Health Care Reform: Is it for real this time around?

1. Health Care Reform: Is it for real this time around? Bob Doherty Senior Vice President, Governmental Affairs and Public Policy American College of Physicians Alaska Chapter June 25 , 2009

2. Questions • What do the voters want? • Why has Obama made it a priority? • How is health care reform occurring? • What are the key issues for ACP?

3. Voters express a strong desire for change in our health care system, with over two-thirds saying we need a complete overhaul or major reform. Does our health care system need complete overhaul, major reform, minor reform or no reform at all? 69% 3

4. Voters’ greatest dissatisfaction is with the rising cost of health care and the lack of coverage for everyone. While they trust their doctors’ training and the quality of care, over one-third are dissatisfied with prevention of medical errors. Now I am going to read you some different aspects of the health care system in the U.S. For each one, tell me how SATISFIED you are with that aspect of our health care system – VERY satisfied, SOMEWHAT satisfied, SOMEWHAT unsatisfied, or VERY unsatisfied. 81% 29% 62% 33% 38% 52% 72% 16% 78% 4

5. Support for reform is strong across all the important political groups, with the strongest support among Democrats and Independents, and with over half of Republican voters on board. Initial Reform Ballot

6. While opposition messages raise some doubts for voters, they are much weaker than supporting messages. Interfering with the doctor is the strongest concept in opposition messages. Now I am going to read you a series of statements people have made in opposition to some of these health system changes. Please tell me whether each raises serious doubts, some doubts, minor doubts, or no real doubts in your own mind about reforms to the health care system. If you are not sure how you feel about a particular item, please say so. In a head-to-head contest, even after hearing opposition arguments, support for health system reform remains strong, with a +29 point margin favoring reform (56% support, 27% oppose).

7. The broad consensus in support of health system reforms remains robust – even after hearing opposition arguments. Final Reform Ballot

8. Health care reform is top Obama priority “Health care reform cannot wait, it must not wait, and it will not wait another year.” President Obama, WH Summit on Health Reform, March 5, 2009

9. Why? Because Obama believes current system is not sustainable • For individuals and families • For the economy • For the federal budget

10. Not sustainable for individuals • “Wages earned by American households will become too small a donkey to carry the load of the family’s spending on health care.” • A family who today has a gross wage base of $60,000 might see it grow by 3 percent per year over the next decade, to $80,600 by 2017 • For the same family, total health spending might grow by 8 percent per year over the same time frame, to $33,700 by 2017. • For this worker, 41 percent of the family’s gross wage base would be taken up by health care alone, before any deductions for taxes or fringe benefits. Economist Uwe Reinhardt, accessed November 10 at http://economix.blogs.nytimes.com/2008/11/07/the-health-care-challenge-sailing-into-a-perfect-storm

11. Not sustainable for the federal budget • “Slowing the growth rate of health care costs will prevent disastrous increases in the Federal budget deficit.” • “Medicare and Medicaid expenditures are projected to rise from the current 6 percent of GDP to 15 percent in 2040. Only about one-quarter of this rise is due to the projected demographic shifts in the population … remaining three-quarters is due to the fact that health care costs are projected to increase faster than GDP.” The Economic Case for Health Reform, Council of Economic Advisors, accessed June 2 2009 at www.whitehouse.gov/assets/documents/CEA_Health_Care_Report.pdf

12. Total outlays in billions Not sustainable for government and taxpayers: Projected Medicare Outlays, 2008-2018 16% 16% 16% 17% 17% 18% 18% 19% 20% 20% 20% 3% 3% 3% 3% 3% 3% 4% 4% 4% 4% 4% Share of: Federal Budget Gross Domestic Product NOTE: Numbers have been rounded to nearest whole number. SOURCE: Kaiser Family Foundation, based on Congressional Budget Office, The Budget and Economic Outlook: An Update, January 2008.

13. Medicare Beneficiaries and The Number of Workers Per Beneficiary Number of workers per beneficiary Millions of beneficiaries SOURCE: Kaiser Family Foundation, based on 2001 and 2008 Annual Reports of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

14. How will health care reform occur? • First stages: • Re-authorization of SCHIP • Stimulus legislation (“down payment” on health reform) • Budget • Now: • Comprehensive health care reform legislation in both chambers before August recess

15. ACP priorities for health reform • Affordable coverage for all • Reverse shortage of primary care physicians • Medical education and financing • Payment reform

16. Reason for Concern: USMD PC Preferences and Practice Our analysis shows that declining interest in primary care is leading to a decline in supply Practice following preferences Preferences equal to the all-time low Sources: AAMC Graduation Questionnaire (preferences), AMA Masterfile (practice), Altarum analysis (forecast)

17. Why does it matter? • Demand for primary care is increasing • Primary care is associated with better outcomes and lower costs

