Joel Gilbertson, vice president of government and public affairs for Providence Health & Systems, provided a "Health Reform 101" presentation at the Alaska Providers Forum Sept. 2, 2010

1. Health Care Reform 101
Joel Gilbertson, vice president, government and public affairs
September 2, 2010

2. Health (Insurance) Reform Is Here
The Patient Protection and Affordable Care Act was signed into law on March 23,
2010. This landmark legislation was immediately amended by the Health Care &
Education Affordability Reconciliation Act, which was signed into law on March 30,
2010.
Together, these bills:
 Expand health insurance coverage
 Provide greater alignment between payment and quality
 Establish new payment models and delivery system reform
 Reduce payments to some providers
 Invest in prevention and building the health care workforce
 Increase transparency and address waste, fraud and abuse
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3. The Legislation: By the numbers
 Increases health insurance coverage level to 94% (+32 million)
 Costs an estimated $940 billion over 10 years (2010 – 2019); (+$115 billion?)
 “Raises” $1.1 trillion through new taxes, fees and spending cuts
 Contains $156 billion in cuts to hospitals through reduced updates,
disproportionate share payment cuts, and penalties
 133% of federal poverty level is new floor for Medicaid eligibility
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4. A few key themes and implications
 Scarcity of resources will increase
 Payments will be more directly tied to quality and outcomes
 Care management, coordination and collaboration highlight new payment models
 Innovation and testing defines early delivery system reform work
 Public accountability and transparency to grow
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5. The Legislation: The financing
Source: Congressional Budget Office
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6. So What’s Not To Love?
 Falls short of universal coverage goal
 Significant DSH cuts, uncertain support for Medicaid programs
 Questionable whether provisions will actually bend cost curve
 No fix to physician payment cuts
 Not as aggressive on delivery system reforms as hoped for
 Limited effort to address barriers to clinical integration or tort reform
 Loose roadmap with many, many risks!
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7. The Reality of Reform is Still to be Decided
 Legislation has varied implementation dates; unfolds over a decade
 Significant portion of bill is subject to rulemaking (regulatory) process
 New legislation will undoubtedly be passed during implementation process
 States will shape how some provisions emerge
and…
 Sizeable federal deficit looms over economic projections
 Future national elections have potential to influence final outcome
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9. Coverage
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10. Coverage: Major provisions
Key Year: 2014
 Individual mandate to obtain coverage begins
 Health Insurance Exchanges are established
– Premium subsidies for Americans between 133% and 400% of FPL
 Medicaid expands nationwide
– 133% of FPL
– 100% federally funded, with phase out to 90% by 2020
– States must maintain current eligibility levels until 2014
– Individual mandate to obtain coverage begins
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11. Coverage: Employer obligations
 Automatic enrollment for employees of large employers (200+ employees)
 Shared responsibility for employers regarding health coverage
– Financial penalty imposed on large employers who do not offer full-time
employees (and dependents) “essential” coverage under an employer-plan
– Financial penalty imposed for large employers who have one or more
employees enrolled in a subsidized state exchange plan
 Inclusion of cost of employer-sponsored health coverage on W2
 Small employer health insurance credit
– Certain small employers may claim a 35% tax credit for health premiums for
2010-2013 (i.e. until health exchanges are active in 2014)
– Beginning in 2014 the credit increases to 50% but the employer must
participate in an insurance exchange to claim the credit
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12. Post-Reform: How we’ll be covered (excluding Medicare)
Source: Congressional Budget Office
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13. Insurance Reforms
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14. Insurance Reform: Major provisions
Effective September 23, 2010:
 Adult children (up to 26) can stay on their parent’s plan
 No pre-existing condition exclusions for individuals under age 19
 No lifetime benefit limits and no cancellation of coverage when someone
becomes sick
 Restrictions placed on insurer’s ability to tie premium rates to health status
And beginning in 2014:
 Insurers cannot exclude coverage based on pre-existing conditions for adults
 Limits placed on premium ratings
 Guaranteed issue for everyone
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15. Quality
Linking Payment To Outcomes
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16. Quality
 The linkage of payment to quality will increase
– Geographic variation adjustments
– Value based purchasing
– Penalties for hospital acquired conditions, readmissions
 Hospitals financially accountable for care outcomes as patients move across
the continuum – regardless of whether they own it
 Enhanced coordination between physicians, hospitals and post-acute facilities
 Payments will continue to migrate towards models where providers are
measured against each other
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17. Delivery System Reform
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18. Delivery System Reform
 Priority on flexibility, innovation, experimentation
– CMS Innovation Center
 New payment models designed to lower cost, maintain or improve quality
– Accountable care organizations
– Bundled payments
 New competencies and collaboration will be required
– Slow transition to risk contracting
– Networks, clinical IT, legal structures
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19. Physician Provisions
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20. Physicians: Major provisions
 No fix to SGR and projected Medicare payment cuts
 10% bonus to primary care providers; 10% bonus to general surgery in Health
Professional Shortage Areas
 For 2013 and 2014, Medicaid payments for primary care cannot be lower than
Medicare
 PQRI incentives through 2014, then penalties
 Beginning in 2015, and expanding in 2017, value modifier added to physician
payment
 No significant tort reform provisions
 No new physician ownership in hospitals after January 1, 2011
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21. Providers: Initial Checklist
 Manage costs as Medicare and Medicaid payment reductions are implemented
 Prepare for private payer reimbursement pressures
 Provider alignment is critical for the future
 Emphasis on care coordination/clinical integration across the continuum of
care
 Capacity of outpatient and emergency services and health care workforce
needs as coverage expands and demand for primary and preventive care
increases
 Focus on provision of cost-effective care within a bundled payment
 Data and information needs to evaluate delivery system reform options
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22. 2010 Provisions Are Being Rolled Out
 Insurance reforms
– Temporary high-risk pools launched nationally
– Private insurance reforms: dependent coverage for children to 26, eliminate
lifetime limits on dollar value of coverage, prohibit pre-existing condition exclusions
for children
 Medicare and Medicaid adjustments
– $250 rebate to Medicare beneficiaries in Part D doughnut hole
– Payment reductions to providers
 Initial regulatory activity focused on near-term provisions
– Employer requirements
– “Patients Bill of Rights”
– Requirements on tax-exempt hospitals
– Stimulus bill “Meaningful Use” regulations finalized
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23. Coming Soon
 Completing leadership team/restructuring at CMS
 ACO initial regulatory guidance expected by end of year
– Will be finalized in 2011 for 2012 start
– Key policy questions around benchmarks, savings model, intersection with other
payment models
 Innovation Center will be operational by January 1, 2011
– $10 billion in seed money
– New authority to explore innovative payment models
 Value based purchasing rulemaking expected in 2011
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24. State’s Scrambling To Do Their Part
 Insurance commissioners taking early action
– Working to validate or establish clear authorities to enforce consumer protection
standards that take effect 9/23/10
– Reviewing medical loss ratio standards
 Some states have launched own high-risk insurance pool to complement new
federal risk pool
 States examining policy approaches to health insurance exchanges, Medicaid
program design, workforce, insurance requirements
 HHS has issued $46 million to states to finance a review of health insurance rate
increases and health plan costs
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25. Health Reform: Resources
A few resources:
 http://healthreform.gov/
 http://www.commonwealthfund.org/Health-Reform.aspx
 http://healthreform.kff.org/
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