Federal and State Health Care Reform: What Does it Mean for CPM’s Members?

1. Federal and State Health Care Reform: What Does it Mean for CPM’s Members? April 29, 2010 Michael Scandrett, JD Halleland Habicht PA and LPaC alliance

2. Overview of Federal Reform • Temporary national high risk pool • Insurance market changes (6 mos. post-effective date) • Prohibit annual and lifetime limits • Prohibit rescissions, except for fraud • Extend dependent coverage to age 26, even if married • Cover pre-ex conditions for kids (under age 19) • Individual mandates and employer requirements to offer coverage (2014)

3. Overview, cont. • Insurance exchanges (fully operational in 2014) • States may begin establishing exchanges sooner • Medicaid/Medicare reform • Expand Medicaid coverage – effective April 1, 2010 for some states including Minnesota • Extensive Medicare changes – parts A,B,D, Medicare Advantage • Payment reform and care coordination • Medical homes, Payment bundling, ACOs, CMS Innovation Center

4. Provisions Impacting LTC: CLASS Act • CLASS Act: National Voluntary Insurance Program for Purchasing Community Living Assistance Services and Support • Voluntary*, self-funded public long-term care insurance program for individuals with “functional limitations” • Secretary develops actuarially sound benefit plan • 5-year vesting period • Provides cash benefit – not < avg. of $50/day to purchase non-medical services and supports needed to live in community * Working adults will be automatically enrolled and must opt-out (effective Jan. 1, 2011)

5. Provisions Impacting LTC: Medicaid • Community First Choice Option • Optional Medicaid benefit to provide community-based supports for beneficiaries with disabilities who would otherwise require an institutional level of care • Enhanced federal matching rate – additional six percentage points • Effective Oct. 1, 2011, sunsets after 5 years • State Balancing Incentive Program • FMAP increases for Medicaid expenditures for non-institutionally based LTC services and supports • Oct. 1, 2011 – Sept. 30, 2015

6. Medicaid, cont. • Removal of Barriers to Providing Home and Community Based Services (HCBS) • State option to provide more types of HCBS through a State plan amendment, rather than through a waiver • For individuals with incomes up to 300% max SSI payment and w/higher level need • States may extend full Medicaid benefits to individuals receiving HCBS under a State plan amendment • Money Follows the Person Rebalancing Demo • Extends through Sept. 2016 • Allocates $10 mil/yr. for 5 yrs. to continue the Aging and Disability Resource Center initiatives

7. Provisions Impacting LTC: Medicare • Many Changes • Restructure Medicare Advantage Payments • Therapy Caps • Reduce annual market basket updates for inpatient, home health, SNF, hospice, etc. • Freeze threshold income for Part B premiums (2011 through 2019) • Reduce Part D premium subsidy for incomes over $85k(single), $170k(couple) • Assisted Living Part D Copay Partial Elimination • Reduce wasteful dispensing of outpatient Rx in LTC settings • Establish 15-member Independent Payment Advisory Board • Eliminate Medicare Improvement Fund • Medicare Shared Savings Programs (ACOs) • Community-based Care Transitions Program • Innovation Center w/in CMS

8. Provisions Impacting LTC: SNF Requirements • New Transparency Requirements • Disclose info re ownership, accountability req’s, expenditures; publish standardized info on nursing facilities to a website so Medicare enrollees can compare facilities • Compliance and Ethics Programs • Requires compliance and ethics program SNF/NH; effective in preventing and detecting criminal, civil, and administrative violations and in promoting quality of care • SNF Market Basket Productivity Adjustment • Begins FY 2012 – reduced by productivity adjustment equal to the 10-yr. moving average of changes in annual economy-wide private non-farm business multifactor productivity as projected by the Secretary

