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Measuring Progress on Administrative Simplification and Driving Change: The U.S. Healthcare Efficiency Index®. Greater FL Buccaneer Chapter of AAHAM & FL HFMA Summer Session August 13, 2010. The Landscape: What’s Driving Healthcare Policy Today?.
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Measuring Progress on Administrative Simplification and Driving Change: The U.S. Healthcare Efficiency Index® Greater FL Buccaneer Chapter of AAHAM & FL HFMA Summer Session August 13, 2010
The Landscape: What’s Driving Healthcare Policy Today? • 41 states face FY 2010 budget shortfalls with a total gap of $196 million (Kaiser Commission on Medicaid and the Uninsured, February 2010) • Medicare Trust Fund Reserves projected to be exhausted by 2029* (2010 Annual Report, Social Security and Medicare Board of Trustees – *Revised from 2017 based on passage of healthcare reform) • By 2019, national healthcare spending expected to reach $4.5 trillion, representing 19.3% of the GDP (CMS National Health Expenditure Projections 2009-2019)
YEA 219 NAY 212 March 21, 2010
Congress Enacts Healthcare Reform in Historic Vote: PPACA H.R. 3590 Patient Protection and Affordable Health Care Act (PPACA) + H.R. 4872 Health Care & Education Affordability Reconciliation Act Fiscal Impact
Basic Provisions: Insurance Reforms • Prohibits insurance companies from denying coverage to individuals with preexisting conditions (effective immediately for children and applies to all individuals beginning in 2014) • Expanding Medicare’s drug benefit by phasing out the “doughnut hole” in that benefit • $250 rebate to help fill Medicare Part D (2010) • 50% discount for brand drugs to help fill Medicare Part D (2011) • Prohibits lifetime caps on health insurance coverage • Requires health plans to allow young adults, up to age 26, to remain on their parents’ insurance policy • Requires medical loss ratio of 85% for large group plans and 80% for individual and small group plans
Basic Provisions: Insurance Reforms • Temporary retiree reinsurance program for employers providing health insurance to retirees over age 55 through 2014 • Establishment of national process for reviewing of health plan premiums and increases • Restructuring Medicare Advantage payments in 2011 • Provider Accountable Care Organizations (ACOs) can share in Medicare cost savings from meeting quality thresholds • Bonus payments to high-quality Medicare Advantage plans • Reduce Medicare Disproportionate Share Hospital (DSH) payments • Reduce state Medicaid DSH allotments • Excise tax on employer health plans that exceed $10,200 in value for individuals and $27,500 for families (by 2018)
Basic Provisions: Access to Coverage • Individual health insurance mandate by 2014 for most US residents; penaltiesfor individuals who do not obtain insurance • Employer coverage mandate by 2014; penalties for employers that do not offer health insurance • Expands Medicaid to cover individuals with income less than 133 percent of the federal poverty level, or $29, 327 for a family of four • Establishes 50 health insurance exchanges, administered by states, through which, small businesses and individuals without employer sponsored insurance coverage could buy coverage • Subsidies for premiums and cost sharing through the new insurance exchanges • Tax credits to small businesses to make coverage more affordable • 10% Medicare bonus for primary care physicians in shortage areas
Basic Provisions: Fraud, Waste & Abuse • Streamlining procedures for Medicare prepayment reviews • CMS‐IRS data match to help identify offenders • Increasing funding for the Health Care Fraud and Abuse Control Fund by $250 million over the next decade • 90‐day period of enhanced oversight for initial claims of DME suppliers
Beyond the Headlines:Administrative Simplification Provisions • Speeds HHS adoption of uniform standards for electronic transactions between plans and providers under the Health Insurance Portability and Accountability Act (HIPAA) – adds electronic funds transfer (EFT) as a required transaction type • Adoption of a single set of Operating Rules for each specified HIPAA transaction • Rules must be consensus-based and reflect the necessary business rules affecting health plans and health care providers • Rules to be developed by a “qualified nonprofit entity” • Establishes a process for regularly updating the standards and operating rules for electronic transactions • Requires health plans to certify compliance or face financial penalties from Treasury (by 2014)
Beyond the Headlines:Administrative Simplification Provisions • Requires Secretary to issue final rule to establish national Health Plan Identifier (HPID) based on input from NCVHS to be effective no later than October 2012 • Other standards to be considered by Secretary (Sec 10109) • Application and enrollment process • Auto and worker’s compensation transactions • Standardized forms for financial audits • Claim edits • Publication of timeliness of payment rules • ICD-10 Crosswalks – Calls for the ICD–9–CM Coordination and Maintenance Committee to meet before January 2011 (first meeting is September 15) to receive stakeholder input on ICD-10 crosswalk (GEMS) • Secretary shall make appropriate revisions and post on CMS website • Any revised crosswalk shall be treated as a code set for which a standard has been adopted by the Secretary
4% on Prevention Where does the money go? 85% 15% Admin Costs = $360 B Cost of Care = $2 T Total U.S. Healthcare Spend = $2.4 Trillion
U.S. Healthcare Efficiency Index®Launched December 2008 ushealthcareindex.com • Purpose • Create an industry forum for monitoring business efficiency in healthcare • Vision • Raise awareness of potential savings and reframe the national dialogue on health reform • Goals • Establish single national reference • Track progress across the industry • Remove barriers • Take costs out of healthcare Phase 1 Findings Based on Industry Data
Practical Savings Today: Measuring Progress Through the US Healthcare Efficiency Index™
Phase 2: Data Collection, Extrapolationand Reporting Payers Providers Clearinghouses Publicly Available National Efficiency Metrics Independent, 3rd Party Statisticians
2010 National Progress Report on Healthcare Efficiency: Key Learnings • Continued progress on adoption of electronic medical claims – current rate of 85% (10% increase over the Phase 1 findings) • Adoption of electronic remittance advice transactions is also higher – current rate of 46% compared to 26% in Phase 1 • Lines are blurring between manual and electronic processing • Costs must be removed at the system level to avoid perpetual cost shifts • Transparency on costs is vital to the nation’s economy • Efficiency is a journey, not a destination: continue to drive transaction value
One Example: e-Payment Offers Immediate Opportunities to Save… Stopping paper checks could save up to $11 billion a year in healthcare waste
Index Development and Implementation • Phase 1: Industry data • 5 basic transactions • Phase 2: Primary data collection • “National Progress Report on Healthcare Efficiency” (April 2010) • Phase 3: Expansion: Pharmacy Index • With Vanderbilt Center for Better Health • Phase 4: Expansion: Dental Index
The Road Ahead • Regulatory process will be long and difficult – 4,321 references to the “Secretary Shall” in the 900 page reform bill – each of which will require regulation • Also expect ongoing efforts to amend the bill; initial “repeal and replace” rhetoric has been dialed back, but still expect significant amendments – particularly if House leadership swings Republican in Fall • Over 20 states are filing challenges to the constitutionality of the individual mandate • But, Administrative Simplification provisions are supported by both parties and will likely be placed higher on the priority list for implementation funding since they reduce costs; the same is true for fraud, waste and abuse provisions
Questions? Susanne Powell Director, Government Affairs spowell@emdeon.com