the future of health care reform brian s. werfel, esq. werfel & werfel, pllc
TRANSCRIPT
The Future of Health Care Reform
Brian S. Werfel, Esq.Werfel & Werfel, PLLC
• 29 States are challenging at least one aspect of the Affordable Care Act
– 26 states are parties to lawsuit filed by Florida AG
– Virginia AG sued separately– Utah is challenging Health Care Exchanges
• “We already have own exchanges, thank you very much”
• Dozens of lawsuits by employers, special interest groups, private citizens, etc.
Legal Challenges to the Affordable Care Act
Two primary constitutional challenges:
1. Individual Mandate – question as to whether the mandate the requires individuals to maintain/purchase insurance violates the “commerce clause”?
2. Medicaid Expansion – question as to whether the requirement that states extend Medicaid coverage to people earning between 100% -- 138% of the FPL is a violation of state sovereignty under the 10th Amendment.
Constitutional Questions
SCOTUS – Oral Arguments
• SCOTUS heard 3 days of oral arguments on constitutionality of ACA
– Day 1 – Jurisdictional Issues– Day 2 – Constitutionality of Individual
Mandate– Day 3 – Effect on rest of the law if Individual
Mandate is ruled unconstitutional
• Decision expected in June
1. Individual Mandate is upheld as a valid exercise of Congress’ authority to regulate interstate commerce
2. Individual Mandate is rejected as an impermissible expansion of Commerce Clause, unaffected provisions of ACA are left unaffected
3. Individual Mandate is rejected as an impermissible expansion of Commerce Clause, Justices are unable to separate out unaffected provisions, and, therefore, the entire law is thrown out.
Possible Outcomes
Public Opinion
Public Opinion
Cost ofHealth Care
Reform
The Underlying Problem…
• 2010:– 2010 - 2019– Total cost: $940 billion– Net cost: - $143 billion (Reduces deficit)
• March 2012:– 2012 – 2022– Total cost: $1.76 trillion – Net cost: $1.25 trillion (Increases deficit)
Congressional Budget Office
March 2012 CBO Report
March 2012 CBO Report
• Insurance Coverage– CBO originally estimated that 3 million people
that currently have employer-based coverage would lose that coverage
– CBO now estimates this number to be 3 – 5 million
– Worst case scenario is 20 million
– Paradoxically, the more people lose their employer health insurance, the less the bill costs
– More amounts paid in employer penalties– Higher income taxes (increased wages to offset loss
of healthcare)
Health CareExchanges
(HCEs)
Health Care Exchanges
•Affordable Care Act requires states to establish state exchanges
– Facilitate the purchase of insurance coverage through qualified health plans (QHPs)
– Assist qualified employers to enroll employees in QHPs through Small Business Health Options Program (SHOP)
Timeline
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Passage of ACA
Release of Essential Health Benefit
GuidanceExchanges
Implemented
2010 2014201220112011
• Standards – Relative to the establishment, operation, and minimum
functionality of Exchanges, including eligibility standards for insurance affordability programs
– For health insurance issuers with respect to participation in an Exchange, including the minimum certification standards for QHPs
– For employer participation in the SHOP– Disseminate information to qualified employees– Submit contributions toward premiums– Offer enrollment period for new employees
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Final Rule re: HCEs
• ACA requires Exchanges cover 10 broad categories of services
– Emergency services– Ambulatory patient services– Hospitalization– Rehabilitative services
• HHS released “guidance” end of 2011
• AAA comment letter in January 2012– Urged that emergency and nonemergency ambulance transports
be expressly included as part of the basic benefit package
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Essential Health Benefits
• States select a single “benchmark plan” to serve as the standard for QHP
• Choice for benchmark plans– The largest plan in any of the 3 largest small group
insurance products in the State’s small group market– Any of the largest 3 State employee health benefit plans– Any of the largest 3 national FEHBP plan options– The largest insured commercial non-Medicaid Health HMO
operating in the State
