Health Care Reform: What We Know CEN-PANPHA April 27, 2010

1. Health Care Reform: What We KnowCEN-PANPHAApril 27, 2010 Marsha R. Greenfield, VP Legislative Affairs AAHSA mgreenfield@aahsa.org www.aahsa.org

2. It’s A History-Making Time [Some historians hold that history] is just one dam_ed thing after another Arnold Toynbee

3. Washington • Where were we one year ago? • New Administration • Democratic Congress • Filibuster proof Senate • Stimulus Package • TARP • Health Care Reform Agenda • Supreme Court nomination

4. Washington • Where are we now? • Health Care Reform • Passed, but only just beginning • State of Congress • What’s on Agenda & What Can Get Done? • Jobs • Energy • Financial Services • Supreme Court Nomination • November Elections

5. Atmosphere: Toxic • As tense as it can be • Lack of agreement between R’s and D’s and between House and Senate D’s • Senate lost its super majority with Massachusetts Senate election • Senate, especially, has lost its manners • American people have lost their patience

6. This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer.  ~Will Rogers

9. Patient Protection and Affordable Care Act (aka Health Care Reform) • An elephant put together by 5 Congressional Committees • Patient Protection and Affordable Care Act signed into law- March 23, 2010 • Health Care and Education Reconciliation Act in the Senate- March 25, 2010 • Two Acts must be read together to get the whole picture • AAHSA health reform hub: www.aahsa.org

10. Aging Services and Health Reform • General focus: acute care • Uninsured/access − Delivery system • Cost− Quality • AAHSA’s focus: show that aging services integral to system • LTSS financing: CLASS Act • HCBS expansion: Community First Choice, etc. • Nursing homes: limiting damage (transparency, elder justice, potential payment changes); • Home health: Independence at Home; Medicare • Systems integration: at least in the definition…

11. Health Care Reform:Vehicle for LTC Objectives • Preservation of SNF Medicare 2010 and 2011 market basket updates • Extension of Medicare therapy caps exceptions process through 2010 • Reform of long-term care financing (CLASS) • Nursing Home Transparency Act • GAO study/report on five-star rating system • Elder Justice Act

12. Vehicle for LTC, cont’d. • Medicare Advisory Board to be established; would recommend Medicare cost growth reductions for Congress • Demo projects on culture change and application of technology in nursing homes • Expansion of Medicaid coverage of HCBS • Closing of prescription drug doughnut hole • Increased funding for nurse training and geriatric training for health professionals

13. Themes for Care ProvidersIn Health Reform • Transitions and care coordination, including care management • Home and Community Based Services • Need for effective partnerships, including those to avoid rehospitalization • Payment and quality will be linked • Transparency in infrastructure • Disclosure

14. Many Opportunities for Members • 5 pilot projects and 30 demonstrations • Independence at Home • Accountable Care Organizations • Transitional care, reduction of hospital re-admissions • Bundled payments • Patient-centered Medical Homes • Patient Navigator program • Culture change in NHs • Use of technology to improve care in NHs

15. Community Living Assistance and Support (CLASS) Act • National insurance trust • Funded by premiums, through payroll deductions • No underwriting for pre-existing conditions • Individuals can choose the services that they need • Employees automatically enrolled if employer participates, but can opt out • HHS Infrastructure to ensure consumer-friendly, actuarially sound

16. CLASS, Cont’d Impact at all levels of services New source of private financing Emphasis on personal services in the home, assistive technology, transportation, etc. Opportunities for new businesses and employment, education and training of workers, families, individuals Keys to success Final program must be affordable and attractive Mass marketing effort Continued collaboration between aging, disability communities

17. Improved Coordination of Services • 1115 waiver to improve coordination of dual eligible beneficiaries • Establishment of the Federal Coordinated Health Care Office • MACPAC new responsibilities to examine provider payments, barriers to LTSS, coordinate with MEDPAC • Traditional MEDPAC (must now consult with each other on related issues; MEDPAC new responsibilities to review Medicaid trends) • IPAC: will develop detailed proposals to reduce per capita growth rate in Medicare spending.

