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A New Era in American Healthcare: Realizing the Potential of Reform. Karen Davis President The Commonwealth Fund www.commonwealthfund.org kd@cmwf.org University of Oklahoma Healthcare Reform Symposium February 24, 2011. What Are the Problems?. Uninsured Rates. Costs of Care.

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a new era in american healthcare realizing the potential of reform

A New Era in American Healthcare:Realizing the Potential of Reform

Karen Davis

President

The Commonwealth Fund

www.commonwealthfund.org

kd@cmwf.org

University of Oklahoma

Healthcare Reform Symposium

February 24, 2011

what are the problems
What Are the Problems?

Uninsured Rates

Costs of Care

Administrative

Complexity

Quality of Care Chasm

slide3
Uninsured Projected to Rise to 61 Million by 2020 Without Reform,Not Counting Underinsured or Part-Year Uninsured

Number of uninsured, in millions

Projected Lewin estimates

Data: U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement, 2010;

Projections to 2020 based on estimates by The Lewin Group.

access how does oklahoma compare
Access: How Does Oklahoma Compare?

Rank = 34

Rank = 41

Source: S. K. H. How, A.K. Fryer, D. McCarthy, C. Schoen, and E. L. Schor, Securing a Healthy Future: The Commonwealth Fund State Scorecard on Child Health System Performance, 2011, (New York: The Commonwealth Fund, Feb. 2011).

seventy two million americans have problems with medical bills or accrued medical debt 2007
Seventy-Two Million Americans Have Problems with Medical Bills or Accrued Medical Debt, 2007

Percent of adults ages 19–64

Source: M. M. Doty, S. R. Collins, S. D. Rustgi, and J. L. Kriss, Seeing Red: The Growing Burden of Medical Bills and Debt Faced by U.S. Families (New York: The Commonwealth Fund, Aug. 2008).

premiums for family coverage 2003 2009 2015 and 2020
Premiums for Family Coverage, 2003, 2009, 2015, and 2020

Health insurance premiums for family coverage

Data sources: Medical Expenditure Panel Survey–Insurance Component (premiums for 2003 and 2009); Premium estimates for 2015 and 2020 using 2003-09 historic average national growth rate.

Source: C. Schoen, K. Stremikis, S. K. H. How, and S. R. Collins, State Trends in Premiums and Deductibles, 2003–2009: How Building on the Affordable Care Act Will Help Stem the Tide of Rising Costs and Eroding Benefits, (New York: The Commonwealth Fund, December 2010).

prevention and treatment how does oklahoma compare
Prevention and Treatment:How Does Oklahoma Compare?

Rank = 51

Rank = 37

Source: D. McCarthy, S. K. H. How, C. Schoen, J. C. Cantor, D. Belloff, Aiming Higher Results from a State Scorecard on Health System Performance, 2009, (New York: The Commonwealth Fund, October 2009).

potentially preventable hospital admissions how does oklahoma compare
Potentially Preventable Hospital Admissions:How Does Oklahoma Compare?

Percent

Rank = 46

Rank = 45

Rank = 48

Source: D. McCarthy, S. K. H. How, C. Schoen, J. C. Cantor, D. Belloff, Aiming Higher Results from a State Scorecard on Health System Performance, 2009, (New York: The Commonwealth Fund, October 2009).

medicare spending varies dramatically
Medicare Spending Varies Dramatically

Total Rates of Reimbursement for Noncapitated Medicare per Enrollee

Source: E. Fisher, D. Goodman, J. Skinner, and K. Bronner, Health Care Spending, Quality, and Outcomes, (Hanover: The Dartmouth Institute for Health Policy and Clinical Practice, Feb. 2009).

safety variations in use of high risk drugs and potentially harmful drug disease in medicare 2007
SAFETY: Variations in Use of High Risk Drugs and Potentially Harmful Drug-Disease in Medicare 2007

High-risk range

11.4 to 44%

Harmful Drug-

Disease Range

9.5 to 30.6%

Source: Zhang Y, Baicker K, Newhouse J. Geographic Variation in the Quality of Prescribing. N Engl J Med 2010; 363:1985-1988.

healthy lives and outcomes how does oklahoma compare
Healthy Lives and Outcomes:How Does Oklahoma Compare?

