hc reform june 2011 ppaca

04/10/23Prepared by Chuck Kiskaden

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HealthCare Reform – Patient Protection and Affordable Care

Act

Changing the Supply and Demand Curve regarding Health Care

The Players Why now instead of under Clinton? What Models were under

consideration? What will be the impact on Employers

and Employees? What can you do now to control costs?

Imagine the HC Reform train roaring down the tracks with “Cost Control” brake broken off in the engineers hand!


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Instructions on implementing Health Care Reform Legislation


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OUT

OF

Control

H C

Insu

rance

Cost Control EmergencyBrake HandleBroken OFF


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Supply and Demand Curve

What happens when you change the demand, hold the cost and no change in Supply?


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The Players Employers Employees Unemployed Retired Organized Medicine (Docs, Hospitals,

HMOs, ancillary Providers, Pharma, etc.) For Profit Insurance Companies & HMO’s States Federal Government

Employers

Wins LosesNo companies Denied Pay or Play$0 Copay on Prev. Children to 26Carrier MLR restrictions Increased $Health Exchanges 2014 Health ExchangesTax Credits Vouchers in 2014

W2 changes


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Individuals

Wins LosesNo Pre-Xexclus. Inc in Med Tax DedChildren to 26 Increased $$0 Copay on Prev. Mandated CoverageVouchers in 2014Reduced Donut HoleMini-Meds eliminated


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Individuals

Wins LosesHigh Risk PoolsExpanded M’CalPremium SubsidiesNo Lifetime LimitsProhibition on RecisionMax waiting period 90 days


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Why Now? Between 2002 and 2009, premiums more

than doubled, increasing 117.5%, while California's overall inflation rate increased 23.1%.

Cost shifting has reached tipping point to trigger federal & state intervention Tipping points are "the levels at which the

momentum for change becomes unstoppable."

$800,000,000,000 in potential savings???


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Plan Design Trends

2007 2009

PPO HMO PPO HMO KP

Co – Pays $10 $20 $ 20 $20/$30 EOA $15

Inpatient Hosp $250/$750 $250 per day $0

Deductible Avg. $364/842 $250 $500 - 1000 250 -1000 $?

Out of Pocket Max

In-Network $2178 $1973 $2000 $1500/$4500 1500/3000

Out of Network $5187 NA $6000 NA NA

Co-Insurance

In-Network 80% 100% 80% 100% 100%

Out of Network 60 -70% 0% 70% 0% 0%


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National Rx Benefit Trends

2005 20072009

Prescriptions (3 Tier)

Generic $ 10 $ 10 $ 10 to $20

Brand $ 23 $ 24 $ 30 (after ded)

Non-Formulary $ 40 $ 50 $ 50 (after ded)

Data Source – National Survey of Employer Sponsored Health Plans


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Macro Cost Shifting


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Pay Full Retail

Medical paid at $.60 on the dollar

Best Risks and Underinsured

Poor Risks, Can’t afford Insurance, etc.

Macro Cost Shifting


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What Models were under Consideration?

Universal Health Care Single Payor System Medicare for All Health Insurance Reform

With Health Care Exchange that includes a Public Plan or Health Care Co-operative

At State Level? (A program like the HIPC?) At Federal Level?


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Health Reform – What happens next and

when?


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Patient Protection and Affordable Care Act

Cost – $940 billion over next 10 years

Deficit Impact – Saves $143 Billion over next 10 years Saves $1.2 Trillion over second 10

years


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32 Million uninsured now covered Mandated coverage starting 2014

Fine if not insured - $95 or 1% of income in first year (whichever is greater) and finally reaching $695 or 2% of income.


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Tax Implications Individual tax starting in 2014 if you are

not insured Pay or Play for large employers - $2000

per year Cadilac Plan tax – 40% excise tax Medicare Tax increase on investment

income from 2.9 to 3.8 in 2013 Brand name Rx excise tax of 2.5 B

rising to 4.2 B in 2018


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Tax Implications Excise tax on medical device

manufacturers – 2.9% starting 2012 Health Carriers – 8 B starting in 2014,

11.3 B in 2015 -2017, 14.3 B in 2018 assessed based on market share

Tax on itemized deductions threshhold increased from 7.5% to 10%

Excise tax on indoor tanning – 10%


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September 2010 Tax Credits for Small Businesses Drug Cost help for Seniors ($250 rebate

checks in 2010 toward donut hole costs and in 2011 50% discount of Generic drug cost as the donut hole slowly closes)

Coverage for Pre-existing conditions through high risk pools - $5 billion

High risk pools set up 90 days after signature


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Tax Credits for small groups For the next four years, until the

Exchanges are set up, businesses with 10 or fewer full-time-

equivalent employees earning less than $25,000 a year on average will be eligible for a tax credit of 35% of health insurance costs.

