Missouri Health Care Executive Assistants Conference

1. Missouri Health Care Executive Assistants Conference May 4, 2012

2. Agenda • Defining the “New Normal” • Key issues

3. Overview: Market Changes • Realignment of capital investments • Constrained reimbursement levels • Passive payers transitioning to active purchasers • Cost pressures • Market consolidation • Growth in physician employment • New coverage through insurance exchanges and Medicaid • Workforce shortages

4. How Do We “Cut Costs”? Employer Reduce benefits Family Add covered services President Obama Subsidize premiums Rep. Ryan Limit contribution to coverage Medicaid Reduce provider payment rates Doctor Reduce overhead Insurer Remove high costs from pool Hospital Close the psych. unit, market the cath. lab

5. Premiums for Family Coverage, by State, 2010 Missouri Source: The Commonwealth Fund – November 17, 2011

6. Employer Premiums as Percentage of Median Household Income for Under-65 Population, 2003 and 2010 62 percent of under-65 population live where premiums are 20 percent or more of income Source: The Commonwealth Fund – November 17, 2011

7. Source: Estes Park Institute Survey of hospital executives, trustees and physicians Sept. 2011

8. Reform Archetypes Send It Back Active Implementers Passive Aggressive On Hold Source: Ian Morrison Layout: Matt Williams

9. States Suing Federal Government Over Health Bill (as of 4/5/11) State has filed suit (27 states) Suit filed by state official, not on behalf of state Source: Matt Williams

17. Missouri Legislative Issues

18. Legislative Topics • Federal budget related to provider taxes • State Issues • Medicaid Appropriations • Enrollment of Newly Insured • State Health Insurance Exchange • Certificate of Need • Hospital Licensure Reform • Prompt Credentialing By Insurers • Expansion of Medicaid Managed Care • Scope of Practice • Conscience Clause • Poison Control Center • Rx Monitoring • Medical Liability

19. Provider Tax Reductions in the President’s Proposed Budget • Phase-down of the maximum provider tax rate • 6 percent in 2014 • 4.5 percent in 2015 • 4 percent in 2016 • 3.5 percent in 2017 • MHA continues to collaborate with other states, the Missouri congressional delegation and the governor and legislative leaders to block this.

20. The Role of the FRA

25. Policy Impacts in Missouri

26. Impact of Tax CapReport by Department of Health Management and Informatics, School of Medicine, University of Missouri • Reduction of $2.4 billion in federal matching funds for SFY 2015-2018 • Estimates that a $2.4 billion reduction in federal revenue would increase health care premiums by $715 per privately insured individual by SFY 2018 • Job loss associated with reduction in the hospital sector could be 16,479 • Medicaid coverage could decrease by 199,790 by 2018.

27. Medicaid Appropriations • In January, staff offered three membership telephone conferences to review the governor’s proposed budget for SFY 2013, which included: • savings from various “efficiencies” • no eligibility or benefit reductions • a focus on a $500 million revenue shortfall from the lapsing of federal stimulus funds and a $100 million FMAP decline • The lower FMAP adds $30 million in state cost for the same level of Medicaid hospital services

28. $30 Million Shortfall From FMAP Change • Limits on early elective childbirth • Curtailing unnecessary ED use • Medicaid RAC focus and standards • Medicaid liens and expanded dispute resolution • Organ procurement efficiency and effectiveness Federal Reimbursement Allowance

29. The Proposed Medicaid Budget • Other components of the $191 million in General Revenue savings in Medicaid included: • $36.7 million in managed care efficiencies • $29.5 million from new generic drugs • $51.5 million more in pharmacy rebates • $4.6 million in General Revenue savings from the Medicaid health homes demonstration

30. Demands on the Medicaid Enrollment System • A new MHA report finds that 386,000 Missourians will become eligible to enroll in Medicaid in 2014 if the federal health reform law is implemented as written. • The state’s eligibility determination system and IT infrastructure is obsolete and entirely inadequate to the task. • Federal funding is available to help states fund upgrades in their eligibility determination systems.

