Implication of Health Care Reform on Hospitals National Capitol Healthcare Executives

1. Implication of Health Care Reform on Hospitals National Capitol Healthcare Executives Falls Church, VA Ashley Thompson October 2, 2010

2. Why Health Reform? • 51 million uninsured • Insurance premiums have risen 131% over 10 yrs • Annual premiums > $13,000 for family of four • U.S. ranks 1st in health care spending… but 38th in health outcomes (in 2000) • Current system rewards volume over value • Care is provided across silos; it is not coordinated • We have a “sick care” system, ratherthan a “health care” system

3. It’s the law – March 23, 2010

4. What’s In It? Coverage & Insurance Reform • Insurance Reform • Individual Mandate • Employer “Play or Pay” • Government Subsidies • Administrative Simplification Delivery System Reforms • Hospital VBP • Bundling • ACO/Shared Savings • Readmissions • CMI – Innovation Center Medicare & Medicaid Payment Changes • Reductions to Annual Payment Update • Reductions to DSH • 340B Expansion • Wage Index Changes • Geographic Variation Adjustment • Enhanced Rural Payment • Medicare Extenders Workforce and GME Wellness and Prevention Quality • Hospital Acquired Conditions • Disparities • Comparative Effectiveness Research Regulatory Oversight • Tax-Exempt Status

5. Legislation Regulation

6. “The Secretary shall”

7. Hospitals will be: • More Integrated • More Accountable • More At-Risk

8. Changing Payment Models Payment system changes encourage greater provider collaboration … • Bundling – voluntary pilot program for acute care hospitals, LTCHs, IRFs, doctors, SNF, and HHA to receive bundled Medicare Part A and Part B payments for selected conditions • Accountable Care Organizations – allows physicians, hospitals and others to participate in “shared savings” for managing a population • Patient-Centered Medical Home – allows capitated payment to interdisciplinary primary care teams • Center for Medicare & Medicaid Innovation – $10 billion to test innovative payment and service delivery models

9. Key Competencies for Forming ACOs • Leadership • Organizational culture of teamwork • Relationships with other providers • IT infrastructure for population management/care coordination • Infrastructure for managing, monitoring quality • Ability to assess and manage financial risk • Ability to receive and distribute payments and savings • Resources for patient education and support

10. Patient-Centered Medical Home Key Components: • Personal physician • Physician directed medical practice • Whole person orientation • Coordinated or integrated care • Quality and safety • Enhanced access • Additional (capitated) payment

11. Models of Service Delivery Accountable Care Organizations Primary Care Physicians Specialty Care Physicians Outpatient Hospital Care and ASCs Inpatient Hospital Acute Care Long Term Acute Hospital Care Inpatient Rehab Hospital Care Skilled Nursing Facility Care Home Health Care PAC Episode Bundling Acute Care Episode with PAC Bundling Acute Care Bundling Medical Home

12. Clinical Integration is Critical Five legal hurdles: - Antitrust - Self referral (Stark) - Civil monetary penalties - Anti-kickback - Internal Revenue Code

13. Reward Value not Volume Payment system changes encourage patient safety, quality, value …. not volume • Value-Based Purchasing – pay hospitals for actual performance on quality measures (not just reporting). Payments reduced 1% growing to 2% over 5 years. • Hospital-Acquired Infections – penalizes hospitals with high rates of hospital-acquired conditions (top 25%) with a 1% reduction in Medicare payment for all discharges • Readmission Penalties – hospitals with higher-than-expected readmissions will have a 1% (growing to 3%) reduction in Medicare payment for all discharges

14. Integration:Accepting Risk, Managing Care Greatest Sharing: Share information on patients, quality, costs; share incentives Integration Reach: Connections to other care givers, patients pre- and post- Core Competency: Manage quality, patient safety, costs, and patient experience during more of the episode Least Make Collaborate Buy

15. Other Implications • Lower rates of reimbursement • More patient volume (impact on ED?) • Stronger focus on quality, patient safety and measurement • Enhanced Health Information Technology • Workforce shortages ? • Focus on wellness & community health • Care will be more integrated, coordinated

16. Reform resources • Special Bulletin…brief summary • Financial calculator • Detailed summary • Timelines • Hospitals as employers • Power-point presentations • Consumer audience • Internal hospital audience • Member tools

19. Tools and Guides

20. What comes next politically? • Democrats • Selling the plan to public • Implementing regulations • Protecting those that took tough votes • Republicans • Overall repeal • Constitutional challenges • Incremental efforts to repeal or “de-fund” provisions

21. “We all know that there is a hurricane coming for the Democrats. We just don’t know if it will be a Category 4 or a Category 5.” Peter D. HartDemocratic PollsterNewsweekSeptember 20, 2010

22. Current Projections(if election were held today) Senate 2010 GOP Needs 10 Senate 2010 + 8-9 GOP House 2010 GOP Needs 39 House 2010 GOP + 47 Governors 2010 Currently 24 GOP Governors 2010 + 8 GOP

23. GOP Control of Congress Implications • New players on key committees • Hearings, investigations and subpoenas • Stake in governance • Different dynamic on labor issues • Efforts to “defund” health care reform • Focus on deficit reduction

24. Marginal control by Democrats Implications • No working majority • Blue Dogs key swing vote • No actions possible without bipartisan support • Focus on deficit reduction

25. Immediate issues (Fall Agenda) • Medicare IPPS final rule • Coding offset • CAH provider taxes • Health information technology rules…multi-campus • Medicare outpatient rule (proposed) • Physician supervision of outpatient therapeutic services • Physician payment fix

26. Positioning for reform • Achieve solid hospital-physician (clinical) alignment • Measure, report and deliversuperior outcomes • Attain a favorable cost position • Strategic alliances

27. Implementation • Strategic plan and framework • Key areas of focus • Health insurance reform • Medicaid/CHIP expansion • Delivery system and payment reforms • Medicare/Medicaid payment changes • Quality • Workforce/Graduate medical education • Reporting information • Prevention and wellness • Program integrity and oversight

28. “Now is not the end.It is not even the beginning of the end. But, it is, perhaps the end of the beginning.” Winston ChurchillNovember 1942