Emerging Trends in Health Reform
The Affordable Care Act Five Years Later
Presentation for:
College of Imaging Administrators – May 8, 2015
Tom Szostak
Senior Healthcare Economics Manager
1
Red Letter Day for Airlines
October 24, 1978
Airline Deregulation Act
2
Thirty-Two Years Later at the College of
Imaging Administrators Spring Assembly
2010
3
1
AGENDA
• FUNDAMENTALS
2
• RETROSPECTIVE REVIEW OF HEALTHCARE CLIMATE
3
• RECOVERY ACT OF 2009 & THE AFFORDABLE CARE ACT OF 2010
4
• UNDERSTANDING VALUE-BASED HEALTHCARE
5
• HEALTHCARE FUTURES
4
Defining Places of Service in 2010
Multi-Specialty or
Physician Office
(MSO) – Provides
routine examinations,
diagnosis, and
treatment of sickness
or injury
Skilled Nursing
Facility – Provides
inpatient skilled
nursing services that
do not require
hospitalization
Emergency Room Hospital
– Emergency diagnosis and
treatment of illness or injury
Outpatient Hospital –
Provides diagnostic,
therapeutic, and
rehabilitative services
that do not require
hospitalization
Inpatient Hospital – Provides
diagnostic, therapeutic, and
rehabilitative services under
physician supervision for
admitted patients
Ambulatory Surgical
Center – Freestanding
facility where surgical
and diagnostic services
are provided
5
Redefining Places of Service in 2015
Urgent Care Clinics –
Low acuity services and
minor wounds or broken
bones
Emergency Room
Hospital – Emergency
diagnosis and treatment
of illness or injury
Freestanding
Emergency
Room – Limited
markets
Multi-Specialty or
Physician Office
(MSO) – Provides
routine examinations,
diagnosis, and
treatment of sickness
or injury
Skilled Nursing
Facility – Provides
inpatient skilled
nursing services that
do not require
hospitalization
Low Acuity Clinics in Retail
Setting – Flu shots, vaccines,
wellness services, minor wounds,
and common infections
Inpatient Hospital – Provides
diagnostic, therapeutic, and
rehabilitative services under
physician supervision for
admitted patients
Ambulatory Surgical
Center – Freestanding
facility where surgical
and diagnostic services
are provided
Outpatient Hospital –
Provides diagnostic,
therapeutic, and
rehabilitative services
that do not require
hospitalization
Home/Telehealth
services – Web-based
and smartphone
physician consults
6
Understanding Types of Insurance
•
Government Plans
• Medicare (Parts A, B, C, and D)
• Medicaid
• TriCare (Military)
•
Self-Insured – Served best for
companies over 350 employees
•
Commercial Plans
• Indemnity
• Managed Care (HMOs and
PPOs)
Health Insurance Stakeholders & Market in 2015
•
Federal, State, and Military Programs
• Medicare
• Medicaid
• Tricare
•
Private Sector
• Employer-base market
• Self-funded
• Cadillac Tax
• Private health insurance exchanges
• 48 million participants expected by 2018
• Health systems selling health plans
• Driven by risk-sharing delivery models
•
Public Sector
• Federal & state-based marketplace
• Cooperatives
1
AGENDA
• FUNDAMENTALS
2
• RETROSPECTIVE REVIEW OF HEALTHCARE CLIMATE
3
• RECOVERY ACT OF 2009 & THE AFFORDABLE CARE ACT OF 2010
4
• UNDERSTANDING VALUE-BASED HEALTHCARE
5
• HEALTHCARE FUTURES
9
Pressures on Healthcare in 2010
Demographics and Cost
Estimate of New Enrollees (in Millions)
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
DOB and Year Eligibility
28
20
27
19
64
&
20
25
&
62
19
19
60
&
20
23
20
21
19
58
&
20
19
&
56
19
19
54
&
20
17
20
15
19
52
&
20
13
&
20
50
&
19
48
&
20
11
Estimate of
New Medicare
Enrollees
19
46
19
• 3.2 million baby boomers
begin to access Medicare in
2011
• Medicare enrollment
increases from 44 million to
79 million by 2030
• 52 million Americans will be
uninsured in 2010
• National healthcare costs as
a percentage of GDP are
unsustainable - $4.4T by
2018 or 20%
And We Continue to Live Even Longer
Estimate of New Medicare Enrollees
4,500,000
4,000,000
3,500,000
3,000,000
20% of U.S. Population will
be 65 or older by 2030
2,500,000
2,000,000
1,500,000
1,000,000
500,000
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Estimate of New Medicare Enrollees
11
Federal Spending Concerns in 2015
• Aging population – “Boomers”
• Per capita healthcare costs
• Expansion of federal subsidies
for health insurance coverage
• Medicaid ACA provisions
• Federal subsidies – Tiers based on
138% above federal poverty level
• Interest on the federal debt
• U.S Healthcare sector as % of
GDP
• 2011 – 17.3% ($2.7T) or $8,680/p.c.