18. Major Focus on HCBS • Incentives for States to offer HCBS as a LTC option to Nursing Homes • States with less than 50% Medicaid spending for HCBS will receive enhanced federal funding • Must increase HCBS spending and institute changes that promote HCBS in order to receive enhanced funding • Expand Aging and Disability Resource Centers

19. Medicaid/Medicare Payment Changes • Increase in number of individuals eligible for Medicaid; feds p/u early costs • Increase in Federal Medical Assistance Percentage based on current eligibility criteria • Study/demo re: home health costs • Make budget-neutral revisions to hospice payments; demo re: hospice services • Develop plan to recalculate hospital wage index

20. Nursing Home Payments • Market basket secure for FY 2011, 2012 • Productivity Adjustment begins FY 2013 • RUGS IV • Partially implemented 10/1/1 • All associations working to ensure timely implem. • No opposition • Implement value-based purchasing

21. Home Health Payments • 2.2% market basket increase • 1% reduction in market basket each year from 2011 to 2013 • Rebasing over 4 years starting 2014 • 3% rural HH payment add on • Study on impact of cuts • Development of value-based purchasing

22. Value-Based Purchasing • In consultation with affected parties, Secretary must develop a plan for value-based purchasing program for SNFs and HHAs by 2011 • SNF model will presumably be based on demo data being collected now • To extend feasible and practicable, measures will include all dimensions of quality and efficiency • An entity under contract to HHS will endorse measures

23. Value-Based Purchasing, cont’d. • Non-endorsed measures may be used as long as due consideration is given to measures that have been endorsed • Secretary will also consider reporting, collection, and validation of quality data, and public disclosure of the information

24. Hospice Payments • .3% reduction in market basket in 2013. Reduce market basket by 1% for 7 years starting in 2013 • Additional data collection requirements • Hospice Concurrent Care demo • Quality Reporting for Hospice • Eligibility – recertification requires face-to-face meeting by physician or nurse practitioner

25. Programs of All-inclusive Care for the Elderly and Special Needs Plans • PACE carve out from Medicare Advantage Cuts • Extends SNPs through 2013 and allows frailty factor to continue • Allows demo in CCRCs to continue

26. Workforce • Future Workforce development • Establishes National Health Care Workforce Commission to look at current supply/demand; make recommendations to Congress and Administration about workforce priorities, goals, policies • Grants to states on workforce planning • Increase loan amounts for nursing students • Expand loan forgiveness programs • 3-year training program funded for direct care workers- LTSS • Funds Geriatric Education Centers • Increases authorized funding levels for Family Caregiver Support

27. Quality Improvement • Focus on development and regular review of quality measures, including those for hospitals and physicians • Establish framework for public reporting of measures and make data available to the public

28. Development of New Patient Care Models • Testing innovative payment/service models to enhance quality and reduce expenditures • Shared savings program to promote accountability, coordinate Medicare parts A and B • Invest in infrastructure • Includes pilot on integrated care, hospital readmissions reduction, Community-Based Care Transitions Program

29. Transparency and Compliance • On request of Secretary, HHS Inspector General, the states, or LTC ombudsman, SNF/NF must provide description of facility’s governing body and organizational structure, as well as information regarding additional disclosable parties • SNF/NF must operate a compliance and ethics program effective in preventing/detecting criminal, civil, and administrative violations • Secretary must establish and implement a QA and performance improvement programs for SNFs/NFs, including chains

30. Transparency, cont’d. • Nursing Home Compare to include staffing data, links to state S/C websites; model standardized complaint form (to be developed by HHS); summary of substantiated complaints; and number of adjudicated instances of criminal violations by a facility or employees • States must establish complaint resolution process • SNFs must report separately on expenditures for wages and benefits at all nursing levels, plus medical and therapy staff (AAHSA priority)

31. Transparency, cont’d. • Secretary must develop program for facilities to report direct care staffing information on payroll and other verifiable and auditable data in uniform format • Comptroller General must study and report to Congress on 5-star rating system

32. Nursing Home Enforcement • CMPs may be reduced by 50% for NHs that self-report and correct deficiencies; no new penalties • Secretary to develop regulations re: post-penalty dispute resolution and escrow account for CMPs • Demonstration required for oversight of chains • Must have 60 day advance notice of NH closure to residents or representatives, including relocation plan • Pre-employment and on-going training required for CNAs re: dementia management and abuse prevention • Secretary must develop nationwide program for state and national criminal background checks for all NH employees with direct patient contact (implem. current demo)

33. Elder Justice provisions • Grants to be made for prevention of elder abuse, neglect and exploitation • Include grants to protect individuals seeking LTC • Provide incentives for individuals to work in LTC facilities • Facility owners/operators/certain employees to report suspected crimes • Repeats notice requirements for facility closure • Establishes Elder Justice Coordinating Council

34. Waste/Fraud & Abuse:General Provisions • Requires CMS to develop screenings of health care providers • Providers must return overpayments within 60 days of the date of payment or by the date that a corresponding cost report was due, whichever is later • Greater scrutiny of home health • Expands Recovery Audit contractor program to state Medicaid programs

