Health Reform After the Elections:

Opportunities and Challenges

Bob Doherty

SVP, Governmental Affairs and Public Policy, ACP

Presentation to

ACP’s Washington DC Chapter

November 16, 2012

The five biggest

opportunities/challenges

1.Coverage

2.Cost

3.Entitlements

4.Sequestration

5.Payment and delivery reform

ACP’s abiding vision

“A nationwide program is needed to assure access to health care for all Americans, and we recommend that developing such a program be adopted as a policy goal for the nation. The College believes that health insurance coverage for all persons is needed to minimize financial barriers and assure access to appropriate health care services.”

Ginsburg, et al, American College of Physicians, Position Paper, Annals of Internal Medicine, May

1, 1990 www.annals.org/search?fulltext=ACP+universal+health+insurance&submit=yes&x=15&y=9

3

Dorn, Uninsured and Dying Because of It: Updating the Institute of Medicine Analysis on the Impact of Uninsurance on Mortality, Urban Institute, 2008

Why does it matter? Because being uninsured is a matter of life and death

Age

U.S.

populatio

n

(millions)

Percent

uninsured

within

age

group

Total deaths

Uninsured

excess

deaths ).

:

2000

2001

2002

2003

2004

2005

2006

Total:

21,000

23,00

Year Number of deaths due to uninsurance

2000 20,000

2001 21,000

2002 23,000

2003 24,000

2004 24,000

2005 25,000

2006 27,000

Total 165,000 Dorn, Uninsured and Dying Because of It: Updating the Institute of Medicine Analysis on the Impact of Uninsurance on Mortality, Urban Institute, 2008

Because of the election

1.No plausible scenario where

the ACA will be repealed

2.State resistance may

undermine its effectiveness

3.Federal government’s ability

to implement the program will

be stressed

2012 elections: federal government

Re-elected the candidate who promised

to continue implementation (Obama)

over the candidate who promise repeal

on “Day One” (Romney)

Expanded Democratic control over the

Senate and reduced GOP majority in

the House

2012 elections: views on health care

Only 25% of voters favored “full” ACA repeal

Slightly more (47%) favored keeping or

expanding it over repealing all or some of the

law (45%)

It remains deeply unpopular in many GOP-

controlled states http://www.dailykos.com/story/2012/11/06/1157266/-EXIT-POLLS-majority-do-

not-repeal-Obamacare

http://www.kaiserhealthnews.org/Daily-Reports/2012/November/07/exit-polls-and-

the-health-law.aspx

2012 elections: states

Democrats took control of 8 state legislative

chambers and added about 200 legislators

nationwide; GOP won 4 chambers while

defending others that were vulnerable

30 states will be controlled by GOP governors,

and 24 will have GOP-controlled legislatures

The big question going forward: will GOP

states support, undermine, resist, or accede to

the ACA’s coverage expansions?

What does the ACA do about

coverage? 2700 pages in four bullets

Provides HI coverage to nearly all residents

• Medicaid up to 133% of FPL

• Subsidized purchase of qualified health plans (up to 400% of FPL)

through state or federal exchanges

Improves Medicare benefits

Pilots new ways of paying and delivering care

Financed by taxes (higher income people,

devices, insurers) and cuts to hospitals, MA plans

SCOTUS and Medicaid

ACA (as written): carrots and sticks

States would expand Medicaid to include everyone with incomes

up to 133% of FPL

Carrots: 100% paid for by the federal government, gradually

declining to 90% by 2020, compared to usual 57% contribution

Sticks: feds can take away funds for existing Medicaid

ACA (post-SCOTUS): carrots only

People with incomes up to 100% of FPL are

not eligible for subsidies or exchanges

Expanding Medicaid is a good $ deal for the states

Sarah Kliff, Wonkblog, Washington Post, July 3, 2012 http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/03/why-hospitals-heart-the-medicaid-expansion-in-one-chart

What happens if the states opt-out

of Medicaid expansion?

