Healthcare Reform Update

Dawn FitzGerald CEO, Qsource

Presentation Overview

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Healthcare Reform and the Imperatives

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Driving “Efficiency” in Healthcare

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Affordable Care Act – What’s next

Why Healthcare Reform?

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Healthcare in America is:

– Uncoordinated – Unfocused – Inconsistent – Unmeasured – Extremely inefficient – Expensive – Dangerous

U.S. Healthcare is Costly

Financing reform alone will not fix affordability -

hence the

Affordable Care Act

Healthcare Costs from Employer Perspective

Employer Coverage Results

Healthcare Costs from Consumer Perspective

Health Care Costs Have Wiped Out Real Income Gains

Cost Distribution of Care

Acute Care Chronic Care

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Focused Care

5 Conditions drive 50% of all healthcare costs

– CHF – Asthma – Diabetes – Coronary Artery Disease – Depression

Baby Boomers will Reshape Payer Mix

2011 2021

Medicare + Medicaid = 59% Medicare + Medicaid = 72%

Source: Health Care Advisory Board

Meet Your Newest Medicare Beneficiaries (2012)

Source: Health Care Advisory Board

Don Berwick – The Moral Test

“ Now, I probably owe you an apology for talking about costs. I know that, among the important dimensions of quality … I am not sure any of us would have chosen “efficiency” – the reduction of waste – as our favorite. It’s not my favorite. Nonetheless, it is the quality dimension of our time.

I would go so far as to say that, for the next three to five years at least, the credibility and leverage of the quality movement ”

“Efficiency” in Healthcare Reform

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Payment Reform Initiatives

– Readmissions Reduction Initiatives (ACA, ARRA) – Bundled payment Initiatives (ACA) – Accountable Care Organizations (ARRA) – Value based purchasing (ARRA) •

Benefit Redesign Initiatives

– Promoting healthy behavior (ACA) – Healthcare spending accounts (ACA)

“Efficiency” in Healthcare Reform

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Health Information Technology (ARRA/HITECH)

– – Enabling better data collection Measurement and surveillance

Readmissions Reduction (ARRA, ACA)

– Improved communication – Better care coordination

Accountable Care Organization (ACO) Adoption

HIT Adoption

Properly implemented and widely adopted, HIT would save money and significantly improve healthcare quality • Electronic Health Record (HER) adoption - per RAND, could save $10s of Billions • Driving to efficiency - $100B+ in savings if HIT improves efficiency

(estimated based on US aerospace and automobile industries…)

Diabetes Patients: EHR vs. Paper Records

Source: Cebul, R. D., M.D.; et al. (2011). Electronic Health Record sand Quality of Diabetes Care. New England Journal of Medicine, 365:825-833. Retrieved from http://www.nejm.org/doi/full/10.1056/NEJMsa1102519#t=article

HIT Adoption

• 93% want a medical home.

Strong Patient Support for HIT

• 96% want info about care quality about providers. • 89% want info about their out of pocket care costs before receiving care. • 88% want doctors to use EMRs. • 92% want doctors to exchange patient info with other doctors.

Source: Commonwealth Fund

Readmissions Reduction Initiatives

Beginning in 2013, CMS began penalizing hospitals and delivery systems with higher than expected readmission rates. Reduction up to:

1% in 2013 2% in 2014 3% in 2015

CMS will focus initially on: – Heart Failure – Acute Myocardial Infarction – Pneumonia Followed by focus on: - Chronic Obstructive Lung - Coronary Bypass Grafting - Percutaneous Coronary Interventions - Vascular Procedures Secretary has discretion to expand program to all discharges.

Readmissions Reduction Initiatives

• Care Transitions established as Theme of QIO 10 th SOW • Community Grants established to reduce admissions (ARRA Section 3026) • Hospital Engagement Network (HEN) created through the newly formed Office of the National Coordinator (ONC) to promote quality of care and readmissions reductions • Innovations Grants created through the Office of Innovations

ACA Coming in 2013

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Health Insurance Exchange

– State notification regarding whether they will operate a Health Benefits Health Insurance Exchange (Tennessee has declined) •

Closing the gap for Part D

– Prescription subsidies for brand name drugs •

Medicare Pilot Bundled Payment Program

– Payment based primarily on acute-care, or post-acute care in alternative settings up to 30-60-90 days for up to 34 clinical conditions.

ACA Coming in 2013

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Medicaid Preventive Services

– – Increased reimbursement for primary care visits under Medicaid to 100% of the Medicare rate for 2013 – 2014 Incentivizes states to offer preventive care services with no patient cost sharing requirement.

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New Medicare Tax for High Earners

– Payroll tax increases – Taxes on unearned income

ACA Coming in 2014

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Guaranteed Insurance

– Ranking of insurance risk only on age, geography, smoking status, and family composition •

Employer penalties

– Companies with 50 or more FT employees must “play or pay” – Penalties if employer does not provide coverage (generally $2,000-$3,000)

ACA Coming in 2014

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Individual Mandate

– Requires all US citizens to purchase individual health insurance or face a tax penalty •

Expanded Medicaid Coverage

– Eligibility of all adults up to 133% of FPL (note: some states may elect to opt out of expansion) •

Health Insurance Exchange

– Individuals and small companies can purchase coverage through an exchange

Impacts of Individual Mandate

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On the Potentially Good Side

– ~ 36 Million previously un-insured and un-insurable individuals will qualify for insurance under the exchange – Cost-shifting of uninsured care and associated escalating costs for covered care will be eliminated – Small business tax credits for providing coverage – Coverage must be offered for all risk stratifications

Impacts of Individual Mandate

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On the Potentially Bad Side

– Availability of insurance may create rise in healthcare demand and overburden the healthcare system already experiencing shortages in healthcare professionals – Employers may simply choose to take the less expensive penalties and drop their insurance plans in favor of employee subsidized care in exchange – No impact on physician reimbursement under the sustainable growth rate (SGR) formula

www.qsource.org

www.tnrec.org

REMOVE THIS DISLAIMER IF USING FOR NON-CMS PRESENTATION. PLEASE ASK COMMUNICATIONS FOR PUBLICATION NUMBER.

The presentation and related material was prepared by Qsource, the Medicare Quality Improvement Organization (QIO) for Tennessee, under a contract with the Centers for Medicare & Medicaid Services (CMS), a federal agency of the Department of Health and Human Services (HHS). Contents do not necessarily reflect CMS policy. 13.EXE.01.000A