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HEALTH CARE REFORM HEALTH CARE REFORM – An Overview– An Overview

Kenneth W. Kizer, MD, MPHAlaska State Hospital and Nursing Home Association

Fairbanks, AKSeptember 7, 2010

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Presentation ObjectivePresentation Objective

1. Place the recently enacted health care reform legislation in context

2. Provide an overview of the legislation and highlight some of the changes that it will bring and their implications

3. Help you understand that a sea change in health care is under way

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HEALTH CARE IS ENTERING A PERIOD OF “CLASS 5 CHANGE”

WHAT’S CAUSING THE ‘RAPIDS’? WHAT’S CAUSING THE ‘RAPIDS’?

1.1. The need to control the The need to control the growth of health care costsgrowth of health care costs

2.2. The need to improve quality The need to improve quality and safety and safety

3.3. Not enough caregivers Not enough caregivers

4.4. The need for new facilitiesThe need for new facilities

5.5. Changing patient needs and Changing patient needs and expectationsexpectations

6.6. Biomedical science advancesBiomedical science advances

7.7. New technologiesNew technologies

8.8. The struggling economy The struggling economy

9.9. The health IT revolutionThe health IT revolution

10.10. The health care reform law The health care reform law

THE CONFLUENCE OF THESE THE CONFLUENCE OF THESE FORCES IS DRIVING A FORCES IS DRIVING A

FUNDAMENTAL TRANSFORMATION FUNDAMENTAL TRANSFORMATION

OF HEALTH CAREOF HEALTH CARE

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THE FORCES DRIVING HEALTH CARE THE FORCES DRIVING HEALTH CARE CHANGE ARE NOT CAUSED BY THE CHANGE ARE NOT CAUSED BY THE

HEALTH CARE REFORM LEGISLATION.HEALTH CARE REFORM LEGISLATION.

THE LEGISLATION IS MERELY THE WAY THE LEGISLATION IS MERELY THE WAY THAT ELECTED POLICY MAKERS HAVE THAT ELECTED POLICY MAKERS HAVE CHOSEN TO ADDRESS THE PROBLEMS CHOSEN TO ADDRESS THE PROBLEMS

WITH HEALTH CARE WITHIN THE WITH HEALTH CARE WITHIN THE CONTEXT OF AMERICAN CULTURE.CONTEXT OF AMERICAN CULTURE.

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What is the Health Care Reform Law?What is the Health Care Reform Law? The most far-reaching health care legislation since

Medicare was enacted in 1965 Refers to 2 specific legislative acts

The Patient Protection and Affordable Care Act of 2010 (PPACA) - PL 111-148, enacted March 23, 2010

The Health Care and Education Affordability Reconciliation Act of 2010 (HCERA) - PL 111-152, enacted March 30, 2010

The legislation seeks to: Expand access to health care by increasing insurance coverage

and pay for the expansion Reform health insurance practices Improve the quality of care Control the rate of increase of health care expenditures

Changes are incrementally implemented, beginning in 2010 and extending well beyond 2014

Legislation that affects everyone involved with health care

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Selected Statistics About the Health Selected Statistics About the Health Care Reform LawCare Reform Law

Expands health insurance coverage to 34 million persons

Guarantees that 94% of Americans will have health insurance of some type

Is projected to cost $938 B over the next 10 years Is projected to extend solvency of the Medicare

Trust Fund by 12 years (to 2029) Is projected to cut the federal deficit by $143 B

over the next decade Medicaid will become larger than Medicare

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Patient Protection and Affordable Patient Protection and Affordable Care Act of 2010Care Act of 2010

I. Quality, Affordable Health Care For All AmericansII. Role of Public ProgramsIII. Improving the Quality and Efficiency of Health CareIV. Prevention of Chronic Disease and Improving

Public HealthV. Health Care WorkforceVI. Transparency and Program IntegrityVII. Improving Access to Innovative Medical TherapiesVIII. Community Assistance Services and SupportsIX. Revenue ProvisionsX. Strengthening Quality, Affordable Health Care For

All Americans

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A Dozen Highlights of the PPACAA Dozen Highlights of the PPACA1. Requires all individuals to have health insurance2. Fundamentally reforms the health insurance market3. Expands Medicaid coverage 4. Provides incentives for employers to provide coverage 5. Creates state health insurance exchanges6. Changes the tax laws related to health insurance7. Makes numerous changes to Medicare8. Links provider payment to performance and establishes

new payment models 9. Expands coverage for health promotion/disease prevention

services10. Increases availability of long term care services11. Increases performance reporting for providers12.Funds numerous research and demonstration grants

