Can’t Anyone Here Play this Game? Broken Politics, Broken Health Care, Broken Promises

1. Can’t Anyone Here Play this Game? Broken Politics, Broken Health Care, Broken Promises Bob Doherty SVP, Governmental Affairs and Public Policy, ACP Presentation to South Dakota Chapter, ACP September 14, 2012

2. “It may be best, at this point, to simply quote Casey Stengel's infamous yelp of frustration about the 1962 Mets: ‘Can't anybody here play this game?’ If the '62 Mets were the worst team in major league history, it's also fair to wonder whether any Congress has ever been more dysfunctional, with less cause, than this one.” Michael Hirsch, The Atlantic, November 21, 2011 www.theatlantic.com/politics/archive/2011/11/the-supercommittee-and-a-neverending-cycle-of- dysfunction/248800/

3. “The level of dysfunction that has characterized the 112th Congress may be unparalleled,” wrote Roll Call, Capitol Hill’s hometown newspaper. Worst ever? • “The level of dysfunction that has characterized the 112th Congress may be unparalleled” Roll Call, Capitol Hill’s hometown newspaper • “Congress ends 2011 with record-low 11% approval” Gallup

4. Why does it matter? • Our broken politics is making it impossible for Washington to find common ground on the biggest challenge facing U.S. health care: a system that produces great care for some but uneven access and quality for many, at a cost that we can’t afford

5. The five big issues in U.S. health care • Cost • Coverage • Entitlements • Sequestration • Payment

6. Issue # 1: Health care costs • What’s the trend? • Where does the $ go? • Why does it matter?

9. U.S.ManufacturersatCompetitive DisadvantageduetoHealthCosts EmployerHealthBenefitContributionCostsasaShareofHourlyPay 13.0% 14.0% 12.0% 10.0% 8.0% 12.8% Manufacturingsectorcompetesglobally,makingitharderto shifthealthcarecoststoconsumersthroughhigherprices. 6.5% 4.9% 6.0% 4.0% 2.0% 4.5% 3.7% 1.9% 0.0% UnitedStatesFrance*Germany* •!FiguresforFranceandGermany includeemployercontributionsfor otherformsofsocialinsurancein Canada Japan United Kingdom Foreign Average (trade weighted) additiontohealthbenefits. DerivedbyNIHCMFoundationfrominformationpresentedinNicholsLMandAxeenS.“EmployerHealthCostsinaGlobal Economy:ACompetitiveDisadvantageforU.S.Firms.”NewAmericaFoundation.May2008.

12. ABeneficiaryLifetimePerspective: Payroll Contributions < Expected Benefits $400,000 $357,000 $357,000 MedicareExpectedBenefits, Lifetime MedicarePayrollTaxes, Lifetime $350,000 $300,000 $250,000 $188,000 Female $200,000 Male $170,000 $150,000 $119,000 $100,000 $60,000 $60,000 $50,000 $0 Single,AverageWage Single,AverageWage One-EarnerCouple, One-EarnerWageCouple,AverageWage Two-EarnerCouple, Two-EarnerCouple, AverageWage Average AverageWages Source:SteuerleCEandRennaneS."SocialSecurityandMedicareTaxesandBenefitsOveraLifetime.”Washington,DC:TheUrban Institute.June2011.

13. Why Is Entitlement Spending Growing? Drivers of Entitlement Spending Growth (Percent of GDP) 56% 36% 44% 64% Source: CBO Long-term Budget Outlook, 2010. 13

15. Hospital&PhysicianSectorsAccountedforMore than70PercentofPrivatePremiumGrowth OverPastFiveYears 2006to2010Change($Billions $120 $100 $80 $60 3%ofnet change $3.1 4%ofnet change $4.0 9%ofnet change $9.5 14%ofnet change $15.4 26%ofnet change $28.0 45%ofnet change $108.5 97percentofchangeinpremiums $40 wasduetogrowthininsurers’ spendingforhealthcareservices $48.3 $20 $0 HospitalCare Physician& ClinicalServices Prescription Drugs&DME Dental&Other Professional HomeHealth& OtherLTC NetCostof HealthInsurance TotalChangein Premiums Services Facilities& Services 2006-2010 20.3% 13.2% 14.5% 14.3% 20.5% 3.1% 14.7% %Change Source:NIHCMFoundationanalysisofdatafromtheNationalHealthExpenditureAccounts.