Rank = 44

Rank = 47

Source: D. McCarthy, S. K. H. How, C. Schoen, J. C. Cantor, D. Belloff, Aiming Higher Results from a State Scorecard on Health System Performance, 2009, (New York: The Commonwealth Fund, October 2009); S. K. H. How, A.K. Fryer, D. McCarthy, C. Schoen, and E. L. Schor, Securing a Healthy Future: The Commonwealth Fund State Scorecard on Child Health System Performance, 2011, (New York: The Commonwealth Fund, Feb. 2011).

.

aiming higher oklahoma
Aiming Higher -- Oklahoma
  • Overall Rank: 50
    • Access: 47
    • Prevention and Treatment: 48
    • Avoidable Hospital Use and Costs: 44
    • Equity: 49
    • Health Lives: 44
  • Potential Gains (match best performing state rates)
    • 315,072 additional adults would be insured
    • 122,351 additional children with a medical home
    • $59 million saved from reducing Medicare readmissions

Source: D. McCarthy, S. K. H. How, C. Schoen, J. C. Cantor, D. Belloff, Aiming Higher Results from a State Scorecard on Health System Performance, 2009, (New York: The Commonwealth Fund, October 2009).

a new era in american healthcare realizing the potential of reform1
A New Era in American Healthcare:Realizing the Potential of Reform

Health reform has the potential to help usher in a new era in American health care

Requires new strategies for health care organizations to succeed

Old Paradigm:

Fee-for-service rewards volume of services, high occupancy, hospital admissions, specialized services; undervalues primary care

Siloed provision of services; hospitals and physicians independent

Financial solvency requires limiting provision of uninsured services and patients

New Paradigm:

Emphasis on primary care; patient-centered medical homes

Value-based purchasing and bundled payment reward quality, reduced hospitalization and readmissions, and evidence-based care

Accountability for patient outcomes requires coordination of care across settings and providers; hospitals and physicians interdependent

Reaching out and serving low-income and uninsured communities is the new market growth area

four health reform game changers
Four Health Reform “Game Changers”

Affordability provisions

Income-related assistance with premiums and medical bills; essential benefits; Medicaid expansion

New federal insurance market rules

Restrictions on underwriting, minimum medical loss ratio requirements, review of premium rate increases, and important consumer protections

New health insurance exchanges

Lower administrative costs and more choice of affordable health plans for eligible individuals and small businesses

Provider payment and delivery system reforms

Patient centered medical homes

Bundled acute and post-acute care payment

Accountable Care Organizations

CMS Innovation Center and Independent Payment Advisory Board

Source: K. Davis, A New Era in American Healthcare, (New York: The Commonwealth Fund, June 2010).

major reduction in uninsured percent of adults 19 64 uninsured by state
Major Reduction in UninsuredPercent of Adults 19–64 Uninsured by State

2019 (estimated)

2008-2009

NH

ME

WA

NH

VT

ME

WA

VT

ND

MT

ND

MT

MN

MN

OR

NY

MA

WI

OR

MA

NY

ID

SD

WI

RI

MI

ID

SD

RI

WY

MI

CT

PA

WY

NJ

CT

IA

PA

NJ

NE

IA

OH

DE

IN

NE

OH

NV

DE

IN

IL

MD

NV

WV

UT

VA

IL

MD

CO

DC

WV

UT

VA

KS

MO

KY

CA

CO

DC

KS

MO

KY

CA

NC

NC

TN

TN

OK

SC

AR

OK

AZ

NM

SC

AR

AZ

NM

MS

GA

AL

MS

GA

AL

TX

LA

TX

LA

FL

FL

AK

AK

HI

HI

23% or more

7.1%–13.9%

19%–22.9%

14%–18.9%

7% or less

Data: U.S. Census Bureau, 2009–10 Current Population Survey ASEC Supplement; estimates for 2019 by Jonathan Gruber and Ian Perry of MIT using the Gruber Microsimulation Model for The Commonwealth Fund.

