“Can’t Anyone Here Play This Game?” How our broken politics is hurting health care (and what physicians can do about it)

1. “Can’t Anyone Here Play This Game?”How our broken politics is hurting health care(and what physicians can do about it) Bob Doherty Senior Vice President, Governmental Affairs and Public Policy Nevada Chapter Meeting January 14, 2012

2. “It may be best, at this point, to simply quote Casey Stengel's infamous yelp of frustration about the 1962 Mets: ‘Can't anybody here play this game?’ If the '62 Mets were the worst team in major league history, it's also fair to wonder whether any Congress has ever been more dysfunctional, with less cause, than this one.” Michael Hirsch, The Atlantic, November 21, 2011 www.theatlantic.com/politics/archive/2011/11/the-supercommittee-and-a-neverending-cycle-of- dysfunction/248800/

3. “The level of dysfunction that has characterized the 112th Congress may be unparalleled,” wrote Roll Call, Capitol Hill’s hometown newspaper. Worst ever? • “The level of dysfunction that has characterized the 112th Congress may be unparalleled” Roll Call, Capitol Hill’s hometown newspaper • “Congress ends 2011 with record-low 11% approval” Gallup

4. Why is Congress so dysfunctional? • Divided government requires power-sharing, but the growing ideological divide makes agreement difficult and compromise suspect • “Tea Party” influence has undermined GOP congressional leadership’s ability to strike deals • Senate rules allow the minority to routinely block most votes, so Democratic “control” is mostly an illusion

5. Why is Congress so dysfunctional? • Agreement is harder when programs are being cut than when sharing largesse • Weak and uncertain congressional leadership? • The President has largely given up on Congress and is running against it • High cost of elections, Super PACs, and end of campaign spending limits has given more power to well-funded lobbies

6. Why is Congress so dysfunctional? • Deepest economic crisis since the depression, with no easy answers • Angry, dispirited and divided public that doesn’t know what it wants from Washington or what it is willing to accept or contribute • 2012 elections are likely to sharpen differences and confrontation between Senate and House, White House and Congress

7. Why does it matter? • Our broken politics is making it impossible for Washington to find common ground on the challenges facing U.S. health care: poor and uneven access, dysfunctional payment system, and rising costs • And you can’t fix the fiscal mess without fixing the health care mess!

8. Components of Revenue and Spending 2011 Revenues and Financing Outlays Total Outlays = $3.629 Trillion Total Revenues = $2.230 Trillion Total Financing = $3.629 Trillion 8

9. Debt Drivers • Rapid Health Care Cost Growth (causing Medicare and Medicaid costs to rise) • Population Aging (causing Social Security and Medicare costs to rise, and revenue to fall) • Growing Interest Costs (from continued debt accumulation) • Insufficient Revenue (to meet the costs of funding government) • Economic Crisis (lost revenue and increased spending from automatic stabilizers) • Economic Response (stimulus spending/tax breaks and financial sector rescue policies) • Tax Cuts (in 2001, 2003, and 2010) • War Spending (in Iraq and Afghanistan) Short-Term Long-Term 9

10. Gap Between Revenue and Spending (Percent of GDP) Avg. Historical Spending (1970-2010): 20.8% Avg. Historical Revenues (1970-2010): 18.0% Note: Estimates based on CRFB Realistic Baseline. 10

11. Why Is Entitlement Spending Growing? Drivers of Entitlement Spending Growth (Percent of GDP) 56% 36% 44% 64% Source: CBO Long-term Budget Outlook, 2010. 11

12. “Can’t anyone here play this game?” • Case study # 1: the debt ceiling debacle • Congress brought the country to the brink of default over increasing the debt ceiling • To prevent default, the Budget Control Act of 2011 was enacted

13. Budget Control Act of 2011 • Increases debt ceiling in three stages; Congress can vote to disapprove but President can veto • Vote on Balanced Budget Amendment, but debt ceiling not contingent on it passing • Process to achieve more than $2 trillion in budget savings

14. Budget Control Act of 2011 • $900 billion in discretionary spending cuts over next ten years, enforced by automatic cuts if appropriations bills exceed authorized level • Joint Committee on Deficit Reduction (“Super Committee”) created to recommend $1.2 trillion in further deficit reduction (entitlements, taxes, discretionary) for fast-track legislative approval • Because Super Committee failed, sequestration will achieve same savingsthrough automatic cuts

