ALMOST Everything You Need To Know About the Affordable Care Act

Download ALMOST Everything You Need To Know About the Affordable Care Act

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Everything You Need to KnowAbout the Affordable Care ActGreater Memphis ChamberBreakfast Presented by Small Business CouncilPatrick Pilch, MBAManaging Director, BDO Consulting, LLC. October 17, 2013Key IssuesPage 2Revenue CycleUrgent Care ClinicsAffordable Care ActHealth BenefitsCost ReportsClaimsHealth ExchangesEmployer MandatePrivacyData Patient-Centric4RsComplianceAlignmentBundled PaymentsCadillac Tax CapitationProvidersHospitalsRiskConsumerPhysiciansElectronic Health RecordsAccountable Care OrganizationICD-10Managed Care OrganizationsMedicareMedicaidCommercial RISKPHYSICIANSDisproportionate ShareUninsuredFQHCChronic CarePayersInsuranceReimbursementPopulation HealthAging PopulationTelehealthPage 3Healthcare Key Market DriversPage 4Aging Population Rise of Chronic Diseases and Associated CostsPopulation in MillionsYearPopulation in MillionsYearCAGR = 3%CAGR = 1%Population in PercentageYear2.4% Increase$108 Billion$300 BillionProjected Cost for Chronic Diseases for Top Six States ($B) 2003 2023 CA FL TX NY OH PAPage 5In the PressPage 6Federal Budget 2012 The Real IssuesPage 7Source of FundsTaxes $2.6T or 16.5% GDPBorrowing $1.1T or 7% GDPAll tax revenue consumed by four items:$900B Federal health spending$781B Social security$676B Defense$224B Interest$ 2.6TEverything else ($1.1T) funded by borrowings Federal Spending - HealthcarePage 8Federal Spending 2011 2022Medicare Enrollees 48M 66MMedicare 554 1,000Medicaid (Federal Share) 240 605Affordable Care Act (ACA) Non M/M 24 161Pentagon/VA/NIH/Other 150 220Total $968B $1,986BSource: CBOApproximate CAGR of 7%Federal Budget 2022 ***Assuming Current Economic GrowthPage 9Source of FundsTaxes $2.6T or 16.5% GDPBorrowing $2.2T or 14% GDPAll tax revenue consumed by two items:$1,900B Federal health spending$850B Social security (assumes 5 to 5.5% GDP)$2.75TEverything else ($2.2T) funded by borrowings including defense and interestWHAT ARE THE IMPLICATIONS?Pricing Power at Risk Drugs ($260B) and devices ($85B) represent 13% of healthcare spending Margins are 50% higher than other industrialized countries Ripe for targeting Managed Medicaid/Medicare, ACOs Advanced data analytics and purchasing algorithms comparing price Price opacity, a cornerstone of profitability, yielding to clarity and falling margins Employers negotiation power driving costs out through greater transparencyPage 11Behavioral and Relationships Change Defined benefits to defined contribution Out of pocket costs will increase Changes in consumer behavior Change in employer/employee relationshipsPage 12Behavioral and Relationships Change Defined benefits to defined contribution Out of pocket costs are going to increase Employees will need to take charge of their healthcare morePage 13Behavioral and Relationships Change Employees become Healthcare ConsumersWhat did you pay? What did you get?What was your experience like? Social media/reviews become very important Change in strategy retention and recruitment of Healthcare Consumers and Clinicians Experience can make or break reputation/brand and challenge the social contract between Employer/ EmployeePage 14Behavioral and Relationships Change What are other drivers of change in the Employer/ Employee Relationship Employer Mandate - Individual Mandate Cadillac Tax (Begins January 1, 2018)- Non-deductible excise tax 40% above $10,200 for self only/ $27,500 for more than self only Affects large employers and unions Implications:- Changing business models - Risk Sharing among Payers, Employers and Employees- Outcomes and Negotiating Power of Employers- Trust FactorPage 15Waste, Fraud and Abuse Targets $1 Trillion in the next two decades in the ACA (Source: 2012 White House Budget Message) Whistleblower Protection Act is further codified in the ACA Other areas are in the financial industry are targeted Data analytics will become extremely important Know your outcomes, your data, your numbers, your processes and employeesPage 16What to do? Prepare Protect Plan In some cases, transformPage 17Thank youPage 18Jeff WalravenMemphis Assurance Managing Partner+1 901-680-7611 (Direct) +1 901-680-7600 (Main)+1 615-618-7377 (Mobile)jwalraven@bdo.comPatrick PilchManaging DirectorBDO Consulting, LLCHealthcare Advisory Leader+1 212-885-8006 (Direct) ppilch@bdo.comPage 19

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