Healthcare Reform:What the new law really says Jill Q. Vecchio, MD Docs 4 Patient Care June 6, 2010
My Sources: • HR 3590, Reconciliation and Congressional Research Service Summary • Congressional Budget Office website • Galen Institute research and sources • Meetings with Congressmen and congressional staffers • Kaiser Foundation “Health News” • Center for Medicare and Medicaid Services • American Medical Association • National Assoc of Health Underwriters
Facts… • The US has the best healthcare in the world • No one is refused healthcare in the US • Private insurance and Medicare subsidizes billions in free care each year • The Healthcare industry accounts for 1/6 of US economy--IN A GOOD WAY! • Every doctor’s office is a small business
Facts… • What we charge and what we get paid are two very different amounts! • Reimbursements are based on Medicare and providers lose money on Medicaid and Medicare in many cases • Medical reimbursements have been decreasing and patient volumes are increasing—we are doing more work for less money every year • Malpractice premiums and risk of lawsuits increase every year (Ob/Gyn malpractice premiums in Colorado are over $100,000 per year)
Doctors and Patients all believe Healthcare Reform is needed But is this the right “reform”???
Typical Process Bill to Law • House originates legislation • House passes (simple majority), goes to Senate (needs 60 votes) • If Senate passes, all done. If Senate makes own version, goes to Conference Committee(20 members) • “Cleaned up” bill goes back to House, then Senate for passage to law
How HR 3590 Bill Became PPACA Law • Started as housing bill passed by House HR3590 • Changed by Senate into healthcare bill • Passed by Senate • Scott Brown elected • House forced to pass Senate bill or no healthcare reform • House passed bill 219/212 • House originated Reconciliation Bill to fix HR3590 • Senate made changes and passed with simple majority under “Reconciliation” rule • House passed revised Reconciliation bill • Everyone went home for Easter Break
In Other Words… • This bill (HR 3590) was never meant to be the LAW • Multiple contradictions • Poorly written by legislative standards
Medicare • Part A: Hospitalization • Part B: Outpt services (in general) • Part C: Medicare Advantage (MA): private policies subsidizes by fed. govt. • Fed. Payments decrease over next 10 yrs • Part D: Prescription drug coverage • “Medigap”: private insurance, NOT MA, aka: Medicare Supplement Insur., covers co-pays, deductibles for Part A
States • Mandate what medical services must be covered by private and public health insurance • Each state is different • Insurance premiums reflect these differences • States execute Medicaid • Medicaid paid mostly by states with federal subsidies
Remember… ALL new costs are either paid by taxpayers directly or passed on to them indirectly!
Cost Recognition Exercise States to businesses and taxpayers Employers to employees Businesses to customers Non-taxpayers are employees and customers too
“Immediate Improvements”Title I- Subtitle A (starts w/in 6 mos.) • No lifetime limits or annual limits • Can’t rescind coverage • Must cover, with no cost sharing/deductibles, for: • Specified preventive svcs • Rec’d immunizations • Rec’d women/children preventive svcs • Dependent coverage up to 26 y/o, married or unmarried • Hospitals must make public list of charges • Secr HHS to set up review of “unreasonable increases in premiums”
“Immed. Actions to Preserve and Expand Coverage”Subtitle B • Estab. Temporary High risk pool program for pre-existing cond. Until Jan 2014 • but Fed funding to most states for this will run out in 2012 • CO already has hi risk pool: Care Colorado • To be replaced by Amer. Health Benefit Exhange (“Exchange”=“Xchg”) • Sets up Electronic Health Care Transactions provisions and estab penalties for non-compliance (Fed EMR database)
Healthcare Exchanges Must be govt agency or nonprofit estab by state Must offer “qualified plans” only Must approve premium increases States can require additional mandates Requires states to pay costs of addl mandates Employers can choose which plan to offer their employees Employees can choose to get plan thru exchange rather than thru employer (big penalty to employer)
“Quality Health Insurance Coverage for All Americans”Subtitle C • Discusses “grandfathered plans” • most of allowances for these were eliminated in the Reconciliation • All plans must contract w all providers—no PPOs • Limits cost-sharing of premiums by employers • Universal Mandates “essential health benefits package”—will eventually apply to self-insured as well • All employers will eventually be required to enroll all employees in govt-sponsored long-term care plan
“Qualified Health Plan”Subtitle D ALL plans must include: emergency svcs hospitalization maternity and newborn care mental health substance abuse prescription drugs preventive and wellness services chronic disease mgmt pediatric services oral and vision care Limits cost-sharing and deductibles
Abortion • “Permits” states to prohibit abortion coverage in Xchg plans • “Prohibits use of federal funds for abortion services” • But fed subsidy used for Xchg plans??? • Requires separate accounts for payment of abortion services • Bottom line: tax dollars can be used to fund Abortion
Cost Comparison for Planssources: CBO, Heartland Institute, Galen Institute • Plan costs by 2016: (all plans have same coverage) CBO • “Bronze”@ 60% actuarial: $5000/ 12500 • “Siver”@75% $5800/15200 • “Gold”@85% (most empl) $7800/19200 • “Platinum” @90% (not scored) • As of 2005: • All plans: $4024/10880 • HSA + hi-deductible: $2772/6955 • Mass. Care policy 2010 • Avg policy for family 4 $15-20000
“Affordable Coverage Choices for all Americans”Subtitle E • Allows refundable tax credit for low income households to help pay premiums • Allows for reduced out-of-pocket expenses for low income • Secr HHS to “estab program to determine eligibility of applicants for participation… based on citizenship or immigration status” and “provides for confidentiality of applicant information” • “Prohibits any federal payments, tax credit or cost-sharing reductions for indiv who are not lawfully present in US” (doesn’t say they can’t participate, doesn’t prohibit state funding)
“Individual Responsibility”Subtitle F • “Imposes penalty for failure to maintain coverage beginning in 2014 ($95 2014 to $695 by 2016 or 2.5% of income)” • “EXCEPT for certain low-income indiv who cannot afford coverage, members of Indian tribes, and indiv who suffer hardship. EXEMPTS…indiv who object to health care coverage on religious grounds, [illegal immigrants] and incarcerated.” • ISN’T THIS THE POINT OF THIS WHOLE EXERCISE??? • Insureds will continue to subsidize these pts.
