HEALTHCARE REFORM – WHAT
NOW?
Steve Markesich, CPAM
Yale-New Haven Health System
Maryland Chapter AI
September 13, 2012
How we left things at last year’s AI
 2012 campaign takes center stage
 Fate of House, Senate and White
House
 Lots of rhetoric – little change
 Maybe some tweaking
 More specifics (good and bad) may
come to light
 Nothing significant until Supreme
Court hears case and/or elections
TODAY’S OUTLINE
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The SCOTUS decision
Review the law’s primary features
What states need to decide
What parts of the law remain vulnerable
What providers should expect
What individuals should expect
The politics of 2012 and beyond
The reality
The Decision - June 28, 2012
 In what was a surprise to many based on
the analysis following March’s oral
arguments, the Supreme Court upheld the
constitutionality of the individual mandate
by a 5-4 vote.
Reform Implementation
 The law’s primary
features
Primary Features
 Prohibits:
 Pre-existing condition exclusions (currently effective for
Children under 19.
 Unjustified rescissions of coverage.
 Prohibits lifetime limits on coverage.
 Restricts annual limits on coverage.
 Provides financial relief for Pt D recipients.
 Extends coverage on parent’s EGHP to children up to 26
year old
 Caps out of pocket expenses for private health plans.
 Major Medicaid Expansion (optional)
Features, cont.
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Employers get help covering cost for their retirees
Tax credits for small business
Subsidies for self-employed
Incentives for wellness and preventative programs
More money for PCPs
Higher taxes, particularly on high income earners
Higher deduction limit for medical expenses
Reduces H.S.A. exemptions and amounts
No coverage no longer an option
Emphasis and reimbursement based on outcomes
and quality, not volume
Features, cont.
 ACOs
 Bundling pilots
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Medicaid first, then Medicare
 Disclosure of information
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Hospital readmission rates (2012)
Hospital records for medical errors and infection rates for
Medicare patients (2015)
 Reimbursement reductions
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Reduce annual MCR market basket amount and update for
productivity
MCR rates reduced by as much as 1% for hospital with
highest rates of medical errors and infections (2015)
No MCD reimbursement for same (2015)
Features, cont.
 Sets target levels for per physician per Capita
Medicare spending in 2015 that may be hard to
reach
 Reduce MCD DSH allotments (2014)
 Uniform transaction sets – comply or pay a
penalty
 Insurance rebates
 80 to 85% spending requirement on medical care
 Estimated 13M Americans will receive a rebate by
year’s end between $1 and $517(most states)
 $1.1B total refunds expected in 2012
Reform Implementation
 What the states need
to decide
Medicaid Options
 The law as originally written required states to
participate in Medicaid expansion or lose all their federal
funding
 SCOTUS ruled that unconstitutional, and that states had
the right to opt out while keeping the rest of their
programs (and funding) intact.
 The following are therefore optional:
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Cover childless adults through a Medicaid State Plan
Amendment.
Provide coverage for family planning services to certain
low-income individuals.
Pick up CHIP coverage to children of state employees
eligible for health benefits if certain conditions are met.
Allow MCD enrollees with certain conditions to designate a
provider as a health home
Medicaid Options, Cont.
 More options:
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Create an incentive program to increase non-institutionally
based long term care service.
Establish an option to provide community-based support
services to certain people with disabilities
Provide Medicaid coverage (and remove cost-sharing) for
preventive services and immunizations.
 States need to decide if they want to additional
federal money and participate in the expansion
 Unlike insurance exchanges, there is not fallback for
states that do not do this.
 For states that expand coverage up to 133% of the
FIPG, the feds cover the entire cost from 2014-2016,
and phase that down to 90% by 2020. (loophole)
Insurance Exchanges
 The day after SCOTUS announced its
decision, the administration began to
aggressively push states to implement
insurance exchanges
 Within 2 weeks, HHS pushed out new funding
opportunities designed to help states plan for
their insurance exchanges
 These funds/grants are designed for planning
the exchanges at the state level. States do
not have to pay the money back of they
decide to let the feds handle their exchanges
Exchanges, cont.
 The law said exchanges had to be up and running by
2014, so HHS has to certify in 2013 whether each state
will be able to build its own.
 HHS said last year in its first proposed rules that is
would certify state-based exchanges after 2014 in case
states were not ready on time but could get there
eventually.
 The feds clearly want each state to set up their own
exchange, which most policy experts agree would be
better than a federal exchange.
 Some Republican governors who said they were waiting
for SCOTUS are now saying they won’t implement the
law until they see how the November elections shake
out and if they pick up enough seats to try to repeal
the law.
Reform Implementation
 What part of the law
remain vulnerable or
are problematic?
Vulnerable/Politically Problematic
 IPAB – Independent Advisory Board
 IRS Enforcement
 Is the IRS capable of policing the healthcare
decisions millions will make while also collecting
the taxes needed to run the federal government?
 Questions exists regarding staffing levels sufficient
 Questions exists regarding whether IRS will be
given the congressional authority to enforce what
it is accountable to enforce
V&P, cont.