18. ACP review of impact of primary care on outcomes and costs • States with higher ratios of primary care physicians to population have better health outcomes, including mortality from cancer, heart disease or stroke • An increase of just one primary care physician is associated with 1.44 fewer deaths per 10,000 persons How is a Shortage of Primary Care Physicians Affecting the Cost and Quality of Medical Care: A Comprehensive Literature Review, ACP, 2008

19. ACP review of impact of primary care on outcomes and costs • During the year 2000, an estimated 5 million admissions to U.S. hospitals may have been preventable with high quality primary and preventive care treatment; the resulting cost was more than $26.5 billion. • A 5 percent decrease in the rate of potentially avoidable hospitalizations alone could reduce inpatient costs by more than $1.3 billion How is a Shortage of Primary Care Physicians Affecting the Cost and Quality of MedicalCare: A Comprehensive Literature Review, ACP, 2008

20. Solving the problem requires a multi-faceted approach How influential were the following factors in determining your specialty choice?*2008 AAMC Graduation Questionnaire

21. Create a national workforce policy • Problem: • Workforce based on institutional needs, not national priorities • Solution: • Commission to establish goals including primary care physicians, policies to achieve them, and benchmarks for success

22. Improve primary care training • Problem: • Students and residents not exposed to well-functioning primary care practices • Solution: • Eliminate barriers to training in ambulatory settings • Increase funding for primary care training programs • Grants for primary care mentorship programs and faculty and curricula development

23. Eliminate student debt • Problem: • Average debt burden of public school graduates was over $145,000 • High debt = less likely to choose primary care • Solution: • Scholarship and loan repayment awards • Allow deferment of educational loans

24. Increase Primary Care GME Capacity • Problem: • GME slots are capped so that we cannot produce enough primary care physicians to meet demand • Solution: • Lift GME caps but require residency programs to give priority to general IM, family medicine, and pediatrics

25. Reduce administrative costs • Problem: • Primary care physicians spend more time (3.5 hours weekly) than other medical specialists (2.6 hours) or surgical specialists (2.1 hours) on interactions with health plans • $64,859 annually per primary care physician - "nearly one-third of the income plus benefits of the average primary care physician.“ • Solution: • Reduce hassles associated with formularies • Uniform billing, credentialing, and eligibility Casalino, et al, What Does it Cost Physician to Interact with Health Plans, Health Affairs, May 14, 2009 http://www.healthaffairs.org/press/mayjun0903.htm

26. Reform a dysfunctional payment system • Problem: • Current system rewards volume not quality or value • No incentive to collaborate across settings • Primary care not competitive with other fields • Solution: • New payment models to align incentives with patient-centered primary care • Increase FFS to make primary care ompetitive

27. New payment models are needed! • Federal government should fundpilot tests of new models to align incentives with value • Then expand successful ones nationwide into Medicare and other public programs • Criteria should be used to evaluate and prioritize selection of new models

28. Traditional FFS Medical Care: Version 1965 • Based on the way that care was provided forty years ago—not the way it is delivered today • patients treated only when sick (acute condition) • little or no emphasis on prevention and coordination • care based on doctor’s best judgment as informed by CME and journals but not on evidence-based guidelines • specific visit or procedure code • individuals not teams • “usual, customary, reasonable” (UCR)

29. Wanted! New pay models forMedical Care: Version 2009 • Medical care today: • prevention/management of illness rather than just treating disease • care rendered by coordinated teams of health professionals • clinical judgment informed by evidence-based clinical decision support • results matter (not just service rendered) • systems and processes of care to support better outcomes

30. New payment models should: • Support patient-centered primary care • Create incentives to work across settings • Consider challenges faced by smaller practices • Be administrative feasible—practice level and administration by government

31. New payment models should: • Support chronic disease prevention and management • Recognize quality and efficiency and reward appropriate stewardship of resources while promoting and maintaining high quality • Transition to a unit of payment that diminishes the incentive to increase volume, ensures appropriateness, and promotes greater accountability

32. Improve FFS • Average primary care income is 55% of the average of the medians all non-primary care specialties • AAFP Graham Center determined that the average non-primary care physician earns $3.5 million more over a 35-40 years • Specialty preferences among USMGs is correlated with PCP income as percentage of specialty income Robert Graham Center. Specialty and Geographic Distribution of the Physician Workforce: What Influences Medical Student & Resident Choices? March 2009. Ebell MH. Future salary and US residency fill rate revisited. JAMA. 2008;300(10):1131-1132

33. Primary Care Income Less Than Most Other SpecialtiesMedian Salary by Specialty in thousands of dollars, 2006 Source: MGMA Physician Compensation and Production Survey, 2007; slide from AAMC Physician Workforce Research Conference, IM Subspecialty Meeting, April 29, 2009 Source: MGMA Physician Compensation and Production Survey, 2007