In states that decline to enroll their

poor in Medicaid, a law designed to

cover nearly everyone could end up

extending coverage to everyone

except the poor—an unfortunate

detour on the road to universal

coverage.

States and health exchanges

States must have exchanges

that meet federal standards by

early 2013 or feds run them

Some are ready to go, but

many are behind, others are

resisting (inviting feds to run

them)

What is ACP doing about coverage?

Continued qualified support for

the ACA—with improvements

Medicaid Patient Advocacy

Campaign

Education and information:

www.healthcareandyou.org

ACP’s Medicaid Patient Advocacy

Campaign Cover letter from College leadership, seeking 100% U.S.

chapter participation

Concise action plan with one-click links to all supporting

materials, background information, presentation slides,

instructions and timetable

Customized state-specific reports (available now!) and press

releases to be issued by all chapters

http://www.acponline.org/cln/medicaid_campaign.htm

Template and web interface to send the report to your

state’s governor and legislators

The five biggest

opportunities/challenges

1.Coverage

2.Cost

3.Entitlements

4.Sequestration

5.Payment and delivery reform

Health care costs

What’s the trend?

Where does the $ go?

Why does it matter?

13.0% 12.8%

4.5% 3.7%

1.9%

4.9%

0.0%

6.0% 4.0% 2.0%

14.0% 12.0% 10.0% 8.0%

Canada Japan United Kingdom

Foreign Average (trade

weighted)

U.S. Manufacturers at Competitive

Disadvantage due to Health Costs

Employer Health Benefit Contribution Costs as a Share of Hourly Pay

United States France * Germany * •! Figures for France and Germany include employer contributions for other forms of social insurance in

addition to health benefits. Derived by NIHCM Foundation from information presented in Nichols LM and Axeen S. “Employer Health Costs in a Global Economy: A Competitive Disadvantage for U.S. Firms.” New America Foundation. May 2008.

Manufacturing sector competes globally, making it harder to shift health care costs to consumers through higher prices. 6.5%

$60,000

$170,000

$60,000

$357,000

$119,000

$357,000

$0

$50,000

$100,000

$150,000

$200,000

$300,000 $250,000

$350,000

A Beneficiary Lifetime Perspective: Payroll Contributions < Expected Benefits $400,000

Average Average Wages

Medicare Expected Benefits, Lifetime Medicare Payroll Taxes, Lifetime

$188,000 Female

Male

Source: Steuerle CE and Rennane S. "Social Security and Medicare Taxes and Benefits Over a Lifetime.” Washington, DC: The Urban Institute. June 2011.

Single, Average Wage Single, Average Wage One-Earner Couple, One-Earner Wage Couple, Average Wage

Two-Earner Couple, Two-Earner Couple, Average Wage

28

Hospital & Physician Sectors Accounted for More than 70 Percent of Private Premium Growth Over Past Five Years

$48.3

$108.5

$20 $0

$40

$120 $100 $80 $60

Hospital Care Physician & Clinical Services

Prescription Drugs & DME

Dental & Other Professional

Services

Home Health & Other LTC

Facilities & Services

Net Cost of Health Insurance

Total Change in Premiums

45% of net change

26% of net change $28.0

14% of net change

$15.4

9% of net change

$9.5

4% of net change $4.0

2006-2010

% Change 20.3% 13.2% 14.5% 14.3% 20.5% 3.1% 14.7%

3% of net change $3.1

Source: NIHCM Foundation analysis of data from the National Health Expenditure Accounts.

97 percent of change in premiums was due to growth in insurers’

spending for health care services

2006 to 2010 Change ($ Billions

So what is ACP doing about cost?

High Value, Cost Conscious Care Initiative

Proposed ways to achieve hundreds of billions in

budgetary savings

Position papers on rational allocation of

resources and controlling costs

Support for comparative effectiveness research

Advocacy for value-based payment reforms

The five biggest

opportunities/challenges

1.Coverage

2.Cost

3.Entitlements

4.Sequestration

5.Payment and delivery reform

Entitlement reform

Medicare: open-ended entitlement

with reforms to focus on “cost

drivers” (Obama/Biden), or defined

contribution (Ryan budget)?

