Federal Healthcare Reform Overview

1. Federal Healthcare Reform Overview Bonita Sorensen, MD, MBA Director, Volusia County Health Department

2. Federal Healthcare ReformEnacted March 23, 2010 • The Bill is the “framework” for Healthcare Reform • Many details of the plan still need to be developed • Purpose of Reform: • Increase the number of insured • Reduce healthcare costs • Focus on quality and better value • Pay for Performance • How Many will be Covered? • An additional 32 million people are expected to gain coverage

3. 2010 • $250 “rebate” for seniors in the Medicare “donut hole” ($2,830 – $6,440) • Discounts continue through 2020 to eliminate “donut hole” • Temporary high risk insurance pools are created for Uninsurable • Employer early retiree assistance is made available (reinsurance)

4. 2010 • In September, new insurance plans address: • Pre-existing conditions in children • Cancellation of coverage for illness • Annual and lifetime caps • Preventive care (new group and individual) (MA + MC free) • Dependent coverage up to 26 years of age

5. 2010 • Tax credits become available for small (up to 25 EEs and wages under $50,000) employers • Consumer assistance: appeals process, website, ombudsmen • Reduces Medicare payments to hospitals, home health, nursing homes, and Hospice • Indoor tanning tax (10%) • Tax relief and expand loan repayment plans for healthcare providers

6. 2011 • Additional funds for Community Health Centers are made available (11 Bil over 5 year) • Physician compare website for quality • Out of pocket costs for Medicare and Medicaid preventive services eliminated • Large pharmaceutical companies begin financial contributions proportional to market share ($2.3 Billion) • Health Insurance Benefit disclosure on W-2 forms

7. 2011 • 10% Medicare bonus for PCPs and surgeons (if in shortage areas) through 2015 • Reduces Medicare Advantage Plans in high-cost areas. • Seniors in “donut hole” receive 50% discount on brand names and 17% on generics

8. 2012 • Pharmaceutical companies must report when samples given to MDs • Some Medicaid payment (bundled) pilot programs begin for episodic care and hospitalizations • Medicare provides incentives for Accountable Care Organizations (ACOs) for physicians • Hospital payment penalties for “readmissions” • CLASS Act - Community living assisted service and support

9. 2013 • Medicaid rates for PC raised to Medicare rates • Flexible spending accounts $2,500 maximum and reduces deductible medical expenses • Medicare payroll tax increased for “high” earners (>$200,000 individual/$250,000 family) • 3.8% tax imposed on unearned income for “high” earners • 2.3% excise tax on medical devices (not glasses or hearing aids)

10. 2014 • Medicaid income eligibility expands to 133% of the federal poverty level • $14,404 in annual income for an individual (2009) • $29,327 in annual income for a family of four (2009)

11. 2014 • Health exchanges in each state open - Federal subsidies for families making up to 400% of the FPL are made available • $43,320 in annual income for an individual • $88,200 in annual income for a family of 4 • Also limits on out-of-pocket expenses ($5,950 individual) and deductibles ($2,000 individual) • Coverage levels: Bronze (60%), Silver, Gold, Platinum (90%), and Catastrophic (for exempt or under age 30 persons)

12. 2014 • Most individuals required to obtain health insurance or pay a fine - Family: 1% of income in 2014 up to 2.5% in 2016 - Individual: $95 in 2014 and $265 in 2016 • Large businesses (50-200) subject to fines if employees qualify for health care subsidies = 2,000 x (# EEs – 30)

13. 2014 • Annual assessments to insurance companies begin to help offset costs of Reform • Insurance companies barred from: • Denying coverage for pre-existing • Charging higher fees based on gender • Imposing annual limits on coverage

14. 2015 • Independent Payment Advisory Board created • Medicare provider payment changes may be made to meet savings targets, doctors paid on value rather than volume • Hospital payments for Safety Net hospitals start to be reduced

15. 2017-2018 • “Cadillac” health plans begin to be taxed at 40% excise tax on policies >$10,200 individual and $27,500 family • States may permit large employers to participate in insurance exchange plans 2020 • ”Donut hole” eliminated (25% co-pay for all drugs)

16. Public Health Benefits • Prevention and Public Health fund—up to $2 Billion annually • Health disparity data collection • Nutritional labeling of chain restaurants, retail and vending • Oral health dollars • Adult vaccine dollars • Breast feeding breaks in workplace • Demonstration grants for transformation, obesity, epidemiology

17. The Good News • 2,449,000 Floridians gain coverage • 565,000 Florida Medicare folks avoid “donut hole” • 21,000 Small Business Associations in Volusia receive tax credits • 92,000 Volusians gain coverage

18. The Good News • More transparency by insurance companies • More protections from insurance companies • More funding for healthcare students • Patient-orientation in medical home model

19. The Challenges: • New physician ownership of hospitals banned • Independent Payment Advisory Board created who can control reimbursement • Payments to physicians and hospitals reduced • Pay for performance/outcome rather than service