HEALTHCARE REFORM – A LOOK INTO THE CRYSTAL BALL Steve Markesich, CPAM Yale-New Haven Health System Philadelphia/Keystone Chapters September 21, 2010
The Evolution of PPACA • The uninsured and under insured • Richard Scruggs • State battlegrounds – Provena Healthcare • 2008 • The bruising 2009 legislative process • Victory?
TODAY’S OUTLINE • The law itself and implementation schedule • Impact on individuals, employers, providers and states • Reaction from the states • The looming constitutionality question • 2010 elections • Some anecdotal fun • Informational Resources
Anecdote # 1: TRUE OR FALSE: Legislation can become law without a vote being taken?
The “Deem” Team “Self-executing rules” exist in Congress under which something can be “deemed” into law. Speaker Pelosi indicated last winter that she actually favored a “deem and pass” legislative maneuver which would allow the House to pass the Senate’s bill without actually having to vote on it.
Reform Implementation Schedule • Insurance
2010 • Establish temporary high risk pool to provide health coverage to individuals with pre-existing conditions (effective 90 days following enactment until 1/1/2014. • Provide dependant coverage for adult children up to age 26 for all individual and EGHPs (9/23). • Prohibit plans from placing lifetime limits on dollar value of coverage prior to 2014. Plans may only impose limits on coverage as determined by the HHS Secretary. Prohibits insurers from rescinding coverage except in cases of fraud. Prohibits pre-existing exclusions for children.
2010 ins. reforms (cont) • Requires qualified health plans to provide minimum coverage without cost sharing for preventive services rated A or B by the U.S Preventive Services Task Force (essential outpatient, inpatient, emergency, maternity, neonatal, mental health, lab), recommended immunizations, preventive care for infants, children and adolescents, additional preventive care and screenings for women, and some prescription drugs. • Provide tax credits to small employers (no more than 25 employees with average annual wages of less than $50K) that provide EGHPs.
2010 ins. reforms (cont.) • Create a temporary reinsurance program for employers providing EGHPs to retirees over age 55 who are not eligible for Medicare (effective 90 days following enactment until 1/1/2014) – more on this later • Require health plans to report the proportion of premium dollars on clinical services, quality and other costs. Provide rebates to consumers for the amount spent that is less than 85% for plans in large group market and 80% for individual and small group market.
2010 ins. reforms (cont) • Establish a process for reviewing increases in health plan premiums - Require plans to justify increases. • Require states to report on trends in premium increases and recommend whether certain plans should be excluded from the Exchange based on unjustified premium increases.
2013 • Create a CO-OP program to foster the creation of non-profit, member-run health insurance companies in all 50 states and DC to offer qualified health plans. • Appropriate $6B to finance the program and award loans and grants to establish Co-Ops by 7/1/13
2013 Ins. Reforms, (cont.) • Simplify health insurance administration by adopting a single set of operating rules for eligibility verification and claim status (rules adopted 7/1/11; effective 7/1/13), electronic funds transfers and health care payment and remittance (rules adopted 7/1/12 effective 7/1/14), and health care or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, and referral certification and authorization (rules adopted 7/1/14 – effective 7/1/16) • Health plans must document compliance with these standards or face penalties of no more than $1 per covered life (effective 1/1/14)
2014 • Create state-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges, administered by a governmental agency or non-profit organization, through which individuals and small businesses with up to 100 employees can purchased qualified coverage. • Reduce out-of-pocket limits to those with incomes up to 400% FPL to the following limits
2014 Ins. Reforms, (cont.) • Limit deductibles for health plans in the small group market to $2,000 for individuals and $4,000 for families unless contributions are offered that offset deductible amounts above these limits. • Limit any waiting period for coverage to 90 days. • Create an essential health benefits package that provides a comprehensive set of services, covers at least 60% of the covered benefit, limits annual cost-sharing to the current law HSA limits ($5,950 per ind./$11,900 per family in 2010) and is not more extensive than the typical employer plan.
2014 Ins. Reforms (cont.) • Require the Office of Personnel Management to contract with insurers to offer at least 2 multi-state plans in each Exchange. At least 1 plan must be offered by a non-profit entity and at least 1 plan must not provide coverage for abortions beyond those permitted by federal law. • Permit states the option to create a Basic Health Plan for uninsured individuals with incomes between 133-200% FPL who would otherwise be eligible to receive premium subsidies in the Exchange.
