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The Patient Protection and Affordable Care Act. Medicare & Medicaid. THE MEDICARE NEWSGROUP . THE HEADLINES:. Health Care Economics Total Health Care Spending vs. Medicare and Medicaid ACA and Medicare Efficiencies Cuts Spending and Taxes ACA and Medicaid Access Funding

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slide1

The Patient Protection and Affordable Care Act

Medicare & Medicaid

THE MEDICARE NEWSGROUP

the headlines
THE HEADLINES:

Health Care Economics

  • Total Health Care Spending vs. Medicare and Medicaid

ACA and Medicare

  • Efficiencies
  • Cuts
  • Spending and Taxes

ACA and Medicaid

  • Access
  • Funding
  • Supreme Court decision, uncertainty
2 7 trillion and growing 1

Health Care Spending in 2011

$2.7 TRILLION AND GROWING1

2011:

  • The growth rate was 3.9%, the same rate observed in 20101
  • Federal spending outside of health care was $2.61 trillion

Future:

  • Health care spending will grow 4.2% in 2012, 3.8% in 2013, and 7.4% in 20141
557 8 billion spent on 47 6 million 1

Medicare Spending in 2011

$557.8 BILLION SPENT ON 47.6 MILLION1

2011:

  • The growth rate was 6.3% an increase from 5.0% in 20101
  • Medicare accounted for 16% of federal spending3

Future:

  • In 2012 Medicare spending is expected to grow 5.9%1
  • In ‬2013 spending could slow to 1.3% or grow at 5.0%1
  • It is projected that from 2014-2021 Medicare spending growth will average 6.7% per year1
428 7 billion spent on 55 4 million 1

Medicaid Spending in 2011

$428.7 BILLION SPENT ON 55.4 MILLION1

2011:

  • Medicaid spending is estimated to have grown by 6.8% in 2011,  down from 7.2% growth in 20101
  • Medicaid accounted for 8% of total federal spending3

Future:

  • Medicaid spending is projected to accelerate to 7.0% by 2012 and 20131
  • Medicaid spending is projected to grow by 18% by 20141
the aca medicare and medicaid

THE ACA, MEDICARE AND MEDICAID

REFORMS UNDER THE NEW HEALTH CARE LAW

efficiency and cuts

ACA and Medicare

EFFICIENCY AND CUTS

Efficiency

  • Preventive health care, drug benefits
  • Accountable Care Organizations
  • New government entities

Cuts

  • Payment cuts to hospitals and insurers

Spending and Taxes

    • Medicare spending
  • Taxes
controversial expansion

ACA and Medicaid

CONTROVERSIAL EXPANSION

Medicaid Expansion

  • Access
  • Funding
  • Supreme Court decision, uncertainty
preventative services

ACA and Medicare

PREVENTATIVE SERVICES

Free screenings for breast cancer, cervical cancer, prostate cancer and diabetes4

From January 1 to July 1, 2011, 51.5% of beneficiaries with Original Medicare received one or more free preventive services5

prescription drug plans part d

ACA and Medicare

PRESCRIPTION DRUG PLANS (PART D)

Rebate Check

  • When beneficiaries reached the coverage gap, or “donut hole,” they received a $250 rebate check.6

50% Discount on brand-name drugs

- Requires manufacturers to provide 50% discounts on brand-name drugs for people in the donut hole.6

Savings

  • As of March 19, 2012, 5.1 million beneficiaries had received a rebate check6
  • The average savings for an individual was $6356
hospital spending

ACA and Medicare

HOSPITAL SPENDING

‪The Affordable Care Act includes up to $716 billion in Medicare spending cuts between 2013 and 2022.‬‪ Of that, 34.8% comes from reductions in hospital reimbursement rates8‬

medicare advantage

ACA and Medicare

MEDICARE ADVANTAGE

Cuts to Medicare Advantage reimbursements to private insurers account for 30.2% of the $716 billion in Medicare spending reductions8

closing the payment gap

ACA and Medicare

CLOSING THE PAYMENT GAP

Of the 47 million Medicare beneficiaries, about 25% are in Medicare Advantage Plans (Part C)9

