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Fasten Your Seat Belts: Health Reform in Turbulent Times

Fasten Your Seat Belts: Health Reform in Turbulent Times. Bob Doherty SVP, Governmental Affairs and Public Policy, ACP Nevada Chapter, ACP January 9, 2013. Health reform: getting from here to there. Here : tens of millions uninsured, uneven quality, rising costs

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Fasten Your Seat Belts: Health Reform in Turbulent Times

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  1. Fasten Your Seat Belts:Health Reform in Turbulent Times Bob Doherty SVP, Governmental Affairs and Public Policy, ACP Nevada Chapter, ACP January 9, 2013

  2. Health reform: getting from here to there • Here: tens of millions uninsured, uneven quality, rising costs • There: near universal coverage--with better quality at a price we can afford? • How smooth or rough will the journey be?

  3. How we would like it to be . . .

  4. What we expect it will be. . .

  5. What we fear it will be . . .

  6. Turbulence • Political environment/election • Affordable Care Act: • Federal rules • State discretion • Entitlements • Fiscal cliff/sequestration • Payment/delivery system reform

  7. Because of the election • No plausible scenario where the ACA will be repealed • State engagement/ resistance may determine the law’s effectiveness in expanding coverage

  8. 2012 elections: views on health care • Only 25% of voters favored “full” ACA repeal • Slightly more (47%) favored keeping or expanding it over repealing all or some of the law (45%) • It remains deeply unpopular in many GOP-controlled states http://www.dailykos.com/story/2012/11/06/1157266/-EXIT-POLLS-majority-do-not-repeal-Obamacare http://www.kaiserhealthnews.org/Daily-Reports/2012/November/07/exit-polls-and-the-health-law.aspx

  9. The role of the states • Medicaid: Accept/reject federal dollars • Exchanges: Set up own exchange, partner with federal government, or turn it over to the feds • Benefits: Establish “benchmark” for plans to be offered through state-exchanges or let feds determine • Enrollment: help/encourage people to get coverage thru Medicaid or exchanges, or do nothing to help

  10. Expanding Medicaid is a good $ deal for the states

  11. Sarah Kliff, Wonkblog, Washington Post, July 3, 2012 http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/03/why-hospitals-heart-the-medicaid-expansion-in-one-chart

  12. More on Medicaid=Fewer Deaths, Better Health Medicaid expansions were associated with a significant reduction in adjusted all-cause mortality (by 19.6 deaths per 100,000 adults, for a relative reduction of 6.1%). Mortality reductions were greatest among older adults, nonwhites, and residents of poorer counties. Sommers and Baicker, Mortality and Access to Care after State Medicaid Expansions, NEJM, July 25, 2012, http://www.nejm.org/doi/full/10.1056/NEJMsa1202099

  13. ACP’s Medicaid Patient Advocacy Campaign • Cover letter from College leadership, seeking 100% U.S. chapter participation • Concise action plan with one-click links to all supporting materials, presentation slides, instructions and timetable • Customized state-specific reports (available now!)and press releasesto be issued by all chapters http://www.acponline.org/cln/medicaid_campaign.htm • Template and web interface to send the report to each state’s governor and legislators

  14. States and health exchanges • State-run exchanges must meet federal standards by early 2013, ready to enroll by 10/1/2013 • Deadline for submitting plan extended to 12/14 • Some are ready to go, many are behind, some are opting out and letting feds run them

  15. Enrollment “States are rushing to decide whether to build their own health exchanges and the administration is readying final regulations, but a growing body of research suggests that most low-income Americans who will become eligible for subsidized insurance have no idea what is coming. Supporters of the health-care law say the plan will not be a success without a massive public relations campaign to build awareness.” Many Americans Unaware of Health-care Law Changes, Sarah Kliff, Washington Post, November 21, 2012, http://www.washingtonpost.com/business/economy/many-americans-unaware-of-health-care-law-changes/2012/11/20/ee02b0bc-3272-11e2-9cfa-e41bac906cc9_story.html?hpid=z2

  16. New proposed rules • Defines benefits that all new individual and small groups must provide • States must select “benchmark” for plans offered through exchanges • About half the states have already selected the plan they will use as a model, meaning that insurers there can now start designing plans for sale • States that do not choose a “benchmark” plan will default to one selected by the federal government

  17. New proposed rules • Instructions to insurers how to determine whether their plans can be sold as “bronze,” “silver,” “gold,” or “platinum” in state exchanges • The law spelled out ratios for how much money individuals could be asked to spend out of pocket in each of those categories—bronze plans will have lower premiums and the highest deductibles and co-payments, while platinum plans will cover and cost more. The regulation includes a detailed calculator.