Medicaid: expanded entitlement and

more funding for states

(Obama/Biden), or turn it over to the

states with fewer federal $ (Ryan

budget)?

2012 elections: entitlement reform

Having campaigned against Medicare

premium support and Medicaid block grants,

no prospect that President Obama will agree to

them, or that the Senate majority would enact

them

But something has to be done: Grand

Bargain tied to tax reform/revenue deal?

Incremental adjustments?

So what is ACP doing about

entitlements? New position papers on Medicare and Medicaid reforms

Reduce spending by addressing cost-drivers: reduce unnecessary care, reform medical liability system (health courts), evidence-based benefit redesign, cap tax deductibility of high-cost insurance, fund research on comparative effectiveness, negotiate drug prices, and reform payment systems

Opposes Medicare premium support, but could support pilot-

test (possible compromise?)

Against Medicaid block grants but supports improved waiver

process to give states more flexibility

The five biggest opportunities/

challenges

1.Coverage

2.Cost

3.Entitlements

4.Sequestration

5.Payment and delivery reform

Sequestration

Failure of Congress’ “Super-Committee”

will result in $1.2 trillion in savings being

achieved through across-the-board cuts:

• Cuts annual funding for non-exempt domestic

discretionary programs by 8.2 percent (in 2013)

• Cuts annual funding for defense programs by 9.4%

percent (in 2013)

Sequestration cuts

Would have a devastating impact on:

NIH: $2.5 billion

CDC: $409 Million

HRSA: $605 million

Medicare: $11 billion

Physicians: 30% cut with SGR

Hospitals and GME (2 percent)

Sequestration cuts

Would have a devastating impact on:

FDA: $319 million

Health care for military: $3.2 billion

And many other programs!

So what is ACP doing about

sequestration?

Sequestration

January, 2012: ACP said “Across-the-board cuts shouldn’t

stand”

Established priorities for funding, including public health,

CDC, NIH, AHRQ, GME, and workforce programs

Offered alternative plan to reduce federal spending by

focusing on cost drivers

ACP Advocate Grass Roots Campaign

The five biggest opportunities/challenges

1.Coverage

2.Cost

3.Entitlements

4.Sequestration

5.Payment and delivery reform

Payment and delivery system reform

SGR?

FFS?

New approaches?

Future of SGR and FFS?

Policymakers across the spectrum want to get rid of

the SGR (but can’t agree on how to pay for it)

And move away from “volume” to “value”

But FFS will be a component of value-based

payments, even as FFS itself will change

• Under-valuation of cognitive care and work outside clinical encounter

• Linked to P4P incentives/disincentives

• Medicare Value Modifier: BN adjustment in Medicare payments

• Targeted policies: Medicaid pay parity, Medicare primary care bonus

“New” approaches

ACOs

Episode-of-care bundles

Risk-adjusted global capitation

PCMH and PCMH-N practices: FFS+risk-

adjusted capitation+shared savings, linked

to quality and cost metrics=total payment

So what is ACP to reform

payment/delivery systems? Developed conceptual framework for Patient-Centered

Medical Homes with other primary care organizations

• PCMHs now available to tens of millions of patients

from dozens of insurers

Worked with CMS to recruit 500 practices for

Comprehensive Primary Care Initiative (PCMH model)

in seven sites

Council of Subspecialty Societies: PCMH-neighborhood

concept, forthcoming NCQA certification

Testified twice before Congress (July) on SGR and

transitioning to value-based payments

What is ACP doing to reform

payment/delivery systems? Influenced CMS to improve ACO program,

reducing barriers to smaller practices

Advocated for new RUC primary care seat; ACP

nominee Doug Leahy elected; opposed AAFP

proposal to eliminate IM subspecialty seat

Worked with Rep. Allison Schwartz (D) and Joe

Heck (R) on Medicare Physician Innovation Act

to stabilize payment and transition to new

models; persuaded them to allow higher updates

for E/M codes not restricted by specialty

What is ACP doing to reform

payment/delivery systems?

