The ACA on the Move!

1. The ACA on the Move! Impact on Medical Practice

2. IMGMA Spring Conference May 9, 2013 Des Moines, Iowa Jeanine Freeman, JD Deputy Executive Vice President Legal Affairs and Policy Development Iowa Medical Society jfreeman@iowamedical.org

3. DISCLAIMER This presentation is general in scope, seeks to provide relevant background information, and hopes to assist in the identification and understanding of pertinent issues and concerns. This presentation does not constitute and is not meant to provide legal advice. Persons with legal questions are encouraged to consult with an attorney of their own choosing.

4. FEDERAL HEALTH REFORM Passed by the 111th Congress, signed by the President • The Patient Protection and Affordable Care Act of 2010 (HR 3590) • The Health Care and Education Reconciliation Act of 2010 (HR 4872) • The Reconciliation Act amended PPACA (or “ACA”) – must read together • http://docs.house.gov/energycommerce/ppacacon.pdf

5. LANDMARK LEGISLATION • Not a “single payer” system • Builds upon existing governmental and private programs, services, and insurance options • Central to the ACA: health insurance coverage for all American citizens

6. CONSTITUTIONAL CHALLENGES • U.S. Supreme Court (5-4) ruled in favor of the ACA’s constitutionality. • Starting point: Role of the courts is to presume legislation passed by Congress or a general assembly is constitutional. • Medicaid expansion: The Court remedied constitutional concerns by treating current Medicaid (up to 100% of FPL) as one program and the ACA’s expansion of Medicaid (up to 133% of FPL) as another program. Under the ACA, if a state elected not to expand Medicaid, the state would be precluded from participating in all of Medicaid. The Supreme Court’s ruling allows a state to elect not to participate in Medicaid expansion absent penalty under current Medicaid. • June 2012 decision – much activity underway to meet ACA requirements and deadlines.

7. ACA REFLECTS KEY DRIVERS IN HEALTH POLICY DEBATES • Costs, costs, costs • Access • Quality

8. DEMOGRAPHIC CONSIDERATIONS – A FEW • Health care’s share of the gross domestic product (GDP) • 1965: 6% • 2011: 17.9% • 2021: 20% • Health care spending outpaces economic growth (by 0.9% from 2011-2012)

9. DEMOGRAPHIC CONSIDERATIONS – A FEW (Continued) • In 2010, U.S. health spending increased to nearly $2.6 trillion or $8,402 per person (2008, $7,538), more than 2 ½ times the average ($3,268) of 33 other developed countries. • The U.S. population has health issues! • 27.5% of Americans are obese; no state has under 20% obesity • Diabetes affects 8.7% of the adult population (4.4% in 1996); projected spending in 2011 on diabetes and pre-diabetes: $208 billion

10. DEMOGRAPHIC CONSIDERATIONS – A FEW (Continued) • In 2011, one in six of U.S. residents (15.7% or 48.6 million) was uninsured. • Of those persons who were insured through private insurance, 55.1% had coverage through their employers. • Commonwealth Fund: of 11 countries surveyed in 2009, the U.S. lags far behind in implementing health care strategies to redesign its primary care system (i.e., elderly populations, chronic diseases) and infrastructures to support that system (i.e., health technology, 24-hour access, teamwork integration, quality reporting/feedback).

11. POVERTY AND HEALTH CARE • Persons in low income families are 3 times more likely to be uninsured than those in families with incomes of $75,000 or higher. • In 2011, 46.2 million Americans (15%) were in poverty. • 21.9% of children • 13.7% of persons age 18-64 • 8.7% of persons aged 65+ • Note: People move in and out of poverty and in and out of Medicaid.

12. 2013 FEDERAL POVERTY LEVELS (Released by HHS, Federal Register, 1/24/13)(Alaska and Hawaii have different calculations) • 1 person – $11,490 • 2 persons – $15,510 • 3 persons – $19,530 • 4 persons – $23,550 • 5 persons – $27,570 • 6 persons – $31,590 • 7 persons – $35,610 • 8 persons – $39,630

13. ACA – HEALTH INSURANCE COVERAGE MANDATES • In 2014, individuals (citizens, legal residents) without “qualifying” health coverage will pay a tax penalty at the greater of $95 or 1.0% of taxable income, increasing in 2015 to the greater of $325 or 2.0% of taxable income and in 2016, the greater $695 or 2.5% of taxable income. • Sliding-scale tax credits to assist in the purchase of health insurance • Cost-sharing subsidies for individuals/families with incomes up to 400% of FPL • In 2014, mandates upon employers with more than 50 full-time equivalent employees to offer “qualified” coverage at the risk of penalty and sliding-scale tax credits to assist small employers in the purchase of employee health coverage