16. Issue # 2: Coverage • Who are the uninsured? • Why does it matter? • What will the ACA do about it? • What’s the impact of the Supreme Court decision?

17. Who are the uninsured? • 47 million persons, mostly in working families • Why are they uninsured? • They are low-income (but growing number of middle class) • They are younger • They have pre-existing conditions • Their employers don’t offer coverage, they don’t qualify for public ones, and they can’t afford individual insurance

18. 47 million uninsured are at greater risk of premature death Percent uninsured withinage group Age U.S. population (millions) Totaldeaths : Uninsured excessdeaths ). 2001 2002 2003 2004 2005 2006 Total: 2000 21,000 23,00 Dorn, UninsuredandDyingBecauseofIt:UpdatingtheInstituteofMedicineAnalysisontheImpactofUninsuranceonMortality, Urban Institute, 2008 3 Dorn, UninsuredandDyingBecauseofIt:UpdatingtheInstituteofMedicineAnalysisontheImpactofUninsuranceonMortality, Urban Institute, 2008

19. What does the ACA do about access and cost? 2700 pages in four bullets • Provides HI coverage to nearly 92% of all residents, reducing uninsured by 32 million • (Up to) half through Medicaid • Half through subsidized state- or federal health exchanges • Improves Medicare benefits • Pilots new ways of paying and delivering care • Financed by taxes (higher income people, devices, insurers) and cuts to hospitals, MA plans

20. SCOTUS and Medicaid • ACA (as written): carrots and sticks • As originally written, states would expand Medicaid to include everyone with incomes up to 133% of FPL • Carrots: 100% paid for by the federal government, gradually declining to 90% by 2020, compared to usual 57% contribution • Sticks: feds can take away funds for existing Medicaid • ACA (post-SCOTUS): carrots only • People with incomes up to 100% of FPL are not eligible for tax credit subsidies

21. Medicaid: how many states will opt-out?

23. Expanding Medicaid is a good $ deal for the states

24. Sarah Kliff, Wonkblog, Washington Post, July 3, 2012 http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/03/why-hospitals-heart-the-medicaid-expansion-in-one-chart

25. But if they don’t . . . In states that decline to enroll their poor in Medicaid, a law designed to cover nearly everyone could end up extending coverage to everyone except the poor—an unfortunate detour on the road to universal coverage.

26. States and health exchanges • States must have exchanges that meet federal standards by early 2013 or feds run them • Some are ready to go, but many are waiting (elections) or resisting • If states don’t go along, may be millions fewer with HI

28. CBO: ACA, Post-SCOTUS • 3 million fewer people with coverage compared to earlier estimate • But 92% of U.S. residents will have coverage • Will cost $84 billion less (ten years) • Repeal would add $109 billion to deficit CBO, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision, July 25, 2012

29. Unless the elections decide otherwise • Obama: continue the course set by the ACA of federally-subsidized coverage • Romney: repeal the ACA, turn more over to the states, “reform” entitlements, cut spending, lower taxes (for some)

30. Issue # 3: Entitlement reform • Medicare: open-ended entitlement with reforms to focus on “cost drivers” (Obama/Biden), or defined contribution (Romney/Ryan) • Medicaid: expanded entitlement and more funding for states (Obama/Biden), or turn it over to the states with fewer federal $ (Romney/Ryan)

32. Issue # 4: Sequestration • Failure of Congress’ “Super-Committee” will result in $1.2 trillion in savings being achieved through across-the-board cuts: • Cuts annual funding for non-exempt domestic discretionary programs by 7.8 percent (in 2013) to 5.5 percent (in 2021) • Cuts annual funding for defense programs by 10.0 percent (in 2013) to 8.5 percent (in 2021)

33. Sequestration cuts: • Would have a devastating impact on: • Discretionary health care programs (workforce, NIH, AHQR, CDC, FDA, VA, PHS, FDA, etc) • Military medicine • Medicare (2% doc cut, on top of 27% SGR; GME; hospitals) • Democrats and Republicans alike agree sequestration should not happen, but disagree on revenue/taxes and how much defense should be cut

34. Issue # 4: Payment reform • SGR? • FFS? • New approaches?

35. Promises, promises . . . “Unless we begin the process of developing a long-term solution, we will once again be faced with the unwanted choice of extending a fundamentally broken payment system or jeopardizing access to care for Medicare beneficiaries. We cannot let either happen.” House Energy and Commerce Committee, March 28, 2011 letter to physician membership organizations, including ACP

