Health Care Reform in the States

Government Research AssociationAnnual Conference

July 27, 2009Washington, D.C.

Enrique Martinez-VidalVice President, AcademyHealthDirector, State Coverage Initiatives

State Coverage Initiatives (SCI)

An Initiative of the Robert Wood Johnson Foundation

Community of State OfficialsConvening state officials

Resources and InformationWeb site: www.statecoverage.orgState ProfilesPublications/State of the States

Direct technical assistance to statesState-specific help, research on state policymakers’

questions Grant funding/Coverage Institute

Overview of Presentation

• Background• State Reform Strategies• Specific State Examples• Lessons Learned from State Reforms• Conclusion

14.9 17.7

The Non-Elderly as a Share of the Population and by Poverty Level, 2007

11%

29%

Drivers of State Health Reform Efforts

Uninsured still high Employer-sponsored insurance down Costs/premiums increasingly

unaffordable – Indiv; Families; Govt Coverage needed for effective and

efficient health care system Lack of national consensus – future? Greater political will at state level

Key Policy and Design Issues Different Populations Require Different Solutions Subsidies and Financing: Who will pay? Who will

benefit? Should Health Insurance Coverage Be Required? What is Affordable Coverage? What is the Most Appropriate Benefit Design? Do Insurance Markets Need to be

Reformed/Reorganized? Best Mechanisms for Cost Containment/Systems

Improvement

2008 State of the States(www.statecoverage.org)

What are States Doing to Reform the Health Care

System?

Key Elements of State Reform Strategies

Insurance market reforms

Public program reforms

Benefit design

Decrease insurance costs

Cost containment/system improvement

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Insurance Market Reforms States use insurance market rules to try to lower premiums,

expand choice of plans/products, and increase efficiencies

Examples Require minimum insurance medical loss ratios: CA, NJ, CO Change definition of “dependents” and extend coverage

beyond the age of 18 for students/non-students: Many states Guaranteed issue: CA No Pre-ex limitations when moving between policies

(including non-group): IA Rating factors/Bands Must offer non-group policies to offer small group policies: NJ Transparency of broker fees/commissions Merge small group and individual markets: MA Purchasing mechanism (Connector): MA, WA High risk pools

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Public Program Expansions

Increase eligibility levels Buy-in programs (esp. disabled) – sliding scale

premiums Longer eligibility periods (i.e., change from 6

mo. to 12 mo.) Outreach to eligible but not enrolled Streamline/simplify enrollment processes/auto-

enrollment strategies Waivers to support premiums for small

employers

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Benefit Design Services included/excluded; cost-sharing; structure of access to

providers

Not just cost of coverage but value of the benefit plan – what set of services are purchased for specific amount of money

Before – limit benefits; raise cost-sharing; limit networks (value issue – not worth it)

Levers within benefit design: reduce premiums encourage efficient/appropriate consumer behavior change carrier and provider behavior

Evidence-based benefit design? MN

Consumer-driven health plans? IN

First-dollar benefits? TN

Direct consumer behavior change? RI, MD, NH, FL

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Decreasing Insurance Costs

Direct and Indirect Subsidies Reinsurance Premium assistance Tax credits

Structural Changes to Lower Premium Costs Section 125 plans: MA, RI, CT, MO Administrative simplification/standardization: MN

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Cost Containment and Quality Improvement Prioritized by States

2009 State of the States – pp. 54-59 (www.statecoverage.org)

Prevention/primary care/wellness Chronic care management and coordination Public health initiatives Value-based purchasing/payment reforms Medical error reduction/patient safety Health-acquired infection reduction Price and quality transparency Heath information technology and exchange Administrative and regulatory efficiencies

Specific State Examples

Strategies for Comprehensive Reform

Maine Massachusetts Vermont

Individual Mandate

No Yes NoWill consider if

coverage targets not met

Purchasing Mechanism

DirigoChoice Health Insurance Connector

Catamount Health

Subsidies for Low-Income

Up to 300% FPL Up to 300% FPL Up to 300% FPL

Public Program Expansion

Parents <200% FPL

Childless Adults <125% FPL

Adults <100% FPL

Children <300% FPL

Builds upon previous expansions

Children <300%

Parents <185%

Childless Adults <150% FPL

Employer Requirements

VoluntaryParticipating employers must

pay 60% of premium

$295/employee fee for non-offering.