15. CQ Today,Monday, November 28, 2011 How the Automatic Cuts Will Work 1 DETERMINE THE SIZE OF CUTS Total “triggered”cut $1.2trillion Evenly split each year’s cut between defense and non-defenseaccounts Distribute remaining $984billion E Evenly among FY 2013-21 DefenseNon-defense $54.7billion*$54.7billion Subtract 18 percent in debt service savings $109.3 billion peryear 2 ALLOCATE CUTS ACROSS DEFENSE AND NON-DEFENSEACCOUNTS Discretionary Accounts DiscretionaryAccounts Mandatory Accounts all years Fiscal 2013 Fiscal 2014-2021 After exempting certain programs, Apply uniform percentage cuts to all accounts to achieve the required savings. apply a uniform percentage cut to all accounts to achieve the required savings. Medicare cuts cannot exceed 2 percent. Lower the statutory cap on total discretion- ary spending by the amount necessary to achieve the required savings Exemptions include: •SocialSecurity•Medicaid •Civilian and military retirement •Low-income assistance

16. Sequestration • Annual cuts of 10.0 percent (in 2013) to 8.5 percent (in 2021) in discretionary defense • Annual cuts of 7.8 percent (in 2013) to 5.5 percent (in 2021) in non-exempt discretionary nondefense • Cuts of 2.0 percent each year in Medicare spending on “providers” ` CBO, Director’s blog, September 12, 2011, http://cboblog.cbo.gov/?p=2719

17. Public health and safety are particularly vulnerable “ In the past year, 40 states and Washington, D.C. have cut funds to public health, 30 states cut their budgets for the second year in a row and 15 of those have cut their budget three years in a row. Since 2008, 49,310 state and local public health department jobs have been lost. Federal funds for state and local preparedness declined by 38 percent from fiscal year (FY) 2005 to 2012 (adjusted for inflation) — and additional cuts are expected under budget sequestration.” Ready or Not? Protecting The Public’s Health From Diseases, Disasters, And Bioterrorism, 2011, The Trust for America’s Health, www.healthyamericans.org/assets/files/TFAH2011ReadyorNot_09.pdf

18. Undoing sequestration? • Sequestration cuts to be announced January, 2012, but won’t go into effect until January, 2013 • Congress will attempt to block (some) of the cuts, especially in defense, but any attempt to over-ride the cuts would have to over-come political, procedural, and economic obstacles

19. “Left in the wreckage of the ‘Super Committee’ process are plans to automatically impose unprecedented cuts in health care programs—cuts that will within weeks endanger Medicare beneficiaries’ and military families’ access to care, and later, cause unsustainable cuts to many other critical programs to reduce disease, protect public health and safety, and ensure that patients have access to doctors.” Virginia L. Hood, MBBS, MPH, FACP , President, American College of Physicians, November 21, 2011, www.acponline.org/pressroom/no_agreement_deficit_plan.htm?hp

21. “Can’t anyone here play this game?” • Case study # 2: the SGR debacle • Congress has “kicked the can” on the SGR, each and every year since 2002, enacting short-term patches that assume even larger cuts later • 2011 was supposed to be different, but we ended up again with another short-term patch!

22. Promises, promises . . . “Unless we begin the process of developing a long-term solution, we will once again be faced with the unwanted choice of extending a fundamentally broken payment system or jeopardizing access to care for Medicare beneficiaries. We cannot let either happen.” House Energy and Commerce Committee, March 28, 2011 letter to physician membership organizations, including ACP

23. So what happened? • Medicine answered the call by offering proposals to end the SGR and transition to new models • But with the collapse of the Super Committee, we lost our best chance to get repeal • Instead, Congress ended up combining the SGR with a bill to extend payroll tax cut and unemployment benefits • House and Senate deadlocked on paying for it, and in the end, all they could agree on was a two-month extension, through February 29, 2012

24. So what happened? • Taking up the SGR cuts will be among Congress’ first order of business • But the fact remains that once again they/we are “faced with the unwanted choice of extending a fundamentally broken payment system or jeopardizing access to care for Medicare beneficiaries”

25. “Instead of replaying the tired old script of arguing over whether the cut should be delayed for two months or two years, Congress must do the right thing and enact a permanent solution. At Congress’ request, ACP put forward concrete proposals to eliminate the SGR . . . and transition to new . . . delivery models, and ACP even gave Congress proposals to help pay for it. When will Congress do its part and join with us to develop a bipartisan plan to end the recurring SGR nightmare?” Dr. Virginia Hood, ACP President, December 19, 2011, www.acponline.org/pressroom/srg_medicare_cut.htm

26. So what can physicians do about our broken politics? • Wait for Washington? • Or take the lead? (And try to keep Washington from getting in the way!)

