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From Theory to Reality

From Theory to Reality. A Manufacturer’s View of Health Reform. SEPAC March 2012. Accountable Care Act. Three Aims Expand Coverage Improve Quality Lower Costs CMS Theme Move from a “Volume” payer to a “Value” payer. Where Are We in 2012?. Expanded Coverage

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From Theory to Reality

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  1. From Theory to Reality A Manufacturer’s View of Health Reform SEPAC March 2012

  2. Accountable Care Act • Three Aims • Expand Coverage • Improve Quality • Lower Costs • CMS Theme • Move from a “Volume” payer to a “Value” payer

  3. Where Are We in 2012? • Expanded Coverage • Cover pre-existing conditions, extend dependent coverage to 26 • Delivery System and Payment Reforms • Value Based Purchasing • ACOs • Bundled payments • Physicians report quality measures, invest in IT • Legal Challenge • Supreme court to rule on individual mandate

  4. Massachusetts Experiment 2006 model for Obamacare • Coverage increased from 88% to 96% • But… • ER visits did not decrease • Premiums soared • Still… • Letting states experiment with reforms is a powerful tool

  5. Hospital Margins Under Pressure • Price Pressure • Public payer growth, quality-based payment, • Payer Mix • Medicare and Medicaid demand implications • Case Mix • Aging population is sicker costlier, surgery moving to ambulatory setting

  6. Payment Risk for Hospitals

  7. Can’t Repeal Aging

  8. Or the Poor 40 States have filed to cut hospital reimbursement rates in 2012

  9. Medicare and Medicaid Spending to Double

  10. How Much Cost-Shifting Left? Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2009, for community hospitals. (1) Includes Medicaid Disproportionate Share payments.

  11. Discharges by Payer 2011 2021 Self Pay Commercial 5% Medicare 37% 40% Medicaid 2011 The Advisory Board Company

  12. Medical and Surgical Case Mix 24% 39% 27% 61% 73% 76% 73%

  13. Full Beds, Wrong Patients

  14. Health Reform Task Force • Review implications of reform law for customers and identify opportunities to align Bard products/processes • Conducted primary research with customers • Validate assumptions with outside experts

  15. Findings • No end in sight to cost pressure • ACOs are not for everybody (32 to date) • Payment penalties a secondary worry • Need data to prove value of new products • Suppliers need to share risk • Aligning with physicians, other systems and payers • Growth of exchanges alter relations with insurers

  16. Trends to Watch • DC gridlock and regulatory uncertainty • Taxes • FDA user fees • Enormous effort to reduce fraud and waste • Insurers buying hospitals and physician groups Highmark - West Penn Allegheny • Supreme court decision and election year politicking

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