HEALTH CARE REFORM REVIEW AND UPDATES

1. HEALTH CARE REFORM REVIEW AND UPDATES April 2011

2. Software Screen

3. Today’s Speaker John Coburn, JD Director of Training & Senior policy attorney for Health & Disability Advocates

4. THEMES OF HEALTHCARE REFORM “If you got it, we want you to keep it and it may get better.” “Now, we spend all our time trying to figure out IF those we serve qualify for coverage and how. In the future, for most, it will be a matter of finding out WHICH coverage is appropriate.” “Everybody has a box.”

5. AREAS TO DISCUSS Overall Structure for Accessing What Has Been Implemented So Far Changes to Medicare Part D Changes to Medicare in General Medicare Cost Savings Repeal and Litigation Implementation to Watch

6. SOME THINGS STAY THE SAME 6 • Most will still get coverage through employer insurance plans. • Categories of Medicaid that exist now should remain in place (SSI, pregnant women, children, etc) • Medicare eligibility was not changed……it will still be the source of insurance for Social Security Disability Insurance beneficiaries and older adults. • The rules around what happens to Medicaid or Medicare when a person works will be the same.

7. THE NEW STRUCTURE 7 “Newly Eligible” Medicaid Insurance Exchange Available to Purchase Coverage (Includes Premium Subsidies and Cost Sharing Credits) Insurance Exchange with No Subsidies.

8. MEDICAID ELIGIBILITY NOW Some low-income parents and pregnant women can get Medicaid. Many low income children get health insurance through Medicaid. Supplemental Security Income (SSI) recipients can get Medicaid. Social Security Disability Insurance (SSDI) beneficiaries may get Medicaid depending on state rules (spenddown, share of cost, recipient liability etc.). Special rules/programs allow most working SSDI and SSI beneficiaries to continue with Medicaid coverage. Low Income seniors can get Medicaid depending on state laws.

9. “NEWLY ELIGIBLE” MEDICAID No need to prove disability or other status. 133% FPL using income “Modified Adjusted Gross Income” MAGI. No asset limit Services may look different than other Medicaid categories but must at least cover “essential benefits”. States required to implement in 2014, but can start earlier if they choose. Unlikely many states will choose this option because there is no enhanced Federal Match until 2014.

10. WHO ARE THE “NEWLY ELIGIBLE” MEDICAID? Individuals waiting for disability determinations. SSDI beneficiaries during the Medicare waiting period. Low wage workers with disabilities that are not severe enough to meet the definition or with no disability. Individuals who are unemployed.

11. NEW INSURANCE EXCHANGE 2014 States will establish exchanges for individuals and small businesses (or feds will for them). Most individuals (exceptions include financial hardship, religious exemptions, etc) must obtain insurance, but insurers can no longer deny or charge more for pre-existing conditions. Premium credits and cost-sharing subsidies available to those with lower incomes (sliding scale up to 400% FPL). Uniform benefits packages (must include “essential services” and states can add more) with four levels of value.

12. ESSENTIAL HEALTH BENEFITS IN ACA Outpatient and lab services; Emergency services; Hospitalization; Maternity and newborn care; Pediatric services, including oral and vision care; Mental health and substance abuse, including behavior health treatment, with parity to physical health services; Prescription drugs; Rehabilitative and habilitative services and devices; Preventive and wellness services and chronic disease management. • Insurance policies must cover these benefits to be certified and offered in Exchanges, and all Medicaid plans must cover these services by 2014. • Coverage must be equivalent (in actuarial value) to one of four benchmarks: • Federal Employee Health Benefits Plan, • State Employee Plan, • Commercial HMO Product, or • Secretary-approved coverage.

13. NEW “SEAMLESS” DELIVERY SYSTEM BY 2014 WITH A SINGLE APPLICATION

14. THE PREMIUM SUBSIDY Available up to 400% FPL Based upon the cost of the second lowest cost silver plan (70% actuarial equivalent) Assures you pay 3% of income starting at 133% FPL up to 9.5% of income at 300-400 FPL. If you want a plan that is more expensive than second lowest cost silver plan, you pay the whole difference.

15. THE COST SHARING SUBSIDY Available up to 250% FPL Pay less out of pocket by requiring higher percentage paid by plan (actuarial equivalent is higher) Reduce the maximum out of pocket.

16. IMPLEMENTATION SO FAR High Risk Insurance Pool –check to see if your state has one or if the federal gov’t runs it for your state. New Requirements for Private Insurance 50% Doughnut Hole Coverage in 2011

17. REQUIREMENTS FOR HIGH RISK POOL INSURANCE Be a U.S. Citizen, National, or Legal Resident Uninsured for 6 months Have a pre-existing condition Limited number of slots; first come, first served. Participation is lower than expected so some programs becoming more generous. Not relevant to people on Medicare or Medicaid as they are already insured!

