Transcript Health reform options still on the table (1/25/10)

Executive Briefing:
The Patient Protection and Affordable Care Act
and Disruptive Innovators
Scottsdale Institute
Paul H. Keckley, Ph.D.
Executive Director
Deloitte Center for Health Solutions
Washington DC
April 15, 2010
The economy was beginning its downturn
Health care since the Clinton era
Uninsured
Percent uninsured by
age group
Health care spending
As percentage of gross
domestic product
Insurance premiums
Cumulative growth
* The Children’s Health Insurance Program, created in 1997, has significantly reduced the number of low-income children who are uninsured.
Sources: Employee Benefit Research Institute estimates of data from the Current Population Survey. Centers for Medicare & Medicaid Services,
Office of the Actuary: Data from the National Health Statistics Group. Kaiser Family Foundation/HRET Survey of Employer-Sponsored Health
Benefits, 1999–2008, and Kaiser analysis of data from bureau of Labor Statistics.
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Cost of workers
Average monthly worker
premium contributions
The New York
Times
Copyright © 2010 Deloitte Development LLC. All rights reserved.
Predisposition of voters: “The US system underperforms and is expensive…”
How would you grade the overall performance of the U.S. health care
system?
38%
20%
Unfavorable
report card
grades are
more likely
among Gen X
and Boomers
(4 in 10) than
among Gen Y
and Seniors
(3 in 10)
Deloitte’s 2009 Survey of Health Care Consumers
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Copyright © 2010 Deloitte Development LLC. All rights reserved.
Overview: The two bills become the “Act”
On March 23, 2010, the President signed the Senate bill (HR3590)
On March 30, 2010, the President signed the House Reconciliation bill
(HR4872) that passed the Senate—includes amendments/changes to the
Senate bill
The bill features…
• Expanded coverage—32 million newly insured through Medicaid and private subsidized
coverage
• Insurance industry reforms—health insurance exchanges, premium reviews, guaranteed
issue, elimination of lifetime limits and pre-existing conditions
• Delivery system reforms—comparative effectiveness, coordination of care, transparency,
value-based purchasing
According to the Congressional Budget Office, the bill costs $938 billion
(2010-2019) and results in a deficit reduction of $138 billion
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Copyright © 2010 Deloitte Development LLC. All rights reserved.
The Patient Protection and Affordable Care Act includes many
programs that increase access and change the insurance
system short term, and re-structure the delivery system long
term
Three Major Goals
Increased Access
Reduced Costs
Improved Quality
Medicaid expansion
Comparative effectiveness
Comparative effectiveness
SCHIP expansion
Medical home
Subsidies for low income
households
Preventive health
Long term care expansion
(new)
Accountable care organizations
Essential benefits: HHS
Electronic health records
Workforce re-design
Delivery system integration
LTC expansion
Connect health & human
services
Focus: under-served populations
Overhaul: FDA
Overhaul: CMS
Insurance reforms: preexisting conditions, lifetime
limits, premium reviews,
health exchanges
Expansion of community
health services & primary
care
Bundled payments
Centers for Innovation
Value-based purchasing
Administrative simplification
Fraud and waste surveillance
Leverage government purchasing:
power,
Independent Medicare Payment
Commission
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Implementation spans a decade
While there are immediate reform elements to address, most of the bigger
impacts will take place in the next 3-5 years
2010
2011
2012
2013
2014
2015
2016
2017
2018
Temporary reinsurance program & temporary high-risk insurance pool
Premium
Subsides to
Employers
Temporary reinsurance/
risk pool ends
Business Tax Credit for <25 people at 35% in 2010, increases to 50% in 2014
Taxes and Fees
2.5B fee on drug makers
Tanning Salon Tax
Medicare Drug Rebates
Medicare /
Medicaid
Annual fee on drug makers increase in 2016, 2017 and 2018
2.3% excise tax on medical devices
2B fee on
health plans
Medicare tax increases, reduced HSA contribution
Excess tax on high-cost insurance
plans
Close ‘doughnut hole’ by 2020
Primary Care 10% Bonus for Medicare; Brand name drug discount; Comprehensive Risk Assessment
Freeze payments to MA plans
Medicaid expanded to 133% FPL
Reduce projected Medicare payments
Dependent
children coverage
until 26
Private
Insurance
Create new Medicaid State Plan; Community First Choice Option
Annual $8 billion fee imposed on
Health care choice
Process to review health plans
health insurance companies
compacts created
Health Insurance Rebates
Ban on lifetime limits to policyholders and on denying
coverage to children with pre-existing
–
conditions
Small group >100 able to purchase
Increase health insurance company annual fees in 2015, 2017 and 2018
Preventive
State Role
Imp. Quality
Long Term Care
Eliminate cost sharing for preventive services in Medicare/Medicaid
Plans required to cover preventive services
Enroll newly eligible Medicaid beneficiaries into Medicaid
Newly eligible final enrollment
program
Non profit insurance co-ops
Essential Health Benefit Package created
Increased Funding Community Health Centers
Natl. quality
imp. strategy
Non – profit Patient Centered Outcomes Research Institute
Primary Care Bonus End
CLASS Act
Ind. Mandate
Employer
Americans without health
insurance pay penalties
Increased penalty for Americans without insurance
Req
Companies with >50 employees fined if FTE qualify for federal health care subsidies
Subsidies
Health
Insurance
Exchanges
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Federal subsidies offered
to offset insurance cost
State Based Health Insurance
Exchange created
Law planned to begin
Law planned to end
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Reforms will also occur in state and federal venues as well
as constitutional challenges to key features of the bill
Federal health reforms
through a la carte bills
Examples:
State health reforms
Examples:
• Data exclusivity: biologics • Universal access
• Insurance reforms:
antitrust exemptions,
guaranteed issue
• Liability reforms i.e.