SOURCE: Commonwealth Fund State Scorecard on Child Health System Performance, 2010

slide16

Major Growth in Medicaid and Coverage of Small Businesses and Individuals Through Health Insurance Exchanges -- 32 Million Uninsured Covered, 2019

23 M (8%)

Uninsured

16 M (6%)

Other

54 M

(19%)

Uninsured

16 M (6%)

Other

162 M

(57%)

ESI

159 M

(56%)

ESI

51 M

(18%)

Medicaid

35 M

(12%)

Medicaid

24 M (9%)

Exchanges

(Private Plans)

15 M (5%)

Nongroup

10 M (4%)

Nongroup

Pre-Reform

Affordable Care Act

Among 282 million people under age 65

* Employees whose employers provide coverage through the exchange are shown as covered by their employers (5 million), thus about 29 million people would be enrolled through plans in the exchange. Note: ESI is Employer-Sponsored Insurance.

Source: S. R. Collins, K. Davis, J. L. Nicholson, S. D. Rustgi, and R. Nuzum, The Health Insurance Provisions of the Affordable Care Act: Implications for Coverage, Affordability, and Costs, (New York: The Commonwealth Fund, forthcoming).

total national health expenditures nhe 2009 2019 before and after reform
Total National Health Expenditures (NHE),2009–2019, Before and After Reform

NHE in trillions

6.3% annual growth

$4.6

$4.3

5.7% annual growth

$2.5

Notes: * Estimate of pre-reform national health spending when corrected to reflect underutilization of services by previously uninsured.

Source: D. M. Cutler, K. Davis, and K. Stremikis, TheImpact of Health Reform on Health System Spending, (Washington and New York: Center for American Progress and The Commonwealth Fund, May 2010).

slide18

Estimated Annual Premiums Before and After Reform, 2019

9.2%

Source: D. M. Cutler, K. Davis, and K. Stremikis, The Impact of Health Reform on Health System Spending, (Washington and New York: Center for American Progress and The Commonwealth Fund, May 2010).

affordable care act delivery system change
Affordable Care Act: Delivery System Change

THE COMMONWEALTH

FUND

Triple Aim of Better Population Health, Better Care Experiences and Slower Cost Growth

timeline for coverage provisions

Small business tax credit

  • Prohibitions against lifetime benefit caps & rescissions
  • Phased-in ban on annual limits
  • Annual review of premium increases
  • Public reporting by insurers on share of premiums spent on non-medical costs
  • Preventive services coverage without cost-sharing
  • Young adults on parents’ plans
Timeline for Coverage Provisions
  • State insurance exchanges
  • Medicaid expansion
  • Small business tax credit increases
  • Insurance market reforms including no rating on health
  • Essential benefit standard
  • Premium and cost sharing credits for exchange plans
  • Premium increases a criteria for carrier exchange participation
  • Individual requirement to have insurance
  • Employer shared responsibility penalties
  • Phased-in ban on annual limits
  • States adopt exchange legislation and begin implementing exchanges
  • Penalty for individual requirement to have insurance phases in (2014-2016)
  • Option for state waiver to design alternative coverage programs (2017)
  • Insurers must spend at least 85% of premiums (large group) or 80% (small group / individual) on medical costs or provide rebates to enrollees
  • HHS must determine if states will have operational exchanges by 2014; if not, HHS will operate them

Source: Commonwealth Fund Health Reform Resource Center: What’s In the Affordable Care Act? (Public Law 111-148 and 111-152), www.commonwealthfund.org/Health-Reform/Health-Reform-Resource.aspx

state insurance exchanges eight difficult issues for hhs and states
State Insurance Exchanges:Eight Difficult Issues for HHS and States

How should the exchanges be governed? State entity or non-profit?

How should adverse selection against exchange and among plans sold in exchange be further deterred – what are options for states and HHS?

Opening the exchanges to large employers or not? What are the key considerations for states and how should federal government reduce risk to the exchanges from self-insured and large employers?

How can the exchanges be made to work well for employers to encourage their participation?

Exchanges must certify qualified plans – how should they exercise their regulatory role in this regard? Allow all plans to participate or restrict participation to high value plans? Standardize plans beyond ACA?

Exchanges must provide information to consumers to facilitate informed choice about health plans – how should the exchanges meet this responsibility?

How should exchanges ensure expedient and continuous enrollment of those eligible for Medicaid/CHIP and premium/cost-sharing credits?

How might exchanges reduce their own administrative costs and those of their users, and how will they finance their activities?