Companies with between 11 and 25 workers and an average wage of up to $50,000 are eligible for partial credits.


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Tax Credits for small groups The tax credit will remain in place,

increasing to 50% of costs, for the first two years a company buys insurance through its state exchange.

The Congressional Budget Office predicts that the tax credit will affect about 12% of individuals covered via the small-group insurance market, lowering their cost of insurance by between 8% and 11%.


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September 2010 Reinsurance for early retirees (55

to 64). The program reimburses participating employment-based plans for 80 percent of the cost of benefits provided per enrollee in excess of $15,000 and below $90,000


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September 2010 All Kids get covered even with pre-

existing conditions Prohibition on Rescission - No

insurance carrier can cancel your insurance if you have a major medical condition

No more lifetime limits


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September 2010 Unmarried Children can stay on parents

plan until age 26 Development and utilization of uniform

explanation of coverage documents and standardized definitions.

Office of women’s health Reasonable break time for nursing

mothers Amends Fair Labor Stds Act (100+ employers)


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Patient Protection and Affordable Care Act As of

January 1, 2011

Insurance premium MLR payment reform Claims to Premium ratio can not be less

than 80% for small employers Claims to Premium ration can not be less

than 85% for all other employers (100+) Non-Profit Blue Plans must meet 85% ratio Rebates for all amounts where

administrative costs exceeding these ratios


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January 1, 2011

Funding for reducing childhood obesity demonstration project

Every hospital operating within the United States shall publish a list of standard charges for items and services provided by the hospital.


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Patient Protection and Affordable Care Act As of January 1, 2011 State health care workforce development grants Federally supported student loan funds Nursing student loan program Health care workforce loan repayment programs Nurse-managed health clinics Training in family medicine, general internal

medicine, general pediatrics, and physician assistantship

Centers of Excellence program, which develops a minority applicant pool


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Patient Protection and Affordable Care Act As of January 1, 2011

Expanding access to primary care services and general surgery services

Spending for Federally Qualified Health Centers (FQHCs)

Transparency reports and reporting of physician ownership or investment interests

Medicare self-referral disclosure protocol (Whistle Blowers) Jan 2011

CLASS - a new, voluntary, self-funded public long term care insurance program


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Inclusion of cost of employer-sponsored health coverage on W-2 (Delayed to 2012)

Increase in additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses to 20%

Eliminates tax deduction for retiree expenses allocable to Medicare Part D


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Increases gross income threshold for itemized deduction for medical expenses from 7.5 percent to 10 percent

Additional hospital insurance tax on high-income taxpayers

single taxpayers with income in excess of $200,000 and couples filing jointly with incomes in excess of $250,000

increases from 0.5 % 0.9 % Requires that non-profit BCBS organizations

have a medical loss ratio of 85 percent or higher


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Establishes Simple Cafeteria Plans that ease participation restrictions so that small businesses can provide tax-free benefits to their employees. Under this provision, self-employed individuals are included as qualified employees

Support for Pregnant and Parenting Teens and Women

Grants for small businesses to provide comprehensive workplace wellness programs


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January 1, 2011

Requires all plans to cover preventive services and immunizations recommended by the U.S. Preventive Services Task Force and the CDC, certain child preventive services recommended by the Health Resources and Services Administration (HRSA), and women’s preventive care and screening recommended by HRSA, without any cost-sharing.


