Oklahoma Municipal League Annual Conference

1. Oklahoma Municipal League Annual Conference Next Step to Healthcare Reform September 26, 2012 1:15 PM - 2:15 PM

2. Healthcare FactsPatient Protection Affordable Care Act (PPACA)Affordable Care Act (ACA)47% of PPPACA Deadlines MissedIs Healthcare a Privilege or a Right? Resources: http://www.healthcare.gov http://www.dol.gov/ebsa/healthreform http://www.healthytexasonline.com http://cciio.ems.gov 1,14,12 http://www.urac.org - Issue Brief/Utilization Review Accreditation Commission (URAC)

3. Business Strategy Formations/ • Stakeholder Synergy • Evolving Healthcare Reform/ • Repeal or Revise • Current Regulatory Mandates • Documentation Standardization • Patient Protection • Benefit Transparency • Health Information Technology • Healthcare Facts • Rate Stability and Management • Effective Medical Intelligence • Healthcare Delivery System Changes HEALTHCARE IS CHANGING

4. Supreme Court Update

5. Stakeholder Synergy • Who will Control Congress? • Who wins Presidential Election? • Will Federal Funding be Available? • What Regulatory Guidance will be implemented? • Key Dates: • November 16, 2012 States must notify HHS if they will run Exchange (28 states no decision yet) • January 1, 2013 States will have to Demonstrate Significant progress to HHS to Justify Running as State-Based Exchange • October 1, 2013 Exchanges, State-Based or Federally run will start enrolling individuals, Families and Small Businesses • Discussion if the administration has the cash to set up a federal health insurance exchange ($1B required for implementation)

6. Stakeholder Synergy • Healthcare Reform Washington Debate • Doc Fix Extension/Sustainable Growth Rate (SGR) discussion occurred in Feb and postponed, some congressmen requested an additional year extension until 12.31.13 • Physicians will not incur Medicare payment cuts of 27.4% and their current Medicare rates will be frozen at about a 2% increase until 12.31.12. (10 month extension-Republicans were pushing for 24 months) • Projected 1.1.13, 30% decrease in rates • Payroll Tax Extension • Unemployment Insurance Extension

7. Stakeholder Synergy • Healthcare Reform Washington Debate • Medicare is currently estimated to be unfunded by 2017. • $300 B in cuts from Medicare over 10 years means 27.4% decrease in pay (attend to doc fix amendment) • 10% of Medicare patients responsible for 2/3 of the cost • Medicare Fee Schedule: Cuts to Medicare Part D drug plan • PBM Contracting Direct ($1.6B over 10 years) • Biologics/Biosimilars (Generic drugs for Biotech prescriptions) available at 7 years instead of 12 years; estimating cost will be 1/3 of Biotech Spend Resource: June Specialty Pharmacy News • Creditable Coverage Part D • High Deductible Plans not recognized as a Creditable Coverage Part D Plan • Medigap: 15% Part B increase starting in 2017 ($2.5B)

8. Stakeholder Synergy • Medicare Fee Schedule • Reduce Post Acute payments 32%, post-acute care facilities 21%, beneficiaries 14%, hospitals 11%, labs 9%, DME 6%, Medicare Advantage Plans 5%, other providers 2% • Home Health Rates • Skilled Nursing Facilities • Hospice • Psychiatric Hospitals • Ambulances • Advanced accreditations of Imaging Services • Outpatient Prospective Payment Systems • Reduce Medicare Bad Debt from (70% to 25% over 3 years) • Teaching Hospital Payment reduction of ($9.7B over 10 years) • Means testing for an increase in income-related premiums under Medicare Part B and D ($27.5B)

9. Evolving Healthcare ReformRepeal or ReviseHeritage Foundation Think TakeConsumer Choice Model vs. a Procurement ModelShared Risk Pricing vs. Fee for ServicePatient Protection Affordable Care Act (PPACA)Patient Protection/Benefit Transparency Resources: http://www.healthcare.gov http://www.dol.gov/ebsa/healthreform http://www.healthytexasonline.com http://cciio.ems.gov 1,14,12

10. Patient Protection Affordable Care Act

11. Patient Protection Affordable Care Act

12. Patient Protection Affordable Care Act

13. Patient Protection Affordable Care Act

14. Patient Protection Affordable Care Act

15. Patient Protection Affordable Care Act

16. Patient Protection Affordable Care Act • Summary of Benefits and Coverage (SBC) Requirement • SBC applies to Grandfathered and Non-Grandfathered Plans exceptions (retiree only) • Timeline Requirement • Distribution 30 days prior to new coverage year • Must distribute SBCs to plans within seven business days after negotiations are finished and policies set • At least 60 days before any mid-year changes • Distribution Requirement • Plans must distribute SBCs to participants and beneficiaries if they live separately, but one can be given per family • SBC must be provided with application materials distributed by the plan for enrollment • Distribution Discussions • Paper • Electronic • Web Portal

17. Healthcare Reform Standard Communication Uniform Glossary of Terms

18. Summary of Benefits and Coverage

19. Summary of Benefits and Coverage

20. Summary of Benefits and Coverage

21. Summary of Benefits and Coverage

22. Summary of Benefits and Coverage

23. Summary of Benefits and Coverage Prescription Services You May Need

24. Healthcare Reform Standard Communication Excluded Services & Other Covered Services

26. Standard Benefit Education Meetings • What is the contribution/premium? • What is the overall deductible? • Are there other deductibles for specific services? • Is there an out-of-pocket limit on my expenses? • What is not included in the out-of-pocket limit on my expenses? • What is not included in the out-of-pocket limits? • Is there an overall annual limit on what the covered individual pays?

