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Healthcare Reform

Healthcare Reform. The current state of play and business implications Session 4 October 1, 2009 2:00 PM You may listen to the audio on line or dial: 1-866-642-1665 Pass code 342441. Agenda. Update on timing and process Late-breaking developments Detailed review Business implications

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Healthcare Reform

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  1. Healthcare Reform The current state of play and business implications Session 4 October 1, 2009 2:00 PM You may listen to the audio on line or dial: 1-866-642-1665 Pass code 342441

  2. Agenda Update on timing and process Late-breaking developments Detailed review Business implications Discussion

  3. TIMING Update on timing and process House • Tri-Committee draft and markups √ • Additional E&C amendments considered (September) √ • Tri-Committee draft finalized (October) • Floor (October) Senate • HELP markup √ • Finance draft released (Sep 16) and markup (ongoing) • HELP and Finance bills merged (October) • Floor (October) Conference • Conference Committee and floor (October-November) If Unsuccessful … • Reconciliation (October/November) • Medicare Package (November/December)

  4. RECENT DEVELOPMENTS Developments August Town Hall meetings Kennedy dies Waxman sends letters Obama engages Internal Democratic disagreement Republicans shift from substance to tone Snowe leaves “Gang of Six” Baucus finesses legislative process

  5. Core components of the healthcare reform debate

  6. COVERAGE Key health reform provisions Coverage 1. Expanded eligibility for sub-populations • The young, the poor ($287b) • Early retirees, small business ($24b) 2. Pooling mechanisms to ensure access • Exchanges and subsidies ($463b) • Individual ($20b) and employer mandates ($27b) 3. Mandated benefit packages • Basic vs. “cadillac” plans and controversial benefits 4. Market reforms • Guaranteed access, cost-share limits, community rating 5. “Public option” or “Coop Plan”

  7. QUALITY – DELIVERY SYSTEMS Key health reform provisions (cont.) Improve Quality 1. Coordinated care and medical home models 2. Comparative Effectiveness Research 3. Prevention Trust Fund Reduce Cost - Reform the Delivery System • Payment bundling across episodes of care • ACE and Care Transitions ($1.6b net) • Aligning provider incentives • ACO ($5b); Gainshare; Innovation Centers($2.5b net) 3. Value-based purchasing 4. Physician payment reform (H-$210b; SFC-$11b)

  8. PAYING FOR REFORM Key health reform provisions (cont.) Sources of Pay-For’s 1. Medicare Advantage Part C Plans ($270 billion total) • Capped MA payment and Competitive bidding ($170b; SFC-$125b) • Coding intensity adjustments • Excise tax (SFC-$55b) • Excise tax on high premium plans (SFC-$215b)

  9. PAYING FOR REFORM Key health reform provisions (cont.) Sources of Pay-For’s (cont.) 2. Pharma ($100 billion total target) • Pharma “deal” (“$80 billion”) • Voluntary donut hole rebates to beneficiary (“$30b”; SFC-$17b) • Excise tax ($50 billion; SFC-$17b) • Medicaid rebates for Part D duals (H-$63b; SFC-$15b) • “Follow-on Biologics” ($6b) • Drug importation (neither bill) • Part D price negotiation (House only) • 340B expansions

  10. PAYING FOR REFORM Key health reform provisions (cont.) Sources of Pay-For’s (cont.) 3. Devices ($30-60 billion total target) • Device tax (SFC-$40b scores at $30b) • High-growth, over-valued” sectors (DME) (SFC-$4b) • Imaging (H-$4b; SFC-$3b) • Wheel chairs (H/SFC-$1b) • DME competitive bidding (SFC-$1b) • Federal preemption fix (not in either bill) 4. Home Health ($57 billion total) • High-growth, “over-valued” sector • Market basket and productivity adjustments

  11. PAYING FOR REFORM Key health reform provisions (cont.) Sources of Pay-For’s (cont.) 5. Hospitals ($200 billion total target) • AHA/CHA/FAH “deal” ($155 billion) • Payment cuts ($135 billion) • Readmissions policy ($16b; SFC-$1.6b net) • Other demos (SFC-$6b) • DSH reimbursement (75% reduction-$106b; SFC-$48b)

  12. PAYING FOR REFORM Key health reform provisions (cont.) Sources of Pay-For’s (cont.) 6. Shared – Multiple Providers • Share (50%) productivity adjustments • Medical liability reform demo (SFC only) • Fraud and abuse reforms (SFC-$1.1b) • Physician payments (e.g., Physician Payment Sunshine) • Increased funding for OIG and agency fraud efforts • IMAC (SFC-$23b)

  13. BUSINESS IMPACT/IMPLICATIONS Policy shifts emerging on multiple interdependent fronts • Private sector • Payers • Employers • Benefits managers • Agencies • CMS • MedPAC • Congress

  14. BUSINESS IMPACT/IMPLICATIONS Impact of reform efforts on industry and investors • Reduced payment across all sites of service, but new incentives for quality • Potential new limits on access to regulators • New decision makers, integrated evidence matrix needed • Evidence development across product lifecycle • Understand variations in practice patterns and utilization • Access to providers, investments in training and support • Adding “productivity” to the “differential value” equation • Shift to least complex site of service and integrated care delivery model

  15. BUSINESS IMPACT/IMPLICATIONS Impact of reform on providers • Focus on evidence-based best practices/ process improvement • Quality incentives drive additional payment • Capture, evaluate, communicate data on your own performance • Explore new models for care delivery structured around shared incentives • Consider expanded industry services • Data and registries, care pathways, etc.

  16. BUSINESS IMPACT/IMPLICATIONS Impact of reform on payers and care management groups • Focus on coordinating care across providers and sites of service • Short and longer-term outcomes • Consider proactive approach to developing new care delivery models (e.g., ACOs) in key regions • De-identified clinical/claims data becomes critical asset • Resource for CER • Platform for enhanced product offerings

  17. BUSINESS IMPACT/IMPLICATIONS What should you be doing now? • Monitor on-going debate • Follow on-going Medicare rule-making and MedPAC, etc. for policy signals • Submit comments • Assume existing payment models (FFS) transition to greater focus on quality/efficiency/productivity • Larger market and “side deal” savings produce net payment cuts • Reach out to customers and stakeholders to educate/engage • Consider roles of new decision makers, constrained access to new regulatory authorities • Position of product/service within broader delivery system • Impact on quality of care, access • Value of innovation established through new metrics

  18. Join us for our next session Vince Ventimiglia Senior Vice President vincent.ventimiglia@bakerd.com 202-312-7463 Ed Dougherty Senior Vice President edward.dougherty@bakerd.com 202-312-7425

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