14. STATE-BASED AMERICAN HEALTH BENEFIT EXCHANGES (“MARKET PLACES”) and SMALL BUSINESS HEALTH OPTIONS PROGRAM (“SHOP”) • Exchanges to provide “qualified” health coverage options to individuals and small businesses • Federal funding available to assist the states in establishing exchanges • Operational by October 1, 2013 for coverage effective January 1, 2014 • At this time, 17 states and the District of Columbia will be state-operated exchanges; 7 states (including Iowa) will be federal/state partnership exchanges; 26 states will default to exchange operation by the federal government.

15. COMPETITION IN THE COMMERCIAL HEALTH INSURANCE MARKETPLACE • AMA report: 70% of metropolitan U.S. commercial health insurance markets are highly concentrated, not competitive. In Iowa, Wellmark has 49% of the commercial PPO/HMO/POS market in Iowa and 76% of the PPO marketplace. • ACA: foster competition and consumer choice. • One example: the Consumer Operated and Oriented Plan (CO-OP) program, offering federal loans toward the establishment of non-profit, member-run health plans in each state. Iowa/Nebraska: CoOportunity, a CO-OP granted $112.5 million in federal loans, approved by the Iowa Insurance Division, utilizing the Midlands Choice network, contracting with Health Partners for operational services, offerings starting October 1, 2013, will be on the exchanges. • ACA: regulates health plans, including medical-loss ratios and premium rate reviews. National Association of Insurance Commissioners (NAIC): key in developing industry standards and measurements for implementation by state insurance divisions.

16. THE ACA AND IOWA PHYSICIAN PRACTICES • Change is underway. The ACA is one mechanism for change. There are many drivers at work. Medicare is key whether as directed by the ACA or otherwise. • Policy analysts: America’s current health care delivery and payment system is not sustainable long-term. • “To live is to change, and to be perfect is to have changed often.” Cardinal John Henry Newman (1801-1890) • “Everything changes, nothing remains without change.” Buddha • “Insanity means doing the same thing over and over again and expecting different results.” Albert Einstein

17. FIVE CONSIDERATIONS FOR MEDICAL PRACTICES • DATA! Know all aspects of your medical practice … your patient base, your service area, your income sources, your costs, your claims and revenue cycles, your good carriers and your bad carriers. Be prepared to conduct analyses. Become knowledgeable and proficient at “quality,” including benchmarks, attribution, documentation, and reporting. • KNOW YOUR ENVIRONMENT! Be informed of what is happening in the medical environment around you. Are there opportunities you might explore? Are there experiences that you can learn from? Is your practice threatened (i.e., referral patterns)? [Remain vigilant about the antitrust laws, i.e., no boycotts, no price fixing, no dividing the market.]

18. FIVE CONSIDERATIONS FOR MEDICAL PRACTICES (Continued) • PARTNERSHIPS! Linkages are critical. There are different ways to link. Conduct “due diligence” up-front regarding your practice. Set business goals and explore options within those goals. Define what is most important. Be prepared to adjust. Don’t be rushed but also don’t rest on your laurels. Remain focused first and foremost on patient care and physician ethics. • EVALUATE YOUR PRACTICE STRUCTURE AND STAFFING EXPERTISE! Do you have the expertise needed to accomplish your goals, whether on staff or by contract? Who are your physician leaders? Would your practice benefit from appropriate employment of allied practitioners? Identify steps to assure that any changes in staffing patterns assure proper physician supervision and engagement and comport with good risk management practices. Should you consider becoming a medical or health home? • IDENTIFY TRUSTED RESOURCES/INVEST IN EXPERTISE! Start with your physicians. What is available through their specialty organizations? What would be most helpful to you and your medical practice? Investing in expertise can produce a positive return over time. Commit to being sharp! Devote time to these endeavors.