34. Relationship Between Income and Preferences USMD preferences move with relative incomes but relationship varies PC Income as Percent of NPC Income Sources: AAMC Graduation Questionnaire for preferences, MGMA data on incomes

35. Improve FFS • Medicare and other payers should increase primary care compensation to be competitive with other specialties • Replace the Sustainable Growth Rate (SGR) and cycle of ongoing Medicare cuts • Establish a mechanism to assess impact of primary care on other aspects of the Medicare program, e.g. Part A, and apply such anticipated savings to increase payments to primary care • Improve accuracy of relative values

36. Growing Support for Primary Care • We're not producing enough primary care physicians.” President Obama, White House Summit on Health Reform, March 5, 2009

37. Growing Support for Primary Care “Primary care is the keystone of a high-performing health care system. Increasing the supply and availability of primary care practitioners by improving the value placed on their work is a necessary step toward meaningful reform.” Senator Max Baucus, D-MT, Chair, Senate Finance Committee, White Paper on Health Reform

38. Growing Support for Primary Care "We've upset the whole practice of medicine to such a point that we don't have many primary care givers. That has driven up the cost of medicine itself with emphasis on specialists, and it has reduced the quality of delivery, particularly in rural areas." Senator Charles Grassley, R-IO, March 19, 2009 Kaiser Family Foundation, Health Reform Newsmaker Series, Senator Grassley’s full remarks are available at: http://www.kaisernetwork.org/health_cast/player_kff.cfm?id=60#clip_1

39. Figure 7. Promoting the growth of integrated delivery systems and increasing supply of PCPs though payment reform seen as most effective in reducing growth of health care costs. “How effective do you think each of these proposals for structural change in health services markets would be in reducing the growth of health care costs?” Source: Commonwealth Fund Health Care Opinion Leaders Survey, April 2009.

40. Preserving Patient Access to Primary Care Act of 2009, H.R. 2350/S. 1174 • Introduced by Representative Allyson Schwartz on May 12, 2009 and on June 3 by Sen. Maria Cantwell (D-WA), Sheldon Whitehouse (D-RI), and Susan Collins (R-ME) • Comprehensive approach to primary care workforce crisis

41. Preserving Patient Access to Primary Care Act of 2009 • Primary care mentorship and curricula development • Scholarships and loan forgiveness, expanded GME and more ambulatory training • Increase Medicare FFS payments, apply savings in Part A to primary care, and pay for care coordination • Patient-Centered Medical Homes • Reduce hassles of Part D formularies and test “real time” claims adjudication

42. What about tort reform? • ACP believes that medical liability reform is essential • But caps on non-economic damages will not pass a Democratic Congress or be signed into law by Obama • Obama told AMA he was open to other ideas: health courts? Alternative dispute resolution? Safe harbors if following guidelines?

43. House draft health reform bill Coverage Consistent with ACP? Yes Yes Yes • Medicaid expanded to cover the poor (133% of FPL) • Sliding scale tax credits for people above poverty level, up to 400% of FPL • People can keep own insurance or buy coverage through an exchange

44. House draft reform proposal Coverage Consistent with ACP? Yes • Health plans must cover people with pre-existing conditions, guarantee renewability, not vary premiums except for age, gender and location

45. House draft reform proposal Coverage Consistent with ACP? Yes Yes • Commission to recommend covered benefits • Plans must provide essential benefits, including preventive services; no cost-sharing for preventive services

46. House draft reform proposal Workforce Consistent with ACP? Yes Yes Yes • Advisory council to recommend workforce goals • Increased funding for NHSC and Title VII primary care programs • New scholarships/loan repayment for primary care physicians in areas of need

47. House draft reform proposal Payment reform Consistent with ACP? Yes Yes, but does not complete eliminate GDP. Provides GDP plus two for primary care, GDP plus one for other services. Yes • Eliminates current SGR formula and accumulated cost • Higher updates for primary care (separate and higher spending target for primary care) • Medicaid pay for primary care increased to Medicare

48. House draft reform proposal Payment reform Consistent with ACP? Yes, but ACP is pushing for a higher bonus Yes, provides over $1 billion to fund pilot to pay qualified practices for care coordination • Bonus payments for primary care: 5% for designated services by primary care physicians, increased to 10% in health professional shortage areas • Patient-centered medical home to be tested on a national scale

49. House draft reform proposal Administrative simplification Consistent with ACP? Yes Yes Yes Yes • Standardizelanguage and forms • Establish operating rules and companion guides for using and processing health care transactions • Increase consistency of claims edits and code corrections • Increase electronic exchange of administrative and clinical data

50. House draft reform proposal Administrative simplification Consistent with ACP? Yes Yes Yes • Standardize quality reporting requirements • Development of “smart card” technology • Plans must spend at least 85% of premiums on patient care instead of administration