Insurance Companies Must accept pre-existing conditions can’t charge higher premium for these indiv Can’t drop anyone from coverage Must issue coverage to anyone who requests it at any time Can’t raise premiums without govt approval
Mass. Experience with Individual Mandate • Indiv choose to pay penalty rather than premiums • When they get sick, they are guaranteed issue of “insur” • When they are well again, they drop insur • Insur co. are only insuring those who are hi-risk/already sick • Premiums skyrocket—no risk sharing to be had • Those responsible folks and employers w insur can’t afford premiums—drop insurance • Insurance cos. request premium increase from govt • Govt says “no” • Insur co. go out of business • Govt steps in with “single payer” system
Mass Experience cont’d • Expansion of Medicare/Medicaid to cover all indiv • Reimbursement to providers doesn’t cover costs • Providers stop participating in MM • Pts can’t find provider or have very long wait times • No co-pay for ER visits • Pts go to ER instead, even for routine care • ER costs are higher than routine visit costs • ER visits incr 30% • Healthcare costs increase 27% • Govt requires providers to accept whatever reimbursement they offer as a requirement for licensure • Romneycare Expenses shared by state/fed 50/50—not w/ Obamacare
Massachusetts Utilization Mass has the most doctors of any state in the U.S. AND the longest wait times to see a physician in the U.S.
“Employer Responsibilties” Must provide notice about option of Exchange, avail. of tax credit Employer is fined if an employee opts for Xchg while it offers its own plan-- $2000 per total number of employees!!! Employer cannot penalize, discharge or discriminate ag. an employee that opts for Xchg Seasonal and part-time empl. counted in total number of employees (small vs. large employer) Extensive reporting required—1099, monthly reporting
“Miscellaneous Provisions”Subtitle G • Requires HHS Secr. to publish on HHS website list of all authorities provided to Secr. under this Act—STILL WAITING!! • Secr. HHS is APPOINTED, not elected • Doesn’t penalize any entity that provides assistance for the death of an individual such as by assisted suicide, euthanasia or mercy killing
“Role of Public Programs”Subtitle A • Expands Medicaid • Fed govt pays for new enrollees, but only from 2014 to 2016, then subsidy decreases • “Allows” states to expand Medicaid further at their own expense • Prohibits a state from requiring applicants for Medicaid to enroll in employer’s sponsored coverage (hence, employers are fined again)
READY FOR THIS??? It just keep getting better…
“Improving the Quality and Efficiency of Health Care”Title III, Subtitle A—”Transforming the Health Care Delivery System” Pt. I—”Linking Payment to Quality Outcomes…”
“Improving the Quality and Efficiency of Health Care”Title III, Subtitle A—”Transforming the Health Care Delivery System” Pt. I—”Linking Payment to Quality Outcomes…” • Extends and expands “Quality reporting system” for hospitals and providers and establishes penalties • Establishes a “value-based payment modifier” under physician fee schedule based upon the “quality of care furnished compared to cost” • Subjects hospitals to “penalty adjustment to payments for high rates of hospital-acquired conditions”
“National Strategy to Improve Health Care Quality” • Directs Secr HHS, “thru a transparent collaborative process” to use “Comparative Effectiveness” data • E.g. UK uses $44,000/yr of expected life remaining to determine whether a given tx is cost-effective for pt • Directs President and Secr. HHS to develop outcome and measurement criteria for all providers for any given program or medical condition
Cont’d • CMMS to test “innovative payment and service delivery models” to reduce costs, such as Payment Bundling during an episode of care around a hospitalization • Hospital receives total bundle payment and distributes proceeds to various provider entities
Improving Medicare for Patients and ProvidersSubtitle B • Cert Nurse Midwife reimb increases from 65% to 100% of physician reimbursement • Decreases over time Medicare benefits including: long-term care, inpt rehab, inpt psych, dx lab, dx imaging, home health, skilled nursing and nursing home care, hospice, surg center coverage, dialysis, hospitalization for low income seniors… • Allows for bonus reimb payments to rural/underserved area providers and facilities for 2-5 yrs • Increased taxes on brand pharmaceuticals • Increases number of and access to community health centers
Provisions Related to Medicare Part CSubtitle C • Medicare Advantage • Decreases federal subsidy significantly over time • Decreases coverage for multiple services
“Medicare Part D Improvements for Prescription Drug Plans…”Subtitle D • Requires drug manufacturers to participate in the “Medicare coverage gap discount program” • Allows Secr of HHS to assign or reassign individuals to a drug plan different from that in which they are enrolled • “Requires Part D enrollees who exceed certain income thresholds to pay higher premiums”. IRS to disclose information.