31. Changes in Coverage under ACAPopulation < Age 65, 2016 Source: Congressional Budget Office March 18, 2011 (updates original CBO estimate of March 20, 2010 without substantial change)/Health Policy Alternatives

32. Changes in Coverage under ACAPopulation < Age 65, 2016 Uninsured: - 32 million Exchange: +22 million (18 million w/subsidy) Medicaid: +16 million Source: Congressional Budget Office March 18, 2011 (updates original CBO estimate of March 20, 2010 without substantial change)/ Health Policy Alternatives

33. Changes in Coverage under ACAfor Missouri Population < Age 65 Source: Urban Institute Analysis

34. Changes in Coverage under ACAfor Missouri Population < Age 65 Uninsured: -411,000 Exchange: Employers 113,000 Non-group 231,000 Medicaid: +410,000 Source: Urban Institute Analysis

35. Health Insurance Coverage Distribution of the Non-Elderly in Missouri, in Baseline and Reform

36. Source: Missouri Medicaid Basics – Spring 2011 Missouri Foundation for Health

38. Currently Uninsured Ages 0-64

39. Current Medicaid Beneficiaries and Newly Eligible in 2014** Ages 0-64 Current Medicaid Beneficiaries Ages 0-64

40. Newly Eligible in 2014** Per Family Support Eligibility Specialist

41. State Health Insurance Exchange • State health insurance exchange formation • The Senate has passed a bill to prevent the executive branch’s creation of a state health insurance exchange under PPACA without specific legislative or voter authorization. It would be on the November ballot for approval. • There has been no legislative action to create a state health insurance exchange. • The MHA board and FRA Long-Range Planning Committee will be exploring exchange issues.

42. Certificate of Need Legislation • Legislation to repeal/revise certificate of need review of construction of a new hospital has been filed but not given a hearing. • A legislative proposal to create a quasi-judicial review process may be debated by the state Senate. Its new review standards favor approval of CON applications.

43. Hospital Licensure Reform • MHA-sponsored bills to revamp hospital licensure processes and standards have been unanimously approved by a Senate committee and the full House of Representatives. • The impediment to passage is a Senate opponent and his allies. • The bill narrows the focus of state complaint investigations, requires surveyors to cite written standards and promotes consistency with CMS.

44. Prompt Credentialing by Insurers • MHA is in a coalition of providers working to address concerns about insurers’ delays in credentialing physicians. • The coalition proposal creates new deadlines for insurer review and also establishes a mechanism for physicians to be paid out-of-network rates while the credentialing application is pending. • Bills are under consideration in both the House and Senate.

45. Expansion of Medicaid Managed Care • Legislators are not considering statutory or budget proposals to expand Medicaid managed care to new regions or populations for SFY 2013. • A prime proponent of expansion, Centene, has become a vendor in all managed care regions. • The number of contracted plans is shrinking as of July 1, 2012. • Medicaid’s leadership is favorably disposed towards managed care.

46. Scope of Practice Bills • Physicians and CRNAs are battling over who may perform various pain management procedures, including spinal injections. MHA is heavily engaged in the debate. • Nursing interests are proposing to authorize advanced practice registered nurses and CRNAs to practice with little if any oversight by physicians. MHA has supported more focused expansions of practice for APRNs but is not promoting this sweeping expansion.

47. “Conscience Clause” Protections • Broad conscience clause protections for all types of health care practitioners and employees are being considered. • The original versions would protect whatever an employee decides offends his or her conscience, with no requirement for prior notification of employers. The bills creates new employer liability and other penalties. • The bills have been somewhat narrowed in scope, but continue to raise serious concerns.

48. Prescription Drug Monitoring and Contracts to Treat State Prisoners • MHA has successfully amended legislation to narrow and clarify hospitals’ role in a new state system for tracking the dispensing of prescription drugs. • Correctional Medical Services, the state’s vendor of medical care for prisoners, is reviving an amendment to force hospitals to contract with them, with payment rates at the greater of Medicaid or Medicare.

49. Medical Liability Reform

50. Thank You Questions?