2014 Ins. Reforms, (cont.) • Allow states the option of merging individual and small group markets. • Create a temporary reinsurance program to collect payments from health insurers in the individual and group markets to provide payments to plans in the individual market that cover high-risk individuals. • Require qualified health plans to meet new operating standards and reporting requirements.
2015 and beyond • Permit states to form health care choice compacts and allow insurers to sell policies in any state participating in the compact. Compacts may not take effect before 1/1/16.
Reform Implementation Schedule • Medicare
2010 • Provide a $250 rebate to beneficiaries who reach Part D gap (doughnut hole) and gradually eliminate the Part D coverage gap by 2020. • Expand coverage to individuals who have been exposed to environmental health hazards from living in an area subject to an emergency declaration as of 6/17/09 and have developed certain health conditions as a result. • Improve care coordination for dual eligibles by creating a new office within CMS – the Federal Coordinated Health Care Office
2010 M/C reforms (cont.) • Reduce annual market basket updates for inpatient hospital, home health, SNF, hospice and other Medicare providers, and adjust for productivity. • Ban new physician-owned hospitals, requiring hospitals to have a provider agreement in effect by December 31. • Limit the growth of certain grandfathered physician-owned hospitals
2011 Reforms - Medicare • Require drug manufacturers to provide a 50% discount on brand-name prescriptions and begin phasing in federal subsidies for generic prescriptions filled in the MCR Part D coverage gap. • Provide a 10% bonus payment to PCPs and to general surgeons practicing in health professional shortage areas (effective 2011-2015). • Restructure payments to Medicare Advantage plans by settling payments to different percentages of MCR fee-for-service rates. • Reduce annual market basket updates for Medicare providers
2011 Medicare Reforms, (cont.) • Provide Medicare payments to qualifying hospitals in counties with the lowest quartile Medicare spending for 2011 and 2012. • Freeze income thresholds for income-related MCR Pt B premiums for 2011 through 2019 at 2010 levels and reduce the Part D premium subsidy for those with incomes above $85K/individual and $170K/couple. • Create an Innovation Center within CMS
2012 • Reduce Medicare payments that would otherwise be made to hospitals by specified percentages to account for excess (preventable) hospital readmissions • Create a Medicare Independence at Home demonstration program • Establish a hospital value-based purchasing program in Medicare and develop plans to implement value-based purchasing programs for SNFs, HHAs and ambulatory surgical centers. • Provide bonus payments to high-quality Medicare Advantage plans • Reduce rebates for Medicare Advantage Plans
2013 • Establishes a national pilot program in which doctors, hospitals and other providers are paid a flat rate by Medicare for each patient “episode of care”
2014 • Reduce out of pocket amount that qualifies an enrollee for catastrophic coverage in Medicare Pt D (thru 2019). • Establish an Independent Payment Advisory Board (IPAB) comprised of 15 members to submit legislative proposals containing recommendations to reduce the per capita rate of growth in Medicare spending if spending exceeds a target growth rate. • Reduce DSH payments initially by 75% and increase payments based on the % of the population uninsured and the amount of uncompensated care provided. • Require Advantage plans to have medical loss ratios no lower than 85%.
More on the IPAB • This is a somewhat radical idea. • Over the past decades, Congress has been gutless when it comes to reforming Medicare. Even though the program might be bankrupting the country, elected officials face re-election so they’ve punted on the issue. • The hope is that the IPAB frees Congress to permit cuts by making it easier for them to dodge the blame. It puts the knife in someone else’s hands.
IPAP • Will consist of 15 presidential appointees from the health care industry, academia, think-tanks and consumer groups – each confirmed by the Senate, who will serve staggered six-year terms. • Their reform proposals will have to pass through Congress, and if Congress does not act the recommendations go into effect. If Congress wants to change their recommendations it requires 3/5 majority, and no filibusters are allowed. • If Congress wants to change the IPAB’s recommendations then they must come up with alternatives that would save a similar amount.
IPAB • The board’s first recommendations will be for 2015. If Medicare spending exceeds targets set in the law they will recommend changes in the way Medicare pays for services in order to reduce spending. • Its purview over hospitals doesn’t occur until 2018. • The IPAB can not change eligibility rules, or modify benefits • This is THE linchpin to assure cost controls because PPACAs savings as deemed by the CBO arrive only the policies behind the savings do their jobs. If the IPAP is stripped then the status quo on Medicare is maintained. • Republicans are taking aim at the IPAP, looking to abolish it before it gets started.