“Health Care Quality Improvements”Subtitle F • “Agency for Heathcare Research and Quality (AHRQ) to conduct or support research on the development of tools to facilitate adoption of best practices that improve the quality, safety, and efficiency of health care delivery services.” • These are the same folks that gave us the 2009 Mammography Screening Guidelines that would reduce the number of pts getting screening mammograms by more than 60%.
“Modernizing Disease Prevention and Public Health Systems”Title IV, Subtitle A • Establishes multiple councils, advisory groups, public health funds, media campaigns, federal website tools… • Requires Director of AHRQ to convene the Preventive Services Task Force “to review scientific evidence related to the effectiveness, appropriateness, and cost-effectiveness of clinical preventive services for the purpose of developing recommendations for the health care community”
“Creating Healthier Communities”Subtitle C • Authorizes Secr HHS to contract exclusively with vaccine manufacturers for purchase and delivery of vaccines for adults. • Retail food chains of more than 20 locations must disclose on the menu/menu board: • No. calories in menu item • Suggested daily caloric intake • Availability of addl nutritional information • Includes vending machine operators
Physician Workforce • Currently operating an annual deficit of physicians of 10,000 (35,000 retiring, only 25,000 graduating) • Up to 45% of practicing PCPs would retire or quit practice if HR3590 was put into effect (IBD poll)
“Increasing the Supply of the Health Care Workforce”Title V, Subtitle C • Multiple new and revised programs to encourage public health education, peds, primary care, nursing, dentistry, geriatrics, social work, psych, nurse-midwifery, family nurse practitioners. • No mention of specialty MD training!
“Supporting the Existing Health Care Workforce”Subtitle E • “Revises the allocation of funds to assist schools in supporting programs…in health professions educ for underrepresented minority individuals” • Incentives for gen surgeons and PCPs/providers that work in underserved areas • Reconciliation increases reimb for Medicaid services by PCPs to 100% of Medicare for 2013 and 2014
“Physician Ownership and Other Transparency”Subtitle A • Prohibits physician-owned hospitals that do not have a provider agreement by Dec. 31, 2010 to participate in Medicare (some exceptions) • Requires drug, device, biological and med supply manuf to report to HHS “transfers of value” made to a provider as well as info on physician ownership or investment interest. Establishes penalties. • Prohibits physician self-referrals
“Patient-Centered Outcomes Research”Subtitle D • Establishes Patient-Centered Outcomes Research Institute • “Prohibits Secr. HHS from using evidence and findings from the institute to make a determination regarding Medicare coverage unless such use is through an iterative and transparent process…” • Establishes w/in IRS the “Patient-Centered Outcomes Research Trust Fund” w/ funds from Medicare Trust Fund
Revenue ProvisionsTitle IX, Subtitle A—Revenue Offset Provisions • Imposes excise tax of 40% on “Cadillac” plans—exceeding $10,200/27,500 starting in 2018 • Reconciliation bill incr. the original amts and delayed implementation to 2018, which will decr. Govt revenue by 80% from orig bill • Labor unions are exempt • Increases HSA penalty for distribution from 10% to 20% • Limits annual salary reduction contributions to $2500 per year for HSAs • Imposes annual fees on manuf of drugs, medical devices and insur companies • Eliminates tax deduction for expenses for employers who offer Medicare Part D coverage (Caterpillar, ATT)
Cont’d • Increases hospital insurance tax rate by 0.9% for individual taxpayers earning over $200,000/250,000 after 12/31/2012. • Reconciliation adds 3.8% “net investment” income tax included in Medicare taxable base for $200,000/250,000 • Allows “50% tax credit for investment in any qualifying therapeutic discovery project…” (but physician ownership or investment in drug, device biological or medical supply manuf is monitored and must be reported to HHS)