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Healthcare Reform Update Dawn FitzGerald CEO, Qsource. Presentation Overview. Healthcare Reform and the Imperatives Driving “Efficiency” in Healthcare Affordable Care Act – What’s next. Why Healthcare Reform?. Healthcare in America is: Uncoordinated Unfocused Inconsistent Unmeasured

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healthcare reform update dawn fitzgerald ceo qsource
Healthcare Reform Update

Dawn FitzGerald

CEO, Qsource

presentation overview
Presentation Overview
  • Healthcare Reform and the Imperatives
  • Driving “Efficiency” in Healthcare
  • Affordable Care Act – What’s next
why healthcare reform
Why Healthcare Reform?
  • Healthcare in America is:
    • Uncoordinated
    • Unfocused
    • Inconsistent
    • Unmeasured
    • Extremely inefficient
    • Expensive
    • Dangerous
u s healthcare is costly
U.S. Healthcare is Costly

Financing reform alone will not fix affordability -

hence the

Affordable Care Act

Healthcare Costs from Consumer Perspective

Health Care Costs

Have Wiped Out

Real Income Gains

cost distribution of care
Cost Distribution of Care

Acute Care

Chronic Care

focused care
Focused Care
  • 5 Conditions drive 50%

of all healthcare costs

    • CHF
    • Asthma
    • Diabetes
    • Coronary Artery Disease
    • Depression
baby boomers will reshape payer mix
Baby Boomers will ReshapePayer Mix



Medicare + Medicaid = 72%

Medicare + Medicaid = 59%

Source: Health Care Advisory Board

meet your newest medicare beneficiaries 2012
Meet Your Newest Medicare Beneficiaries (2012)

Source: Health Care Advisory Board

don berwick the moral test
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 will rise or fall on its success in reducing the cost of health care … while improving patient experience.

efficiency in healthcare reform
“Efficiency” in Healthcare Reform
  • 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 reform1
“Efficiency” in Healthcare Reform
  • Health Information Technology (ARRA/HITECH)
    • Enabling better data collection
    • Measurement and surveillance
    • Readmissions Reduction (ARRA, ACA)
    • Improved communication
    • Better care coordination
hit 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
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

hit adoption1
HIT Adoption
  • 93% want a medical home.
  • 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.

Strong Patient Support for


Source: Commonwealth Fund

readmissions reduction initiatives
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: Followed by focus on:
  • Heart Failure - Chronic Obstructive Lung
  • Acute Myocardial Infarction - Coronary Bypass Grafting
  • Pneumonia - Percutaneous Coronary
                • Interventions
                • - Vascular Procedures
  • Secretary has discretion to expand program
  • to all discharges.
readmissions reduction initiatives1
Readmissions Reduction Initiatives
  • Care Transitions established as Theme of QIO 10th 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
ACA Coming in 2013
  • 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 20131
ACA Coming in 2013
  • 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.
  • New Medicare Tax for High Earners
    • Payroll tax increases
    • Taxes on unearned income
aca coming in 2014
ACA Coming in 2014
  • 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 20141
ACA Coming in 2014
  • 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
Impacts of Individual Mandate
  • 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 mandate1
Impacts of Individual Mandate
  • 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


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