  • Part C plans receive more money per participant from the federal government than is spent on the average beneficiary under Traditional Medicare.9
  • The ACA aims to close this gap by reducing the extra payments over the next several years, starting in 2012.9
payment reduction impact

ACA and Medicare

PAYMENT REDUCTION IMPACT

The 2012 Medicare Trustees Report predicts that enrollment in Part C plans will peak at 27 percent in 2012 and then, as new ACA-mandated payment rates are phased in, will decline to about 17 percent by 2020.10

According to the report, more seniors will opt for Traditional Medicare because Part C plans will offer less attractive benefit packages.10

Some of the extra benefits that Part C provides may be eliminated, or insurers may stop doing business in certain counties.10

care coordination

ACA and Medicare

CARE COORDINATION

An Accountable Care Organization is a network of doctors and hospitals that share responsibility for providing care to patients‬

The ranks of the 259 ACOs covering 4 million patients include:12

  • 192 ACOs: participate in the Medicare Shared Savings Program12
  • 32 ACOs: participate in the Pioneer Model13
  • 35 ACOs: participate in the Advanced Payment Model14
slide17

ACA and Medicare

32 Pioneer Model ACOs16

STATES INCLUDE:

Arizona California Colorado Florida Illinois

Iowa Indiana Maine Massachusetts Minnesota

Michigan New Hampshire New York Nevada New Mexico

Pennsylvania San Diego Vermont Wisconsin Texas

35 advanced payment model acos 17

ACA and Medicare

35 Advanced Payment Model ACOs17

STATES INCLUDE:

California Florida Kentucky Mississippi

Massachusetts Texas Maryland Arkansas

New Hampshire Rhode Island Connecticut Tennessee

Missouri Ohio Nebraska North Carolina

aca links quality and payment 18

ACA and Medicare

ACA LINKS QUALITY AND PAYMENT18
  • New Center for Medicare and Medicaid Innovations (2011)
  • Shared Savings/Accountable Care Organizations (2012)
  • Reduces payments for preventable hospitalizations (2012)
  • Independence at Home demonstration project with shared savings (2012)
  • Value-based purchasing for hospitals (2012)
  • National pilot to bundle payments for hospital and post-acute care (2013)
  • Reduce payments for hospital-acquired conditions (2015)
  • Mandatory physician quality reporting (2015)
entities created by the aca

ACA and Medicare

ENTITIES CREATED BY THE ACA

Independent Payment Advisory Board (IPAB)

Patient-Centered Outcomes Research Institute (PCORI)

Center for Medicare & Medicaid Innovation

Federal Coordinated Healthcare Office

checks on growth

ACA and Medicare

CHECKS ON GROWTH

Independent Payment Advisory Board19

  • The mission is to recommend ways to reduce the growth in Medicare spending, if Medicare spending growth exceeds target rates.19
  • IPAB is comprised of 15 members, appointed by the president and confirmed by the Senate, and its savings recommendations will be sent to Congress for approval.19
  • IPAB is not subject to judicial or administrative review.19
  • Funding was $15 million for FY2012 from the Medicare Trust Funds.19
with checks on power

ACA and Medicare

WITH CHECKS ON POWER

Limitations to Recommendations:19

  • Cannot reduce beneficiary benefits.19
  • Cannot modify Medicare beneficiary premiums, cost-sharing or eligibility requirements, or other changes that would result in health care rationing19
  • Cannot recommend any increase in taxes19
  • Cannot make changes that would reduce payments to certain providers before 202019
patients first

ACA and Medicare

PATIENTS FIRST

Patient-Centered Outcomes Research Institute -

  • The PCORI is authorized by Congress to give out grants to conduct evidence-based research to help patients and their health care providers make more informed decisions about care.20
  • Funding for PCORI’s research derives from taxes in the ACA. Its budget through 2012 totals $210 million, and is expected to reach $500 million by 201420
innovative solutions

ACA and Medicare

INNOVATIVE SOLUTIONS

Center for Medicare & Medicaid Innovationidentifies, develops, supports and evaluates:21

  • Innovative payment and service delivery models
  • Programs that reduce expenditures
  • Programs that preserve or enhance the quality of care for those who receive Medicare, Medicaid or CHIP benefits

