Legislative Update

1. Legislative Update Indiana Osteopathic Association (IOA) Indianapolis, IN Presented by: Ray Quintero American Osteopathic Association December 6, 2013

2. Agenda • Legislative Activity • The Patient Protection & Affordable Care Act – 3.5 Year Overview • Provisions • Implementation • Challenges & Ramifications • Question & Answer Session

3. Legislative Activity

4. Physician Payment Reform

5. Medicare Physician Payment Innovation Act • Permanently repeals SGR; institutes a reimbursement freeze at 2013 payments for all physicians through 2014 • Period of stability in 2015-2018 while CMS develops, tests, and evaluates alternative payment models. • All physicians receive +.5% annual updates • Primary care, preventative care coordination services receive 2.5% updates • In 2019, physicians must participate in alternative payment model from a CMS-offered menu • Updates to be based on performance, in range of +1% to MEI • If remaining in traditional FFS, face increasing negative annual updates • Option for high-performing practitioners to participate in separate “value-driven” FFS program

6. Bipartisan, Bicameral Proposal • Repeal of the SGR • A period of stability - 10 years with a 0% annual update (a freeze at 2013 rates) • A new Value Based Performance (VBP) program harmonizing all current quality incentive programs into one • Opportunities for substantial incentives and penalties • Acceleration toward alternative payment models (APM) • Considerable recognition and incentives for the PCMH • Evaluation/revaluation of misvalued codes • A projected cost below $150 billion • Beginning 2024, fixed positive updates for all physicians (1% for FFS, 2% for APMs)

7. Current Law v. Proposal

8. What do we support? EPC supports a three-phased approach to reforming the physician payment system, including: • A period of stability to provide physicians with predictability of physician payment levels; • A period of identification, development and trial of new innovative delivery and payment systems; and • A final period of transition to those payment models that are proven most effective. This policy will provide for the necessary repeal of the sustainable growth rate (SGR) formula and complete transition to a variety of new payment models over a 10-year period.

10. Why now? • This year, Congress has a chance to solve a problem that’s plagued America’s seniors and physicians for a decade. • In the past 10 years, Congress has spent $146 billion in short term patches. • The cost of repeal is now $139 billion compared to over $300 billion in recent years. • This is like only making the minimum payment on a credit card -- over time the payoff amount becomes out of reach. It may be now or never. Physicians can no longer afford to treat Medicare patients

11. Resident Physician Shortage Reduction Act (S. 577/H.R. 1180) • Introduced in previous Congressional sessions. • Increases the nation’s physician training capacity by 15% over the next 3 years. • Places an emphasis on the establishment of new residency programs in shortage specialty areas. • Promotes training in non-hospital settings by clarifying existing regulations and allowing residency positions to be allocated to hospitals that expand or create training opportunities in non-hospital settings.

12. Training Tomorrow’s Doctors Today Act (H.R. 1201) Contains similar provisions to Senate counterpart, and: • Requires transparency of GME funding- both DME & IME. • Includes accountability provisions that require hospitals to meet certain quality measures to qualify for a percentage of IME funding. • Expected to be reintroduced in 113th Congress in coming weeks.

13. Independent Payment Advisory Board (IPAB) • Protecting Seniors’ Access to Medicare Act of 2013: House bill introduced by Rep. Roe, MD (R-TN) to repeal the ACA provisions providing for the Independent Payment Advisory Board. • S.351: Introduced in the Senate by Sen. Cornyn (R-TX) to repeal the IPAB.

14. Patient Protection & Affordable care act (P.L. 111-148)

15. ACA vs. Obamacare

16. Affordable care act –Provisions

17. What is in the Law? • Coverage • Insurance Reforms • Payment Reforms • Primary Care Bonus • Medicaid Primary Care Payment Incentive • Bundled Payment • Demonstration • Workforce and Graduate Medical Education • GME • Teaching Health Centers • Delivery System Reforms • Medicare Shared Savings Program - Accountable Care Organizations • Pioneer & Advanced Payment ACOs • Patient Centered Medical Home • Comprehensive Primary Care Initiative • Hospital Readmission Demonstration • Partnership for Patients