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As of 2013 Limits the amount of contributions to

health FSAs to $2,500 per year Medicare Tax increase on investment

income from 2.9 to 3.8 Exchanges begin being marketed and

employees are made aware


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As of 2014 Total Ban on Pre-existing condition denials Health insurance exchanges open End to annual benefit maximums Fair health insurance premiums

(individuals and small groups age rates limited to 1 to 3 ratio)

Small Groups 1 to 100 ees (state can set at 1 to 50 until 2016)

Guaranteed availability of coverage


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As of 2014 Prohibits discrimination against individual

participants and beneficiaries based on health status

No Discrimination based on medical condition, claims experience, receipt of health care, medical history, genetic information, evidence of insurability – including acts of domestic violence or disability

Permits employers to vary insurance premiums by as much as 30 percent for employee participation in certain health promotion and disease prevention programs


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As of 2014 Comprehensive health insurance

coverage minimum package defined For all plans in all markets, prohibits out-of-pocket limits

that are greater than the limits for Health Savings Accounts. For the small group market, prohibits deductibles that are greater than $2,000 for individuals and $4,000 for families.

Prohibition on excessive waiting periods that exceed 90 days

Risk Assessment Risk Adjustment with 3% corridor


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As of 2014 - Free choice vouchers Requires employers that offer coverage

and make a contribution to provide free choice vouchers to qualified employees for the purchase of qualified health plans through Exchanges.

Employees qualify if their required contribution under the employer’s plan would be between 8 and 9.8 percent of their income.


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Insurance Exchanges Available to employees who lose their job,

quit or decide to start up their own business Catastrophic plan available to people under

the age of 30 Catastrophic plan also available to anyone of

any age making a salary of less than 8% of the lowest premium plan available.

Employees in group plans where the employer does not cover at least 60% of the premium


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Insurance Exchanges Premium subsidies in the exchanges for

anyone from 133% to 400% of FPL Free coverage if the cheapest policy

exceeds 8% of your income. Expanded Medicaid to 133% of FPL

$29,327 for family of four Premiums capped at a percentage of

income From 3% to as much as 9.5%


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As of 2018 Employer excess premium tax of 40% for

plans with premiums exceeding $10,200 for singles and $27,500 for family coverage

Retirees and employees in high risk professions like fire fighters would have the excess premium tax kick in at premiums exceeding $11,850 for singles and $30,950 for family coverage


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MediCare Hospital value-based purchasing program – FY

2013 payment would be tied to hospital performance on

quality measures related to common and high-cost

conditions, such as cardiac, surgical and pneumonia care Payment adjustment for conditions acquired in

hospitals hospitals in the top 25th percentile of rates of hospital

acquired conditions Medicare shared savings program. Rewards

Accountable Care Organizations (ACOs)


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MediCare National pilot program on payment bundling Independence at home demonstration program Permitting physician assistants to order post-

hospital extended care services Medicare coverage gap discount program

Requires drug manufacturers to provide a 50 percent discount to Part D beneficiaries for brand-name drugs and biologics purchased during the coverage gap

beginning July 1, 2010 Office of women’s health


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Payment ReformHealth Care Payment Reform That Rewards Value, Not Volume

Bundling payments to cover care over a specified period, revising fees to increase compensation for primary care, and offering providers financial incentives to serve as patient-centered medical homes

Quality ImprovementHealth Information Technology Policy Evidence Based Medicine and a Business Case for Health

Information Technology

Business Case for Investing in HC Reform


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NOW – Silos of Payment

Doctors HMO’s

Hospitals

Nursing Homes and ECF’s

$$$

$$$$$$

$$$$$$

$$$$$$


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NOW – Silos of Payment

Doctors HMO’s

Hospitals


$$$

$$$$$$

$$$$$$

$$$$$$


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FUTURE? Accountable Care Organizations

Doctors HMO’s

Hospitals


$$$


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A Financing and Data Integration Model


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What can you do today to manage health care costs?

Ideas on how to lower HC Costs


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What Cost Control Options do Employers currently have?

Unavoidable Costs

Cost Sharing (5% to 10%)

Coverage Elections (0% to 15%)

Plan Selection (5% to 10%)

Provider Selection (5% to 10%)

Prescription Therapies (5% to 7.5%)

Disease Management (5% to 10%)

While no silver bullets will solve the health care crisis, aggressive strategies in two to four areas will have a dramatic impact.

While no silver bullets will solve the health care crisis, aggressive strategies in two to four areas will have a dramatic impact.

7.5%5.0%

55.0%

10.0%

5.0%

7.5%

7.5%


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Improving employees Lives

• Improving Work/Life Cycle

• Create a Corporate Wellness Culture

• Employee/dependents Health Care education

Seeking Synergy in Managing Employee Benefits!!!