• 2012 – 17.2% ($2.8T) or $8,915/p.c.
• Projected 2015 costs at $3.2T
Source: CBO Economic Outlook 2015 -2025
12
Hospital Challenges in 2010
•
•
•
•
•
•
•
Costs exceeding revenue growth
Declining patient volumes
Reimbursement cuts FY’11 – FY’13
Reforms point to Episode Based Payment
Eliminate unprofitable service lines
Reduce risk of costly readmissions
Capital decisions focused on long term clinical and
economic utility (e.g. EMR, vertical integration, service line
strategies)
13
Hospital Challenges Are No Different in 2015
•
•
•
•
•
•
•
Costs exceeding revenue growth
Declining patient volumes
Reimbursement cuts continue (e.g Tax Relief Act)
Reforms point to Episode Based Payment
Eliminate unprofitable service lines
Reduce risk of costly readmissions
Capital decisions focused on long term clinical and
economic utility (e.g. EMR, vertical integration, service line
strategies, physician employment, partnering with health
plans)
14
1
AGENDA
• FUNDAMENTALS
2
• RETROSPECTIVE REVIEW OF HEALTHCARE CLIMATE
3
• RECOVERY ACT OF 2009 & THE AFFORDABLE CARE ACT OF 2010
4
• UNDERSTANDING VALUE-BASED HEALTHCARE
5
• HEALTHCARE FUTURES
15
American Recovery and Reinvestment Act of 2009
Infrastructure for Health Reform
• Healthcare Information Technology for Economic and Clinical
Health (HITECH) Title
• Electronic Medical Record (EMR) - $28B
• Meaningful Use phase one deadline – 2011
• 2015 deadline for EMR adoption
• Comparative Effectiveness Research - $1.1B
• Prevention and Wellness Programs
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Electronic Medical Record Connects Points of Care
Establishes Foundation for Payment Reform
Imaging Center #1
HOPPS
Clinic A
Phys. Fee
Schedule
Long Term
Care Hospital
Long Term Care PPS
Hospital A
Acute IPPS
Electronic Medical
Record
Clinic B
Phys. Fee
Schedule
Clinic C
Phys. Fee
Schedule
Clinic D
Phys. Fee
Schedule
Imaging Center #2
HOPPS
Skilled Nursing
Facility
SNF PPS
Hospital B
Acute IPPS
Ambulatory Surgical
Center
ASC Payment System
17
Electronic Medical Record Connects Points of Care
Establishes Foundation for Payment Reform
Electronic
Medical Record
18
A Red Letter Day for Healthcare
March 23, 2010
• Patient Protection and Affordable Care Act (H.R. 3590)
and Health Care and Education Reconciliation of 2010
(H.R. 4872) signed into law.
