Healthcare Reform’s Impact on Rural Communities

1. Healthcare Reform’s Impact on Rural Communities Brock Slabach, MPH, FACHE Sr. Vice-President of Member Services, NRHA

2. NRHA Mission The National Rural Health Association is a national membership organization with more than 21,000 members whose mission is to provide leadership on rural issues through advocacy, communications, education and research.

3. Improving the health of the 62 million who call rural America home. NRHA is non-profit and non-partisan.

5. Policy Institute • Capital Hilton, Washington, DC • January 23-26, 2011 • Speakers include: • Donald Berwick, MD, CMS Administrator • David Blumenthal, MD, ONC Director • Sens. Roberts, Enzi, Nelson, and Johans Register at www.ruralhealthweb.org/pi

6. 2011 Meetings • Annual Conference, May 3-6, 2011 • Austin, TX • Quality/Clinical Conf., July 20-22, 2011 • Rapid City, SD • RHC/CAH Conf., Sept. 27-30, 2011 • Kansas City, MO

7. NRHA’s Principles The Solution: • To resolve the health care crisis in rural America, the rural health care safety net must be prevented from crumbling. Four reforms are crucial: • The workforce shortage crisis must be abated; • Equity in reimbursement must occur; • Decaying rural health care infrastructure must be repaired and non-existent infrastructure must be created; and • Health disparities among vulnerable populations must be corrected.

8. Our Grassroots Effort • NRHA doesn’t have a PAC • Website: www.ruralhealthweb.org • Depends solely on grassroots advocacy • Members have access to: 1. Periodic Washington Updates (webinars): join-grassroots@lists.wisc.edu 3. Rural Health Blog http://blog.ruralhealthweb.org • Join NRHA today: www.ruralhealthweb.org

9. Will Congress Kill Healthcare Reform?

10. Let’s take a step back…how did we get here? • The cost of doing nothing: • By 2015, projected 60 million uninsured. • Middle-class households would suffer most without reform - - health costs projected nearly double in next decade • As cost to employers increase, 20% fewer firms will offer insurance to their employees by 2020. • For employees who still receive coverage from their employer, cost increases are expected to jump 79% by 2020. • These costs erode employee take home pay

11. How did we get here?

12. Legislation in Context • Strategically disruptive legislation on par with • Hill Burton Act in 1946 • Stimulated the growth and expansion of hospitals across the country • Medicare in 1964 and Medicaid in 1965 • Tax Equity and Fiscal Responsibility Act of 1982 • Introduced prospective reimbursement

13. But after Nov 2nd will health reform ever be realized? 1) “Repeal and Replace” • Expect much legislation in New Congress. • Not votes to pass - - and even if it did - - likely not 2/3 votes to override presidential veto. 2) Opt Out – Many states have “opt out” on ballot measure. • Preemption Clause of the Constitution prohibits a state from opting out of a constitutional law. 3) Declared unconstitutional by Supreme Court

14. Confusing Exit Polling • Fewer than 20% said healthcare reform was the main motivator for their vote. • 48% said they favored repeal. • 31% wanted the law to be expanded. • 16% said it should be left alone. • Total is 47% against repeal

15. Repeal and Replace? No More Likely… • Most Republicans acknowledged that a full repeal is impossible with a Democratic majority in the Senate and the likelihood of presidential vetoes. • Likely efforts to whittle away… • Mandate • Certain IRS filing requirements

16. Expect attempts to… • Withhold funding of health reform initiatives. Appropriations process important. 30% discretionary spending. • Pursue hearings and oversight investigations • Republicans have pledged to take several actions (e.g. call Sebelius and Berwick to regularly testify and cost estimates) • New Republican governors like to slow-walk implementation within state.

17. The election: I took a “ Shellacking” President Obama • House: Democrats lost 63 seats - - Not since 1948 has a party captured so many seats in one election. Republicans will control at least 240 seats. • Senate: Loss of 6 seats. Democrats retain majority, but far short of magic 60 seats. • Why does it matter?

