan Design

Changes, August 2010.

2010 2011

3%

30%

12%

13%

28%

13%

N/A -- Already incompliance

Don't know

Increase by 5% or more

Increase by 3-4%

Increase by 1-2%

Increase by less than 1%

Source: Mercer, Health Care Reform – Sizing up the Challenge, 2010.

Budgeted Changes 2010-2011

Employer Estimates of Healthcare Costs

Even the Government Expects Higher Costs

The rate of increase in total U.S. healthcare spending will be little changed by the healthcare overhaul, according to federal economists

Healthcare spending as a percentage of GDP

CMS Office of the Actuary Sept. 8, 2010

Projected

With effects of HC reform

Prior to HC reform

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Employer Reactions to Healthcare Reform

Source: Towers Watson, Health Care Reform:, 2010.

88%

74%

33%

20%

12% 12%7%

11%

IncreaseEmployees'

Costs

Reduce healthbenefits and

programs

Absorb costs inthe business

Pass on increseto consumers

Eliminate orreduce

wellness/healthpromotionprograms

Reduceemployment

Reduce employercontributions toretirement plans

Reducesalaries/direct

compensations

U.S. Healthcare System is Broken

Care is fragmented and not coordinated Over-consumption of services

Patient side: no “skin in the game” (more is better) Physician side: fee-for-service rewards volume not quality; physicians are

paid for what they order not for what they know; fear of lawsuits; etc. Primary care physician shortage, projected to be even lower with ACA

No time to be the “trusted” physician No coordination with other providers, specialists Earlier referral to specialists (with regional differences based on local

expectations and sophistication) Lowest paid provider

IT deficiencies low rate of electronic record adoption and sharing, exaggerated HIPAA

interpretation, little interoperability, etc.

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Reality: Patients Do Not Receive Recommended Care

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McGlynn et al “The Quality of Health Care Delivered to Adults in the United States” NEJM June 26, 2003Health Study by the RAND Corporation (supported by the Robert Wood Johnson Foundation and the Veterans Affairs Health Administration);

Employers to the Rescue:Reasons for Success of Onsite Clinics

Better opportunities to control costs: Shift to less expensive but patient-oriented primary care Introduce “consumerism” in controlled setting:

Focus on generic drugs, annual physical exams, etc. Value-based health plan design

Good health is good for business: Physician-patient relationship is the cornerstone of care Emphasis on screening, wellness programs, chronic disease

management Reduced productivity losses and absence Employee retention, work-life balance, employer of choice, etc.

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Legal Issues

Corporate practice of medicine issues

Licensing issues

Privacy issues

ERISA applicability

Relationship to HSAs

HRAs & GINA

Liability Issues

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Corporate Practice of Medicine Issues

Medical home is a physician-driven model in which the physician

leads a team that takes collective responsibility for a patient.

Problem with employment of physicians in some states so there is a

need to link with a captive PC.

On-site clinics frequently rely on physician extenders (APNs and

PAs) to decrease costs.

On-site clinics need to balance reliance on physician extenders with

medical home concept that physicians are pivotal.

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Licensing Issues Involving Physician Extenders

PAs are frequently licensed by medical licensing statutes, so corporate practice of medicine prohibition may apply.

APNs are typically the only type of nurses that can diagnose and treat.

APNs may not have prescriptive authority. Typically neither a doctor nor a physician extender can rely on the

patient assessment by an RN and make a medical diagnosis if he or she does not see the patient directly. Further, a RN can not take orders from a doctor unless: The doctor has seen the patient; and Has prepared a medical protocol.

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Licensing Issues Involving Drug Distribution

Chronic disease management includes medication management

and employers are desiring to purchase and dispense drugs directly

to employees to lower costs.

Distribution of medication through employer facilities may

necessitate wholesale or distribution pharmacy licensing issues

depending on state law.

In some states, properly registered physicians can dispense

non-schedule medicine but on-site clinics frequently warehouse

drugs.

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Privacy Issues

Covered entity status of employer health plan, but not

employer, so free exchange of PHI between on-site clinic

and health plan must be shielded from employer.

Ease of access to patients: emails and quick and

frequent meetings when healthcare providers reside at

patient’s place of location necessitates enhanced HIPAA

and HITECH responsibilities.

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Privacy Issues

State privacy laws, Americans with Disabilities Act, and Family

and Medical Leave Act may apply to PHI.

