Everything You Need to Know
About the Affordable Care Act
Greater Memphis ChamberBreakfast Presented by Small Business Council
Patrick Pilch, MBAManaging Director, BDO Consulting, LLC. October 17, 2013
Key Issues
Page 2
Revenue Cycle
Urgent Care Clinics
Affordable Care Act
Health Benefits
Cost Reports
Claims
Health Exchanges
Em
plo
yer
Mandate
Pri
vacy
Data Patient-Centric4Rs
Com
pliance
Alignm
ent
Bundled Payments
Cadillac Tax Capit
ati
on
Providers
Hospitals
RiskConsumer
Physicians
Electronic Health Records
Accounta
ble
Care
Org
aniz
ati
on
ICD-10
Managed Care Organizations
Medicare
Medic
aid
Commercial
RISK
PHYSICIANS
Dis
pro
po
rtio
nate
Sh
are
Uninsured
FQ
HC
Chro
nic
Care
Payers
Insu
rance
Reimbursement
Population Health
Aging
Population
Tele
healt
h
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Healthcare Key Market Drivers
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Aging Population Rise of Chronic Diseases and Associated Costs
Popula
tion i
n M
illions
Year
Popula
tion i
n M
illions
Year
CAGR = 3%
CAGR = 1%
Popula
tion i
n P
erc
enta
ge
Year
2.4% Increase
$108
Billion
$300
Billion
Projected Cost for Chronic Diseases for Top Six States ($B)
2003 2023
• CA
• FL
• TX
• NY
• OH
• PA
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In the Press
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Federal Budget 2012 – The Real Issues
Page 7
Source of Funds
Taxes $2.6T or 16.5% GDP
Borrowing $1.1T or 7% GDP
All tax revenue consumed by four items:
$900B Federal health spending
$781B Social security
$676B Defense
$224B Interest
$ 2.6T
Everything else ($1.1T) funded by borrowings
Federal Spending - Healthcare
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Federal Spending 2011 2022
Medicare Enrollees 48M 66M
Medicare 554 1,000
Medicaid (Federal Share) 240 605
Affordable Care Act (ACA) Non M/M 24 161
Pentagon/VA/NIH/Other 150 220
Total $968B $1,986B
Source: CBO
Approximate CAGR of 7%
Federal Budget 2022
***Assuming Current Economic Growth
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Source of Funds
Taxes $2.6T or 16.5% GDP
Borrowing $2.2T or 14% GDP
All tax revenue consumed by two items:
$1,900B Federal health spending
$850B Social security (assumes 5 to 5.5% GDP)
$2.75T
Everything else ($2.2T) funded by borrowings including defense and
interest
WHAT 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, ACO’s
— 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 transparency
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Behavioral and Relationships Change
Defined benefits to defined contribution
Out of pocket costs will increase
Changes in consumer behavior
Change in employer/employee relationships
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Behavioral 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 more
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Behavioral and Relationships Change
• Employees become “Healthcare Consumers”
—“What 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/ Employee
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Behavioral 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 Factor
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Waste, 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 employees
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What to do?
Prepare
Protect
Plan
In some cases, transform
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Thank you
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Jeff Walraven
Memphis Assurance Managing Partner
+1 901-680-7611 (Direct) +1 901-680-7600 (Main)
+1 615-618-7377 (Mobile)
Patrick Pilch
Managing Director
BDO Consulting, LLC
Healthcare Advisory Leader
+1 212-885-8006 (Direct)
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