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10/29/2012
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A Discussion About Healthcare Reform
Dan Schwebach
Vice President, AAPC Physician Services
Agenda
A look at the US Economy
Current State of Healthcare
Healthcare Reform
Case Study – Massachusetts
The Future of Healthcare and Impact on Providers / CodersCoders
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Total Government Spending for United States FY 2013
Source: www.usgovernmentspending.com Totals for FY2013
How is America Doing Financially
US Financial Position @ Year End
• U.S. Tax Revenue (Income): $2,303,000,000,000
• Federal budget (Expenses): ($3,603,000,000,000)
• New Debt: ($1,300,000,000,000)
• Total National Debt: $16,100,000,000,000
• 2011 Budget Cuts: $38,500,000,000
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If the U.S. Were a Family
Ann al Income $58 000• Annual Income: $58,000
• Annual Spending: $86,000
• New Credit Card Debt: $28,000
• Outstanding Credit Card Dept: $350,000
• Budget Cuts: $860
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U.S. Healthcare Costs Per Person
• The US spends $2.6 Trillion / year on R k C t
Per Capita
Spendin
healthcare (18% GDP)
• Average cost of $8,300 per person each year
• ~55 Million people do not have any type of healthcare coverage
Rank Country g
1 United States
$8,300
2 Norway $5,400
3 Switzerland $5,350
4 Netherlands $4,900
5 Luxembourg $4,800
$
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6 Canada $4,500
7 Denmark $4,350
8 Austria $4,300
9 Germany $4,200
10 France $4,000
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Where Healthcare Dollars Are Spent
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Funding Sources 1960 vs. 2009
8Source: USA Inc. Report – US Department of Health and Human Services
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U.S. Healthcare Costs Per Person
$13,700$14,000
$16,000
$2,854
$4,878 $5,200
$6,100
$6,870
$7,600
$8,400
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
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$147 $356$1,110
$0
$2,000
1960 1970 1980 1990 2000 2001 2003 2005 2007 2012 2020
Source: CMS, office of actuary, National Health Statistics Group
What is Driving Up Medical Costs?
System-Wide
Inefficiency
Regulatory and Admin
Activity
Aging Population
Explosion in Chronic
Illness
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What is Driving Up Medical Costs?
System-Wide
Inefficiency
Regulatory and Admin
Activity
Aging Population
Explosion in Chronic
Illness
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Administrative Burden of Medical Office
What is Driving Up Medical Costs?
• Doctor office incurs $83,000 in admin costs per doctor annually.
• 4 x higher compared to Canada
• #1 Admin Cost = Interacting with Insurance#1 Admin Cost Interacting with Insurance
• Nurse / MA average spend 20.6 hours per week on administrative tasks related to health plans.
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Source: Commonwealth Fund Report, August 4, 2011 Mary Mahon and Bethanne Fox
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What is Driving Up Medical Costs?
System-Wide
Inefficiency
Regulatory and Admin
Activity
Aging Population
Explosion in Chronic
Illness
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Medicare Costs vs. Income Projections
Source: 2009 Annual Report of Board of Trustees Federal Hospital / Medical Insurance Trust Fund
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Medicare Costs vs. Income Projections
Source: USA INC report - 2009 Annual Report of Board of Trustees Federal Hospital / Medical Insurance Trust Fund
2009 2010 moving forward
What is Driving Up Medical Costs?
System-Wide
Inefficiency
Regulatory and Admin
Activity
Aging Population
Explosion in Chronic
Illness
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Percent of Obese (BMI > 30) Adults in U.S. from 1985 to 2010
Cost of Social Factors
“An estimated 7% of $2.1 trillion healthcare costs
(including those linked to diabetes, cancer, heart /
respiratory / joint diseases) were related to obesity in 2008.
By comparison, that’s more than all corporate income taxthan all corporate income tax
revenue that year.”
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Source: Annual Medical spending Attributable to Obesity: Payer and Service Specific Estimate, Health Affairs
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What is Driving Up Medical Costs?
System-Wide
Inefficiency
Regulatory and Admin
Activity
Aging Population
Explosion in Chronic
IllnessTechnology
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Technology Impact on Costs
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Source: Kaiser Family Foundation, Statehealthfacts.org 2009 data
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Example: Robotic Surgery
Is this more or less expensive?