It’s not just about new payment

models—ACP advocacy has

resulted in big wins for

internists on improving

Medicare and Medicaid fee-for-

service

New CMS rules: big wins for IM!

Direct result of ACP advocacy! New CPT codes 99495-99496: Medicare will pay

physicians for transitional care management services, the

non-face-to-face time they and their clinical staff spend on

patient cases. Until now, only the face-to-face reimbursed

• National pay of $164-$231, depending on whether a patient is seen

within 7 or 14 days of discharge, prior to geographic adjustment

(Assumes Congress does not allow SGR cut to go into effect).

• Combined with other changes in the Medicare fee schedule, total 2013

gain for IM of 4-5% in total Medicare payments [FPs average gain

higher only because mix of services different)

• These gains are on top of ACA’s 10% Medicare primary care bonus

(Average of $8000 more each year for qualified internists, 2011-15)

New CMS rules: big wins for IM!

Direct result of ACP advocacy!

Medicaid pay parity rule, effective 2013-2014:

increases payments for evaluation and

management and vaccine services to no less than

Medicare rates, paid fully by federal government

• CMS agreed with ACP that increases should apply to both primary

care internists and IM subspecialists

• Applies to E&M codes 99201 through 99499 to the extent that those

codes are covered by the approved Medicaid state plan or included

in a managed care contract

• Also, applies to services not covered by Medicare: New and

Established Patient Preventive Medicine; Counseling Risk Factor

Reduction and Behavior Change Intervention; and Consultations

Medicaid pay parity=big gains for DC

internists!

DC Medicaid primary care payments

=47% of Medicare

Because of the new rule, DC Medicaid

payments:

=100% of Medicare (2013-2014)

http://statehealthfacts.org/profileind.jsp?cmprgn

=1&cat=4&rgn=10&ind=196&sub=51

What’s next? The Mother of Lame Duck Congresses

Congress and the President must reach

agreement on legislation involving

hundreds of billions of dollars

With enormous short- and long-term

consequences

Lame-duck scenarios

SGR—temporary extension of current rates,

combined with instructions to committees to

develop plan to transition to new models

Temporary deal on expiring tax cuts,

sequestration linked to agreement to develop

plan for more revenue combined with tax and

entitlement reforms

Obama appears to be holding firm that he will

not agree to extension of all Bush tax cuts

Summary

2012 election: the ACA is here to stay, only a

minority of voters favor full repeal, but

electorate remains divided, and law remains

deeply unpopular in some states

States are the new battleground: decisions on

Medicaid and exchanges may determine how

effective the ACA is in covering uninsured

Summary

Cost is an abiding concern: ACA reforms may

help “bend the curve” (although critics say we

can’t afford it) but more must be done to make

spending sustainable

Entitlement reform will (must) happen—but

how and when?

Payment and delivery system reforms will

accelerate, standing still is not an option

Summary

Even as new models are developed, FFS will

continue to be part of the equation, but it won’t

be your father’s FFS

ACP advocacy: design new models that

recognize value of internists’ services (PCMH)

and improve FFS payments

ACP advocacy is paying off: big wins for

internists in Medicare and Medicaid pay rules

Summary

No other physician organization is doing as

much as ACP to put forth ideas on how to

address coverage, cost, entitlement reform,

sequestration and delivery system reform in a

fiscally- and socially-responsible way

In this time of challenge and opportunity,

physician leadership is essential, because the

public has extraordinary trust in you!

The way forward

“You’ve got be careful, if you don’t know where you’re going, cause you might not get there.”

Yogi Berra

The way forward

“We’re lost but we’re making good time!”

Yogi Berra