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Title I. Quality, Affordable Health Care For All Title I. Quality, Affordable Health Care For All AmericansAmericans

Changes health insurance practices Prohibits discrimination based on pre-existing conditions, health

status and gender; lifetime or annual limits; recissions Restricts age rating Guarantees renewability of individual coverage Expands health promotion/disease prevention care Sets acceptable medical loss ratios

Creates a temporary high risk insurance pool for uninsured persons with pre-existing conditions

Creates state health insurance exchanges for individuals and small businesses (allows interstate exchanges)

Establishes tax credits for small businesses who provide coverage and cost-sharing assistance

Establishes performance reporting requirements for private health plans (quality, how premium is spent)

Requires that individuals maintain “minimum essential coverage”

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““Minimum Essential Coverage”Minimum Essential Coverage”1. Ambulatory patient services

2. Emergency services

3. Hospitalization

4. Maternity and newborn care

5. Mental health and substance use disorder services, including behavioral health treatment

6. Prescription drugs

7. Rehabilitative and habilitative services and devices

8. Laboratory services

9. Preventive and wellness services and chronic disease management

10.Pediatric services, including oral and vision care

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Title II. Role of Public Programs Title II. Role of Public Programs

Expands eligibility for Medicaid to persons <65 with incomes below 133% FPL (federal government to fund 100% of the cost for newly eligible persons from 2014-2016, decreasing to 90% in 2020)

Increases Medicaid payment for PCPs in 2013 & 2014 Increases federal contribution to CHIP (2015-2019) Requires states to offer home and community-based

services and supports Reduces Medicaid DSH allotments (2014-2020) Requires performance measures for Medicaid (adult) Establishes demonstration projects for:

Episode of care bundled payment for MedicaidMedicaid global payment system

Expands MCH home visiting programs Creates a special office to coordinate coverage and

payment for dual eligible beneficiaries

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Title III. Improving the Quality and Efficiency of Title III. Improving the Quality and Efficiency of Health Care Health Care

Establishes a Medicare value-based purchasing (VBP) program with incentive payments based on performance

Reduces physician payment if quality measures not reported; adjusts payment based on performance metrics

Establishes a VBP program for SNFs and HHAs Reduces hospital payments if hospital is among the top 25%

for hospital-acquired conditions Calls for a national strategy to improve health care quality Establishes the Center for Medicare and Medicaid Innovation Establishes a Medicare Shared Savings program using

accountable care organizations and a pilot program on payment bundling

Reduces DSH payment and payment to hospitals, SNFs, HHAs, hospice, lab, other

Creates an Independent Medicare Advisory Panel to reduce rate of growth of Medicare spending

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Title III. Improving the Quality and Efficiency of Title III. Improving the Quality and Efficiency of Health Care (con’t) Health Care (con’t)

Provides support for:Health care delivery system researchQuality improvement technical assistanceCommunity health teams to support PCMHMedication managementRegionalized systems for emergency careTrauma care centersShared decision makingPatient navigator programs

Reduces payment for excess readmissions to a prospective payment system hospital and establishes a hospital readmissions reduction program

Increases payment for certified nurse midwives and ambulance services provided by critical access hospitals

Changes how Medicare payment is computed Establishes a community-based care transition program

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Title IV. Prevention of Chronic Disease and Title IV. Prevention of Chronic Disease and Improving Public Health Improving Public Health

Eliminates co-pays and deductibles for preventive care and health education

Improves education on disease prevention and public health and supports research on delivery of preventive services

Establishes the National Prevention, Health Promotion and Public Health Commission and authorizes development of a national prevention and public health strategy

Establishes a Preventive and Public Health Fund and preventive services task forces in AHRQ and CDC

Provides grants for community preventive health activities, healthy aging, and worksite wellness programs

Calls for demonstration projects for individualized wellness plans using community health centers

Calls for a prevention and health promotion outreach and education campaign

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Title V. Health Care Workforce Title V. Health Care Workforce

Increases funds for the National Health Service Corps Provides grants, loans and other support to expand the

health care workforce (especially primary care practitioners and public health workers)

Provides incentives for primary care practitioners and for providers to serve underserved areas

Establishes a National Health Care Work Force Commission and a National Center for Health Care Workforce Analysis

Provides funds for nurse managed health clinics Creates a Primary Care Extension Program

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Title VI. Transparency and Program Integrity Title VI. Transparency and Program Integrity