Under the ACA, the Innovation Center may be allocated $10 billion every decade21

duals coordination

ACA and Medicare

DUALS COORDINATION

The Federal Coordinated Health Care Office, which is under the auspices of the CMS, is charged with:22

  • Integrating benefits between Medicare and Medicaid
  • Improving coordination between state and federal governments
  • Addressing cost shifting between the two programs
  • Developing new strategies to improve care coordination and cost effectiveness
  • Eliminating regulatory conflicts between rules under the Medicare and Medicaid programs
trimming spending

ACA and Medicare

TRIMMING SPENDING

The Medicare provisions of the health care reform law are estimated to experience a net reduction of $428 billion in spending between 2010 and 2019, taking into account $533 billion in Medicare savings and $105 billion in new Medicare spending.23

medicare tax changes 9

ACA and Medicare

MEDICARE TAX CHANGES9

Increases to the Medicare Hospital Insurance (Part A) tax rate on wages from 1.4% to 2.3% on earnings over $200,000 for individual taxpayers and $250,000 for couples filing jointly24

A 3.8% Medicare contribution tax on net investment income for higher-income taxpayers25

Elimination of the Medicare Prescription Drug Plans (Part D) subsidy tax deduction for employers that provide retiree prescription drug coverage.26

projected revenue

ACA and Medicare

PROJECTED REVENUE

Revenue collected through 201927

  • $87 billion through a higher Medicare payroll tax
  • $27 billion by imposing an annual fee on brand-name prescription drugs by pharmaceutical manufacturers and importers
  • $5 billion by eliminating the tax deduction for employers who receive Medicare Prescription Drug Plans (Part D) retiree drug subsidy payments, beginning in 2013
coverage for the poor

ACA and Medicaid

COVERAGE FOR THE POOR

Intent of the Law:9

  • Expand health care for the poor
  • Would have added 24 million beneficiaries to Medicaid
  • Program now covers 60 million recipients (30 million children, 15 million adults, 8 million people with disabilities)
  • Expansion would have covered 16 million uninsured people
everyone plays now

ACA and Medicaid

EVERYONE PLAYS NOW

Funding for Medicaid comes from both federal and state governments. State participation in Medicaid is optional, but all 50 states have opted to join.9

The Medicaid expansion would see:

State spending increase by $76 billion over 2013-2022 (an increase of less than 3%)

Federal spending would increase by $952 billion (a 26% increase).28

expansion timeframe

ACA and Medicaid

EXPANSION TIMEFRAME

Starting in 2014: States that opt into this provision will make their residents under age 65 Medicaid-eligible if they have incomes at or below 133% of the federal poverty level ($14,484 for an individual, or $29,726 for a family of four).28

2014-2016: For the first three years of the policy, the federal government will pay 100% of the costs of the expansion, and in subsequent years, it will gradually lower its share to 90% of costs.28

controversy strikes

ACA and Medicaid

CONTROVERSY STRIKES

Supreme Court Case:

National Federation of Independent Business v. Sebelius35

Result:

On June 28, 2012, the Supreme Court upheld the ACA,

but set limits on the Medicaid expansion provision.35

Eligibility goes into effect on January 1, 2014, but

states can choose whether they want to participate in

the expansion of coverage.35

slide35

WHICH STATES ARE PARTICIPATING?30

14 STATES AND THE DISTRICT OF COLUMBIA ARE PARTICIPATING: Arkansas, California, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Nevada, Rhode Island, Vermont, Washington

slide36

WHICH STATES ARE LEANING TOWARD PARTICIPATING?30

5 STATES LEANING TOWARDS PARTICIPATION:

Colorado, Kentucky, New Hampshire, New York, Oregon

slide37

WHICH STATES ARE NOT PARTICIPATING?30

9 STATES ARE NOT PARTICIPATING:

Alabama, Georgia, Louisiana, Maine, Mississippi, South Carolina, South Dakota, Oklahoma, Texas

slide38

WHICH STATES ARE LEANING TOWARD NOT PARTICIPATING?30

5 STATES ARE LEANING TOWARDS NOT PARTICIPATING:

Iowa, Nebraska, New Jersey, Virginia, Wyoming

slide39

WHICH STATES ARE UNDECIDED?30

17 STATES ARE UNDECIDED:

Alaska, Arizona, Florida, Idaho, Indiana, Kansas, Michigan, Montana, Ohio, New Mexico, North Carolina, North Dakota, Pennsylvania, Tennessee, Utah, West Virginia, Wisconsin

storylines it s all about the money

Summarizing ACA

STORYLINES: IT’S ALL ABOUT THE MONEY
  • Medicare has a revenue problem
  • So does Medicaid, from some states’ perspective
  • At some point there will not be enough money to sustain the Medicare program
  • State officials are leery that more and more of their budgets will fund health care at the expense of other programs
storylines reform is about the money