Must offer §125 Plan

$365/FTE fee for non-offering

Massachusetts Pillars of the Reform

Employer Responsibilities Section 125 Plan Requirement Offer Coverage or Be Assessed

Personal Responsibility/Individual Mandate

Expansion of Publicly-subsidized Programs

Major Changes to Insurance Market Merged Small Group and Individual Markets Raising age of dependents – up to 25 Connector – Purchasing Mechanism NOT a Risk Pool

Current State of the Commonwealth

More than 439,000 newly-insured between June 2006 and March 31, 2008

191,000 more in private coverage (no public $$) – more than 40% of all newly covered have no subsidies

Employer-sponsored insurance remains predominant source of coverage (82% of non-elderly): no crowd-out

Non-group premiums are down over 40% and membership has grown over 50%

Approximately 1-2% of the MA population or 60,000 persons may be exempted from the mandate

Oregon: HB 2116 – Expanding Coverage

Children: “Healthy Kids” Access to comprehensive health care coverage for uninsured

Oregon children up to age 19 Options for families at all income levels Simplified application and enrollment processes Enhanced outreach to children in under-served communities Covers 80,000 currently uninsured children

Low-income adults: OHP Standard Covers approximately 60,000 uninsured, low-income adults Provides limited coverage, including medical, emergency dental,

mental health, prescription drug and chemical dependency services

Financing Restructures and renews provider taxes to replace those that

sunset October 1, 2009. Funded by 1% assessment on most health insurance premiums &

2.8% hospital tax on net revenues - combined with matching federal funds.

Oregon: HB 2009 – Setting Reform in Motion I

Streamlines State Health Functions Oregon Health Authority

– Consolidates state health purchasing and aligns programs to maximize efficiencies (including Public Employers Benefits/Oregon Educators/Medicaid/High Risk Pool and Premium subsidy (FHIAP)/Public Health/Mental Health and Addictions)

Oregon Health Policy Board– Guides the Health Authority as it implements reforms to gain value and reduce costs

Insurance Market Pieces Insurance Reform

– Implement value-based small business product– Improve oversight of small group, individual, and portability premium rates– Develop uniform standards for health insurers– Enhance data submitted by Insurers and TPAs

Business Plan for a Health Insurance Exchange due for next legislature’s approval

Oregon: HB 2009 – Setting Reform in Motion II

Gaining Value and Cost Savings Care Coordination:

– Statewide registry of physician orders for life sustaining treatment orders (POLST)

– Implement uniform quality standards and payment reform, starting with primary care and chronic disease

– Uniform use of Evidence-based health care guidelines and comparative effectiveness standards

– Health Information Technology Oversight Council (HITOC) Improved Transparency

– All-claims, all payer database– Public reporting on proposed hospital and ambulatory surgical

center capital projects – Healthcare workforce database and coordinated policy

Colorado Reforms – HB1293 (2009)Provides coverage to more than 100,000 Coloradans through Medicaid/CHIP using a hospital fee

• Generates about $600 million a year. State will receive about the same in federal matching funds.

– Children and pregnant women from 205 to 250 percent FPL – Parents from 60 to 100 percent FPL– Disabled adults and children with incomes up to 450 FPL will

be able to buy into the Medicaid program – Childless adults with incomes up to 100 percent FPL will be

eligible for a new medical assistance program

• Also raises reimbursement for inpatient and outpatient services up to Medicaid’s maximum allowable rate.

• 20 other states have similar fee to collect money for health programs and obtain federal matching funds.