19. PHYSICIAN PAYMENT • The SGR will be “fixed” but “how” and “when” are question marks. Budget implications are critical. (Not driven by the ACA) • Medicare’s geographic payment adjusters (GPCIs) remain under review but are here to stay at least for the immediate future. GPCI floors (i.e., the current 1.0 Work GPCI floor) moderate the inequity among highest-paid Medicare regions and lowest-paid Medicare regions. GPCI adjusters in CY 2013 put Iowa physicians 4th from the bottom in Medicare payment among U.S. regions (excluding Puerto Rico) based solely on geographic location of their medical practices. (Not driven by the ACA)

20. PHYSICIAN PAYMENT (Continued) • “Value-based” payment is a powerful buzzword influencing direction. (The ACA supports this direction, along with Medicare, commercial insurance and other drivers) • Medicare Shared Savings Program (MSSP)/private payer payment models • Re-valuing codes • Bundled Payments for Care Improvement (BPCI) Initiative • Adjustments in payment (incentives/penalties) based on meeting identified technology and quality initiatives (ACA) • Medicare Quality and Resource Use Reports (QRUR)/Value-based Payment Modifier (VBM)/Physician Quality Reporting System

21. PHYSICIAN PAYMENT (Continued) • “Costs” and “saving costs” generally means lower insurance premiums, not physician practice costs, with one exception: “administrative simplification” which potentially can save considerably on physician business costs over time. • “Cost shifting” to physician practices (i.e., prior authorization, physician rating)

22. PAYMENT AND DELIVERY MODELS – ACOs, MEDICAL HOMES, HEALTH HOMES • Accountable Care Organizations (ACOs) • In Iowa (as of December 2012) – • Trinity Health Systems/Tri-Health, Ft. Dodge (Pioneer ACO Model) • Genesis Accountable Care Organization (Davenport) • Iowa Health Accountable Care (Des Moines) • One Care (Des Moines) • University of Iowa Affiliated Health Providers (multi-health system network statewide, including assistance available in performance metrics, comparative reporting, best practices, programs to assess and address population health, shared information systems, expertise to analyze clinical data; managing patients with chronic diseases; value-based purchasing initiatives; research) • Allegent Health Partners (Council Bluffs) • Accountable Care Clinical Services (CA, CT, MA, PA, Iowa)

23. PAYMENT AND DELIVERY MODELS – ACOs, MEDICAL HOMES, HEALTH HOMES(Continued) • Wellmark agreements with three systems: Iowa Health (Unity), Mercy Des Moines, Genesis, with effective primary care as the core, member attribution to primary care physicians, clinical risk groups, and quality targets and incentives • Iowa Medicaid CSM Innovation Grant (multi-payer ACO) – work underway

24. MEDICAL HOMES/HEALTH HOMES • Legislation passed by the 2008 Iowa General Assembly calls for the establishment of a statewide medical home system to be administered by the Iowa Department of Public Health, guided by a Medical Home Systems Advisory Council. (Iowa Code sections 135.157-.159.) This initiative continues to receive state funding. The legislation defines “medical home.” Accreditation standards (i.e., NCQA) are important. • In 2008, the Iowa Healthcare Collaborative (IHC) and the Iowa Academy of Family Physicians formed a Medical Home Workgroup – representatives of Iowa’s major health systems, community health centers, large physician groups, and independent physician practices – and Medical Home Learning Communities to meet at least 2x each year re: best practices and standards for medical homes.

25. MEDICAL HOMES/HEALTH HOMES (Continued) • NCQA’s Recognition Directory lists 50 accredited medical homes in Iowa – five Level 2 (most in rural communities) and 45 Level 3 (most in urban communities). • 2013 Iowa General Assembly provided funding for several medical home initiatives (i.e., to federally qualified health centers, to local boards of health, to maternal and child health centers, to free clinics, to rural health clinics).

26. MEDICAID HEALTH HOMES • ACA option for state Medicaid programs to submit a State Plan Amendment (SPA) for a health home model targeting beneficiaries with chronic conditions, including dual eligibles • Projected benefits to the state of Iowa: improved beneficiary health; reduced ER use; projected cost savings of $7-$15 million over 3 years; enhanced federal match • Four tiers – • Tier 1 (1-3 chronic conditions) – PMPM rate: $12.80 • Tier 2 (4-6 chronic conditions) – PMPM rate: $25.60 • Tier 3 (7-9 chronic conditions) – PMPM rate: $52.21 • Tier 4 (10 or more chronic conditions) – PMPM rate: $76.81

27. MEDICAID HEALTH HOMES (Continued) • Quality benchmarks • Primary care is the initial focus with expansion now underway to specialty care for persons with serious and persistent mental illness. • The program is off to a slower-than-hoped for start, with only 500+ providers in health homes in 24 Iowa counties; 7 health homes are successfully billing Medicaid. • Marni Bussell, Project Manager (mbussel@dhs.state.ia.us or 515/256-4659)

28. MEDICAID EXPANSION • The ACA required states to expand their Medicaid programs to persons up to 133% of FPL (technically, 138%) and to eliminate traditional categories of eligibility or no longer be able to participate in Medicaid at all; the Supreme Court ruled that the ACA could not constitutionally tie “original” Medicare participation to “expanded” Medicare participation. • States have a choice to expand or not expand their Medicaid programs.

