Making Health Care Reform Happen on the Ground: From Legislation to Implementation and Improvement

1. Making Health Care Reform Happenon the Ground:From Legislation toImplementation and Improvement 2010 Results International Conference June 20, 2010 – Washington, DC Mark Hannay Board Co-chair, Universal Health Care Action Network www.uhcan.org Director, Metro New York Health Care for All Campaign ww.metrohealthcare.org

2. Basic Take-Aways • The new health care reform law is a major, historic step forward. • The current status quo was NOT an option over the long-term. • Approximately 32 million of America’s 47 million uninsured will get health coverage. • Even so, we still have more to do to get to true universal health care across America and here in New York, so there is continued work ahead. • Goal: Almost all residents of our nation, regardless of their financial situation or immigration status, will have comprehensive insurance coverage that’s affordable-to-buy and affordable-to-use. • Goal: Almost all residents of our nation, regardless of their financial situation or immigration status, will also have places to go receive the high-quality , affordable services from culturally-competent health care professionals.

3. THE NEW LAW ITSELF: The Patient Protection and Affordable Care Act (PPACA)

4. PPACA Overview Proviso • Comprehensive analyses of this new law are still very much a work-in-progress, and regulations are being developed and issued to flesh out details. This outline is primarily based on materials produced by the Kaiser Family Foundation (www.kff.org) and Families USA (www.familiesusa.org) • See also resource links at end of this presentation.

5. PPACA Overview Three broad areas of focus: • Insurance coverage reform • Delivery system reform • Financing-related provisions

6. Insurance coverage reforms: • Private insurance market • Employer-based plans • Public programs

7. Private insurancemarket reforms: • Overall insurance rules and regulations • Individual/family coverage mandates • New “Health Insurance Exchanges”

8. Insurance rules and regulations:Basic consumer protections • Elimination of pre-existing condition exclusions • Coverage waiting periods limited to 90 days • Elimination of lifetime coverage limits, and restrictions on annual limits • Elimination of “rescissions” (retroactive cancellations of coverage based on high-volume claims experience) • Young adult dependents can remain on parents’ plan thru age 24; some states already allow this, some to higher ages

9. Insurance rules and regulations:Policyholder benefits • Standardized “essential benefit package” – comparable to “typical employer plan”(as determined by HHS – updated annually); minimum actuarial value of 60% • No out-of-pocket costs for preventive care • State-based consumer counseling and ombuds programs re: how to sign-up & how to use – to be offered to individuals/families and small groups • Standardization of appeals processes (both internal and external) for denials of coverage for a particular service

10. Insurance rules and regulations:Cost Regulation • Limits on premium variations – only allowed based on age (3:1), geography, family size, and tobacco use (1.5:1) • Required “medical-loss ratios” (amount of premium income to be spent on claims – 85% (large groups); 80% (individuals/families, small groups) • Premium rate increase review procedures established – encouraged at state level; federal govt. back-up process; plans with “excessive increases” can be removed from Exchanges

11. Insurance rules and regulations:Business operations • Regulation of marketing practices • Standardized eligibility and enrollment procedures • Standardized claims forms and payment processing

12. Individual/family mandates • Only if: • not eligible for a public program • not offered employer coverage • Tax penalty for non-compliance: • ramp up from 2014-16 • Top rates: $695/$2,085 (individuals/families), or 2.5% income, whichever is greater

13. Individual/family mandates • Exemptions: • If premium cost is >8% income • Non-legal immigrants • Non-tax filers • Uninsured <3 mos. • Native-Americans • Incarcerated • Religious beliefs

14. “Health Insurance Exchanges” • Government-sponsored “marketplaces” to pool: • Individuals & Families • Employer groups • Bulk-purchase bargaining with plans to: • lower premium costs • lessen cost growth (over time) • State-based, with federal fall-back

15. Exchanges: Who Qualifies • Individuals and families who are not eligible for public programs or don’t have employer-sponsored coverage • Initially available to smaller groups (<100 employees) • Larger groups (>100 employees) eventually possible (at discretion of HHS secretary) • Only open to citizens and legal residents • All Members of Congress and Senators and their direct staff must use