36. So what happened? • Medicine answered the call by offering proposals to end the SGR and transition to new models • Urged that SGR repeal and payment reform be included in a comprehensive deficit deal • Congress passed two extensions, one through 2/29/12, and another through 12/31/12 • Will result in a scheduled cut of nearly 30% on 1/1/13! [32% with sequestration]

37. Congress again is asking for solutions

38. Future of FFS? • Policymakers across the spectrum want to move away from “volume” to “value” • But FFS will be a component of value-based payments, even as FFS itself will change • Under-valuation of cognitive care and payment for work outside clinical encounter • Linked to P4P incentives/disincentives • Medicare Value Modifier: BN adjustment in Medicare payments based on measure of costs and quality • Targeted policies: Medicaid pay parity, Medicare primary care bonus

39. “New” approaches • ACOs • Episode-of-care bundles • Risk-adjusted global capitation • PCMH and PCMH-N practices (hybrid payment)

40. The imperative of physician leadership • Medical profession can’t control Washington or state governments • But it can influence public policy • By showing leadership on key issues • By offering your own ideas • If you do, the public will listen-and thank you!

42. ACP’s leadership • Cost • High Value, Cost Conscious Care Initiative • Proposed ways to achieve hundreds of billions in budgetary savings • Position papers on rational allocation of resources and controlling costs • Support for comparative effectiveness research • Advocacy for value-based payment reforms

43. ACP’s leadership • Coverage: • 20-plus years of advocacy for universal coverage • Developed own plan in 2002—key features included in ACA • Continued qualified support for the ACA—with improvements • Launching state action plan on Medicaid expansion

44. ACP’s leadership • Entitlements • New position papers on Medicare and Medicaid reforms • Reduce spending by addressing cost-drivers: reduce unnecessary care, reform medical liability system (health courts), evidence-based benefit redesign, cap tax deductibility of high-cost insurance, fund research on comparative effectiveness, negotiate drug prices, and reform payment systems • Pilot-test Medicare premium support (vouchers) • Against Medicaid block grants but supports giving states more flexibility

45. ACP’s leadership • Sequestration • January, 2012: ACP said “Across-the-board cuts shouldn’t stand” • Established priorities for funding, including public health, CDC, NIH, AHRQ, GME, and workforce programs • Offered alternative plan to reduce federal spending by focusing on cost drivers • September, 2012: launching grass roots action campaign • November, 2012: AMA resolution

46. ACP’s leadership • Payment reform • Developed conceptual framework for Patient-Centered Medical Homes with other primary care organizations • Helped establish Patient-Centered Primary Care Collaborative • PCMHs now available to tens of millions of patients from dozens of insurers • Worked with CMS to recruit 500 practices for Comprehensive Primary Care Initiative (PCMH model) in seven sites • Council of Subspecialty Societies created the PCMH-neighbor “aspirational” proposal

47. ACP’s leadership • Payment reform (continued) • Influenced CMS to improve ACO program, reducing barriers to smaller practices • Advocated for new RUC primary care seat; ACP nominee Doug Leahy elected; opposed AAFP proposal to eliminate IM subspecialty seat • Worked with Rep. Allison Schwartz (D) and Joe Heck (R) on Medicare Physician Innovation Act to stabilize payment and transition to new models; persuaded them to allow higher updates for E/M codes not restricted by specialty

48. ACP’s leadership • Payment reform (cont’d) • Advocated that Medicaid pay parity rulethat will set Medicaid payments to IM specialists and subspecialists (and other “primary care” specialties) at no less than the Medicare rate • Advocating for CMS proposal to pay for post-hospital transition planning • Working with other organizations to get payment for chronic care coordination services under MFS • Testified twice before Congress (July) on transition to value-based payments, including higher pay for practices structured as PCMHs and PCMH-N practices

49. Summary • Supreme Court allowed the ACA to mostly proceed but didn’t resolve the broken politics that has paralyzed policymakers • 2012 election: starkly different choices on coverage for uninsured, entitlement reform, budget priorities • Payment and delivery system reform will continue, no matter who wins the election • Cost will remain an abiding concern, with or without ACA, but near-universal coverage is at risk • In uncertain times, physician leadership is imperative

50. Charting a course in uncertain times “You’ve got be careful, if you don’t know where you’re going, cause you might not get there.” Yogi Berra