27. Taking the lead on deficit reduction • ACP’s letter to the Supercommittee identified potential budget savings of between $500 billion and $886 billion, not counting savings from reducing low value care • Goal was to show Congress a pathway to reduce federal spending on health care, permanently pay for SGR repeal, and allow for continued funding of critical programs including GME

28. Taking the lead on deficit reduction • Reduce health care spending in a socially and fiscally responsible way: • Make changes in federal health programs and tax policy consistent with ACP policy • Broaden GME financing and allocate funds strategically • Reform payment and delivery systems • Promote High Value Care www.acponline.org/advocacy/where_we_stand/medicare/super_comm9-12-2011.pdf

29. “Menu” of health of health savings supported by ACP policies include: • Tort reform ($62 billion) • Accelerate/modify tax on high cost health plans ($113 billion to $309 billion) • Require Part D drug rebate ($110 billion) • Allow federal government to negotiate Part D drug prices (CBO: nominal savings; Center for Economic and Policy Research, $300 billion) • Enroll dual-eligibles in managed care ($12 billion)

30. “Menu” of health of health savings supported by ACP policies include: • Single Medicare A and B deductible ($32 billion) • Add a public plan to health exchanges ($88 billion) • Strengthen primary care and care coordination ($83 billion)

31. Taking the lead on Graduate Medical Education • Preserve funding for GME • Require all payers to contribute to provide sufficient funding, and gradually reduce federal contribution • Align funding with workforce needs • Link payments to assessment of workforce needs • Substantially increase weight for IM and other primary care programs • Competitive of funding of innovative GME programs

32. Taking the lead on transitioning to new models • Stage 1 (CYs 2012-16): eliminate SGR, set updates by statute, ensure no cuts for any services and higher update for primary care • During period of stability, engage in broad testing and evaluation of new payment models • Stage 2 (CYs 2015-19) physicians transition to new payment and delivery models that meet certain specified criteria

33. Taking the lead on transitioning to new models • Rep. Allyson Schwartz (D-PA) developed the Medicare Payment Innovation Act, sent to “Super Committee” on 11/16 • Seeking Republican co-sponsors for stand-alone bill • Incorporates key ACP’s suggestions and is consistent with our own proposal

34. Taking the lead on influencing new models • Center on Medicare and Medicaid Innovation is spearheading the development of multiple options to improve payment and delivery systems: • Comprehensive Primary Care Initiative • ACOs

35. Taking the lead on influencing new models • Comprehensive Primary Care Initiative (CPCI) modeled on ACP’s Patient-Centered Medical Home and PCMH-Neighborhood concepts • Private payers and Medicaid to join with Medicare to support comprehensive primary care, if selected practices demonstrate capabilities aligned with the PCMH model • Initially: 75 practices each in 5-to-7 markets with total of 330,000 beneficiaries

36. Taking the lead on influencing new models • Substantial revenue opportunity for CPCI practices: • Medicare: first two years, risk-adjusted $20 PPPM (ranging from $8 to $40, depending on a patient’s health risk), reduced to $15 PPPM in second two years when shared savings become available, in addition to regular Medicare fee-for-service payments • More PPPM payments if Medicaid participates • Shared savings if selected practices collectively save compared to others in the community • Private payers must describe “plan for enhanced support for comprehensive primary care”

37. Taking the lead on influencing new models • CPCI practices will implement and report on following five capabilities: • Risk-stratified Care Management; • Access and Continuity; • Planned Care for Chronic Conditions and Preventative Care; • Patient and Caregiver Engagement; • Coordination of Care Across the Medical Neighborhood

38. Taking the lead on influencing new models • If successful, CMS has the authority to expand the program throughout Medicare, potentially leading to a sustainable new payment and delivery models for primary care • Letters of intent by non-Medicare payers to participate were due November 15, 2011, final applications later this month