35. Medical Malpractice Reform • Sense of the Senate • Health reform presents an opportunity to address issues related to medical malpractice and medical liability insurance • States should be encouraged to develop and test alternative models to the existing civil litigation system; • Congress should consider state demonstration projects to evaluate such alternatives

36. Employer Provisions Maintains current system – most individuals obtain health insurance through employers Most significant employer/individual obligations do not begin until 2014 Goal: encourage employers who provide insurance now to continue to do so Encourages employers w/ 50+ FTE to offer coverage Opportunity for smaller employers to provide insurance through state Exchanges

37. Key Dates 2010 Small Employer Tax Credit 25 or fewer FTE w/ avgann wages $50K or less Sliding-scale tax credit up to 25% for NFP Subsidy for employers who provide insurance to retirees (2010-2014) $1B appropriated 80% subsidized for claims between $15K & $90K

38. Key Dates 2011 Coverage extended to children up to 26 y.o. No lifetime limit on “essential health benefits” No pre-existing condition exclusions <19 No rescission unless fraud or material misstatement OTC not reimbursed by FSA, HSA, HRA (exc. insulin) No cost-sharing for preventable care (new plans) Employer disclose aggregate cost of coverage No discrimination based on salary or wages Plans must have appeals processes

39. Key Dates 2012 Final regulations for CLASS 2013 FSA limited to $2500 Plans must provide uniform explanation of coverage in simple understandable terms

40. Key Dates 2014 State health insurance exchanges in place Individuals w/o access to employer insurance, and employers w/100 or fewer employees eligible (states can limit to 50 FTE during first 2 years) Simple cafeteria plan for small employers Plans must cover “essential health benefits” Employees w/ access to employer-based insurance but who pay more than 40% of total benefit costs and more than 9.5% of income eligible; if family income <440% of FPL, eligible for subsidy

41. Key Dates 2014 Large employer (50+ FTE) who does not provide health insurance Employees eligible for exchange If any employee receives a subsidy, the employer must pay a monthly fee/penalty of $166.67 ($2000/yr) for each FTE (first 30 FTE not counted) New plans prohibited from discrimination based on pre-existing conditions

42. Key Dates 2014 Employers w/ 50+ FTE who provide health coverage New plans: employers must pay 60% total cost “Free rider penalty” for new & current plans if less than 60% subsidy and employee whose share of premium exceeds 9.5% of household income (400% of FPL), opts out and goes into exchange and is subsidized: employer pays $250/mo per FTE receiving subsidy Free choice voucher: Must provide voucher equivalent to maximum employer would have paid for certain exchange-eligible employees (employee not eligible for subsidy)

43. Key Dates 2018 Excise tax on “Cadillac” plans in effect 40% tax on amount of benefit over $10,200 for individuals and $27,500 for families indexed for inflation Stand-alone dental and vision excluded Employer contributions to HSA included Tax imposed on group insurance issuer

44. Next Steps in Health Reform • Will need another bill to correct the mistakes – inevitable in complex legislation • When will health reform “start”? Regulations must be developed • Implementation dates range from early 2011 to 2018 • Getting the team in place: • CMS director finally nominated • Role of White House?

45. Obama Fiscal Commission • Bi-partisan commission to look at cutting expenses, raising revenues • Everything on the table, including entitlements: Medicare, Medicaid • Social Security excluded by a vote of 97-0 in the Senate

46. Some Things to Do • Employer of choice • Incorporate upcoming employer/individual responsibilities into long-term planning • Please visit with your benefits counselor soon! • Provider of choice • Consider applying for demonstrations and pilots as they become available • Consider joining with other NFP community groups to take advantage of integrated demos, etc.

47. More Things to Do • Review corporate compliance plans for all levels of care • Nursing home plans now required, based on guidance issued previously for voluntary compliance plans • Make sure policies are clear, including admission, transfer and discharge • Make sure plans are being implemented. No sitting on the shelf, gathering dust! • Check coming developments for compliance requirements

48. Things to Think About • How to position the field for growth; how will consumers want to be served • What partnerships are possible between providers of senior services • How we become a resource to community agencies • How we harness the advocacy energy of our residents and other consumers for good

49. Other Things to Think About • How do we involve residents in CCRC community decisions? • Increasing risk of tax exemption issues • Social Accountability: we have to do the math • Fair Housing: What about that guy next door with the home health aide? • When we have challenging times like this, how do we keep going?

50. The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails. William Arthur Ward