2015 and after • Reduce Medicare payments to certain hospitals for hospital acquired conditions by 1%
Reform Implementation Schedule • Medicaid
2010 • Creates a state option to cover childless adults through a Medicaid State Plan Amendment. • Creates a state option to provide Medicaid coverage for family planning services to certain low-income individuals through a Medicaid State Plan Amendment up to the highest level of eligibility for pregnant women, • Creates a new option for states to pick up CHIP coverage to children of state employees eligible for health benefits if certain conditions are met.
2011 • Prohibit federal payments to states for Medicaid services related to health care acquired conditions. • Create a new state plan option to permit MCD enrollees with at least two chronic conditions, one condition and the risk of developing another, or at least one serious and persistent mental health condition to designate a provider as a health home. • Provide states taking up this option with 90% FMAP for 2 years for health home related services including care management, care coordination and health promotion.
2011 MDC reforms, (cont.) • Create a State Balancing Incentive Program in MCD to provide enhanced federal matching payments to increase non-institutionally based long term care service. • Establish the Community First Choice Option in MCD to provide community-based attendant support services to certain people with disabilities.
2012 • Create new demonstration projects to pay bundled payments for episodes of care that include hospitalizations (effective 1/1/12 through 12/31/16) • Provide MCD payments to institutions of mental disease for adult enrollees who require stabilization of an emergency condition (effective 10/1/11 – 12/31/15).
2013 • Increase Medicaid payments provided by PCPs for 2013 and 2014 with 100% federal funding.
2014 Reforms - Medicaid • Expand Medicaid to all non-Medicare eligible individuals under age 65 with incomes up to 133% FPL based on modified adjusted gross income and provides enhanced federal matching for new eligibles. • Reduce states’ Medicaid DSH allotments.
Reform Implementation Schedule • Quality Improvement
2010 • Support comparative effectiveness research by establishing a non-profit Patient-Centered Outcomes Research Institute.
2011 • Develop a national quality improvement strategy that includes priorities to improve the delivery of health care services, patient health outcomes and population health. • Establish the Community-based-Collaborative Care Network Program to support consortiums of health care providers to coordinate and integrate health care services for low-income and underinsured populations. • Establish a new trauma center program to strengthen emergency department and trauma center capacity.
2011 Q/I reforms, (cont.) • Improve access to care by increasing funding by $11B for community health centers and the National Health Services Corps over five years. • Establish new programs to support school-based health centers and nurse-managed health clinics
2012 • Require enhanced collection and reporting of data on race, ethnicity, sex, primary language, disability status, and for underserved rural and frontier populations.
2013 • Require disclosure of financial relationships between health entities, including physicians, hospitals, pharmacists, other providers, and manufacturers and distributors of covered drugs, devices, biologicals, and medical supplies.
Reform Implementation Schedule • Prevention and Wellness
2011 • Cover only proven preventive services and eliminate cost sharing for preventative services in Medicare; Increase Medicare payments for certain preventative services by 100% of actual charges or fee schedule rates. • For states that provide Medicaid coverage for and remove cost-sharing for preventive services recommended by the US Preventive Services Task Force, and recommended immunizations, provide a 1% point increase in the FMAP (federal matching funds) for these services
2011 Prevention/wellness (cont.) • Provide M/C beneficiaries access to a comprehensive risk assessment and creation of a personalized prevention plan and provide incentives to MCR/MCD beneficiaries to complete behavior modification programs. • Provides grants for up to five years to small employers that establish wellness programs. • Establish the National Prevention, Health Promotion and Public Health Council to develop a national strategy to improve the nation’s health. • Require chain restaurants and food sold from vending machines to disclose nutritional content on each item.
Reform Implementation Schedule • Taxes
2010 • Impose additional requirements on non-profit hospitals. Impose a tax of $50K for failure to meet these requirements. • Limit the deductibility of executive and employee compensation for health insurance providers to $500K per applicable individual. • Impose a tax of 10% on the amount paid for indoor tanning services.
2010 Tax reforms, cont. • Tax credits available for small businesses (through 2013). Must have fewer than 25 employees with average annual wages <$50K • For profit firms must contribute 50% towards their employees premiums. • The benefit works on a sliding scale. Companies with 10 or less employees with average wages <$25K get a 35% tax break. The percentage decreases for firms with more employees, higher salaries or both. • For profit firms get a general business credit. For non-profit firms, the credit will be in the form of a reduction in income and Medicare tax the employer is required to withhold from employees’ wages and the employer share of the Medicare tax on these wages.