16. Exchanges: Benefit Packages • Standard “essential benefits package” to be offered • Cannot include abortion coverage (which must be purchased separately as a rider); states can ban abortion coverage altogether • Differing “tiers” of plans based on “actuarial values”: bronze, silver, gold, platinum – 60%, 70%, 80%, 90% • Lower-cost, limited-benefit “catastrophic plans” can be offered – available up to those up to age 30, and to those who are exempt from mandate

17. Exchanges: Affordability Provisions • Sliding-scale premium subsidies: • For low- and moderate-income individuals and families (up to 400% of the “Federal Poverty Level” (“FPL”) – e.g., $44K individuals/$88K family of 4) • People cannot be required to spend more than 9.5% of income on premiums • Subsidies cannot be used for abortion coverage riders • Annual sliding scale out-of-pocket limits (for deductibles, co-pays, co-insurance) for low- and moderate-income individuals/families (up to 400% FPL)

18. Exchanges: Other provisions • Small group and individual exchanges can be merged by states • States can form regional, geographically-contingent exchanges • Plans offered must meet standards for provider capacity

19. Employer-sponsored coverage reforms: • Large groups (>50 employees) • Small groups (<50 employees) • Special program for age groups: • Young adults • Early retirees

20. Employer Coverage: Large Groups • If >200 employees: mandate to provide coverage to all workers • If >50 employees: penalties incurred if no coverage offered and if any employee(s) gets premium subsidies via new insurance Exchanges • Employees may opt out of employer plan to new insurance Exchange in certain circumstances; vouchers available if <400% FPL • Eventual access to Exchanges if/when allowed by HHS secretary

21. Employer Coverage: Small Groups • Coverage offered via Exchanges starting in 2014 • Tax credits to assist purchasing coverage: • start in 2010 • ramps-up by 2014 in amount (initially <35%, then to 50%) • eligibility and amount depends on employer size (initially <10 employees), and average wage base (initially < $25K/yr.) • Overall, smaller and lower-wage businesses get better deals • slightly lower tax credit rates for non-profits

22. Employer Coverage: Special Age Groups • Targets: cohorts with high rates of uninsurance • Young adult dependent coverage (age 19-24) can stay on parents’ plan • Early retirees (age 55-64) – temporary re-insurance program for high-cost claims (up to 2014)

23. Public Insurance Programs • Low(er) income individuals/families: • Medicaid • State Child Health Insurance Program (SCHIP) • New state-based “basic health plan” option • Medicare – seniors and long-term disabled • Other options

24. Medicaid: Individuals and Families • Expanded eligibility (up to 133% FPL – ~$14K indivs. /~$29K family of 4) • Elimination of various differential categories for eligibility based on age, family composition, pregnancy, etc. • Standardized, comprehensive benefits • No out-of-pocket costs for preventive care

25. Medicaid: State Requirements • Expansions possible as soon as 2011, but no later than 2014 • Increase federal matching fund support (“FMAP”) for states starting 2014 • Simplify and streamline enrollment and re-certification procedures • Increased reimbursement rates for primary care to Medicare levels • “Maintenance of effort” requirement

26. Child Health Insurance (SCHIP) • Mostly dealt with in Jan. 2009 via “Child Health Insurance Program Reauthorization Act” • Reauthorization extended via PPACA from 2014 to 2019 (additional 5 yrs.) • Funding extended via PPACA from 2014 through 2015 (additional 2 yrs.)