• Medicare Trust insolvency date extends to 2029
• 21.2% physician payment cut – June 1, 2010
•
•
Jobs Bill is in a state of flux – extends cut until October 1, 2010
Sustainable Growth Rate formula is a $250B problem
19
Health Reform’s Final Detour to the Oval
Office in 2010
House passed the
Senate’s bill and
provided reconciliation
bill
Affordable Care Act (ACA) of 2010
Tenets of the New Health Economic Law
• Access -
• Potential for 38 million more covered lives*
• 92% of Americans would be covered
• Quality – Active purchaser of healthcare services
• Volume-based to Value-based
• Physician-centric to patient-centric care
• Cost – Making healthcare affordable
• Extends life of the HI Trust Fund (Part A) for 13 years (2030)**
• Independent Payment Advisory Board (IPAB) – Delayed
• Contain Medicare cost growth
• Mandate board to be functioning Jan. 1, 2014
Sources: CBO – Updated Estimates of Insurance Coverage Provisions of ACA – April 2014* &
CBO – The 2014 Long-Term Budget Outlook (July 2014)**
21
Timeline of Health Policy and Medicare Rule Making
Impacts on Medical Imaging
July 2010 – MPPR
Increases from
25% to 50% on TC
2010
MPPR – Extended to PC on
all secondary studies by
25% - Jan. 1, 2012
2012
2011
Advanced imaging
utilization rate (CT
& MR) increases to
75%
New CT
Abdomen/Pelvis
Codes in effect,
Jan. 1, 2011
Separate Cost Center
reporting for CT, MR,
and DX Cath for
hospitals – Impact to
OPPS rates, Jan. 1, 2014
2013
Medical
Device Tax on
First Sale
Jan. 1, 2013
Physician
Office/Center
Accreditation for
Advanced Imaging
Jan. 1, 2012
Advanced imaging selfreferral equipment
ownership rule Jan. 1,
2011
MPPR extended to
TC Dx
cardiovascular
codes – Jan. 1, 2013
2014
2015
Jan. 1, 2014 – CT & MR
Equipment Utilization
increases to 90% (Tax
Relief Act ‘13)
Recalibration of CT
and MR procedure
weights – Jan. 1,
2014
22
H.R. 2 - Physician Payment Reform’s Pathway in
2015
Medicare Physician Fee Schedule Conversion Factor
Historical Timeline Through March 31, 2015
$40.00
$36.79
$35.00
$34.59
$37.34
$37.90
$37.90
$37.90
$36.18
$35.98
$38.09
$38.09
$36.87
$36.07
$35.82
$35.13
$34.07
$34.07
$33.98
$34.02
$145 billion cost to taxpayers
$30.15
$30.00
$34.04
Rate
$28.39
Where we were in 2010
$25.00
$35.82
$28.22
$25.50
$24.67
$25.00
2012
2013
$25.71
$20.00
$15.00
2003
2004
2005
2006
2007
2008A
2008B
2009
2010
2011
2014
2015A
Year
CMS Final Rule Conversion Factor
Congressional Relief Final Rule
Meant to be addressed in 2010, but cost would have
been a roadblock for health reform.
24
A Bipartisan/Bicameral Solution in 2015?
H.R. 2 – The Medicare Access & CHIP Reauthorization Act
• Eliminates the Sustainable Growth Rate (SGR) Formula
• 0.5%/year rate increase from 2016 – 2019
• Payment freeze from 2020 -2025 @ 2019 rate
• Replaces SGR with Merit-Based Incentive Payment System
(MIPS) or an Alternative Payment Model (APM) program
• Providers participation in MIPS
• Value-based in design and measurement
• Budget-neutral approach
• APM participation
• Providers receiving significant portion of payments via APM would
receive a 5% lump sum payment equal to their Medicare payments
• Incentive payment based on prior year
25
1
AGENDA
• FUNDAMENTALS
2
• RETROSPECTIVE REVIEW OF HEALTHCARE CLIMATE
3
• RECOVERY ACT OF 2009 & THE AFFORDABLE CARE ACT OF 2010
4
• UNDERSTANDING VALUE-BASED HEALTHCARE
5
• HEALTHCARE FUTURES
26
Delivery Reforms in New Law - 2010
• Pilot program for Episode Based Payment
• Phase-out of Fee for Service reimbursements
• Pilot program for Accountable Care Organizations –
Coordinate care of patient
• Readmission Penalties
• Value-Based Purchasing
Quality-Based Reimbursements
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Examples of Healthcare Places of Service
Imaging Center #1
Clinic A
Skilled Nursing
Facility
Hospital A
Clinic B
Hospital B
Long Term
Care Hospital
Clinic C
Ambulatory
Surgical Center
Clinic D
Imaging Center #2
28
Payment Systems for Place of Service
Imaging Center #1
HOPPS
Clinic A
Phys. Fee
Schedule
Skilled Nursing
Facility
SNF PPS
Long Term
Care Hospital
Long Term Care PPS
Hospital A
Acute IPPS
Clinic B
Phys. Fee
Schedule
Hospital B
Acute IPPS
Clinic C
Phys. Fee
Schedule
Ambulatory
Surgical Center
ASC Payment
System
Clinic D
Phys. Fee
Schedule
Imaging Center #2
HOPPS
29
One Payment System - (Episode Based Payment)
Eliminates Fee for Service
Imaging Center #1
Inpatient
Rehabilitation
Clinic A
Clinic B
Long Term
Care Hospital
Clinic C
Hospital Episode
Based
Payment
Ambulatory
Surgical Center
Skilled Nursing
Facility
Home
Healthcare
Clinic D
Imaging Center #2
Consolidates payment over
continuum of care. Ends
fragmentation & duplicity
30
Accountable Care Organizations
st and July 1st,
Pilot Program Launch – April
1
• Shared Savings Program
2012• 3 year participation
Part B
•
•
Part B
Part B
Part A
Promotes accountability for a patient
population that coordinates care
under Medicare Parts A & B.
