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From Theory to Reality. A Manufacturer’s View of Health Reform. SEPAC March 2012. Accountable Care Act. Three Aims Expand Coverage Improve Quality Lower Costs CMS Theme Move from a “Volume” payer to a “Value” payer. Where Are We in 2012?. Expanded Coverage

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from theory to reality

From Theory to Reality

A Manufacturer’s View of Health Reform

SEPAC March 2012

accountable care act
Accountable Care Act
  • Three Aims
    • Expand Coverage
    • Improve Quality
    • Lower Costs
  • CMS Theme
    • Move from a “Volume” payer to a “Value” payer
where are we in 2012
Where Are We in 2012?
  • Expanded Coverage
    • Cover pre-existing conditions, extend dependent coverage to 26
  • Delivery System and Payment Reforms
    • Value Based Purchasing
    • ACOs
    • Bundled payments
    • Physicians report quality measures, invest in IT
  • Legal Challenge
    • Supreme court to rule on individual mandate
massachusetts experiment
Massachusetts Experiment

2006 model for Obamacare

  • Coverage increased from 88% to 96%
  • But…
    • ER visits did not decrease
    • Premiums soared
  • Still…
    • Letting states experiment with reforms is a powerful tool
hospital margins under pressure
Hospital Margins Under Pressure
  • Price Pressure
    • Public payer growth, quality-based payment,
  • Payer Mix
    • Medicare and Medicaid demand implications
  • Case Mix
    • Aging population is sicker costlier, surgery moving to ambulatory setting
or the poor
Or the Poor

40 States have filed to cut hospital reimbursement rates in 2012

how much cost shifting left
How Much Cost-Shifting Left?

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2009, for community hospitals.

(1) Includes Medicaid Disproportionate Share payments.

discharges by payer
Discharges by Payer

2011

2021

Self Pay

Commercial

5%

Medicare

37%

40%

Medicaid

2011 The Advisory Board Company

medical and surgical case mix
Medical and Surgical Case Mix

24%

39%

27%

61%

73%

76%

73%

health reform task force
Health Reform Task Force
  • Review implications of reform law for customers and identify opportunities to align Bard products/processes
  • Conducted primary research with customers
  • Validate assumptions with outside experts
findings
Findings
  • No end in sight to cost pressure
  • ACOs are not for everybody (32 to date)
  • Payment penalties a secondary worry
  • Need data to prove value of new products
  • Suppliers need to share risk
  • Aligning with physicians, other systems and payers
  • Growth of exchanges alter relations with insurers
trends to watch
Trends to Watch
  • DC gridlock and regulatory uncertainty
    • Taxes
    • FDA user fees
  • Enormous effort to reduce fraud and waste
  • Insurers buying hospitals and physician groups

Highmark - West Penn Allegheny

  • Supreme court decision and election year politicking