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Employee Benefits Cost Control

• Plan Design

• Utilization Management

• Risk Management Data Reports



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Employers “In Control”• Improving Work/Life Cycle

• Plan Design

• Create a CorporateWellness Culture

• Utilization Management

• Employee/dependents Health Care education

• Risk Management Data Reports



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Information and Data Sources


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Health Care Reform Web Sites commonwealthfund.org/ healthreform.gov/ mailmanschool.org/facultypubs/womenshealth

carereform.pdf whitehouse.gov/assets/documents/CEA_Health

_Care_Report.pdf reuters.com/article/healthNews/idUSTRE56K01

720090721 hudson.org/files/documents/20090612_JB_Kutt

ner_longterm_fiscal_impact_health_reform.pdf


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http://randcompare.org/http://randcompare.org/current/http://randcompare.org/options/

http://randcompare.org/options/mechanism/refundable_tax_credit http://randcompare.org/options/mechanism/purchasing_pools

Massachusetts “Health Care Connector”

http://randcompare.org/options/mechanism/employer_mandate

Pay or Play explainedMandates (Cal, Or, WA passed and subs

repealed)Hawaii 1974Mass 2006

Health Care Reform Web Sites


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Health Care Web Sites


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Medical Info/Research www.medem.com - modern medical library www.ncqa.com - Nat'l Committee on Qual.

Assurance www.doctorsolve.com/ - Info on drugs in Canada www.coverfingtheuninsured.org www.insureusa.org http://www.prevent.org/ - information on disease

prevention and health promotion policies and practices

www.cmwf.org/index.htm - Commonwealth Fund


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Employee Empowerment & Health Wellness

www.4women.gov - Nat'l Women’s Health site www.ivanhoe.com - Medical Breakthroughs http://vm.cfsan.fda.gov - US FDA Food Safety Ctr. www.healthyroads.com – ASHP wellness product www.new.chcf.org - Cal Health Care Fndn www.mrmib.ca.gov – MRMIB http://www.opa.ca.gov/report_card/. - Cal Office of

Patient Advocate www.healthcarecoach.com/ www.mayoclinic.com http://www.doclopedia.com- Use doclopedia to

put your medical history, prescriptions, and bills in one convenient space for FREE


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Employee Empowerment & Health Wellness

http://www.hhs.gov/transparency/ - The “Four” Value Driven Health Care Principles. Health care transparency provides consumers with the information necessary, and the incentive, to choose health care providers based on value.

www.netwellness.org – 100 health topics to find in-depth information on hundreds of diseases and wellness issues

http://www.insureuonline.org/ - The National Association of Insurance Commissioners (NAIC) has created the Insure U — Get Smart About Insurance program to help consumers make educated decisions.

www.organizedwisdom.com - OrganizedWisdom is a collaborative health information community, combining professional and user-generated health content with social networking technologies to help people make the most informed health decisions possible.


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Provider/Health Plan Report Cards www.healthscope.org www.lumetra.org - dedicated to measurably

improving the quality, safety, and integrity of healthcare.

www.aahp.org - Amer Assn of Health Plans www.chcf.org – California Health Care

Foundation www.healthcarecoverageguide.org – Cal

Health Care Foundation web site www.guiadecoberturadesalud.org – CHCF

hispanic site for small employers www. benefitscheckup.org/


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Government Web Sites www.cdc.gov - Center for Disease Control www.medlineplus.gov www.medicare.gov/ - info on Part D drug plans www.leginfo.ca.go - Cal ins code www.dmhc.ca.gov - Dept Managed Health

Care www.mrmib.org – High Risk Ins pools


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Insurance / Employer Purchasing www.pbgh.org - Pacific Business Group on Health www.calchoice.com – Small employer purchasing pool

www.ibenefits.com www.bizjournals.com www.definedcare.com - Defined Care Website www.egroupbenefits.com http://www.healthsmart.org/ - Practical health care

information brought to you as a service from the National Business Coalition on Health.

http://www.nbch.org/members/members.cfm - List of Business Coalitions by state


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Info for HR Specialists www.smartbrief.com - AAHP Smartbrief www.benefitsalert.com - ER benefits legal news www.mcol.com [email protected] - Email newsletter http://www.lifemasters.com/ - An internet site to

help employers access disease management information

www.ncqucalculator.com www.healthleaders.com - stock site www.allbusiness.com - small bus resources

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