  18. New proposed rules • Describes how much prices can vary according to patients’ ages and health histories • Hews closely to the requirements of the law. According to the rule, insurers can charge the oldest patients three times as much as the youngest, and no more. • More detailed analysis on ACP state advocacy web page http://www.acponline.org/advocacy/state_policy/hottopics/side_by_side.pdf

  19. 2012 elections: entitlement reform • Having campaigned against Medicare premium support and Medicaid block grants, no prospect that President Obama will agree to them, or that the Senate majority would enact them • But something has to be done: Grand Bargain tied to tax reform/revenue deal? Incremental adjustments?

  20. ABeneficiaryLifetimePerspective: Payroll Contributions < Expected Benefits $400,000 $357,000 $357,000 MedicareExpectedBenefits, Lifetime MedicarePayrollTaxes, Lifetime $350,000 $300,000 $250,000 $188,000 Female $200,000 Male $170,000 $150,000 $119,000 $100,000 $60,000 $60,000 $50,000 $0 Single,AverageWage Single,AverageWage One-EarnerCouple, One-EarnerWageCouple,AverageWage Two-EarnerCouple, Two-EarnerCouple, AverageWage Average AverageWages Source:SteuerleCEandRennaneS."SocialSecurityandMedicareTaxesandBenefitsOveraLifetime.”Washington,DC:TheUrban Institute.June2011.

  21. Hospital&PhysicianSectorsAccountedforMore than70PercentofPrivatePremiumGrowth OverPastFiveYears 2006to2010Change($Billions $120 $100 $80 $60 3%ofnet change $3.1 4%ofnet change $4.0 9%ofnet change $9.5 14%ofnet change $15.4 26%ofnet change $28.0 45%ofnet change $108.5 97percentofchangeinpremiums $40 wasduetogrowthininsurers’ spendingforhealthcareservices $48.3 $20 $0 HospitalCare Physician& ClinicalServices Prescription Drugs&DME Dental&Other Professional HomeHealth& OtherLTC NetCostof HealthInsurance TotalChangein Premiums Services Facilities& Services 2006-2010 20.3% 13.2% 14.5% 14.3% 20.5% 3.1% 14.7% %Change Source:NIHCMFoundationanalysisofdatafromtheNationalHealthExpenditureAccounts.

  22. 2011 Debt Limit Crisis: Timeline of Events U.S. Credit Downgraded Standard & Poor’s downgrades the U.S. credit rating from AAA to AA+ for the first time in history. Download the U.S. Credit Rating Primer for more information. Deal Reached Obama and House Speaker John Boehner agree to legislation that will cut the deficit and prevent default Debt Limit Reached U.S. hits $14.3T debt limit; U.S. Treasury Secretary Timothy Geithner asks Congress to raise debt ceiling Cuts Demanded by GOP Leadership Republican leadership calls for balanced budget amendment and measures to cut and cap spending; certain GOP members of Congress argue that U.S. should default on debt obligations Budget Control Act Passed Obama signs the Budget Control Act into law, increasing the debt-ceiling by $400B to $16.4T Source: National Journal Research, 2012.

  23. 2011 Debt Limit Crisis Led to Sequestration Threat Updated 1/3/13 Budget Control Act of 2011 Raised U.S. debt ceiling to prevent default Established 12-member Joint Select Committee (“Super Committee”) charged with reducing deficit by $1.2T to $1.5T over 10-year period Mandated long-term debt reduction through sequestration if Super Committee failed to reach goals Because Super Committee failed to reduce the deficit, U.S. faces threat of sequestration. Congress postponed the sequester for two months in legislation passed to address the fiscal cliff. Absent further negotiation, automatic spending cuts will take effect in March. Source: Budget Control Act of 2011, “Here’s What’s in the Fiscal-Cliff Deal,” Catherine Hollander, National Journal, January 1, 2013.

