Health Care Reform Developments in Tennessee: Your Options at Present

1. Health Care Reform Developments in Tennessee: Your Options at Present Lance T. Laurence, Ph.D. Associate Professor, Dept of Psychology & Director, Univ. of Tennessee-Knoxville Psychological Clinic Director, Professional Affairs, Tenn. Psychological Association TPA Convention 11/1/12

2. Health Care Reform in Tennessee: Important Developments • Patient Protection & Affordable Care Act (2010) • Supreme Court rules on critical component of PPACA: that is, CAN require individuals to buy health insurance (tax authority interpretation) • Tennessee now in the process of creating Health Exchanges which will be run by Tennessee, not the federal government (some states passing on state-run option and looking to the Feds to do it) • Commissioner McPeak’s state-wide solicitation of opinion on which plan to use as “standard/benchmark” for the Health Exchange

3. Health Care Reform Developments • The 2012 Election in November: Will it affect PPACA? • Answer: Probably Not. Neither candidate is going to win by a substantial amount and the voting control of the House and Senate not likely to change much. Hence, PPACA law that has already been passed not likely to be overturned substantially. • Also, private sector already moving in same direction as PPACA. More blurring of distinctions between providers, hospital systems, and insurance companies. More provider-insurance company risk sharing, “global payments” (patient care paid with fixed annual fees in “health homes”), more providers of different disciplines owning health care companies. Efforts to maximize prevention and disease management increasing.

4. PPACA: Intentionalities • Reduce number of uninsured • Reduce health care costs • Curb unsustainable rise of health care costs in the public sector (Medicare and Medicaid) • Improve patient care • Eliminate waste and fraud (2007 OIG Report on 2003 MH Audit: “47% of care did not meet program requirements; spent 2.14 billion in 2003 so $1.01 billion ‘waste’”) • Incentivize organizations/providers who provide quality, cost-effective care • Support prevention and disease management programs • Encourage integrated mind-physical health care

5. PPACA: Early Effects • Has already eliminated pre-existing conditions • Has extended coverage for dependents from age 24 to age 26 • #1 and #2 probably has contributed to drop in uninsured in 2011 to 15.7% (44% of the population) from 16.3% in 2010 (46%) • Health care costs increase declined from 5.6% increase in 2010 to 5.3% in 2011 • Massive cuts in provider wages in public and private sector being considered • Creation of new entities, particularly Accountable Care Organizations (ACOs)

6. Why Do Health Care Reform? • Three primary factors: increased costs of health care relative to Gross Domestic Product, aging population, increasing uninsured population (recession recently increased these numbers) • Simply has to happen. Costs in the public sector are unsustainable and increasingly so in the private sector so that more and more employers consider abandoning the social contract of providing employees with health insurance (i.e., “legacy costs” of General Motors major reason for their bankruptcy). • Simply must contain Medicare, Medicare and uninsured costs of health care, yet alone those in the private sector

7. Health Care Costs • 1960s: 28 Billion • 1970s: 75 Billion, $326.00 per person, 7.2% of GDP • 1980s: 253 Billion • 1990s: 714 Billion (remember Clinton Reform Efforts?) • 2008: 2.3 Trillion, $7,681.00 per person, 16.2% GDP • 2009: 17% GDP • 2010: 20.3% GDP • 2018 Estimate: $13,000+ per person

8. Unsustainable Cost Increases & Population Shifts • Since 1980s, cost increases in health care greater than increases in GDP rate and galloping gap continues to widen; didn’t used to be that way • In 2010 cost increases in health care 200% higher than increases in GDP rate; by 2018 increases in health care are 350% more than increases in GDP rate • We are aging, and fast: - In 2010, those 60 and older make up 18% of the population, 65+ 13% and 85+ 2%. - By 2030, 60+ are 25% of population, 65+ 20% and 85+ 3% - By 2050, 60+ are 25% of population, 20% for 65+, and 5% for 85+

9. PPACA: How It Includes People • Keeps employer-based systems • Expands Medicaid in order to try to cover poor, low-income uninsured people or uninsured working poor. Opens door to introduce managed care to this population (in Tennessee, “Tenncare”) • Begins the process of introducing managed care into Medicare population which is critical for aging population • If you don’t “fit” into any category above, you buy an insurance product through the exchange rather than be uninsured • Combination of the above “captures” most people

10. PPARC: What It Does/Attempts • It is NOT a single payer system (like Canada). Some believe it is an incremental step toward an eventual single payer system; others deny such an intentionality • With the requirement of everyone having to purchase insurance, you either purchase it through your employer or if you can’t get it there, you buy it through a state-approved exchange which provides the “basic” plan available to all in the insurance exchange. State approves what a “basic plan” is, which includes all PPARC mandated benchmarks (mental health and substance use disorders included), and you purchase it from the exchange

11. Most Visible Development: Creation of Accountable Care Organizations • Two already in Upper East Tennessee: Mountain States and Highlands • 154 ACO’s already approved by CMS, covering 2.4 million people with more ACOs on their way • Largely “provider” (i.e, independent practice associations) or “hospital controlled”. Thinking is that it is preferable to have these organizations more “physician-controlled” organizations promote “more patient engagement and better quality care” than traditional managed care plans run by largerly for profit managed care firms • ACO’s? What are they? Think “Modernized HMO” • ACO’s are “carve-in”, not “carve out” benefits like managed mental health plans: integrated care emphasis

12. ACOs: 33 Standards • Prescribed quality standards all ACOs must meet. 26 physician determined, 3 hospital-based, 4 hospital-physician based • Attempts to keep patients healthy and out of more high cost settings while providing quality care • How save? 1) Decreased avoidable hospital readmissions and readmissions (2) avoid unnecessary procedures (3) promote healthy lifestyle • PCP key in this operation: “quarterbacks” the care • These 33 quality standards not always present in today’s managed cost marketplace