18. Coverage • Young adults under the age of 26 may remain on their parents health insurance • 2.5 million young adults impacted • Pre-Existing Condition Insurance Plan • 45,000 individuals with pre-existing conditions have secured coverage • Early Retiree Coverage • 6,000 businesses participating to assist early retirees secure coverage until they turn 65 and become Medicare eligible • State-Based Health Insurance Exchanges • Starting in 2014, individuals and small businesses can purchase insurance through state-based health insurance marketplaces

19. Insurance Reforms • Prevention and Wellness Services • 24.2 million Medicare beneficiaries received preventive services • 41 million individuals with private health insurance received preventive services • Elimination of Lifetime Limits on Benefits • 102 million individuals impacted • Medical Loss Ratio • Private health insurance companies must spend 80% of premiums on direct medical care

20. Payment Reform • New payment models that move away from current episodic-based system • Primary Care Bonus • 10% bonus on all Medicare allowable charges for qualifying practices • Medicaid Primary Care Payment Incentive • 100% of Medicare allowed charges for services provided by primary care physicians for 2013-2014 • Bundled Payment Demonstration

21. Workforce & Graduate Medical Education • Creation of Teaching Health Centers • Redistribution process for residency positions impacted by closed hospitals • Redistribution of funded/unfilled residency positions • Emphasis on primary care residency creation and underserved states • National Commission on Health Care Workforce

22. Delivery System Reform • Patient Centered Medical Home and Advanced Primary Care Practices • Comprehensive Primary Care Initiative • Medical Home Demonstrations • Medicare Shared Savings Program • Accountable Care Organizations (ACOs) • Pioneer ACOs • Advanced Payment ACOs • Dual Eligible's (Medicare and Medicaid beneficiaries)

23. Affordable care act –Implementation

24. Health Insurance Marketplaces • Final decisions by states • 17 declared State-based marketplace • 7 planning for State-Federal Partnership marketplace • 27 defaulting to federally-operated marketplace Source: Kaiser Family Foundation State Health Facts

25. Medicaid Expansion • AOA supported provision in ACA requiring states to expand Medicaid to cover those earning up to 133 percent of the federal poverty level, including non-disabled adults without dependents • Following 2012 Supreme Court ruling, provision became voluntary for states • Federal government to pay states the full cost of adding newly eligible for three years. Payment declines to 90% in 2019 and thereafter • 26 states have announced intention to expand • 25 states have announced intention not to expand, 5 of which are still weighing their options

26. Essential Health Benefits Package • Under the ACA, health plans in individual and small group markets must offer a minimum package of covered items and services • CMS’ minimum package includes 10 categories of services • AOA through the Essential Health Benefits Coalition recommended: • Striking necessary balance between affordable and comprehensive health care benefits to ensure patients can obtain quality health care from their physician • Preserving the physician-patient relationship as the foundation of quality care delivery, and ensuring that appropriate services and treatments can occur in the right setting and at the right time • Ensuring that private sector benefit design, medical management and care delivery approaches can continue to be used by health plans and providers • Individual States understand their populations best and should maintain flexibility in ensuring the services provided in the package allow for physicians to provide appropriate care for their unique population.

27. Physician Payment Sunshine Act – Final Rule • Requires manufacturers of drugs, devices, biologics, or medical supplies to report to HHS certain payments or transfers of value to physicians and teaching hospitals, to be released to the public on the CMS website • Reporting exemption for physicians serving as speakers at an accredited or certified continuing education program under certain conditions • Clarified that indirect payments made to a speaker at a continuing education program would not need to be reported • CMS will correct disputed information on public website at least once annually, but does not have resources to do so on a real-time basis • Recommends, but does not require, that manufacturers voluntarily provide physicians with opportunity to review data prior to reporting to CMS • Data collection will begin on August 1, 2013

28. Affordable care act –challenges & ramifications

29. Two Driving Factors

30. Aligning Coverage and Access Private Plans Coverage of Health Care Services Access to Health Care Services Patients Physicians Health Insurance Marketplaces Public Plans

31. Challenges

32. Where do we go from here?

33. Member Resources • Resources • GOAL Advocacy Network – www.osteopathic.org/goal • Contact Information Department of Government Relations (202) 414-0140 govt-issues@osteopathic.org

34. Questions & Discussion