A Need for Reform: Perfect Storm
The country is currently in fiscal crisisy y
Healthcare represents the largest expense
Our current spending isn’t sustainable
It is unaffordable for everyone
Millions are without insurance
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Future of Healthcare Where are we headed
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3 Pillars of Healthcare
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Cost
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Health Reform
Healthcare Reform: Questions we need to ask
• Is healthcare a fundamental right?
• Who should have access to healthcare and under what circumstances?
• How should healthcare be paid for?
• What role should the government play in the healthcare economy?
• How do you control costs?• How do you control costs?
• What should be done about unfunded liabilities (e.g. Medicare)?
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Affordable Care Act (2009)
The most comprehensive reform since Medicare is intended to:intended to:
1. Provide more people with access to healthcare
2. Shift from Acute Care Model to Prevention and Wellness
3. Increase pressure on costs and cost containment –however costs are still projected to rise
4. Encourage a major IT transformation
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Reform expected to cost almost $1 trillion to
implement
ACA Changes – Insurance Reform
Reform Provision Effective
Extend adult coverage to age 26 2010
Requires health plans to cover preventive services 100% 2010
Restricts lifetime dollar limits on coverage / pre-existing condition 2010
Plans have to justify premium increases 2011
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Minimum Medical Loss Ratio for Insurers 2011
Provide Uniform Summary of Benefits to Consumers 2012
Health Insurance Exchange 2014
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ACA Changes – Financing & Taxes
Reform Provision Effective Date
Funding for fraud and abuse programs
Tax on Indoor Tanning Services 2010
Tax on Pharmaceutical companies 2012
Increase tax on earnings over $200,000 2013
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Imposes new fees on Health Insurance Sector 2014
Tax on high cost insurance 2018
ACA Changes – Medicare
Reform Provision Effective Date
Change in Medicare Provider Rates 2011
Medicare bonus payments for primary care services 2011
Increased Medicare Premiums 2011
Reduced payment for hospital readmissions 2012
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Medicare Bundled Payment Pilot Programs 2013
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ACA Changes – Medicaid
Reform Provision Effective Date
Medicaid Payment Projects 2012
Coverage of Preventive Services 2013
Reduction in DSH Payments 2013
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Extends CHIP Program through 2015 2013
Expands Medicaid Coverage 2014
ACA Changes – Employers & Individuals
Reform Provision Effective Date
Small business tax credit 2010
Required to offer coverage 2014
Individual Requirement to Have Insurance 2014
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More information: www.healthreform.kff.org/en/timeline.aspx
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Cost Estimate of ACA
Financial Impact (Congressional Budget Office Projects)
• Gross Costs ($938 billion)
• Medicare Cuts $500 billion
• Taxes $420 billion
• Penalty Payments $149 billion
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• Total Cost Surplus $143 billion
Actual vs. Estimated Spending on Medicare
Source: USA Inc. Report –Senate Joint Economic Committee Report, 7/31/2009
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PPACA vs. US Supreme Court
26 State Attorney General Offices filed legal action against the Federal Governmentaction against the Federal Government.
Main Issues Before Supreme Court
Constitutionality of the Individual Mandate
Constitutionality of the Medicaid ExpansionCo s u o a y o e ed ca d pa s o
Supreme Court ruled on the case on June 28, 2012
PPACA vs. US Supreme Court
Individual Mandate
Federal POV State POVCongress can require all Americans to purchase insurance under the commerce clause.
Mandate is unconstitutional b/c Congress does not have power to ‘compel’ citizens to become active participants in a private market.
Court sided with the Federal Government citing it had the authority under the Taxing Clause of the Constitution which grants the government the ability to Tax its citizens.
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PPACA vs. US Supreme Court
Penalty for Not Having Insurance
Federal POV State POVPenalty for not having insurance is a “Tax” imposed by IRS.
Penalty is a “penalty” not a “tax”b/c the goal of the penalty is to encourage a behavior (i.e. buy insurance) not to raise revenue
Court sided with the Federal Government citing the penalty is a tax.
PPACA vs. US Supreme Court
Constitutionality of the Medicaid Expansion
Federal POV State POVCongress is authorized to attach“conditions” to the receipt of federal funds by States under the Spending Clause of the Constitution.
Medicaid funding is so important to States that they must participate in the program.
There must be a limit to congressional regulationcongressional regulation
At what point do grant conditions imposed by Congress cross the line.