Iowa Reforms – 2008/2009

Coverage for children up to 300% of FPL (with a sliding scale premium between 200-300% FPL) + one-year continuous eligibility

Creates Legislative Health Care Coverage Commission to develop Iowa Health Care Reform Strategic Plan – Final report by 10/11

A Medicaid buy-in option for those with disabilities Modify tax forms to ask if dependent children have insurance Implementation of Medicaid/CHIP performance bonus criteria

(express lane eligibility, paperless renewal verification, etc) Dependent coverage up to 25 years old can stay on parent’s

policy Health Care Workforce Support Initiative Transparency: Create MOU to use IA Hospital Assoc as state’s

intermediary to collect, maintain and disseminate hospital inpatient, outpatient and ambulatory information

A Medical Homes Initiative Healthy Communities Initiative, Quality improvement council,

electronic health plan to be developed

Vermont Blueprint Integrated Pilot Summary1. Financial reform (2 major components - includes MCAID/commercial insurers)

- Payment to practices based on NCQA PCMH score- Shared costs for Community Care Teams

2. Multidisciplinary care support teams (CCT Teams)- Local care support & population management

3. Health Information Technology- Web based clinical tracking system (DocSite)- Visit planners & population reports

- Electronic prescribing- Updated EMRs to match program goals and clinical measures in DocSite - Health information exchange network

4. Community Activation & Prevention - Prevention specialist as part of CCT - Community profiles & risk assessments

- Evidence based interventions

5. Evaluation- NCQA PCMH score (process quality)- Clinical process measures- Health status measures- Multi payer claims data base- Population Indicators

Health IT Framework

Global Information Framework

Evaluation Framework

Operations

Blueprint Integrated Pilots Coordinated Health System

PCMH

PCMH

PCMH

PCMHHospitals

Public Health Prevention

Community Care TeamNurse Coordinator

Social WorkersDieticians

Community Health WorkersOVHA Care Coordinators

Public Health Prevention Specialist

Mental Health & Substance

Use Disorders

Source: Presentation by Craig Jones, State Coverage Initiatives-Sponsored site visit to

Vermont, June 8-10, 2009

Vermont: Prevention Strategies for Obesity

Menu labeling

Built environment (rail trails)

Community gardens

Changes in school cafeteria

selections (Farm to School)

Running/bike/hiking clubs

Weight control programs

Increased awareness

Health care provider recommendation

Source: Presentation by Craig Jones, State Coverage Initiatives-Sponsored site visit to

Vermont, June 8-10, 2009

Vermont Health Technology Fund

A dedicated fund to support ‘medical health care IT initiatives’ such as

Building health information exchange infrastructure Blueprint for Health IT initiatives Electronic Medical Records for primary care providers Technical assistance to providers in selection, installation and effective use

of IT Funds raised by 0.2% ‘investment fee’ on all medical claims paid

by insurers and TPA’s for 7 years Total 7 year funding of $33 million

2/3 for EMR’s 1/3 for health information exchange and technical assistance

State Medical Home Initiatives

• 31 states have engaged in efforts to implement programs to advance Medical Homes in Medicaid/CHIP

• States working across payers on Medical Homes Programs include Colorado, Louisiana, Maine, New Hampshire, Pennsylvania, Rhode Island, and Vermont

• States with model Medical Homes programs include Vermont, North Carolina, Rhode Island and Pennsylvania

• Medical Home Design Issues: Practice Redesign Consumer Engagement Beyond Primary Care Setting Incentive Alignment Evaluation

Community Care of North Carolina

Source: D. McCarthy and K. Mueller, “Community Care of North Carolina: Building Community Systems of Care Through State and Local

Partnerships,” Case Study, Organized Health Care Delivery System. The Commonwealth Fund. Jan. 2009

14 networks, > 1,300 primary care practices, 3,500-4,000 physicians

$3 PMPM to each network for nurse case management

Hire case managers/medical management staff

$2.50 PMPM to each PCP to serve as medical home and population-management activities

Care improvement: asthma, diabetes, prescription advantage list, nursing home poly-pharmacy initiative

Medical Home: providing acute and preventive services and facilitating patient access to care through referrals and after-hours coverage

Mental Health Integration: 4 CCNC networks have integrated mental health care into routine medical care

HealthNet Collaborative: integrated networks of care for uninsured adults; states provide technical assistance and funding to support 16 networks to serve uninsured adults up to 200% FPL

Studies conducted by Mercer documented that CCNC saved the state up to $314m in FY2006

Pennsylvania Chronic Care Initiative Created by Gov. Rendell, May 2007 to improve chronic care

delivery 45 Commission members, with 5 subcommittees: practice redesign, incentive

alignment, performance measurement, pooled claims database, consumer engagement

Model incorporates features of the Chronic Care Model and the Patient-Centered Medical Home

