health care reform: new realities post election

1. health care reform:new realities post election

2. today’s talk • historical background • gaps in coverage • goals of health care reform • provisions of health care reform • political realities • changes in health delivery and payment • final thoughts and how IT can help

3. evolution of u.s. health care policy • Our system is the result of several major policy decisions rather than one, unified health care policy • Employer-based coverage • Government-sponsored coverage • EMTALA

4. the start of employer-sponsored coverage During World War II, wage controls administered by the federal government’s Office of Price Administration led employers to offer health insurance as a benefit in lieu of wage increases

5. the start of medicare & medicaid To provide coverage for the elderly as well as poor women and children, Congress enacted Medicare & Medicaid in the mid-1960s

6. emtala • Emergency Medical Treatment and Active Labor Act of 1986 is arguably the largest unfunded mandate ever imposed on private business • The law requires hospitals to screen and stabilize (treat) every patient who comes to the hospital ED, regardless of the patient’s ability to pay and regardless of what it costs the hospital to provide the care

7. policy decisions have left a gap in coverage for sc • 2.2 million have employer-based health insurance • 1.2 million rely on a government-sponsored program for coverage • 178,000 have coverage purchased in the individual market • 760,000 South Carolinians have no coverage *Source: Kaiser Family and Robert Wood Johnson Foundations

8. sc’s uninsured: who are they? • 552,000 people from working families • Pay taxes to support government coverage for others • 422,000 childless adults (do not qualify for Medicaid) • 219,500 adults between 139-399% of federal poverty levels • 147,500 children *Source: Kaiser Family Foundation

9. what happens when the uninsured need care? remember emtala? • Last year, SC hospitals provided more than $1 billion worth of care for which they received no direct payment • Those financial losses were passed along to insured patients and their employers

10. past presidents’ attempts at reform

11. “In my State of the Union message, I pledged to present a program to assure that no American family will be prevented from obtaining basic medical care by inability to pay. I am announcing that program today.” “What I am proposing will require employers to provide basic health insurance for their employees. In the past, we have taken similar action to assure workers a minimum wage, to provide disability and retirement benefits. We should go one step further and guarantee that all workers will receive adequate health insurance protection.” President Richard Nixon February 18, 1971

12. The Clintons pressed for government-led health care reform… in the early 1990s,

13. …but Republicans led by Senator Bob Dole, opposed the Clinton plan • Dole and his fellow Republicans argued for a market-based system designed around an individual mandate and the creation of state insurance exchanges

14. patient protection and affordable care act On March, 23, 2010, the Patient Protection and Affordable Care Act was signed into law

15. broad goals of reform • increasing coverage will expand coverage to almost 500,000 of the 760,000 uninsured South Carolinians • payment reform will change the way hospitals and other providers receive payment

16. broad goals of reform • delivery system reform includes delivery system reforms that hold great promise for improving care • insurance reform includes provisions to protect consumers and increase access to health insurance

19. increasing coverage

20. increasing coverage • medicaid: By 2014, states have the option to extend Medicaid eligibility to all legal residents up to 138% of poverty and under 65 years old • individual mandate: Beginning in 2014, US citizens and legal residents must have coverage or pay a penalty • financial assistance Offers premium assistance and subsidies for low-income individuals and families, tax credits for small businesses, and improvements in Medicare benefits and rebates for prescription drugs

21. 2013-2014 federal poverty guidelines

22. medicaid • Option to expand coverage to individuals up to 138% FPL • For states that choose to expand it removes all categorical requirements changing Medicaid to an income based eligibility program • The Federal Government will cover bulk of the cost of expansion, paying 100% of cost through 2016

23. individual mandate • beginning Jan. 1, 2014, us citizens and legal immigrants must have coverage or pay a penalty when they file their federal tax returns • penalties will be phased in between 2014-2016 • failure to maintain “minimum essential coverage” will result in a $695 penalty per year with a maximum penalty of $2,085 per household by 2016

24. financial assistance: tax credits & subsidies • low-income individuals and families will have access to financial assistance to help buy private health insurance • Tax credits will be provided to reduce premium costs of insurance purchased through health insurance exchanges • 477,000 SC citizens will receive premium tax credits • Cost-sharing subsidies will be provided to limit copayments, deductibles and premiums

25. financial assistance: tax credits & subsidies Citizens and legal residents with incomes between 138% and 400% of FPL are eligible for: • premium tax credits • Provided as refundable credits (for those w/ no tax liability) and advanceable credits (for use at time of purchase) • cost sharing subsidies • Limits cost sharing for copayments and deductibles (income at or below 250% of FPL) • limits out-of-pocket maximum amounts for premiums (income at or below 400% of FPL)

26. financial assistance: small businesses • Tax credits for small employers with less than 26 workers paying at least half of their workers’ health premiums • Phase I provides tax credit up to 35% of employer’s contribution (tax years 2010 – 2013) • Phase II provides tax credit up to 50% of employer’s contribution (tax years 2014 and beyond) • Amount of tax credit varies with firm size and average wage

27. financial assistance: medicare • Transitional rebates to help seniors in the prescription drug “doughnut hole” • First year rebate = $250 (2010) • Closed by 2020 • Additional benefits for traditional Medicare coverage: • Free preventive screenings such as colonoscopies, mammograms • A free annual physical or “wellness” visit