Encourages investment in
infrastructure & redesign of care
processes
•
•
•
•
•
Primary care (e.g. GP, IM,
Geriatric, & FP) – 75%
Electronic Health Record not
required
Prospective beneficiary
assignment – 5K minimum
Two Track option – 50/60%
33 measures/4 domains
Prevention & Wellness
“3 Part Aim”
Must achieve quality and spending
benchmarks
31
Episode of Care
Patient Home (Monitoring,
Wellness and prevention)
Post-acute care (SNF, Long
Term Care, Inpatient
Rehab, home health,
follow-up PCP visits)
Acute Care (Medical or
surgical acute care
services)
Access Point (Primary care,
Specialist, Diagnostics,
Emergency Dept.)
Service Line Center
(Procedure preparation,
post discharge care
coordination)
32
Episode of Care Payment Bundling – Redefining Integrated Care
Radiology from Profit to Cost Center in 2015
33
Bundled Payments for Care Improvement Initiative
Model Type
Model #1 –
Inpatient Stay
Only
Model #2 –
Inpatient Stay
& Postdischarge
Services
Model #3 –
Postdischarge
Services Only
Model #4 –
Inpatient Stay
Only
Providers
PGP, IPPS acute care
facility, health systems,
PHO, and conveners of
health providers
PGP, IPPS acute care
facility, health systems,
PHO, and conveners of
health providers
PGP, IPPS acute care
facility, health systems,
PHO, sub-acute care,
and conveners of
health providers
PGP, IPPS acute care
facility, health systems,
PHO, and conveners of
health providers
Payment of Bundle
Discounted IPPS
Retrospective
comparison – Target
versus FFS actual
Retrospective
comparison – Target
versus FFS actual
Prospectively set
payment
Targeted clinical
conditions
All MS-DRGs
Proposed MS-DRGs by
applicant for IP stay
Proposed MS-DRGs by
applicant for IP stay
Applicants propose
based on MS-DRG IP
stay
Types of Services
Included in Bundle
Inpatient hospital
services
Inpatient, post-acute,
related readmissions,
and other services
defined in bundle
Post-acute, related
readmissions, and
other services defined
in bundle
Inpatient hospital and
physician services
Features
34
Response to Opportunities
• Promoting clinical and economic value of technologies:
• Dynamic Volume CT for diagnosing acute stroke and post-intervention
follow-up
• VL technologies in promoting transradial approach vs. femoral for cardiac
catheterization
• Non-contrast MRA for imaging patients with renal insufficiency and
diabetic patient demographic
• UL versus NM for myocardial perfusion analysis – Isotope availability and
reduced patient risk
• UL musculoskeletal imaging for soft tissue studies versus MRI.
Technologies must prove clinical utility, economic value and aid in
improving outcomes
35
Medical Imaging in Value-Based Healthcare
• Imaging must demonstrate value in patient care
• Value of imaging in Episode of Care payment model
•
•
•
•
Pre-operative planning
Diagnostic workup
Post discharge follow-up care
Used to prevent readmissions
• Value of imaging in an Accountable Care Organization
• Where will imaging be provided?