27. Standard Benefit Education Meetings • Does this plan use a network of providers? • Does the covered individual need a referral to see a specialist? • Are there any services the plan does not cover? • Provide samples information of what could occur in the provider’s office? • Primary Care visit, specialist visit, preventive care, screenings, immunization, diagnostic test, imaging • If medication is required, ask: Is the medication Generic, Preferred brand, Non-preferred brand, or a Biotech ($12.94 per month) medication?

28. Standard Benefit Education Meetings • What are the covered individual rights in regards to continuation of coverage? • What are the covered individual rights in regards to grievance and appeals? • Cultural and Linguistic Appropriate • Internal and External Appeal Services • Health Insurance Ombudsmen Program

29. Employee Education Meetings

30. 2012 Diabetes Benefit Example • Management of Type 2 Diabetes • A fifty-two year-old man has type 2 diabetes. His diabetes is well-controlled with metformin (500 mg) twice daily and long-acting insulin (20 units), administered once daily. He is also on ramipril (10 mg once daily) to maintain appropriate blood pressure and kidney function, and aspirin as a cardiovascular preventive service. He visits his primary care provider four times a year. His podiatrist once a year, his ophthalmologist once a year. Twice yearly, he receives test for blood glucose, hemoglobin A1C, urinalysis and an estimated glomerular filtration rate. Once yearly, he receives blood tests for microalbuminuria, a lipid panel, and a comprehensive metabolic panel. He purchases medication and supplies as needed; including testing supplies so he can test is insulin levels. In addition, he receives diabetes self-management education and medical nutrition therapy education. • He receives an annual influenza vaccine, but has never received a pneumococcal vaccine, so will receive one this year and another after he turns 65 years of age. His glucagon kit has expired so he will purchase a new kit this year.

31. 2012 Diabetes Benefit Example cont’d Calculations are based on Network provider utilization, Preferred Lab providers and generic drugs at an Align Network retail. • Services are based on a PPO Benefit Design • $500 In Network Deductible • $2,000 In Network Out-of- Pocket • $25 Office Visit co- payment • 85% In Network Benefit Percentage.

32. 2012 Diabetes Benefit Example cont’d Allowable amounts are based on services provided in the Dallas marketplace – Region 13 (amounts will vary with each provider)

33. 2012 Preg/Maternity Benefit Example • Maternity Care • A healthy, twenty-eight year old woman decides to start a family and begins taking prenatal vitamins in January. Her doctor confirms her pregnancy in April. She receives routine, prenatal care, as recommended by national guidelines. (Evidence based medicine) She attends a cycle of childbirth and breastfeeding classes. In December, she gives birth to a healthy child: the deliver is normal and uncomplicated. Mother and child are released on the second hospital day. The mother is discharged with pain medications and a stool softener.

34. 2012 Preg/Maternity Benefit Example cont’d Calculations are based on Network provider utilization, Preferred Lab providers and generic drugs at an Align Network retail. • Services are based on a PPO Benefit Design • $500 In Network Deductible • $2,000 In Network Out-of- Pocket • $25 Office Visit co- payment • 85% In Network Benefit Percentage.

35. Benefit Examples

36. Health Information Technology HITECH AT ITS BEST Security of Protected Health Information

37. HealthInformationTechnology • Health Information Technology (HITECH)/Health Information Clinical Health Act • Effective date was 2.17.10 discussion is occurring regarding delay

38. Health Information Technology • Health Information Technology (HITECH)/Health Information Clinical Health Act

39. Health Information Technology • Health Information Technology (HITECH) Advancement/Upgrades • Conversion from 4010 to 5010 - Delayed until June 2012 • Conversion from ICD-9 to ICD-10 • October 2013 - Delayed until October 2014 (2 Year discussion) • 4.17.12 - CMS made public statement for ICD-9 code freeze –extended another year/claim management hybrid code management • Expansion of Diagnosis Codes: 14,000 to more than 67,000 and procedure codes from 13,000 to 85,000 • CMS announced its intention to review ICD-10 implementation timeline using a rule based process. Possibly two year extension; 2015 ICD-11 is available • Healthcare Dollar Transparency/MyHealthcare Estimator