Employer health plan and on-site clinics are both covered

entities, and this differs from typical arrangements when TPA

is business associate of employer health plan so aggregate

collection of PHI for plan administration purposes needs to be

carefully monitored.

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Privacy Issues

Confidentiality obligations of the on-site provider differ for

the treatment of job related injuries versus other health

care needs. Most state workers compensation laws allow

employer access to treating physician report.

May need to consider enhanced or coordinated privacy

policies for “trust.”

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ERISA Applicability

Maintenance on the premises of an employer facility of treatment for

minor injuries or illness or rendering first aid in the case of accidents

occurring during working hours is not an employee welfare benefit

plan pursuant to DOL section 2510.3-1(c).

A wellness program is any program designed to promote health or

prevent disease. DOL section 2590.702(f).

When an on-site clinic provides chronic care coordination it

becomes a wellness program subject to ERISA plan and notification

requirements, HIPAA nondiscrimination rules, and COBRA.

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Applicability to HSAs

IRS Notice 2008-59 (Q&A 10) allows an employer or dependent to

have an HSA and use an employee on-site clinic that is either free

or charges below fair market value, if the employee or dependent

does not receive significant benefits in the nature of medical care.

A hospital that permits its employees to receive all medical care at

its facilities for no charge is providing significant care and the

employees are not eligible for HSAs.

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Notice 2008-59 Guidance on Significant Benefits

Physicals and immunizations are not considered significant benefits.

Injecting antigens provided by employees is not considered significant benefits.

Providing aspirin and other non-prescription pain relievers is not considered significant benefits.

Query: Does the nature of a medical home necessitate a provision of more than significant benefits?

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PPACA Increases Confusion

Query: Are preventive screenings broad enough to include annual

physicals, basic tests, and services typically provided in an

outpatient physician’s office to manage chronic conditions, which is

implicit in the medical home concept.

PPACA provides some indication that management of chronic

problems (such as regular blood pressure checks) fall within the

concept of preventive screenings but need further guidance.

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PPACA Increases Confusion

Tests as to whether the services provided by on-site clinic are in the

nature of preventive and primary or treatment for injuries and

illnesses contracted at the employer’s worksite versus management

of specialist healthcare needs.

Once on-site clinics enter into employer direct service agreements

with hospitals or specialists movement to significant benefits.

For now most employees with an HSA are charged a nominal fee for

on-site clinic services, but this does not resolve the exemption from

ERISA issue.

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Future Issue

On-Site medical clinics will be treated as a group health plan coverage for purposes of the excise tax that goes into effect in 2018 on “Cadillac Plans” if they offer more than a de minimus amount of medical care to employees in executive physical programs. This is in the technical explanation of the revenue provisions of

the Reconciliation Act of 2010 as amended, in combination with the Patient Protection and Affordable Care Act (JCX-18-10), 64 (March 21, 2010).

This explanation does not define de minimus medical care.

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HRAs and GINA

Title I prohibits health plans from discriminating against covered

individuals based on genetic information.

Title II prohibits employers from discriminating against employees

based on genetic information.

Genetic Information includes family medical history and information

on individuals’ and family members’ genetic tests and genetic

services.

Federal regulations at 74 Fed Reg 51664 (October 7, 2009).

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HRAs and GINA

Fundamental to the concept of Medical Home is collecting sufficient information through health risk assessments and/or biometric testing, which enable the provider to manage chronic illness or provide preventive care.

The Medical Home concept incorporates wellness initiatives which are governed by the HIPAA nondiscrimination rules that prohibit discrimination in the provision of wellness programs based on participant’s illness or medical condition (29 CFR § 2590).

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HRAs and GINA Wellness programs that provide rewards for completing HRAs that

request genetic information, including family medical history, violate the prohibition against requesting genetic information for underwriting purposes. This is the result even if the rewards are not based on the outcome of the assessment, which otherwise would not violate the 2006 final HIPAA nondiscrimination rules regarding wellness programs. Some employers give rewards for completing HRAs that do not solicit genetic information.

Some employers make completion of HRAs completely voluntary. Query: When a turn-key on-site clinic or independent contractor

seeks completion of HRA, is this an action of the employer?

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Professional Liability

The professional must render care with the same degree of care as a reasonable member of that profession in similar circumstances would render in the community.

Query: What is the community standard for on-site clinics? Is it a different standard?