Four planned regional rollouts Southeast (5/08), South Central (2/09); Southwest and Northeast forthcoming

PCP practices must: attend “learning collaborative” meetings; work with practice coaches; use a patient registry and report data; achieve Level 1 NCQA PPC-PCMH Recognition within 12 months; reinvest funds into the site

Payers must: give a 3yr commitment; payment to IPIP for practice coaches; payment to PCP to offset costs

Source: Richard Snyder ”Pennsylvania’s Chronic Care Management, Reimbursement and Cost Reduction Commission,” presentation February 10-

11, 2009 and Michael Bailit “Overview of Medical Home Projects and Demonstrations to Date,” presentation March 2, 2009

Lessons Learned in State Reform Efforts

2009 State of the States – pp. 20-25(www.statecoverage.org)

Comprehensive Reform is Possible: Massachusetts Shows the Way

Massachusetts’ passage of universal reform in 2006, demonstrated bi-partisan support for broad reform is possible

Massachusetts public-private plan represents compromise between single payer and strict market-based approaches.

This approach has been broadly accepted and incorporated into other comprehensive reform proposals.

Compromise and Consensus Building Though consensus on the necessity of reform is

growing, significant political hurdles still hinder reform in many states.

There are a number of lessons learned from the states related to building stakeholder support:

Leadership is essential Be inclusive Build relationships early Find supporters wherever possible Get supporters on the record Keep your eyes on the prize(s): big picture & perfect vs good

States have established a consensus-building process for many reasons

Consensus building is not a magic bullet

No Free Solutions: Who Will Pay? Who Will Benefit?

Shared responsibility – Who helps cover the costs? Individuals; Employers; Federal government; State government;

Health plans/insurers; Providers Potential downside: “shared responsibility” means “shared pain”

Enough money in current system? If yes, then – Redistribution (Who will pay? Who will get paid?) States have attempted to recoup savings from the system:

• Maine and the Savings Offset Payment (SOP)• Minnesota’s 2008 health reform law

If not, then need new forms of revenue: Sin taxes; Sodas; Provider taxes; Payroll taxes; Lease lottery; Slots revenues; Gross Receipts Tax

Sustained Effort Needed

Health reform takes sustained effort/built on previous efforts, financing mechanisms Massachusetts New Jersey, Iowa, and Wisconsin Oregon, Colorado, and New Mexico

Sustained effort during implementation of reform is especially critical. To ensure success of reform: Outreach and education are crucial Strong evaluation mechanisms which allow reform

to be adapted as it moves forward

A Sense of Urgency Creates Opportunity

Massachusetts reforms propelled by potential to lose federal funds

Other states seek way to create similar sense of urgency

Comprehensive reform will remain difficult without a sense of urgency or a sense of inevitability as many stakeholders are invested in status quo

Individual Mandate Voluntary strategies will not result in universal

coverage - some states are beginning to recognize the need for mandatory participation - Massachusetts

Unenforceable? Impingement on individual freedom? Money for subsidies?

Those pursuing individual mandate must consider: Affordability of mandate Richness of benefits package How to enforce mandate

Though there are significant policy challenges, there are also notable benefits:

Distribution of risk Fairness “System-ness”

Relationship Btw Reducing Costs, Improving Quality & Expanding Coverage Little success so far in addressing underlying cost of

health care but a new focus on chronic care management/preventive care holds potential

Massachusetts leads on health coverage reform, while Minnesota is at the forefront of cost containment

The trend in states is to address access, systems improvement, cost containment simultaneously—concern about long-term sustainability of coverage programs and improved population health

Concerns about rising costs are an impetus for reform, but cost cutting is likely to raise opposition from various stakeholders.

Conclusion: States Can Advance Reform Initiatives But Need Federal Support

States face growing pressures for reform Uninsurance continues to rise as ESI declines Cost increases threaten state budgets and capacity to sustain

Medicaid/SCHIP

States play critical role in moving the conversations about coverage expansions Testing new ideas (politically and practically) Creating momentum for national policy solution

States cannot achieve universal coverage without a federal framework and funding BUT remember variation

State and National: Comprehensive reforms need sequencing Sequential = incremental with a vision

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