29. MEDICAID EXPANSION (Continued) • States expanding their Medicaid programs consistent with federal requirements will receive 100% federal matching dollars for beneficiaries on the expanded program for CYs 2014-2016; CY 2017: 95%; CY 2018: 94%; CY 2019: 93%; CY 2020: 90%. • IowaCare is slated to expire at the end of the year – 65,000 enrollees up to 200% FPL • DHS estimates additional enrollees under Medicaid expansion of 150,000 (plus the majority of IowaCare enrollees).

30. MEDICAID EXPANSION IN IOWA – A PARTISAN DIVIDE • Democrats support Medicaid expansion. Senate File 296 proposes to move all full benefit Medicaid recipients under Medicaid as expanded into a medical home model by January 1, 2015 (approximately 600,000 Iowans). Medical home responsibilities would be expanded to include linkages to community services and dental services. SF 296 establishes a legislative commission on integrated models of care.

31. MEDICAID EXPANSION IN IOWA – A PARTISAN DIVIDE (Continued) • Governor Branstad has introduced legislation (House Study Bill 232) to establish the Healthy Iowa Plan, dividing the state into regions, each with its own Medicaid ACO, with payments made to the ACO; Medicaid providers must contract with a regional ACO. Persons up to 100% FPL would enroll in Medicaid; persons above 100% would receive federal tax credits to purchase private coverage through Iowa’s Exchange. Beneficiaries would be responsible for copays & deductibles not to exceed 5% of their income. The program would be supported by ordinary federal Medicaid match funds (approximately 60%), county property taxes from hospital and mental health levies, and state legislative dollars, including those now dedicated to IowaCare.

32. IOWA HEALTH INSURANCE EXCHANGE • ACA requires each state to establish a health insurance exchange, now being called a “marketplace,” to assist individuals and small businesses in the selection and purchase of a plan for health insurance coverage. • Finding insurance coverage • Enrolling in a plan • Determining eligibility for advance payment of premium tax credits and cost-sharing reductions. • Health plan options offered through an exchange must meet federal requirements.

33. IOWA HEALTH INSURANCE EXCHANGE (Continued) • Exchanges must be ready for enrollment as of October 1, 2013, with plan coverage to begin January 1, 2014. • Iowa Interagency Planning Group (Pubic Health, Human Services/Medicaid, Insurance Division, Revenue Department) has been meeting since late 2010. Iowa has received several federal grants for planning and building an exchange infrastructure. • In March 2013, HHS granted conditional approval to Iowa’s proposed federal/state partnership exchange with a lead role for the Insurance Division in assuring that health plans on the Iowa exchange meet federal and state regulatory requirements; the federal government will develop the consumer assistance infrastructure. • Contracting with health plans on the exchange is a key focus for medical practices. • Much work to be done before October 1!

34. HEALTH CARE WORKFORCE • ACA authorizes a National Health Care Workforce Commission to make recommendations to Congress on health care workforce needs. • ACA: primary care/general surgery Medicare bonus effective January 1, 2011-December 31, 2015. • Increasing emphasis on expanded roles for nurse practitioners (ACA and other initiatives)

35. IOWA PHYSICIAN WORKFORCE • Iowa’s physician-to-patient population ratio is 42nd from the bottom among the 50 states and the District of Columbia. • Certain specialties are particularly challenging: emergency medicine (51st); obstetrics/gynecology (51st); diagnostic radiology (51st); neurological surgery (49th); psychiatry (48th); physical and rehabilitation medicine (47th); orthopedic surgery (47th); internal medicine (46th); pediatrics (45th); general surgery (45th); cardiovascular disease (42nd). • Family medicine/general practice: 6th. • http://www.iowamedical.org/documents/physicianworkforce/2011PhysicianPopulationSummaryofIowaRankingsforSelectedSpecialties.pdf.