Health Care Reform Health Care Reform

Where we’ve beenWhere we’ve beenWhere we are Where we are

Where we’re goingWhere we’re going

MedicareMedicare

Part A

Part D Part B

Part C

Inpatient Hospital/SNF/HHA/Hospice Services

Prescription Drug

Coverage

MedicareAdvantage

Physician/Non-Physician

Practitioner/Ancillary

Suppliers/OutpatientHospitalServices

The U.S. Spends More on Health Care The U.S. Spends More on Health Care Than Other Developed CountriesThan Other Developed Countries

Costs of Doing NothingCosts of Doing Nothing

% Median Family Income to Purchase Health Insurance

1987 2006 2016

7% 17% 34%

Uninsured Numbers Continue to GrowUninsured Numbers Continue to Grow

Quality – Variations in CareQuality – Variations in Care

Federal Government P & L (2012) (in billions)Federal Government P & L (2012) (in billions)

RevenuesRevenues $2,469$2,469 (16% of GDP)(16% of GDP)

ExpensesExpenses

• Defense / Homeland SecurityDefense / Homeland Security $ 868$ 868

• Medicare / MedicaidMedicare / Medicaid $ 733$ 733

• Social SecuritySocial Security $ 773$ 773

• Other Mandatory and TARPOther Mandatory and TARP $ 746$ 746

• Other DiscretionaryOther Discretionary $ 450$ 450

• Net InterestNet Interest $$ 225 225$ 3795$ 3795 (24% of GDP)(24% of GDP)

DeficitDeficit ($1,326)($1,326) (8% of GDP)(8% of GDP)

Medicare Bankrupt 2024Medicare Bankrupt 2024

Options-Options-Reduce BenefitsReduce Benefits

Increase TaxesIncrease Taxes

Reduce Payments to ProvidersReduce Payments to Providers

Reduce UtilizationReduce Utilization

QUALITY QUALITY

TRANSPARENCYTRANSPARENCY

ACCOUNTABILITYACCOUNTABILITY

INTEGRATIONINTEGRATION

Who Decides What Quality Is?Who Decides What Quality Is?

CMSCMS 1972- Social Security Act1972- Social Security Act

Professional Standards Review Organizations (PSRO)Professional Standards Review Organizations (PSRO) 1982-Tax Equity and Fiscal Responsibility Act (TEFRA)1982-Tax Equity and Fiscal Responsibility Act (TEFRA)

PSROs become PROsPSROs become PROs 1992- Health Care Quality Improvement Initiative1992- Health Care Quality Improvement Initiative

PROs become Quality Improvement Organizations (QIO)PROs become Quality Improvement Organizations (QIO)Focus on quality rather than cost.Focus on quality rather than cost.

Each contract cycle- Revised Scope of Work or Statement of Work (SOW)Each contract cycle- Revised Scope of Work or Statement of Work (SOW) 1999- Aligned data elements and inclusion/exclusion criteria with JCAHO1999- Aligned data elements and inclusion/exclusion criteria with JCAHO 2003- voluntary reporting of process measures2003- voluntary reporting of process measures 2004- reporting tied to hospital payment2004- reporting tied to hospital payment 2005-Hospital Compare rolled out2005-Hospital Compare rolled out 2007-public reporting of risk-adjusted hospital mortality rates2007-public reporting of risk-adjusted hospital mortality rates 2009-American Reinvestment and Recovery Act2009-American Reinvestment and Recovery Act 2010-Patient Protection and Affordable Care Act2010-Patient Protection and Affordable Care Act

What is VBP?What is VBP?

VBP = Value Based PurchasingVBP = Value Based Purchasing

Part of the Patient Protection and Affordable Care Act Part of the Patient Protection and Affordable Care Act (PPACA, 2010)(PPACA, 2010) Final rule April 29, 2011Final rule April 29, 2011

Designed to reward hospitals with higher quality careDesigned to reward hospitals with higher quality care

Affects only CMS Medicare paymentsAffects only CMS Medicare payments

What is VBP? (cont.)What is VBP? (cont.)

Money comes from trimming CMS base operating DRG Money comes from trimming CMS base operating DRG payments (IPPS add-on payments excluded) to hospitalspayments (IPPS add-on payments excluded) to hospitals FY 2013: 1%FY 2013: 1% FY 2014: 1.25%FY 2014: 1.25% FY 2015: 1.5%FY 2015: 1.5% FY 2016: 1.75%FY 2016: 1.75% FY 2017: 2%FY 2017: 2%

Money then given back to some hospitals based on Money then given back to some hospitals based on performanceperformance

The Joint CommissionThe Joint Commission

IPPEIPPE

OPPEOPPE

FPPEFPPE

American Recovery and Reinvestment Act (ARRA)American Recovery and Reinvestment Act (ARRA)Summary of LegislationSummary of Legislation

Health Care Provisions – Care Delivery Organizations:

Federal Medicaid Funding $ 90 Billion

Health Insurance – Extension of COBRAfor early retirees $ 25 Billion

NIH Scientific Research Grants $ 10 Billion

HHS Wellness and Prevention Initiatives$ 10 Billion

Health Information Technology for Economicand Clinical Health Act (HITECH) $ 23 Billion

Total Potential Physician Payment ImpactTotal Potential Physician Payment Impact

PQRI 1% 0.5% 0.5% 0.5% (1.5%) (2%) (2%)

MOC 0.5% 0.5% 0.5% 0.5% 0% 0% 0%

E-Prescribing (ii) 1% (1%) – 1% (1.5%) – 0.5% (2%) (2%) (2%) (2%)

Meaningful Use (iii) 0% 0% 0% 0% (1%) (2%) (3%)

Value-Based Modifier N/A N/A N/A N/A TBD TBD TBD

Maximum Risk/Reward 2.5% (1%) – 2% (1.5%) – 1.5% (2%) – 1% (4.5%) (6%) (7%)

Program 2011 2012 2013 2014 2015 (i) 2016(i) 2017(i)

Hospital Payments at RiskHospital Payments at Risk

““It’s not the strongest species that It’s not the strongest species that survives nor the most intelligent but survives nor the most intelligent but the most adaptable.”the most adaptable.”

DarwinDarwin