 Congressional funding (more on this
later)
 Will employers who currently offer
EGHPs continue to or find it cheaper to
pay the fine and push their employees
to the insurance exchanges
 Political issue for the administration who
promised that if you like what you have
you will be able to keep it
 The uninsured does not go away
Reform Implementation
 What providers should
expect
Impact on Providers
 The law will cut payments to physicians and hospitals as a
group, although the degree to which payments are cut
varies
 Hospitals will see more patients and get paid less to do so.
 Emphasis on quality and outcomes
 Hospital readmission rates
 Hospital errors and infections
 Hospitals hire more PCPs?
 Expansion of electronic medical records
 Inpatient care de-emphasized
 Replaced by outpatient services move to at-home services
Providers, cont.
 Community Hospitals are more vulnerable
 The era of CHs being all things to all people is over
 Significant increase in hospital integration
 Creation of “centers of excellence”
 Elimination of duplicate services in regional areas
 A surgeon who performs 350 heart-valve surgeries a
year will have better outcomes than one who performs
a variety of 200 heart-related procedures a year
 Patient-centered care where specialists treat specific
conditions within an area of expertise
 Individual/small physician groups to become extinct?
To summarize:
 The legislation aims at reducing wasteful
spending and duplicate services, and to
slow the growth of costs through
improvement in the delivery system
 In order to thrive in this environment
physicians will have to merge into larger
groups to make it easier to adopt
management practices to evaluate their
care, and conduct internal quality
reviews.
Summary, cont.
 The law includes incentives for hospitals
to shift business away from traditional
acute care inpatient facilities into more
cost-effective settings.
 Focus on disease management and
avoiding hospitalizations
 Medicare cuts will be a reality as the IPAB
will fast-track recommendations to reduce
Medicare spending if spending exceeds
targets.
Reform Implementation
 What individuals
should expect
Penalties on unhealthy
“choices”
 Higher costs related to obesity
 Recent studies show that obesity’s price tag
is not $190B a year, more than 20% of U.S.
healthcare costs
 Rewards for eating healthier and exercising
 Eventual out of pocket premium and co-pay
expenses.
 Same kind of penalties for smokers
Rationing of care?
 The issue nobody wants to confront
 Cost/benefit of chemo
 Cost/benefit of artificial joints
 Cost/benefit of expensive, life saving treatment
with questionable expected outcomes
 Do we ultimately wind up with a two-tiered
system?
Reform Implementation
 The politics of 2012
and beyond
The immediate aftermath
 Shortly after the SCOTUS decision the Republicancontrolled house voted to repeal the law. This was
the 33rd time since the law was passed in 2010
the House has voted to repeal all or part of the
law.
 Democrats pleased with Republicans to stop
fighting old (and losing) battles.
 Republicans claimed they had to press forward
with repeal to jump-start a sluggish economy and
rein in spending
Aftermath, cont.
 The House Appropriations subcommittee passed a
spending bill in July that would defund PPACA,
eliminate the Agency for Health Care Quality and
Research, as well as slashing the budgets for other
health programs.
 Romney and the R’s vowed to make this a
referendum in the November elections and
promised to kill the bill
 Some pundits have reported that the mantra of
“repeal and replace” has been changed to “repeal”.
Onto November
 Expect a lot of sound and fury and political posturing as
the political campaign heats up, but not much else.
 How much political capital will the Republicans invest in
this crusade and how will it sell with the national
electorate?
 Are they really going to go on record as being against
many of the law’s aspects that have tremendous
bipartisan support among the electorate?
 How is Romney going to handle opposition to bill when it
virtually models the act he championed and got passed
as Governor of Massachusetts?
 How is one’s position going to help or hurt them in this
election (polls)
Election scenarios as they pertain
to the bill
 Repeal:
 Republican sweep of Presidential, House of
Representatives and Senate
 Still may not be enough if the Senate majority is
thin
 Put them in position of having to provide a
viable alternative
 Defunding:
 Obama re-elected but Republicans control House
and Senate
 Budget reconciliation option in Senate by-passes
filibuster option
Scenarios, cont.
 Status quo:
 Democratic sweep
 Obama re-elected and Democrats control either
the House or the Senate.
 Worst case:
 Obama re-elected but Republicans control House
and Senate
 Romney elected by Democrats control either the
House or the Senate.
Reform Implementation
 The reality
It’s here to stay
 “Congressional majorities come and
go, but entitlement program last
forever.”
 Even if the Republicans swept, which
appears unlikely at this time, it would
be extremely difficult legislatively,
politically and fiscally to put this
genie back into the bottle.
The Reality
 In many ways, the SCOTUS decision represents
the end of the beginning rather than the
beginning of the end.
 The act mostly extends a flawed system to more
people
 Medicare and SS insolvency are real threats so
something has got to give.
 In many ways this is only the first step in the
reform process, hopefully providing a step in the
right direction that ultimately evolves into
something better.
The Reality
 Expect the law’s infrastructure continue to
develop as states decide what they are going
to do
 Expect changes and tweaks to be made on the
fly during the first decade of the programs
existence
 Look at the successes and failure of other
countries as a guide to what we may
ultimately wind up (sometime in the 2020s)
The reality
 Healthcare delivery as we know it is
going to change (nothing new)
 Lower reimbursement puts priority on
collecting every penny possible (is
more pressure possible?)
 Education, operational flexibility and
technology are going to be critical for
revenue cycle success.
THANK YOU
 QUESTIONS?