18. The fall of our rural champions • House: 37 losses in House Rural Health Care Coalition • Senate: 10 losses in Senate Rural Caucus. • Nearly half of the House Blue Dogs lost on Nov. 2nd. • Means no seniority for moderates. • Polarized parties equals gridlock.

19. New rules of the House • House adopts a “cut-as-you-go” rule. Replaces “pay-go” which required offsets for both mandatory spending and tax cuts. Tax cuts no longer require a tax cut. • Freshman getting “A Committee” assignments. • CBO scores may not be as relevant. (Recent score stated repealing ACA would cost $230 over 10 years.)

20. Key House Committees • Ways and Means: Chairman, Dave Camp (R-MI) • Health Subcommittee: Wally Herger (R-CA) • Appropriations: Harold Rogers (R-KY) • New “cardinals” of House Appropriations committee will be announced Friday • Steve Crane new majority clerk for Labor-HHS subcommittee (Steve.Crane@mail.house.gov ) • Energy and Commerce: Chairman, Fred Upton (R-MI)

21. Key Senate Committees • Finance – Baucus (D-MT), Hatch (R-UT) • HELP – Harkin (D-IA), Enzi (R-WY) • Appropriations – Inouye (D-IA), Cochran (R-MS)

22. Bipartisanship in 112th? • Bipartisanship? • Senators Ron Wyden (D-OR) and Scott Brown (MA-R) support expanding state waivers in ACA that allow states to waive many of the requirements of ACA if they can show that they have met goals for covering a high percentage of the population. • The Wyden-Brown plan would move up the date for waiver requests from 2017 to 2014, when state or regional “exchange” markets are expected to open. • Under measure, state officials who got a waiver could avoid imposing controversial requirements that most people buy insurance and most companies offer it to their employees. • Early efforts by Bingaman

23. State Opt-Out Attempts • Arizona (55%-44%) and Oklahoma (65%-35%) approved opt-out measures of the individual mandate. • Colorado rejected similar proposal. (would have eliminated tax penalties for residents that failed to obtain coverage).

24. A Constitutional Battle • 10th Amendment – “powers not delegated to the United States by the Constitution…are reserved to the states respectively, or to the people.” • Article 1 – Commerce Clause, grants authority to regulate interstate commerce has been enshrined in court decisions since Justice Marshall. New Deal tested Commerce Clause. Broadly interpreted. • Likely to be decided by Supreme Court.

25. The Forces At Work: Budget Deficits

26. Deficits Do Matter

29. Rural Hospital Fact: Medicare’s payments to 50 bed or fewer hospitals represent less than two percent of overall Medicare budget.

30. Healthcare Critical to Rural Economy • Healthcare is the fastest growing segment of rural economy. • Each rural physician generates 23 jobs in the local rural economy • In most rural communities hospitals are the largest or second largest employer • Health care often represent up to 20 percent of a rural community's employment and income.

31. Healthcare Critical to Rural Economy • Every two jobs created (or lost) in rural health care will cause the number of jobs in other local businesses to increase (or decrease) by one job. • Bottom line: • Rural healthcare equals rural jobs

32. Healthcare Reform Healthcare Reform Background & Overview

33. PPACA (HCR): Two Goals • Better health insurance coverage that is more available and affordable • Reform the health care delivery and payment system to provide better care in a more cost-efficient manner

34. Getting from Here to There Here Fee-for-service Provider silos Fragmented care Data is an afterthought Defensive medicine There Outcome-based reimbursement Integrated provider networks Coordinated care Data is king Evidence-based medicine Source: Spencer Fane Britt and Brown LLP, Overland Park, KS

35. What is Health Reform? • Goal to have 95% of population insured • Medicaid expanded (16 million) • Requiring Insurance Coverage – mandate • Individuals (subsidies to low-income – up to 400% fpl) • Employers (small business will be exempted) • Create more choice -- state-based exchanges, administered by govt. agency or non-profit organization. • Insurance reforms • Cost Control • Fraud and Abuse • Electronic Medicine • Investment in Prevention • Cuts in Medicare Advantage, DME • Increase in Taxes • Two separate bills - - together referred as the “Affordable Care Act”

36. Many positives have kicked in • Insurance reforms. Sept. 23, 2010 key date. • High risk pools; $5 billion funded • Children with pre-existing conditions • Caps on coverage eliminated • Preventive care benefits • Covering children up to age 26 • $250 for seniors to help with donut hole.