Summarizing ACA

STORYLINES: REFORM IS ABOUT THE MONEY

There are currently two schools of thought:

  • Refocus the health care delivery system around value over volume (pay for performance) 
  • Restructure the program in more basic and fundamental ways (eligibility age increase, premium support, means testing)
storylines follow the money

Summarizing ACA

STORYLINES: FOLLOW THE MONEY

Look at the reform proposals from the view of each stakeholder operating in the Medicare space:

  • How much have they already given in the name of reform?
  • Who profits and who loses? 
  • Who will be squeezed? 
  • Where and how can money be made? 
  • Where can saving be found? 
storylines compare constrast bottom lines

Summarizing ACA

STORYLINES: COMPARE, CONSTRAST BOTTOM LINES

The financial bottom line versus the quality health bottom line:

  • Can you have both, without either suffering terribly?
  • Who has to give in order to get?
  • Who might get hurt? 
  • And is that hurt real or perceived? 
reference list
REFERENCE LIST
  • http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdf
  • https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/tables.pdf
  • http://facts.kff.org/chart.aspx?cb=58&sctn=169&ch=1793
  • http://www.uspreventiveservicestaskforce.org/uspstf/uspsabrecs.htm
  • http://www.hhs.gov/news/press/2011pres/08/20110804a.html
  • http://healthreform.kff.org/Document-Finder/HHS/HHS-Report-on-the-Medicare-Prescription-Drug-Rebate-Program.aspx
  • http://www.healthcare.gov/compare/partnership-for-patients/about/index.html
  • http://www.washingtonpost.com/blogs/wonkblog/wp/2012/08/14/romneys-right-obamacare-cuts-medicare-by-716-billion-heres-how/
  • http://www.kff.org/healthreform/upload/7948-02.pdf
  • http://www.cbo.gov/sites/default/files/cbofiles/attachments/43471-hr6079.pdf
  • http://innovations.cms.gov/Files/x/Pioneer-ACO-Model-Press-Release-12-19-2011.pdf
  • https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/index.html?redirect=/sharedsavingsprogram/
  • http://innovations.cms.gov/initiatives/ACO/Pioneer/index.html
  • http://innovations.cms.gov/initiatives/aco/advance-payment/index.html
  • http://www.hhs.gov/news/press/2013pres/01/20130110a.html
reference list1
REFERENCE LIST
  • http://innovations.cms.gov/initiatives/ACO/Pioneer/index.html
  • http://innovations.cms.gov/initiatives/aco/advance-payment/index.html
  • ‪http://healthreform.kff.org/timeline.aspx
  • http://www.kff.org/medicare/upload/8150.pdf
  • http://www.pcori.org/about/
  • http://www.innovations.cms.gov/About/index.html
  • http://www.healthcare.gov/law/full/
  • http://www.kff.org/healthreform/upload/7948-02.pdf
  • http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Questions-and-Answers-for-the-Additional-Medicare-Tax
  • https://www.fidelity.com/viewpoints/personal-finance/new-medicare-taxes
  • http://www.deloitte.com/view/en_US/us/Services/audit-enterprise-risk-services/Financial-Statement-Internal-Control-Audit/Accounting-Standards-Communications/b9500b1044c97210VgnVCM100000ba42f00aRCRD.htm
  • http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/downloads/PPACA_2010-04-22.pdf
  • http://www.kff.org/healthreform/upload/8288.pdf
  • http://www.kff.org/healthreform/upload/8348.pdf
  • http://www.advisory.com/Daily-Briefing/2012/11/09/MedicaidMap#lightbox/1/
  • http://www.nasbo.org/sites/default/files/Summary%20-%20State%20Expenditure%20Report_0.pdf