27. State-based “basic health plan” option • Can be offered by states to individuals and families between 133%-200% FPL (~$14K-$22K indivs./~$29-$44K family of 4) • An alternative to coverage through Exchanges • States get 95% of premium subsidies that would have otherwise gone to qualifying individuals and families • Medicaid benefit package • No co-pays for preventive services

28. Medicare: Beneficiary Improvements • Eliminate Part D coverage gap (“donut hole”) over 10 years • $250 rebate in 2010 once Part D coverage gap is reached • 50% discount on brand-name drugs in Part D coverage gap (starts in 2011); includes biologics • Lowering of “catastrophic coverage” eligibility level for Part D (over 10 years) • Elimination out-of-pocket costs for preventive care and annual physical • Freeze sliding-scale Part B premium levels

29. Medicare: Program Improvements • Expand and streamline eligibility for Medicare Savings Plans that help lower-income beneficiaries with their out-of-pocket costs and Part B premiums • Raise reimbursement rates for primary care • Eliminate over-payments to private “Medicare Advantage” plans • Improve long-term financing of Part A Trust Fund for an additional decade

30. Other Public Program Options • Temporary high-risk pools – funding offered to states – fed govt. to offer fall-back program • Two new national plans via Office of Personnel Management offered through state exchanges; one must be non-profit • Creation of non-profit co-op plans incentivized – can be national, multi-state, statewide, or regional • New, voluntary long-term care insurance program (“Community Living Assistance Services and Supports” aka “CLASS”); financed via payroll deductions – employees must opt-out; provides $50-$75/day for personal care  • States allowed to apply for waivers from PPACA paradigm starting in 2017 to implement alternative schemes, if they meet set criteria

31. Delivery System Reform • Goals – to improve: • Access • Quality • Efficiency • Cost control • Reforms leveraged via: • Public programs: Medicare and Medicaid • Insurance regulations • Pooling via Exchanges

32. Delivery System Reform: Areas of Focus • Expanded access to services • Quality Improvement • Public health • Wellness • Workforce development • Reimbursement reforms

33. Expanded Access: Where to get care • Various expansions of primary, preventive, and home/community-based services • Doubling of funding for community health centers and the National Health Service Corps • Expanded funding for school-based health services • New “patient-centered medical homes”, “accountable care organizations” and “community-based collaborative care networks”

34. Expanded Access: Other Reforms • Bonus payments to primary care providers to practice in medically-underserved areas • Non-profit hospitals to offer expanded free/discounted care to uninsured and under-insured patients • A whole variety of new initiatives to address various health care disparities

35. Quality Improvement • Disease management and chronic care coordination programs for patients with serious and multiple medical conditions • New programs to expand and improve trauma and emergency care services • Comparative effectiveness research • State-based pilot programs in medical malpractice reform • New “Federal Coordination of Health Care Office” to focus on “dual-eligibles” (people on both Medicare and Medicaid)

36. Public Health • New “National Prevention, Health Promotion, and Public Health Council” • New “Prevention and Public Health Fund” • New “Community Preventive Services Task Forces” • New “Regular Corps” and a “Ready Reserve Corps” to serve in national emergencies

37. Wellness • Technical assistance to employers for wellness programs • Grants to small employer groups to establish wellness programs • Allow employers to offer premium discounts to employees participating in wellness programs • State-based pilot wellness programs for individual markets • Disclosure of nutritional information by fast-food chains and vending machines

38. Workforce Development • New “Workforce Advisory Committee” to advise HHS Secretary and develop a comprehensive plan • New physician training programs to prioritize primary care training, training in community-based settings, and training in medically-underserved areas • Increase scholarships and loans for training of health care and public health professionals, with priority on primary care services in community settings in medically-underserved areas • Education and training programs to prioritize workforce diversity, and emphasize linguistic and cultural competence • Increased support for training in oral health, interdisciplinary mental health, and chronic/multiple disease coordination • Increased training of nurse practitioners and physician assistants

39. Reimbursement Reforms: General • Incentivize primary, preventive, and home/community-based care (vs. acute, institutional services) • Move away from piecemeal fee-for-service toward consolidated/global payments • New “value-based pay-for-performance” payment methods for hospitals • New accountable care organizations, Medical Homes, etc. to bundle services