9. SNF Requirements, cont. • Many Changes • Delays certain SNF “RUGs-IV” payment system changes to Oct. 1, 2011 • Medicare value-based purchasing implementation plan for SNF • Reporting of expenditures – wages and benefits for direct care staff, breaking out RN, LPN, CNA, other med. and therapy staff • Standardized complaint form • Staffing accountability requirements • GAO study and report on Five-Star Quality Rating System • Permissive reductions in civil money penalties for facilities that self-report deficiencies • Notification of facility closure requirements • Dementia and abuse prevention training requirements • New screening requirements for Medicare/Medicaid certification • Additional Fraud and Abuse prevention meausres

10. LTC Organizations as Employers • Many considerations: • Reporting of employee health coverage on W-2 Forms • CLASS Act – whether to participate • Higher Medicare payroll tax on incomes over $200k/$250k • Notice to employees of coverage through exchange • Shared Responsibility provisions – offer affordable coverage to employees working 30+ hrs/wk • Add’l background check requirements for SNF/NH employees with “direct patient access” • How to pay for the higher costs?

11. Strategic Considerations for CPM • Understand the currents • Mind the gap • Design the mousetrap

12. Currents: Global Accountability • Provider accountability • Payment reform: ACOs, bundled payment, shared savings, total cost of care • Care management: Health care homes, chronic care management, disease management • Public reporting: baskets of care, peer grouping • Methods of managing care • Care manager and health coach • IT tools • Reduce use of hospital, ER and other expensive • Care model redesign • Outside the medical model: social services, housing, etc.

13. Currents: Demographic Changes • Long-term Care Imperative • Demographics of consumers • Workforce changes • Financing and revenue sources

14. Currents: Population Health • Increasing attention to population-wide health status (obesity, smoking, addiction, mental illness) • Funding and incentives for upstream primary and secondary prevention • Acknowledgement of need for greater community-wide (and employer-wide) cooperation to improve the health of entire communities (and employers)

15. Currents: Long-term Care Trends • Home and community-based services • Fewer traditional long-term SNF services • More sub-acute transitional care services • Changing consumer and family preferences

16. Currents: Employer Health Coverage • Too early, too complex to predict the impact • Anticipate health insurance costs may go up in the short-term • Public program program reimbursement questions need to be answered • 2011 Legislative Session will be significant!

17. Mind the Gap • Embrace (or at least accept) the demise of the distinction between acute and long-term care • Understand the new payers – who are the customers? • Federal government (Medicare, etc) • State government (MA, MNCare, etc.) • Managed care plans • Providers (ACO’s, bundled payments, health care homes) • Anticipate and market to the new consumer preferences and incentives

18. Design the Mousetrap • Continuously redefine your organization and your industry • New role in the newly integrated continuum of care • New relationships with payers and consumers • New accountability • New terminology • Design, negotiate new approaches to care delivery, payment and financing • Join with, learn from, other employers about strategies for controlling health benefit costs • Be proactive in proposing reimbursement changes related to LTC organizations as employers

19. Case Study: GAMC & ACOs • Hospitals: GAMC Coordinated Care Delivery Systems • Dramatic decrease in revenues • Increased provider-level accountability for total cost of care • “Payment reform” – the demise of fee-for-service incentives • Opportunities to improve coordination of services • Opportunities to improve the care model • Strategies: • New members of the care team • Better IT tools to track utilization, costs, quality • New external partners • Patient engagement

20. Case Study: GAMC & ACOs 3. Implications • Buy vs build • Control costs vs. maximize revenues • Manage capacity • Predict future costs and measure impact of new strategies • Improve risk adjustment tools • Address non-clinical factors (and services and providers) affecting health status and care plan compliance

21. Final Thoughts: Cost Shifting (‘05) Long-Term Care Social Services Public Health and Prevention Acute Care

22. Final Thoughts: Continuum (’06)

23. Final Thoughts: Paradigm Shift (‘06) • Private sector marketplace and payers • Part of a continuum of care and a network of providers • Competing for business • Data-driven, outcomes-based report cards • Shift to lower cost services and settings • Multiple payors, drug formularies, suppliers, care management protocols • Electronic medical records & communication

24. Questions?