40. Health Information Technology • Health Plan Identifier (HPID) • October 2012 (reduce pended claims by 5%) • Application Process • Other Entities Plan Identifier (OEID) • Health Information Technology (HITECH) Advancement/Upgrades • Comparing to Y2K transition a decade ago • Data Breach Management • Phone Applications regarding claim status and network information • 835 Electronic Claim Submission and Electronic Fund Transfers • Business Continuity Costs

41. Health Information Technology • Security and Data Transmission • Computers • iPhones, iPads, Netbooks • Cloud Information Management • iPhone Applications • Provider Network Status • Pharmacy Benefit Management Services • Network pharmacies • Cost comparison of prescriptions • Claim Look-Up HealthX

42. Healthcare Facts • Healthcare Costs are in excess of 15% of Gross National Domestic Product • Healthcare Spending is estimated to increase from 18% to 25% of gross domestic product by 2037 • Milliman study states premium/contributions would increase 8% to 37% in 2014 with a cumulative increase of as much as 122% between 2013 and 2017 • Starbucks spends more on healthcare than coffee beans. • General Motors spends more on healthcare than on steel. • The cost of healthcare is bankrupting families, employers, the nation, and overburdening taxpayers who are responsible for funding local, state, and federal healthcare plan.

43. Healthcare Facts • Regional and Cultural Disparity is contributing to increased costs and inadequate coverage. • More than ½ of U.S. hospitals are technically insolvent or at risk of insolvency. • The U.S. could face a shortage of Primary Care Physicians by 2025. • Self Funded plans will be required to demonstrate to the Secretary of Health and Human Services that their plans are sufficiently funded or capitalized to cover all likely medical claims.

44. Municipalities are the fourth largest employer. 86% of all cities and towns provide health insurance for their employees, and most provide coverage for employee’s families. Cities and towns spend $87B per year for healthcare for their employees and their families. Approximately 17% of the employer’s budget are health benefits for employees, retirees, and families. Healthcare Facts

45. Rate Stability and Management • Healthcare Transformation • Aging Workforce • PPACA Healthcare Reform • Redefining the Employer/Employee Benefit Responsibility • Economic Uncertainty • Expanded Benefits to the Uninsured Population • Business to Consumer • MyHealth Cost Estimator; Healthcare Calculators

46. Rate Stability and Management • Uninsured Population continues to grow • Implementing healthcare for dependents to the attained age 26 increased insured population by $2.5M • Uncompensated Care • Uninsured population • Ineligible Care • Unproven • Medically Justified and Unproven

47. Rate Stability and Management • Waste and Fraud • Donald Berwick, stating waste is 20% to 30% of spending is “waste” that yields no benefit to patients and that some of the needless spending is a result of regulations • Infections, Hospital Rate • UpCoding/Unbundling • Lack of Provider Billing transparency/Lack of Charge Master Access • Provider Overutilization of Wellness Benefits at no Covered Individual Cost Share • Chronic Care/Non Compliant Treatment

48. Rate Stability and Management • Waste and Fraud • Major Imaging Services - Overutilization, Physician Owned, Free-Standing • Radiation • Dialysis • Repricing claims at 125% of RBRVS (employee has to be enrolled in Medicare A & B) • Requires Plan language transparency/ID Card Payment • Medicare Part B Premium Payment (estimated cost $99.90/month) • Provider appeals per payment of ESRD • Employer Plan responsible for first 33 months (includes the 3 month waiting period), Medicare is reviewing the increase to 42 or 60 months extension for Primary Plan • Estimate of monthly cost for dialysis is $52,923 ($53,000) about $635,000 year • Benefit Compliance • Alternative Treatment/Homeopathic • International Medicine • Benefit Exclusions: Suicidal, Felonious Activities, experimental, medically justified, and clinical trials

49. Rate Stability and Management • High Dollar Claim Audits • Per Diem, Case Rates, DRG, % of Discount, Reasonable and Customary Per Plan Book • Hospital Readmission Rates • Vendor Contract Pricing • Network: Primary, Secondary, Tertiary, Professional Negotiations, Centers of Excellence/Designated Centers • Facility • Provider • Patient Advocacy Out of Pocket Negotiations • Prompt Payment Penalties • Coordination/Integration of Benefits • Medicare Eligible A, B, C/Medicare Secondary Payor (medical and prescription option) • Medicare Allowable • TriCare

50. Rate Stability and Management • Census Management • Participation Requirements • % of Fire and Police • Actively at Work • Disabled Personnel • Continuation of Coverage Participants • Pre/Post Sixty-five Eligibility • Extension of Coverage Benefits • Access to Sick Pool Benefits • Dependent Enrollment Accuracy • 6%- 8% on Average of all Dependents are deemed Ineligible • $3,000 the Employer pays for each Dependent on the plan annually (includes Contribution, Claims, and Admin Cost) • Most common examples • Ex-spouses (2 pieces of documentation), Kids over the age of 26, Grandchildren, Nephews