18. PRIVATE INSURANCE REFORMS NOW THROUGH 2011 Prohibition on pre-existing exclusion for children. Young adults can stay on parent’s insurance until 26. Prohibition on lifetime limits and rescissions. Prohibition on charging co-pays or deductibles for certain preventative and medical screenings on all NEW insurance plans. Insurers required to reveal details about admin and executive expenditures (Medical Loss Ratio) and on Jan. 1, 2011. Medical Loss Ration must be 80-85, but many waivers have been granted

19. MEDICARE PART D CHANGES Changing of Annual Enrollment Period Drug Manufacturer Discount During Doughnut Hole Discounts to Generics during Doughnut Hole Closing of Doughnut Hole Over Time Uniform Exceptions and Appeals Process

20. MEDICARE PART D CHANGES ADAP and Indian Health Services Count as TROOP Means-tested Part D premiums Costs eliminated for those participating in Medicaid waivers (similar to nursing home) Formulary Requirements for 6 Protected Classes and Others Elimination of part of tax deduction for employer retiree plans

21. PHASE OUT OF BRAND DOUGHNUT HOLE 2011-12 50% 2013-2014 52.5% 2015-16 55% 2017 60% 2018 65% 2019 70% 2020 75%

22. PHASE OUT OF GENERIC DOUGHNUT HOLE 2011 7% 2012 14% 2013 21% 2014 28% 2015 35% 2016 42% 2017 49% 2018 56% 2019 63% 2020 75%

23. OTHER MEDICARE CHANGES Savings through several mechanisms Elimination of cost sharing for certain preventive services and free annual check-up. Freeze Part B means tested income levels at 2010 through 2019

24. MEDICARE SAVINGS IN MORE DETAIL 24 Constraints in payment increases or reductions in payments Changes to Medicare Advantage Strategies to increase quality and efficiency Revenue enhancement through taxes and changes to premium structure for higher income beneficiaries

25. CONSTRAINTS IN PAYMENT INCREASES/REDUCTIONS IN PAYMENTS 25 Cuts in payment increases that vary by type of provider and year Productivity adjustment based on 10 year average annual increase in economywide productivity Proponents argue that this will not impact services and this is in line with cuts from previous laws, opponents argue that it will.

26. INDEPENDENT PAYMENT ADVISORY BOARD 26 15 member board appointed by President and confirmed by Senate with 6 year staggered terms (with 3 recs each from Congressional leaders). Experts in healthcare financing, delivery and organization and majority cannot be involved in delivery or management of services. Make recommendations for savings if targeted growth rates are not met, with implementation beginning in 2015. Recommendations go into effect unless Congress enacts, though a fast track process, specific legislation to prevent.

27. CHANGES TO MEDICARE ADVANTAGE PAYMENTS 27 Payments to plan based upon comparison between bid (plan’s cost) and benchmark (max medicare will pay for those benefits). Benchmarks have been increased in past to encourage participation, which has resulted in benchmarks being higher than average cost of original Medicare. New law phases in a new way to calculate benchmarks, which will result in both reductions and possible increases for plan quality.

28. STRATEGIES TO INCREASE QUALITY AND EFFICIENCY 28 Medicare prohibited from interfering with practice of medicine or manner in which medical services are provided (medically necessary) Productivity adjustments (discussed above). Voluntary program to bundle payments for physician, hospital and post-acute care. Accountable Care Organizations that meet quality of care targets and reduce costs share in savings. Payment reform in certain hospital readmission situations and penalty to some hospitals where common, high-cost health conditions acquired in hospital occur Patient-Centered Outcome Research Institute and CMS Center for Medicare and Medicaid Innovation Stepped up efforts to prevent fraud

29. REVENUE ENHANCEMENT Increases Medicare Hospital Insurance payroll tax from 1.45 to 2.35 for higher wage earners ($200,000 single, $250,000 couple). Freezes income point at which Part B premium is means tested at $85,000 single/$170,000 couple through 2019. Begins means testing for Part D at same income point and that point remains through 2019.

30. WAIT: WHERE IS THE DOCTOR’S CUT NOW? 30 Every year, the physician payment is supposed to decrease and, every year, Congress “kicks the can” to the next year. Both healthcare reform bills failed to address this issue at all as it was sticking point to moving forward. But, as usual, the cut was stalled in December 2010, effective through 2011

31. WHAT ABOUT REPEAL? Repeal would require both houses of Congress and President (not gonna happen!) Most funding is self-executing. History shows once the ball starts rolling……….

32. WHAT ABOUT THESE LAWSUITS? Score is 3-2 upholding HCR One judge threw out whole law, other the individual mandate. Implementation is proceeding. Likely to land in the Supreme Court for final decision.

33. IMPLEMENTATION TO WATCH OUT FOR • High Risk Insurance Pool • How is enrollment in your state? • Can it be expanded? • States are planning now: • Is there stakeholder involvement? • What will your exchange look like? • What are they doing with planning grants, if applicable? • How is your state shoring up eligibility infrastructure? • Essential Benefits Package: • What will the requirements be on the federal level • What will your state require?

34. Questions / Discussion ?

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