39. Taking the lead on influencing new models • Accountable Care Organization final rule made changes to respond to ACP’s concerns: • Less burdensome reporting requirements • EHRs encouraged but not mandated • Option to share in savings without being at risk for losses • Physicians will know in advance which of their Medicare patients are being attributed to the ACO • Recognizes role of internal medicine subspecialists in providing primary care

40. Taking the lead on influencing new models • Advanced payment initiative helps smaller practices and hospitals participate in the ACO program through upfront front bundled payments • These advanced payments will be recouped from the ACO’s earned shared saving distributions, but participating ACO will not be liable to repay Medicare if savings do not equal the advanced payments

41. Taking the lead on improving care • High Value, Cost Conscious Care Initiative • Estimated $700 billion spent annually on ineffective, marginal and wasteful care • Provide patients and clinicians with information on comparative effectiveness • Establish incentives for clinicians, hospitals, other providers • Establish patient-side incentives and insurance design to encourage high value care (i.e. vary cost-sharing based on effectiveness)

42. Taking the lead on preserving and improving health reforms • Preserve funding and implementation of key policies to expand coverage, reform payments, address workforce shortage, and reduce costs • Improve the legislation by: • Giving states more options to design own programs, earlier, if they can cover as many • More congressional oversight over IPAB

43. Taking the lead on preserving and improving health reforms • Influence implementation of the law by submitting comments on proposed rules, everything from ACOs to health exchanges to required benefits to administrative simplification • Submitted comments on at least nine major rules since January! • Supported IOM framework for considering cost in determining essential benefits to be offered through the health exchanges

44. Uninsured Rate Among Adults Ages 19–64, 2008–09 and 2019 (with ACA) NH ME WA VT ND MT MN OR NY WI ID SD MI WY PA NJ IA NE OH IN NV IL WV UT VA CO KS MO KY CA NC TN OK SC AR AZ NM MS GA AL TX LA FL AK HI 2019 (estimated) 2008–09 NH ME WA VT ND MT MN OR NY MA WI MA ID SD RI MI RI WY CT PA NJ CT IA NE OH DE IN NV DE IL MD WV UT VA MD CO DC KS MO KY CA DC NC TN OK SC AR AZ NM MS GA AL TX LA FL AK HI 23% or more 7.1%–13.9% 19%–22.9% 14%–18.9% 7% or less Data: U.S. Census Bureau, 2009–10 Current Population Survey ASEC Supplement; estimates for 2019 by Jonathan Gruber and Ian Perry of MIT using the Gruber Microsimulation Model for The Commonwealth Fund. Source: Commonwealth Fund State Scorecard on Child Health System Performance, forthcoming 2011.

45. Taking the lead on medical liability reform • Medical liability reforms should be included in any agreement on deficit reductions • Caps on non-economic damages and limits on contingency fees • National pilot of no-fault health courts

46. What can individual physicians do?Advocate for your patients “Physicians should help the community and policymakers recognize and address the social and environmental causes of disease, including human rights concerns, discrimination, poverty, and violence. They should work toward ensuring access to health care for all persons . . .”

47. What can individual physicians do?Advocate for your patients “Physicians, patient advocates, insurers, and payers should participate together in decisions at the policy level; should emphasize the value of health to society; should promote justice in the health care system; and should base allocations on medical need, efficacy, cost-effectiveness, and proper distribution of benefits and burdens in society.”

48. What can individual physicians do?Advocate for your patients “Physicians should not engage in strikes, work stoppages, slowdowns, boycotts, or other organized actions that are designed, implicitly or explicitly, to limit or deny services to patients that would otherwise be available. In general, physicians should individually and collectively find advocacy alternatives, such as lobbying lawmakers and working to educate the public, patient groups, and policymakers about their concerns.” ACP Ethics Manual: American College of Physicians Ethics Manual: Sixth Edition Lois Snyder, for the American College of Physicians Ethics, Professionalism, and Human Rights Committee, Ann Intern Med January 3, 2012 156:73-104; http://www.annals.org/content/156/1_Part_2/73.full#fn-group-1

50. What can individual physicians do?Be informed about the issues • Election 2012: Compare the candidates positions on health care and our policies, www.acponline.org/advocacy/election_2012/index.html?hp • Health reform: • An Internist’s Practical Guide to Understanding Health System Reform, www.acponline.org/advocacy/where_we_stand/access/internists_guide/ • Consumer guide, www.healthcareandyou.org • State health policy, www.acponline.org/advocacy/state_policy/