37. Significant Expansion of National Health Service Corp Significant funding of Title VII and Title VIII Rural Physician Training Grants to medical colleges Graduate Medical Education Improvements Grants to Improve Primary Care Training Redistributes unused residency training slots to rural Establishes Health Care Workforce Commission Rural Positives:Workforce Improvements

38. Primary Care bonus payments. MedPAC study on Adequacy of Medicare Payments in Rural Areas. Expansion of 340B Drug Program Community Transformation Grants (evidence-based community preventive health activities. ) Ensures 101% reimbursement for CAHs under Optional Payment Method. Improvement in Community Pharmacy Reimbursement Medicaid Generic Drug Reimbursement (AMP Fix) Pharmacists exempted from DME Accreditation Rural Positives:Reimbursement Improvements

39. Rural Hospital Demonstration Program (5yr) Medicare - Work GPCI 1.0 Floor for Providers Outpatient Hold Harmless Physician Pathology Services Section 508 Hospital Payments Two percent bonus for rural ambulance trips 3 percent Add-on payment for home health services. Rural Postives:Medicare “Extenders” for Rural Providers

40. Extension of physician fee schedule mental health add-on. Continued moratorium on new specialty care hospitals. Independent Payment Advisory Board (IPAB) (Wakefield provision.) Other Issues in HCR:

41. Rural Impact of HCR • DSH reductions start one year earlier (2014) but $3 billion less. • National summit on geographic variation • 340B drug program only to outpatient. • $800 million more for rural doctors and hospitals. (more on next slide)

42. Rural Impact of HCR • 2010-2011 $400 million boost for rural GPCI • 2011-2012 $400 million boost to rural hospitals to address geographic disparities.

43. Other Provisions Impacting Rural Accountable care organizations State based exchanges Medical homes Value based purchasing CMS Center for Innovation

44. Legislative/Regulatory Priorities Going Forward • CAH Meaningful Use Adoption (flexibility, extension of timeline and improved access to capital) • 340B Improvements (orphan drug issue, expansion to inpatient, expansion to RHCs) • Make permanent the Low-Volume Hospital Payment Program • CAH Bed Flexibility • Resolve significant concerns with Direct Supervision requirements in 2011 Outpatient Rule • Reintroduce and expand HR 6346 to clarify provider taxes are allowable costs for CAHs and small hospitals.

45. Legislative/Regulatory Priorities Going Forward • Reinstate “Necessary Provider” for CAH status • RHC Payment Cap Increase • Improve Rural Workforce Development • Ensure Rural Access to Anesthesia Services • Eliminate CAH "Isolation Test" for Ambulance Reimbursement • Ensure Rural Representation on MedPAC and newly created similar Commissions (IPAB, HIT Policy Committee, etc.)

46. On the Watch List HPSA/MUA Committee MedPAC – Rural Report Workforce Commission Independent Payment Advisory Board (IPAB) $16 billion in savings over 10 years 15 member board within HHS Similar to MEDPAC Key difference…authority to implement rather than simply recommend to Congress HRSA Administrator – ex officio full time member Hospitals free from IPAB authority until 2020 Possible technical correction needed for CAHs

47. The 112th • Key: build relationships with new members of Congress. • Education Process Critical • Policy Institute • Contact District Offices. Let your voice be heard early • New Congress • Appropriations - - more important than ever • Legislation left out of health reform • Education on positive provisions

48. Where have we been? • Build/improve provisions in ACA • Protect efforts to repeal certain provisions or stall funding • Ensure that NRHA understands your concerns with legislation of the last Congress.

49. Importance of Non-partisanship… • NRHA fight focused on improving access to care in ACA. • Payments improvements • Workforce improvements • Rural disparities • What we need to build on…

50. The Rural Provider Challenge • Success differentiator: Those who have deployed HIT systems beyond Meaningful Use and leveraged these systems to control costs and improve quality (demonstrably) will survive the coming storm!