• Default – largest small group plan in the State
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HHS Guidance
•State mandated coverage– If the selected benchmark plan is subject to State
mandates, then the benchmark must include state mandates on coverage
– If the selected benchmark includes a State’s benefit mandates, the State would be required to cover the cost of those mandates outside the EHB package
•Federal mandated coverage– If the selected benchmark plan does not include an ACA
mandatory category it must be added– Federal government would pick up cost
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HHS Guidance
• $610 million awarded to 33 states and D.C. to develop state exchanges
–Most other states have received funding for other aspects related to HCEs
• Implementation varies:–Some states put implementation on hold pending SCOTUS decision
–Others moving forward–Many finding that costs are prohibitive, looking to federal government to establish their exchange
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HCEs – Implementation
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HCEs – Implementation
Accountable Care
Organizations(ACOs)
•“Accountable Care Organization” is a network of hospitals and physicians that will share responsibility for providing care to patients
–Would be responsible for pre-hospital, inpatient acute care, and post-acute care of the patient
–Goal is to replace the insurance company as the “gatekeeper”
•Capitated payment regime
Accountable Care Organizations
•Starting in 2012, ACOs will be eligible to share in cost savings they achieve for the Medicare program
•Starting in 2013, a 5-year Medicare pilot program would experiment with a bundled payment to ACOs
–Cover all care starting 72 hours prior to hospital admission through 30 days post-discharge
Accountable Care Organizations
•Acceleration of existing trend towards merger of hospitals into larger and larger “health systems”–50% increase post-ACA
•Bringing physicians into the fold as employees–> 50% of physicians are now employed by hospitals
–75% increase since 2000
Horizontal Integration
•Health systems becoming more aggressive in acquiring ancillary services–Rehab and long-term care hospitals–SNFs
Vertical Integration
• AMR (EMSC)– Purchased by Clayton, Dubilier & Rice– $3.2 billion
• Rural Metro – Purchased by Warburg Pincus– $438 million
• Falck A/S– 2011 acquisition of Lifestar Ambulance– 2010 acquisition of Care Ambulance
• First Call Ambulance (TN)– Purchased by EDG Partners LLC
EMS Acquisition Activity
A Vision of the Future?
• Medicaid expenditures to increase by $455 billion from FY 2010 – FY 2019
– Largely the result of increased enrollment– 11.6 million recipients in FY 2014– 20 million recipients by FY 2019
• 95% of the increased costs will be paid by federal government through 2017
– What happens in 2018?
Impact of ACA
Projected Medicaid Expenditures
• Texas– On June 8, 2011, Texas Legislature approved legislation
that would restructure the state’s Medicaid program– Privatization in South Texas– Formation of Healthcare Cooperatives
• Utah– State officials have released a 91-page blueprint for
overhauling the state’s Medicaid program– ACOs
• Florida– Plan to shift beneficiaries into private-run Medicaid
managed care organizations
Reaction of States
• Alabama – Stopped paying Medicare crossovers– Increased mileage rate from $1 to $3 per mile
• Florida– Looking to move its entire Medicare population into HMOs
• Montana– Looking at 5% rate cuts
• Oklahoma– 3.25% rate cut
• South Carolina– Repealed a law that prohibited Medicaid Agency from adjusting
rates– Prelude to significant rate cuts
Rate Cuts
•California– Proposed across-the-board cuts of 5 –
10%– Various provider groups sued– Includes ambulance
– On hold pending resolution of a case involving SNFs that is currently pending before SCOTUS
– February 12, 2012, SCOTUS remands case back to 9th Circuit for further hearings
Rate Cuts
• May 6, 2011
• Would create a standardized process that states must adhere to when setting Medicaid rates
• Review must include:– Comparison of Medicaid rate to customary charge– Comparison of Medicaid rate to:
– Medicare allowable – Average commercial rate– Medicaid allowable
– Estimate of increase or decrease in access attributable to rate change
Medicaid Proposed Rule