• Where will radiologists fit within the model
• Comparative Effectiveness
• Evaluate clinical pathways through EHR data collection
• Provides a baseline for development of evidence-based medicine
• Understand who is THE purchaser of healthcare services
36
1
AGENDA
• FUNDAMENTALS
2
• RETROSPECTIVE REVIEW OF HEALTHCARE CLIMATE
3
• RECOVERY ACT OF 2009 & THE AFFORDABLE CARE ACT OF 2010
4
• UNDERSTANDING VALUE-BASED HEALTHCARE
5
• HEALTHCARE FUTURES
37
What We Considered in 2010
• Two election cycles (2010 and 2012) prior to 2014
• More changes to come?
• Medicare program legislative and regulatory evolution
• Diagnosis Related Groups – 1983
• Stark anti-referral laws - 1993
• Balanced Budget Act of 1997 – (Sustainable Growth Rate
introduced)
• Medicare Modernization Act of 2003 – Medicare Part D
• Deficit Reduction Act of 2005
• Medicare Improvements for Patients and Providers Act 2007
• Patient Protection and Affordable Care Act - 2010
38
“What We Said in 2010”
Market Moves Ahead of Federal Government
• Reimbursements will continue to decrease
• New payment systems will evolve that are patientcentric, quality focused
• UPMC, Mayo Clinic, Cleveland Clinic, Geisinger,
Intermountain Health, Kaiser, Merit/Sanford, Beth Israel
Deaconess and Bon Secours are steps ahead of federal
intervention:
•
•
•
•
Hospitals hiring physicians or acquiring groups
Regional Integrated Delivery Networks emerging
Electronic Medical Records for efficiency and decision support
Hospitals have financial means to absorb new payment paradigm
39
What to Expect in a Post Reform Market in
2010
• Market Consolidation
• Providers - Decision to ‘stand alone” or merge
• Accountable Care Organizations
• National players
• Regional players – Greater access to capital markets
• Insurance industry mergers, acquisitions, and market exits
• Standardization of care – ½ of all healthcare in US unsupported by
evidence based guidelines
• Cost-shifting by employers, insurance companies, and providers –
expect to pay more (e.g. baggage, food, drinks, pillows, and
blankets)
• Ancillary businesses must adapt to change
• Greater personal accountability
40
Market Trends – Hospitals in 2015
•
•
•
•
•
•
•
Partnering with Payers
• Redefining networks
• Private label community insurance products
• Administrative synergies to leverage operating margins
Partnering with Low-Acuity Clinics (e.g. Minute Clinics)
Partnering with Physicians (e.g. aligment/employment)
Partnering with Home Health agencies
Consolidation and “right-size”
• Payment models focused on outpatient market
• Inpatient volumes declining and admission index higher acuity
• Eliminating unprofitable service lines
Market pressures from quality, cost, and outcome requirements:
• Readmission penalties and poor quality will drive market exits
Medicaid expansion and non-expansion market impacts
41
Market Trends
Health Insurance Exchanges in 2015
• Commercial payers dropping providers from contracts
•
•
•
•
Eliminating high cost providers – 60 day out clause
Narrowing networks to contain costs
Providers challenged Medicare Advantage reductions
Electing to stay in network defaults to HIX reimbursements
• Health plan benefit requirements
• “Ten” essential benefits
• Administrative requirements regarding premiums – 85%
rule
• No benefit denial – pre-existing conditions
• Challenged to maintain “affordable” health plan
• Transforming from Payer to Provider (e.g. Highmark)
• Administrative delay for medium-sized employers until
2016
42
Market Trends
Retailing Transformation in 2015
•
Pricing transparency
• NC law – Healthcare Cost Reduction & Transparency Act
• All hospitals report prices for the 140 most common inpatient,
surgical and imaging services performed – Effective Jan. 1, 2014
• Payments from Medicare, Medicaid, and top five commercial plans
available to patients and providers
• Hospitals must outline charity care policies on state’s website
•
Retailing of healthcare – Migration from wholesale
•
•
“Uber-ization” of diagnostics marketplace
Migration to high-deductible health plans
• Urgent care market segment
• Low-acuity services – CVS local alignment with hospitals
• Employer-based market migration driving shift
• Creates demand for price
• Lead to retailing of healthcare services
43
Remember When They Ruled the Skies?
44
…..and Who Rules in 2015?
45
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