medical courts/safe
harbors
• Medicaid eligibility &
benefits standards
• Comparative
effectiveness
• Safe harbors & physician
ownership
• Long-term care
coordination
• HIPAA, privacy & security
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• Individual mandates
• Employer mandates
• Workforce scope of
practice & licensing
Medicare (CMS) driven
reforms
Examples:
• Accountable care
organizations
• Episode based
payments
• Fee schedules
• Health-human services
connectivity
• Safety, quality
measurements
• Health Information
Exchanges
• Community-benefit &
NFP eligibility
• Price transparency
• Medical education
• Medicaid expansion
• Clinical information
technology adoption
• ICD-10 adoption
• Personalized
therapeutics &
companion diagnostics
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Impact on delivery system: Shift from volume-based
payments to value-based purchasing, incentives for
coordination, quality (adherence to evidence) and
efficiency
Big changes
• Implementation of
comparative effectiveness to
drive out waste and
inappropriate variation
• Implementation of episode
based payments, medical
homes and value based
purchasing to change
incentives from volume to
value
• Implementation of
Independent Medicare
Payment Commission to slow
rate of Medicare spending
Funding
Consumerism
• Medicare cuts
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• DSH payment cuts
Focus:
Preventive health
Primary Care 2.0
• Penalties for nonparticipation (employer,
individual)
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Focus: Prevention, Chronic, LTC
• Excise tax on high-cost
plans
• Industry fees
Comparative Effectiveness/EBM
Focus: (1) Personalized medicine,
(2) bundled payments, (3) provider adherence/performancebased payments (4) liability reforms
Health Care Information Technology
Focus: (1) e-prescribing, (2) fraud detection
(3) administrative simplification, (4) care coordination
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• Increased individual taxes
on higher income
individuals/households
2
1
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Implications: Hospitals
Pay attention to…
Focus on…
• Effectiveness of CMS
• Radical cost reduction and
demonstration programs and strategic capital
pilots
deployment
• CMS funding priorities:
• Physician alignment
connecting health and
strategies
human services programs,
• Clinical and administration
fraud, waste, coordination of IT deployment (HiTech,
care, variation, transparency ICD-10)
• Employer, health plan, and
• Post acute
supply chain responses to
linkages/coordination
cuts, new taxes, and
• Transparency (safety,
additional regulations
quality, guidelines)
(pressure on hospital costs
• Supply chain economies
and revenues)
• Capital markets risk
assessment
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Looking ahead…
• Strategic partnerships/
collaboration/acquisitions
• Consumerism and retail
strategies
• Transparency: prices
• Cost management: operate
at Medicare payment levels
• Gainsharing with
physicians
• Broadening definition of
health: allopathic +
alternative
• Team-based clinical
operations
Copyright © 2010 Deloitte Development LLC. All rights reserved.
Four major themes will be prominent in public
discussion, Campaign 2010…
The economy:
Economic recovery
and the consumer
quest for value
• Can we afford health reform NOW or can it wait?
• Can reforms be paid for without significant federal
spending cuts and increased taxes?
• Are incentives aligned with desirable behavior by
payers and providers?
• How can the value gap in healthcare be closed?
Balance: reduce
costs or cover
everyone
• How can the uninsured be insured?
• Should the healthy and young subsidize the older
and less healthy?
• How should personal health and accountability be
pursued?
“Big Government”
• Can government improve the system or is the private
sector a better option?
• How much government is too much, and is it
good/bad?
Politics: Change
• What does it mean for 2010 election cycle?
• How will spin benefit partisans?
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Contact information
For more information, please contact:
Paul H. Keckley, Ph.D., Executive Director,
Deloitte Center for Health Solutions
[email protected]
202-220-2150
And visit our website to subscribe to our content:
www.deloitte.com/CenterforHealthSolutions/subscribe
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Copyright © 2010 Deloitte Development LLC. All rights reserved.
Copyright © 2010 Deloitte Development LLC. All rights reserved.
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