Source: T. S. Jost, Health Insurance Exchanges and the Affordable Care Act: Eight Difficult Issues, (New York: The Commonwealth Fund, September 2010).

timeline for payment and system innovation
Timeline for Payment and System Innovation

2010

2011

2012

2013

2014

2015

Productivity Improvement

10% Medicare Primary Care Increase

Value-based Purchasing for Hospitals

Payment Bundling Pilot

IPAB

Value-based Purchasing for Physicians

Reduce Payment for Hospital Acquired Infections

Patient Centered Outcomes Research

Innovation Center

Improve Physician Feedback

Medicaid Primary Care up to Medicare Levels

Community Transformation Grants

All-Payer Demos and HIZs

Reduce Payment for Preventable Readmissions

Extend Gainsharing Demo

Medicare Shared Savings (ACOs)

Source: Commonwealth Fund Health Reform Resource Center: What’s In the Affordable Care Act? (Public Law 111-148 and 111-152), www.commonwealthfund.org/Health-Reform/Health-Reform-Resource.aspx

center for medicare medicaid innovation
Center for Medicare & Medicaid Innovation

Beginning this year, new center in CMS to test innovative payment and service delivery models to reduce spending while preserving or enhancing quality of care

Expanded authority to innovate and spread

Selection based on evidence of population health focus

Emphasis on care coordination, patient-centeredness

Could increase spending initially

Over time must improve quality without higher costs, reduce spending without reducing quality, or both

Secretary can expand duration and scope

accountable care organizations
Accountable Care Organizations

“A group of health care providers who give coordinated care, chronic disease management, and thereby improve the quality of care patients get. The organization's payment is tied to achieving health care quality goals and outcomes that result in cost savings.”

Source: http://www.healthcare.gov; S. Kravet, “Preparing an Academic Medical Center for Health Care Reform,” 2010 Ohio State University Health Services Management and Policy Management Institute, Columbus, OH: October 2010.

aco requirements
ACO Requirements

Source: S. Kravet, “Preparing an Academic Medical Center for Health Care Reform,” 2010 Ohio State University Health Services Management and Policy Management Institute, Columbus, OH: October 2010.

promising aco models of payment and care delivery
Promising ACO Models of Payment and Care Delivery

Risk-adjusted global fee with risk mitigation (e.g., reinusrance)

Global amb-ulatory care fees & bundled acute case rates

Global primary care fees & bundled acute case rates

Global primary care fees

Blended FFS and medical home fees

Quality bonuses for patient outcomes; large % of shared savings, some shared risk

Less Feasible

Quality bonuses of care co-ordination and intermediate outcome measures; moderate % of shared savings

Continuum of Quality Bonuses and Shared Savings

Continuum of Payment Bundling

More Feasible

Quality bonuses for preventive care; management of chronic conditions; small % of shared savings

Patient-centered medical home networks

Multi-specialty physician group practices

Integrated ambulatory and inpatient systems

Continuum of Organization

Source: A. Shih, K. Davis, S. Schoenbaum, A. Gauthier, R. Nuzum, and D. McCarthy, Organizing the U.S. Health Care Delivery System for High Performance, (New York: The Commonwealth Fund, August 2008).

a new era in health care delivery how oklahoma can realize the potential
A New Era in Health Care Delivery: How Oklahoma Can Realize the Potential

Realizing the potential of health reform will require skillful implementation by states

Oklahoma can lead on primary care focus

Oklahoma one of first states with primary care extension service

Adoption of Access model of patient-centered medical homes

Community Health Teams to support patient-centered medical homes (Sec. 3502)

Invest in maternal and child health

Oklahoma can also lead on chronic care and care coordination of frail elders and disabled

Improve transitions in care and reduce hospital readmissions

CMS Innovation Center pilots for dual Medicare and Medicaid eligible population

Community-Based Care Transitions Program (Sec. 3026)

thank you
Thank You!

Tony Shih,

Executive Vice President for Programs, ts@cmwf.org

Cathy Schoen, Senior Vice President for Research and Evaluation, cs@cmwf.org

Rachel Nuzum,

Senior Policy Director

rn@cmwf.org

Sara Collins,

Vice President, src@cmwf.org

Kristof Stremikis, Senior Research Associate, ks@cmwf.org

Melinda Abrams,

Vice President, mka@cmwf.org

For more information, please visit:

www.commonwealthfund.org