  24. Senate Passed Fiscal Cliff Deal with Bipartisan Support Senate Votes For and Against American Taxpayer Relief Act of 2012 by Party GOP Yes 51 votes needed for passage N/A Independent Yes Dem No 47 40 Totals Yes: 89 No: 8 N/A: 3 2 3 5 Dem Yes 3 GOP No • Quick Takes • 90% of voting Dems, 88% of voting Republicans, and all Independents voted in favor of the American Taxpayer Relief Act of 2012 • Tea party had far less splintering effect among Senate than House Republicans, with only three tea party Senators voting against the bill: Marco Rubio (R-FL), Mike Lee (R-UT), and Rand Paul (R-KY) Sources: “The ‘fiscal cliff’: How the House voted,” Aaron Blake, Washington Post, Jan. 2, 2013; National Journal Research.

  25. Most House Republicans Voted Against Fiscal Cliff Deal House Votes For and Against American Taxpayer Relief Act of 2012 by Party GOP Yes 217 votes needed for passage N/A 85 11 Dem No 172 151 Totals Yes: 257 No: 167 N/A: 11 16 GOP No Dem Yes • Quick Takes • 64% of voting House Republicans voted against the American Taxpayer Relief Act of 2012 • Divisions in party leadership on important votes are rare, but House Majority Leader Eric Cantor (R-VA) and House Majority Whip Kevin McCarthy (R-CA) voted against the bill, splitting from House Speaker John Boehner (R-OH) and signifying a possible ideological split within the Republican party • House Tea Party Caucus members accounted for 50 of the GOP’s 151 votes against the fiscal cliff deal (33%) Sources: “The ‘fiscal cliff’: How the House voted,” Aaron Blake, Washington Post, Jan. 2, 2013; National Journal Research.

  26. Updated Jan. 2, 2013 Fiscal Cliff Deal At a Glance Sources: National Journal, Jan. 1, 2013, “Here’s What’s in the Fiscal-Cliff Deal,” Catherine Hollander, National Journal, Jan. 1, 2013; “House votes to extend federal pay freeze,” Tom Shoop, Government Executive, Jan. 1, 2013.

  27. Fiscal cliff deal: impact on physicians • No 27% Medicare pay cut (through 2013) • Does not advance permanent SGR reform • Paid for by cuts in disproportionate share payments to hospitals, Medicare Advantage, ambulance services, other non-physician providers • Reduces physician practice expense payments for advanced imaging

  28. Fiscal cliff deal: impact on physicians • Does NOT cancel Medicaid primary care increases to offset cost of blocking SGR cut • Directs HHS to improve advanced clinical data registries to clarify data tracking, reporting and transparency and implement quality improvements for services paid under SGR • Sequestration, postponed only until March, could result in cuts in critically important health programs

  29. Non-Defense Cuts: Health Care Non-Defense Cuts Focus Heavily on Medicare, Medicaid Substance Abuse and Mental Health Services Administration Centers for Medicare and Medicaid Services Health Resources and Services Administration Administration for Children and Families Office of the Inspector General Program Support Center Departmental Mgmt. Administration On Aging NIH CDC FDA Estimated Department of Health and Human Services Cuts from Sequestration for FY2013 Total cuts: 54.6B ($11,855M) ($2,529M) ($1,532M) ($605M) ($490M) ($319M) ($275M) ($168M) ($122M) ($5M) ($5M) Source: OMB Report Pursuant to the Sequestration Transparency Act of 2012.

  30. Non-Defense: Health Care HHS Reductions Would Lead to Private Sector Strain Sequestration’s Financial Impact on Public and Private Sector Health Stakeholders Less government spending means reduced spend on health industry Source: OMB Report Pursuant to the Sequestration Transparency Act of 2012; “Hospitals’ Medicare Cuts Under Sequester: $5.8 billion – White House Report Breaks Down Looming Budget Sequestration.” The Advisory Board, Sept.17, 2012.

