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Healthcare Reform The current state of play and business implications Session 4 October 1, 2009 2:00 PM You may listen to the audio on line or dial: 1-866-642-1665 Pass code 342441 Agenda Update on timing and process Late-breaking developments Detailed review Business implications

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healthcare reform
Healthcare Reform

The current state of play and business implications

Session 4

October 1, 2009 2:00 PM

You may listen to the audio on line or dial:

1-866-642-1665 Pass code 342441

agenda
Agenda

Update on timing and process

Late-breaking developments

Detailed review

Business implications

Discussion

update on timing and process

TIMING

Update on timing and process

House

  • Tri-Committee draft and markups √
  • Additional E&C amendments considered (September) √
  • Tri-Committee draft finalized (October)
  • Floor (October)

Senate

  • HELP markup √
  • Finance draft released (Sep 16) and markup (ongoing)
  • HELP and Finance bills merged (October)
  • Floor (October)

Conference

  • Conference Committee and floor (October-November)

If Unsuccessful …

  • Reconciliation (October/November)
  • Medicare Package (November/December)
developments

RECENT DEVELOPMENTS

Developments

August Town Hall meetings

Kennedy dies

Waxman sends letters

Obama engages

Internal Democratic disagreement

Republicans shift from substance to tone

Snowe leaves “Gang of Six”

Baucus finesses legislative process

key health reform provisions

COVERAGE

Key health reform provisions

Coverage

1. Expanded eligibility for sub-populations

  • The young, the poor ($287b)
  • Early retirees, small business ($24b)

2. Pooling mechanisms to ensure access

  • Exchanges and subsidies ($463b)
  • Individual ($20b) and employer mandates ($27b)

3. Mandated benefit packages

  • Basic vs. “cadillac” plans and controversial benefits

4. Market reforms

  • Guaranteed access, cost-share limits, community rating

5. “Public option” or “Coop Plan”

key health reform provisions cont

QUALITY – DELIVERY SYSTEMS

Key health reform provisions (cont.)

Improve Quality

1. Coordinated care and medical home models

2. Comparative Effectiveness Research

3. Prevention Trust Fund

Reduce Cost - Reform the Delivery System

  • Payment bundling across episodes of care
    • ACE and Care Transitions ($1.6b net)
  • Aligning provider incentives
    • ACO ($5b); Gainshare; Innovation Centers($2.5b net)

3. Value-based purchasing

4. Physician payment reform (H-$210b; SFC-$11b)

key health reform provisions cont8

PAYING FOR REFORM

Key health reform provisions (cont.)

Sources of Pay-For’s

1. Medicare Advantage Part C Plans ($270 billion total)

  • Capped MA payment and Competitive bidding ($170b; SFC-$125b)
  • Coding intensity adjustments
  • Excise tax (SFC-$55b)
  • Excise tax on high premium plans (SFC-$215b)
key health reform provisions cont9

PAYING FOR REFORM

Key health reform provisions (cont.)

Sources of Pay-For’s (cont.)

2. Pharma ($100 billion total target)

  • Pharma “deal” (“$80 billion”)
    • Voluntary donut hole rebates to beneficiary (“$30b”; SFC-$17b)
    • Excise tax ($50 billion; SFC-$17b)
  • Medicaid rebates for Part D duals (H-$63b; SFC-$15b)
  • “Follow-on Biologics” ($6b)
  • Drug importation (neither bill)
  • Part D price negotiation (House only)
  • 340B expansions
key health reform provisions cont10

PAYING FOR REFORM

Key health reform provisions (cont.)

Sources of Pay-For’s (cont.)

3. Devices ($30-60 billion total target)

  • Device tax (SFC-$40b scores at $30b)
  • High-growth, over-valued” sectors (DME) (SFC-$4b)
  • Imaging (H-$4b; SFC-$3b)
  • Wheel chairs (H/SFC-$1b)
  • DME competitive bidding (SFC-$1b)
  • Federal preemption fix (not in either bill)

4. Home Health ($57 billion total)

  • High-growth, “over-valued” sector
  • Market basket and productivity adjustments
key health reform provisions cont11

PAYING FOR REFORM

Key health reform provisions (cont.)

Sources of Pay-For’s (cont.)

5. Hospitals ($200 billion total target)

  • AHA/CHA/FAH “deal” ($155 billion)
  • Payment cuts ($135 billion)
  • Readmissions policy ($16b; SFC-$1.6b net)
  • Other demos (SFC-$6b)
  • DSH reimbursement (75% reduction-$106b; SFC-$48b)
key health reform provisions cont12

PAYING FOR REFORM

Key health reform provisions (cont.)

Sources of Pay-For’s (cont.)

6. Shared – Multiple Providers

  • Share (50%) productivity adjustments
  • Medical liability reform demo (SFC only)
  • Fraud and abuse reforms (SFC-$1.1b)
  • Physician payments (e.g., Physician Payment Sunshine)
  • Increased funding for OIG and agency fraud efforts
  • IMAC (SFC-$23b)
policy shifts emerging on multiple interdependent fronts

BUSINESS IMPACT/IMPLICATIONS

Policy shifts emerging on multiple interdependent fronts
  • Private sector
    • Payers
    • Employers
    • Benefits managers
  • Agencies
    • CMS
    • MedPAC
  • Congress
impact of reform efforts on industry and investors

BUSINESS IMPACT/IMPLICATIONS

Impact of reform efforts on industry and investors
  • Reduced payment across all sites of service, but new incentives for quality
  • Potential new limits on access to regulators
  • New decision makers, integrated evidence matrix needed
  • Evidence development across product lifecycle
    • Understand variations in practice patterns and utilization
  • Access to providers, investments in training and support
  • Adding “productivity” to the “differential value” equation
  • Shift to least complex site of service and integrated care delivery model
impact of reform on providers

BUSINESS IMPACT/IMPLICATIONS

Impact of reform on providers
  • Focus on evidence-based best practices/ process improvement
    • Quality incentives drive additional payment
  • Capture, evaluate, communicate data on your own performance
  • Explore new models for care delivery structured around shared incentives
  • Consider expanded industry services
    • Data and registries, care pathways, etc.
impact of reform on payers and care management groups

BUSINESS IMPACT/IMPLICATIONS

Impact of reform on payers and care management groups
  • Focus on coordinating care across providers and sites of service
    • Short and longer-term outcomes
  • Consider proactive approach to developing new care delivery models (e.g., ACOs) in key regions
  • De-identified clinical/claims data becomes critical asset
    • Resource for CER
    • Platform for enhanced product offerings
what should you be doing now

BUSINESS IMPACT/IMPLICATIONS

What should you be doing now?
  • Monitor on-going debate
    • Follow on-going Medicare rule-making and MedPAC, etc. for policy signals
    • Submit comments
  • Assume existing payment models (FFS) transition to greater focus on quality/efficiency/productivity
    • Larger market and “side deal” savings produce net payment cuts
  • Reach out to customers and stakeholders to educate/engage
  • Consider roles of new decision makers, constrained access to new regulatory authorities
    • Position of product/service within broader delivery system
    • Impact on quality of care, access
    • Value of innovation established through new metrics
join us for our next session
Join us for our next session

Vince Ventimiglia

Senior Vice President

vincent.ventimiglia@bakerd.com

202-312-7463

Ed Dougherty

Senior Vice President

edward.dougherty@bakerd.com

202-312-7425