Does the standard differ for independent contractor, employee, turn-key operation, or captive PC?

Possible apparent authority or ostensible agency issues as raised against non-staff model HMOs.

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JM FAMILY EXPERIENCE WITH “MEDICAL HOME”

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About JM Family Enterprises, Inc.

Diversified private automotive company

Founded in 1968 by automotive legend Jim Moran

Led by President and CEO Colin Brown

Approximately 4,000 associates

Headquarters in Deerfield Beach, FL

Major business operations throughout U.S. and Canada

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Notable JM Family Rankings

No. 30 on list of America’s Largest Private

Companies

No. 28 on “100 Best Companies to Work For” list; ranked for 12 consecutive years

No. 2 on list of Florida’s Largest Private Companies

No. 3 on list of “100 Best Places to Work in IT”

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About JM Family Enterprises, Inc.

On-site Health & Wellness Centers

Health & Wellness Centers

4,000 Associates10,000 Covered Lives

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Our Leaders “Get It”

CEO

Total Rewards

Healthcare Services

CAO/HR

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Overall Medical Home Strategy: Engagement, Wellness, Prevention

Core ProgramsWeight Management

Physical Activity

Smoking Cessation

Risk Reduction

Associate EngagementStay Healthy

Accept responsibility for one’s own health

Better understand how to consume healthcare

Coordinate Care

“Medical Home”Education

Coaching

Manage chronic disease

Prevention Promote healthy

lifestyle

Promote targeted screening

Health Risk Assessment

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On-site Health & Wellness Centers

Staff: Primary care/IM physicians, gynecologists (full and part-time) Full-time registered nurses Physical therapist on-site or locally accessible in major facilities Contracted registered dietitians and fitness instructors

Patients served: Benefit plan members including associates, spouses, children >15 Wellness/prevention programs are open to all

Schedule options: By appointment “Fast Track” minor care (viewed as a “stay healthy” opportunity) Virtual waiting rooms

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Wellness & Prevention Programs

Smoking cessation Weight management Cancer screening

Breast Prostate Colorectal others

Vaccinations Psychological counseling Nutritional consultations Onsite fitness programs tailored to location:

Gyms, swimming pool Exercise classes, Pilates, Boot Camp, etc.

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Coordinated Care (DM) Programs

Core programs: Diabetes Hypertension Hyperlipidemia

Always available: Weight management Smoking cessation Behavioral health

Planned: Musculo-skeletal health

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We “Drive” Associates and Families to Our Health & Wellness Centers

No-cost access to H&W Centers (except HAS plan) No deductibles

All services performed on company time “Free” ancillary lab and imaging services

Local vendor contracting High-touch/quality services

“Free” screening specialty visits Well-woman exams by GYN Dermatology checks

“Free” starter medications, course of antibiotics

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“Modified” HRA with biometric data: 72% participation rate in pilot of > 1,000 associates without incentives Generated multiple annual and wellness visits, nurse coaching,

teachable moments

LifeSteps weight management program: 3-components: behavior modification, proper nutrition, and activity Remote locations tested first Mentoring from previous participants is maintaining engagement Success prompted “waiting list” for future enrollees and need for

additional personnel We pay for programs; participants maintain memberships through

continued engagement and commitment

We Test Our Programs Through Pilot Studies

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Partnerships with area hospitals: Employers are good corporate community partners for hospitals Hospital revenue streams and margins are challenged Grants are possible and should be pursued:

We earned a fitness and smoking cessation grant in one location $1.5 M grant proposal is being submitted with another hospital system for

wellness partnerships Opportunities for integrated delivery systems (ACO) and other

opportunities through PPACA Local specialty networks

Reinforce coordinated care concept Assure quality Coordinated by our physicians

We Promote Partnerships WithLocal Hospitals and Provider Groups

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Preliminary results We’ve begun bending the cost curve Associate engagement has increased

Future direction Continued focus on overall health and wellness of our

associates Expand onsite or near-site services Telehealth in certain locations

Modulate benefit design in conjunction with healthcare services

What’s Next?

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Employer On-Site Clinics As Medical Homes © 2010 is published by the American Health Lawyers Association. All rights reserved. No part of this publication may be reproduced in any form except by prior written permission from the publisher. Printed in the United States of America. Any views or advice offered in this publication are those of its authors and should not be construed as the position of the American Health Lawyers Association. “This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought”—from a declaration of the American Bar Association