28. insurance exchanges “Small companies and individuals who don’t have insurance through work will be able to purchase insurance through newly created marketplaces, known as insurance exchanges, created and regulated by states. … Think of it as an Orbitz or Travelocity for health care plans.” - USA Today

29. payment reforms

30. payment reforms • payment cuts: To slow the growth of the Medicare and Medicaid programs • payment penalties: To discourage inefficiencies in care delivery • payment changes: To improve existing methods of reimbursement

31. payment cuts • Nationally, hospital payments will be cut $155 billion over 10 years to help pay for expanding coverage to 32 million • Medicare update factors to hospitals will be reduced by $157 billion beginning 2010 • Medicare DSH will be reduced $22 billion beginning 2014 • Medicaid DSH will be reduced $14 billion beginning in 2014

32. payment cuts • Establishes independent payment advisory board (IPAB) to submit proposals to reduce Medicare spending beginning in 2014 • Target reduction of 0.5 percent in 2015, increasing to 1.5 percent in 2018 • Most hospitals exempt for first 10 years

33. payment penalties • Prohibits federal payments to states for Medicaid services related to health care acquired conditions (2011) • Reduces Medicare payment for excess readmissions (2013) • Requires penalties and public reporting on health care acquired conditions for Medicare patients (2015)

34. payment changes • Expands 340B drug discount program (2010) • Allocates $400 million for additional payments to hospitals in counties with lowest Medicare spending (2011 and 2012) • Medicaid payment demonstration for free-standing psych hospitals for adult enrollees (2011- 2015)

35. payment changes • Medicare and Medicaid bundling pilots (2012-2016) • Requires plan for reforming hospital wage index system (2012) • Establishes budget-neutral Medicare Value-Based Purchasing Program (2013)

36. delivery system reforms

37. delivery system reforms • care coordination and quality Provides incentives to improve patient care • infrastructure Provides incentives for providers to meet the demands of coverage expansion

38. care coordination & quality • Supports comparative effectiveness research (2010) • Improves care coordination for dual eligibles (2010) • Establishes Center for Medicare and Medicaid Innovation within CMS to improve coordination, quality, and efficiency (2011)

39. care coordination & quality • Creates new Medicaid medical home option for enrollees with chronic conditions (2011) • Establishes voluntary, national pilot program allowing groups of providers to be recognized as accountable care organizations (ACOs) (2012) • Requires enhanced data collection, reporting, and analysis to identify and monitor trends in health disparities (2012)

40. infrastructure • Establishes teaching health centers to provide Medicare payments for primary care residency programs in federally qualified health centers (2010) • Adds $11 billion for community health centers and the national health service corps over five years (2011) • Establishes new programs to support school-based health centers and nurse-managed health clinics (2011)

41. infrastructure • Increases workforce supply and supports training of health professionals through scholarships and loans (2010) • Increases graduate medical education slots for primary care by redistributing unused slots (2011) • Provides 10% Medicare bonus to primary care physicians and general surgeons in shortage areas (2011-2015) • Increases Medicaid payments to primary care physicians to 100% of Medicare rates (2013-2014)

42. insurance reforms

43. insurance reforms • coverage protection • Protect the existing coverage of consumers • access to insurance • Remove barriers to accessing health insurance

44. coverage protection • No cancellation of coverage when an insured person becomes sick (2010) • Young adults up to age 26 may remain on parents’ policies (2010) • No lifetime limits on coverage (2010) • No annual limits on coverage (2014) • Insurers required to report share of premium income spent on medical care (2014)

45. access to insurance • No denial of coverage for children with pre-existing conditions (2010) • Temporary high risk pool to cover persons with pre-existing conditions and non-Medicare eligible retirees over 55 (2010) • No denial of coverage for adults with pre-existing conditions (2014) • No higher premium based on gender or medical history (2014)

46. insurance reforms & the individual mandate • Many of the popular insurance reforms work only if we have an individual mandate. Why? • If you could buy auto insurance the day you had an accident, would you buy it beforehand? • If you could buy homeowners insurance the day your house burned down, would you buy it beforehand? • If you could buy health insurance the day you were diagnosed with cancer, would you buy it beforehand? • If only sick people bought insurance, what would happen to the premiums?

47. other provisions impacting hospitals • New requirements for maintaining 501(c)(3) status • i.e. Community needs assessment, charity care policy • Increases funding to fight fraud and abuse • Provides $50 M to states for medical liability reform demonstrations • Simplifies health insurance administration

48. our position in support of reform • It covers over 32 million people and contains significant insurance reforms…historic opportunity to lay foundation in moving toward coverage for all • No stakeholder—or legislator—is getting everything they want • Given the long phase-in periods…there will be numerous opportunities to improve this legislation over time • The alternative to health reformis focus on only deficit reduction

49. what reform means to south carolina • 714,000 seniors on Medicare will no longer pay a co-pay for preventive services (2010) • 30,173 Medicare beneficiaries already received a one-time, tax-free $250 rebate (2010) • 18,100 young adults have access to insurance coverage through their parents’ health plans (2010) • 57,900 small businesses are eligible for a tax credit (2010) • 477,000 citizens will receive premium tax credits (2014) • Almost 500,000 of the 760,000 uninsured will be covered (2014 – with Medicaid expansion)

50. political realities • bipartisan support: • Insurance reforms • Quality initiatives • Payment reforms • party lines: • Individual mandate • Medicaid expansion • what it means for hospitals? • Possibility that less people will be covered coupled with decreased payments • Detrimental to hospitals!