40. Reimbursement Reform: Public Programs • New “Independent Medicare Payment Advisory Board” to develop bi-annual recommendations for President and Congress – cannot ration care, change benefits, raise taxes, change eligibility, change premium or cost-sharing structures • New “Innovation Center” for Medicare, Medicaid, and S-CHIP payment methods • Reduce and/or prohibit Medicare and Medicaid payments for preventable hospital re-admissions and hospital-acquired complications and medical errors • Reduce “market basket updates” for institutional providers • “Disproportionate Share” funding from federal government reduced to 75%, with increases based on documented services provided to uninsured • Increase Medicaid drug rebates from manufacturers • Strengthen waste, fraud, and abuse programs

41. Financing PPACA Reforms • Public program cost savings (over the long term) via Medicare and Medicaid (see above) – as compared to current projections • New taxes: • Medicare payroll • Unearned income • Excise tax on comprehensive employer plans • “Special interests” taxes • Tax deduction limitations • Penalties for coverage mandate non-compliance

42. PPACA Tax Measures • Increased Medicare payroll taxes (0.9%) on upper-income earners ($200K indivs./$250K joint-filers) • New 3.8% tax on unearned income for same  • Excise tax on “top-of-the-line” employer plans: • $10,200 for individuals/$27,500 for families (annual premiums) • Higher levels for early retirees, high-risk professions • 40% tax only on value above these levels • Dental and vision benefits excluded

43. PPACA Tax Measures (cont’d) • New taxes on pharmaceutical and medical device manufacturers, health insurance companies, and indoor tanning services  • Elimination of tax deduction for employers who receive Medicare Part D subsidies for their retiree drug benefit programs  • Limits on deductions for Health Savings Accounts, and higher penalties for unallowedwithdrawls from them  • Tax penalties on employers and individuals/families who don’t comply with coverage mandates (subject to certain terms and conditions)

44. PPACA: WHAT’S NEXT?

45. PPACA as a new platform to build on: a floor, not a ceiling – particularly for states Tasks at hand: • Education on PPACA • Implementation of PPACA • Defense of PPACA • Ongoing politics of reform • Fostering cross-movement unity and collaboration • Laying groundwork for a single-payer down the road

46. Education • Ourselves & our members • The public – town meetings and forums • Health and social service professionals (“train the trainers and experts”) • Individual one-on-one counseling with individuals, families, employers – numerous, ongoing • Goals: • Reassure about changes • Explain, but don’t over-promote • Acknowledge shortcomings and ability to improve law • Combat lies and misinformation • Stress values/characteristics of: choice, control, peace of mind, improved affordability

47. Implementation: Goals • Dual focus: national and state • GOAL: Max out and go beyond PPACA to move to true universal health care • Monitor and weigh-in on proposed new rules and regulations • Stakeholders to be monitored at every step along the way (especially insurers)

48. Implementation: State Level • Much of implementation will happen at the state level • State and local lawmakers will need to be educated about PPACA requirements, options, and implications • New laws will need to be passed at state level, and/or regulations written • New programs will need to be created – with Gov., Legislature, Dept. of Health, State Insurance Dept., other state agencies

49. Federal Implementation 2010 • Denials of coverage for pre-existing conditions for children banned • Small business tax cuts – begin in 2010; IRS has posted materials online • Young adult dependent coverage – some insurance plans are already offering voluntarily, and more will start as of Sept. 23, 2010; HHS has issued interim final rules for comment • Medicare Part D coverage gap (“donut hole”) – rebate checks ($250) going out starting this month • Temporary high-risk pools funding to states – HHS has issued formal RFP and is moving forward to complete this summer • Employer early retiree re-insurance program – OMB has issued draft application, and HHS has posted FAQs on website

50. Federal Implementation 2010 (cont’d) • Consumer assistance program funding for states – HHS to issue RFP very soon; another RFP re: Medicare and long-term care (outside PPACA) was issued recently • Rate review funding for states – RFP has been issued • Appeals procedures – proposed rules expected out soon for public comment • Prohibition of rescissions – proposed rules expected out soon for public comment • New consumer protections expected starting Sept. 23, 2010: ending lifetime limits on essential benefits, and annual limits; ending co-pays for preventive services; expanded choice of primary care providers; expanded access to emergency services