13. Another Entity: Patient-Care Homes • What is that? Think “Modernized Nursing Homes” • Multidisciplinary care in care center s to improve patient care and reduce costs • Goal is bona fide integrated care versus fragmented care offer in one facility • Will include many different providers and types of services • Eventually payment will come to bundled fashion to providers and then distributed amongst them; initially retains fee-for-service with spending targets

14. Payment in ACO’s and Patient Care Homes • Once actualized, payments to move away from traditional fee-f0r-service and towards bundled payments and payments per episode of care • “Bundled” and “Per Episode” Payments: (1) Sounds a lot like capitation, doesn’t it (2) risk of financial incentive to “emotionally strip-mine” care (ACO’s 33 Standards work against that dynamic) and (3) likely to push care for these populations towards time-limited, protocol-driven treatment packages

15. Ok, How Exactly Does It Work • ACOs likely to start their operations by initiating the program with the traditional, non-managed Medicare populations (not Medicare Advantage Plans). The non-managed plans are the most costly and where the most savings can occur • After Medicare application and expansion of the Medicaid program, start the program with the Medicaid population (already managed in Tennessee)

16. ACO/PCC Calculus • Commercial plans likely to watch what happens with health care reform in public sector before they decide whether or not to play; will cherry-pick those things that work and pass on others • Those private employers who cannot sustain rising health care costs will abandon providing insurance for their employees, pay the fine, and encourage their employees to purchase insurance through the State Approved Health Exchange • These exchanges will also run either as free-standing ACO’s or increasingly connect with existing ACO’s

17. ACOs and Medicare • Office of the Actuary from the Center for Medicare and Medicare Services “assigns” the average Medicare cost figure per patient per geographical area • Audience Question: What is the amount allowed per patient for a non-traditional Medicare patient in the Upper East Tennessee geographical area?

18. Per the Office of the Actuary • Answer: $8200.00 per patient • ACO is created. Membership assigned by Medicare: one primary care physician. PCP can belong to only one ACO. Specialists can join as many as they want • Initially you join the ACO, care is referred to you by PCP, you see the patient, you are still paid directly by CMS in the initial stages

19. ACO Calculus • Likely to be a participation fee based on revenue collected to help fund the ACO management • ACO will have “target” savings goals the ACO will attempt to meet, set by CMS. If savings achieved, ACOs and their providers receive their share of savings per directives of the ACO Board • Eventually payment from CMS will move from fee-for-service to bundled payments (any kind of health care) or payment per episode of care (so much money for this exacerbation of the patient’s chronic bipolar condition). By this time ACO is expected to be “good enough” at integrated care that they can treat the patient with this prescribed amount of money for this event

20. ACOs and the Private Sector • Inevitable that if successful, these systems of care for the public sector will begin sprouting up in the private sector • At present time, so much unknown about how well these ACOs will work that the next few years will be a time of much uncertainty and constant change • Lot like the early beginnings of managed care but will two CRITICAL differences: (1) carve-in of mental health and substance disorders, not carve-out and (2) financial incentives change with new payment structures. In short, MUCH more difficult to execute

21. Ok, What is TPA Doing? What Do you do? • TPA actively engaging in shaping future directions of health care in Tennessee • TPA provided input on the Value and Cost-Offset Effects of Mental Health Care to the Commissioner of Insurance and provided testimony to Commissioner McPeak on these matters. • TPA trying to secure a Psychologist representative on the State Insurance Committee governing any and all ACO operations • TPA engaged in national efforts with APAPO to prevent massive cuts in provider reimbursement

22. Cost-Offset & Testimony to Commissioner McPeak • Contact Michelle, Lance (LANCETL@aol.com) or TPA website if you want that powerpoint • Contains good information to take to your emerging ACOs and other new health care systems • Golden opportunity to secure “full-seat” at the table and to finally get mental health care an important place in the treatment of the whole person, mind and body • Key is the carve-in factor: these new systems have to have good mental health care coverage or they will lose money –do you remember Hawaii? Irony is that the money will finally drive mental health care to a good seat at the table • Note in the recommendations the importance of getting Psychologists as full-partners in decision-making

23. What For You to Do Personally • Rethink how you are going to practice every year for the next ten years: the nature of it. Stay the same? Join an integrated care practice? Better networking? Need to conduct this type of professional due diligence • For professional psychology, the task of how to proceed in the future more difficult than in the past. HIPAA, managed care –those developments generally affected practitioners in generally similar ways. Not the case with PPACA and as such more difficult to advise colleagues on what to do • Future options f(x) early, middle or late career stage and whether you are going to participate or not in the emerging new developments. See Milbank Memorial Fund handout which we will discuss as a group

24. What to Do Personally • Don’t panic • Don’t worry about not understanding what is happening; nobody has all the answers to this new way of being • Find out where you are on the “Milbank grid” • Changes will start with Medicare; you’ll have time • Begin to move toward using outcome measures in your practice • Hook up with medical offices and reaffirm your relationships with them. Some will stay in independent offices with strong connections to PCPs; others will join together in more integrated, side-by-side office arrangements • Diversify your practice

25. What to do Personally • Stay connected to TPA and help us • You can’t talk about certain fee structure issues due to anti-trust issues so be careful BUT you can actively participate in shaping what is happening with Medicare. Respond to those TPA alerts to stop Medicare cuts (3% cut coming in January, again), to expand definition of “physician” in Medicare law. What happens there WILL substantially affect your reimbursement rate in any system as well as your scope of practice

26. Goodbye –Thank You • A Brief Look at the Value and Cost-Offset Powerpoint if you want it: Note savings in ERs, chronic medical conditions !! That is where huge savings can occur