Requires physicians to disclose ownership of hospitals, medical equipment and nursing homes

Enhances efforts to combat waste, fraud and abuse Will establish a private, non-profit entity to identify

priorities for and provide for the conduct of comparative outcomes research

Requires Pharmacy Benefits Managers to disclose performance information

Requires SNFs and Nursing Facilities to have ethics program

Establishes demonstration projects for SNF best IT practiced

Establishes a Patient-Centered Outcomes Research Institute and Research Trust Fund

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Title VII. Improving Access to Innovative Medical Title VII. Improving Access to Innovative Medical Therapies Therapies

Will establish a regulatory pathway for FDA approval of biologically similar versions of previously licensed products

Expands scope of the existing 340B drug discount program to increase access to medicines at lower cost for children’s hospitals, cancer hospitals, critical access hospitals and underserved communities

Requires manufacturers to offer covered drugs for purchase at reduced prices

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Title VIII. Community Assistance Services and Title VIII. Community Assistance Services and Supports (CLASS) Supports (CLASS)

Provides for a lifetime cash benefit for long-term supports and services to help persons with severe disabilities remain in their homes through a national voluntary, self-funded insurance program provided through employers

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Title IX. Revenue ProvisionsTitle IX. Revenue Provisions

Adds requirements for charitable hospitals to maintain tax incentives

Assesses fees for medical device manufacturers and pharmaceutical companies

Increases Medicare Hospital Insurance tax by 0.5% for persons with annual incomes greater than $200K (couples > $250K)

Establishes a tax on high cost health insurance plans Multiple other miscellaneous new charges

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Title X. Strengthening Quality, Affordable Health Title X. Strengthening Quality, Affordable Health Care For All AmericansCare For All Americans

Creates an incentive payment program for states that offer home and community-based LTC services

Requires development of more outcome performance measures for hospitals, physicians and other providers

Protects prospective payment hospitals in frontier states Creates pilot pay-for-performance programs for long-term

care, psychiatric, rehabilitation and some other hospitals and hospice programs

Requires public reporting of physician performance Provides grants for community-based collaborative care

networks for low-income populations Establishes a Family Nurse Practitioner Training Program Provides grants for training rural physicians and public

health programs

PPACA Implementation Timeline

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PPACA Implementation Timeline HighlightsPPACA Implementation Timeline Highlights

2010 Numerous health insurance practice reforms Dependent coverage Medicaid expansion – state option Small business tax credits Coverage of preventive care

2011 Medicare Part D discounts CLASS offerings

2012 Quality reporting by health plans

2013 Insurer administration simplification rules Health care choice compact regulations

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PPACA Implementation Timeline HighlightsPPACA Implementation Timeline Highlights

2014 Individual requirement to have health insurance Further health insurance practice reforms Medicaid expansion Guarantees availability and renewability of coverage State health insurance exchanges operational Employer shared responsibility penalties Increase in small business tax credits

2016 Health care choice compact implementation

2018 Excise tax on high-cost employer-provided health plans

becomes effective

The PPACA entails an The PPACA entails an enormous amount of enormous amount of

detailed change. detailed change.

A FEW THINGS TO KEEP A FEW THINGS TO KEEP IN MIND IN MIND

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IT’S A JOURNEYIT’S A JOURNEY

1. PPACA IS A MAJOR MILESTONE IN THE TRANSFORMATION OF AMERICAN HEALTH CARE, BUT THE JOURNEY HAS BEEN UNDERWAY FOR SOME TIME

2. HUNDREDS OF SETS OF IMPLEMENTING REGULATIONS HAVE YET TO BE WRITTEN

3. THERE WILL BE UNPLANNED OCCURRENCES AND UNINTENDED CONSEQUENCES

4. COURSE CORRECTIONS WILL BE NEEDED 5. THERE WILL BE MORE HEALTH CARE

REFORM LEGISLATION

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THE WAY WE THINK ABOUT HEALTH THE WAY WE THINK ABOUT HEALTH CARE HAS TO CHANGE CARE HAS TO CHANGE

6. It’s about the quality, not quantity, of services provided

7. Payment will be increasingly based on value – and constrained

8. Historical levels of waste and inefficiency can no longer be accepted

9. Performance improvement is an essential business strategy

““ALL HEALTH CARE IS ALL HEALTH CARE IS LOCAL”LOCAL”

THE FUTURE IS NOT THE FUTURE IS NOT WHAT IT USED TO BE! WHAT IT USED TO BE!