health reform 101
DESCRIPTION
Joel Gilbertson, vice president of government and public affairs for Providence Health & Systems, provided a "Health Reform 101" presentation at the Alaska Providers Forum Sept. 2, 2010TRANSCRIPT
Health Care Reform 101Joel Gilbertson, vice president, government and public affairsSeptember 2, 2010
The Patient Protection and Affordable Care Act was signed into law on March 23, 2010. This landmark legislation was immediately amended by the Health Care & Education Affordability Reconciliation Act, which was signed into law on March 30, 2010.
Together, these bills:
Expand health insurance coverage
Provide greater alignment between payment and quality
Establish new payment models and delivery system reform
Reduce payments to some providers
Invest in prevention and building the health care workforce
Increase transparency and address waste, fraud and abuse
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Health (Insurance) Reform Is Here
Increases health insurance coverage level to 94% (+32 million)
Costs an estimated $940 billion over 10 years (2010 – 2019); (+$115 billion?)
“Raises” $1.1 trillion through new taxes, fees and spending cuts
Contains $156 billion in cuts to hospitals through reduced updates,
disproportionate share payment cuts, and penalties
133% of federal poverty level is new floor for Medicaid eligibility
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The Legislation: By the numbers
Scarcity of resources will increase
Payments will be more directly tied to quality and outcomes
Care management, coordination and collaboration highlight new payment models
Innovation and testing defines early delivery system reform work
Public accountability and transparency to grow
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A few key themes and implications
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The Legislation: The financing
Source: Congressional Budget Office
Falls short of universal coverage goal
Significant DSH cuts, uncertain support for Medicaid programs
Questionable whether provisions will actually bend cost curve
No fix to physician payment cuts
Not as aggressive on delivery system reforms as hoped for
Limited effort to address barriers to clinical integration or tort reform
Loose roadmap with many, many risks!
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So What’s Not To Love?
Legislation has varied implementation dates; unfolds over a decade
Significant portion of bill is subject to rulemaking (regulatory) process
New legislation will undoubtedly be passed during implementation process
States will shape how some provisions emerge
and…
Sizeable federal deficit looms over economic projections
Future national elections have potential to influence final outcome
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The Reality of Reform is Still to be Decided
Coverage
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Key Year: 2014
Individual mandate to obtain coverage begins
Health Insurance Exchanges are established
– Premium subsidies for Americans between 133% and 400% of FPL
Medicaid expands nationwide
– 133% of FPL
– 100% federally funded, with phase out to 90% by 2020
– States must maintain current eligibility levels until 2014
– Individual mandate to obtain coverage begins
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Coverage: Major provisions
Automatic enrollment for employees of large employers (200+ employees)
Shared responsibility for employers regarding health coverage– Financial penalty imposed on large employers who do not offer full-time
employees (and dependents) “essential” coverage under an employer-plan – Financial penalty imposed for large employers who have one or more
employees enrolled in a subsidized state exchange plan
Inclusion of cost of employer-sponsored health coverage on W2
Small employer health insurance credit – Certain small employers may claim a 35% tax credit for health premiums for
2010-2013 (i.e. until health exchanges are active in 2014)– Beginning in 2014 the credit increases to 50% but the employer must
participate in an insurance exchange to claim the credit
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Coverage: Employer obligations
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Post-Reform: How we’ll be covered (excluding Medicare)
Source: Congressional Budget Office
Insurance Reforms
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Effective September 23, 2010:
Adult children (up to 26) can stay on their parent’s plan
No pre-existing condition exclusions for individuals under age 19
No lifetime benefit limits and no cancellation of coverage when someone becomes sick
Restrictions placed on insurer’s ability to tie premium rates to health status
And beginning in 2014:
Insurers cannot exclude coverage based on pre-existing conditions for adults
Limits placed on premium ratings
Guaranteed issue for everyone
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Insurance Reform: Major provisions
QualityLinking Payment To Outcomes
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The linkage of payment to quality will increase
– Geographic variation adjustments– Value based purchasing– Penalties for hospital acquired conditions, readmissions
Hospitals financially accountable for care outcomes as patients move across the continuum – regardless of whether they own it
Enhanced coordination between physicians, hospitals and post-acute facilities
Payments will continue to migrate towards models where providers are measured against each other
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Quality
Delivery System Reform
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Priority on flexibility, innovation, experimentation
– CMS Innovation Center
New payment models designed to lower cost, maintain or improve quality
– Accountable care organizations
– Bundled payments
New competencies and collaboration will be required
– Slow transition to risk contracting– Networks, clinical IT, legal structures
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Delivery System Reform
Physician Provisions
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No fix to SGR and projected Medicare payment cuts
10% bonus to primary care providers; 10% bonus to general surgery in Health
Professional Shortage Areas
For 2013 and 2014, Medicaid payments for primary care cannot be lower than
Medicare
PQRI incentives through 2014, then penalties
Beginning in 2015, and expanding in 2017, value modifier added to physician
payment
No significant tort reform provisions
No new physician ownership in hospitals after January 1, 2011
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Physicians: Major provisions
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Manage costs as Medicare and Medicaid payment reductions are implemented
Prepare for private payer reimbursement pressures
Provider alignment is critical for the future
Emphasis on care coordination/clinical integration across the continuum of care
Capacity of outpatient and emergency services and health care workforce needs as coverage expands and demand for primary and preventive care increases
Focus on provision of cost-effective care within a bundled payment
Data and information needs to evaluate delivery system reform options
Providers: Initial Checklist
Insurance reforms – Temporary high-risk pools launched nationally– Private insurance reforms: dependent coverage for children to 26, eliminate
lifetime limits on dollar value of coverage, prohibit pre-existing condition exclusions for children
Medicare and Medicaid adjustments– $250 rebate to Medicare beneficiaries in Part D doughnut hole– Payment reductions to providers
Initial regulatory activity focused on near-term provisions– Employer requirements – “Patients Bill of Rights”– Requirements on tax-exempt hospitals– Stimulus bill “Meaningful Use” regulations finalized
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2010 Provisions Are Being Rolled Out
Completing leadership team/restructuring at CMS
ACO initial regulatory guidance expected by end of year– Will be finalized in 2011 for 2012 start– Key policy questions around benchmarks, savings model, intersection with other
payment models
Innovation Center will be operational by January 1, 2011– $10 billion in seed money– New authority to explore innovative payment models
Value based purchasing rulemaking expected in 2011
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Coming Soon
Insurance commissioners taking early action– Working to validate or establish clear authorities to enforce consumer protection
standards that take effect 9/23/10– Reviewing medical loss ratio standards
Some states have launched own high-risk insurance pool to complement new federal risk pool
States examining policy approaches to health insurance exchanges, Medicaid program design, workforce, insurance requirements
HHS has issued $46 million to states to finance a review of health insurance rate increases and health plan costs
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State’s Scrambling To Do Their Part
Health Reform: Resources
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A few resources:
http://healthreform.gov/
http://www.commonwealthfund.org/Health-Reform.aspx
http://healthreform.kff.org/