Court upheld Medicaid expansion but makes it voluntary not mandatory
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Case Study
Massachusetts Health Reform
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K C t
Case Study
Key Components
Individual Mandate to purchase insurance
Expansion of Medicaid and subsidy for individuals w/ income up to 300% FPL
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Creation insurance exchange (MA Connector)
Employer Mandate
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Case Study: Impact on CoverageIncrease in # of Insured 2006-2011
41Source: Health Reform in MA, Assessing the Results, BCBS of Massachusetts Foundation, May 2012 Report
Case Study: Impact on CoverageInsurance coverage by Type (2011)
42Source: Health Reform in MA, Assessing the Results, BCBS of Massachusetts Foundation, May 2012 Report
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Case Study: Impact on Medicaid Costs
Impact on costs from 2007-2010
State Medicaid spending increased $500M
Federal Medicaid spending increased $1.6B
Total increased Medicaid spending $2.1B
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Medicaid Waiver Helped limit impact on State Budgets
Source: Medical Expenditure Panel Survey US Department of HHS. Beacon Hill 2011 Study
Case Study: Impact on Insurance Rates
Impact on costs from 2006-2009
Single insurance premiums rose $284
Family insurance premiums rose $2,504
Medicare Advantage Plan costs increased $1 090
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$1,090
Source: Medical Expenditure Panel Survey conducted by the Agency for Healthcare Researchand Quality at the U.S. Department of Health and Human Services. Beacon Hill Institute 2011 report
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Case Study: Impact on AccessWait time (days) by specialty
Some of the longest wait times in the country
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Case Study: Impact on Access
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Largest year to year change recorded was shortly after implementing State Health Reform
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Case Study: Impact on Access
Decline in primary care practices accepting new patients
1 in 5 non-elderly adults report challenges finding
h i i h ld
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physician who would see them
Source: Health Reform in MA, Assessing the Results, BCBS of Massachusetts Foundation, May 2012 Report
Case Study: Impact on CostsMassachusetts per capita spending trend
48Source: Health Reform in MA, Assessing the Results, BCBS of Massachusetts Foundation, May 2012 Report
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Healthcare Reform
Insured – Negative Impact
Tax Payers – Negative Impact
Non-primary care providers – Negative Impact
Primary Care Providers – Positive Impact
States – Negative Impact
Young and Healthy Negative Impact
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Young and Healthy – Negative Impact
Uninsured – Positive Impact
How does this impact providers?
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Healthcare ReformImpact on Providers
More people will have access to healthcare
• Access issues will be exacerbated.• Care delivery will expand beyond the traditional physician office
• Retail clinics• Internet • Web Visits• Remote patient monitoring / Telehealth
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• Providers will have re-evaluate how they provide care to patients and non-traditional delivery models.
• Providers will need to evaluate their roles in continuum of care and learn to leverage clinical skills of mid-level providers.
Healthcare ReformPatients willingness to use alternative access models
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Healthcare ReformImpact on Providers
Shift from Acute Care Model to Prevention and Wellness
• Trend towards hospitals buying up physician practices
• Greater emphasis on Quality and Outcomes. Payment reform is focused on Value Based Purchasing
• ACO and medical home models
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• There will be a much greater emphasis on coordinating care and information. Physicians and staff will have to learn to be far more efficient with their resources and tracking information.
Healthcare ReformImpact on Providers
Increased pressure on costs and cost containment
• Efforts to curb rising costs putting downward pressure on Medicare / Medicaid rates. Continued erosion of reimbursement.
• Payment is moving away from Fee For Service towards capitation and bundled payments.
• Increasing Operational Costs (e.g. Labor costs, supplies, insurance)
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• Providers will be expected to do more with less.
• Efficiency will be critical. Practices will need to learn to be Lean.
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Healthcare ReformImpact on Providers
Healthcare will go through a major IT transformation
• Focus on EMRs will continue for the next several years.
• Health Information Exchanges will continue to grow, hopefully providing access to longitudinal information for providers.
• Increased compliance and standards associated with IT security and sharing of patient information.
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• Providers will have to become more technologically savvy and willing to adopt information technology into their practice.
• Staff will need to develop deeper computer skills
What does this mean for AAPC Members?
The need for AAPC members will increase The need for AAPC members will increase
Coding and billing is going to be more complex. Coders need to stay on top of skills and training
The need for more knowledgeable and versatile employees will be critical
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