  31. Another Debt-Ceiling Crisis Looms Updated 1/3/13 Trajectory of Debt Relative to Debt Ceiling Current Debt Ceiling Reached in December (May 2012 – Dec. 2012) $16.1T The U.S. hit the debt ceiling of $16.4T on December 31, 2012. The Treasury has begun to take “extraordinary measures” to keep the government running until February or mid-March. $16.8 $15.7T Current Debt Ceiling: $16.4T . Debt in Trillions $16.0 . $15.2 Source: U.S. Treasury Department, “Here’s What’s in the Fiscal-Cliff Deal,” Catherine Hollander, National Journal, January 1, 2013.

  32. 2012 Debt Limit Crisis Could Lead to Default Updated 1/3/13 Debt Limit Reached U.S. hits $16.4T debt limit; U.S. Treasury Secretary takes “extraordinary measures” to avoid default February 2013 March 2013 Congress Negotiates Congress debates how to reduce the national debt and whether to raise the debt ceiling Congress Passes American Taxpayer Relief Act Sequester delayed by two months; Congress postpones debt reduction deal and negotiations to raise the debt ceiling Possible Default on U.S. Debt Obligations Failure to reach a debt reduction deal or raise the debt ceiling could cause the U.S. to default on debt obligations, throwing financial markets into a tailspin Source: National Journal Research, 2012, “Analyst: Changes of U.S. Default Now 20%,” Damian Paletta, January 1, 2013, Wall Street Journal.

  33. Potential risks to ACP priorities • Result in budget “offsets” contrary to ACP policy and/or damaging to some members: • Repeal rule to increase Medicaid primary care payments • GME/IME payments • “Over-valued” procedures • Lower non-primary care conversion factor • Restrictions on in-office ancillary services • Cuts in discretionary dollars (workforce, AHRQ), reductions in ACA’s coverage subsidies

  34. ACP advocacy: • Opposes across-the-board sequestration • Identified ways to achieve hundreds of billions in savings in a responsible way (high value care, medical liability reform, payment/delivery system reforms, tax treatment of benefits) • Proposed plan to transition from SGR to better models aligned with value to patients

  35. Future of SGR and FFS • Policymakers across the spectrum want to get rid of the SGR (but can’t agree on how to pay for it) • And move away from “volume” to “value” • But FFS will be a component of value-based payments, even as FFS itself will change

  36. “New” approaches • ACOs • Episode-of-care bundles (new rule expected soon) • Risk-adjusted global capitation • PCMH and PCMH-N practices

  37. What is ACP doing to reform payment/delivery systems? It’s not just about new payment models—ACP advocacy has resulted in big wins for internists on improving Medicare and Medicaid fee-for-service

  38. New CMS rules: big wins for IM! • New CPT codes 99495-99496: Medicare will pay physicians for transitional care management services, the non-face-to-face time they and their clinical staff spend on patient cases. Until now, only the face-to-face reimbursed • National pay of $164-$231, depending on whether a patient is seen within 7 or 14 days of discharge, prior to geographic adjustment • Combined with other changes in the Medicare fee schedule, total 2013 gain for IM of 4-5% in total Medicare payments [FPs average gain higher only because mix of services different) • These gains are on top of ACA’s 10% Medicare primary care bonus (Average of $8000 more each year for qualified internists, 2011-15)

  39. New CMS rules: big wins for IM! • Medicaid pay parity rule, effective 2013-2014: increases payments for evaluation and management and vaccine services to no less than Medicare rates, paid fully by federal government • CMS agreed with ACP that increases should apply to both primary care internists and IM subspecialists • Applies to E&M codes 99201 through 99499 to the extent that those codes are covered by the approved Medicaid state plan or included in a managed care contract • Also, applies to services not covered by Medicare: New and Established Patient Preventive Medicine; Counseling Risk Factor Reduction and Behavior Change Intervention; and Consultations

  40. Medicare to Medicaid fee ratios, by state <.60 (8 states . 61 ‐.75 (14 states .76‐.85 (16 states and DC) .86‐1.00 (8 states) >1.00(3 states) How Much Will Medicaid Physician Fees for Primary Care Rise in 2013? Evidence from a 2012 Survey of Medicaid Physician Fees, Kaiser Family Foundation, December 2012 ORG

  41. ACP: “go to” resource for members to prepare for changes • Practical guides • Social media • Policy summaries • Advocate newsletter • Coming soon: timeline of pending changes (regulation, payment, MOC) and promotion of resources from ACP

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