Your source for professional liability education and networking. ACA & Health Exchanges: The Changing Landscape of Health Care & What it Means for Professional

Y o u r s o u r c e f o r p r o f e s s i o n a l l i a b i l i t y e d u c a t i o n a n d n e t w o r k i n g .

ACA & Health Exchanges: The Changing Landscape of Health Care &

What it Means for Professional Liability

Thursday, April 17, 2014

8:00-11:00am

Century Square Building

1501 4th Avenue

Third Floor Conference Room

Seattle, WA 98101

Thank You 2014 Annual Sponsors!

Gold Sponsor:

Northwest Chapter


Gold Sponsor:

Northwest Chapter


Gold Sponsor:

Northwest Chapter


Silver Sponsors:

Northwest Chapter

ADMIRAL INSURANCE

Cooper & McCloskey, Inc.

Griffin Underwriting Services

Regional Excess Underwriters, LLC

Skellenger Bender PS

Travelers Bond & Financial Products

Wells Fargo Insurance Services

P r o f e s s i o n a l L i a b i l i t y U n d e r w r i t i n g S o c i e t y

Disclaimer: The views and information expressed are the

opinions and perspectives of the speakers and do not represent the official position of PLUS, the State of Washington, the Washington Health Benefit Exchange Board or Staff, the Washington State Medical Association or any of the speakers’ employers.


Panelists

• Panelists– Phil Dyer, Senior VP, Healthcare Management Services,

Kibble & Prentice, A USI Co.– John Feltz, VP of Select Sales, Cigna Pacific NW Region– Bob Perna, MBA, FACMPE, Senior Director, WA State

Medical Association

• Moderator– Kara Masters, Of Counsel, Masters Law Group & Jerry

Moberg & Associates


Introduction

• Phil Dyer– Emerging Changes in Healthcare Delivery

• John Feltz– Health Insurance Exchanges & Health Insurance Carriers

• Bob Perna– Impact on Healthcare Professionals / Professional Liability


Biographical Information

• Phil Dyer – SVP, Health Care & Management Services, Kibble & Prentice/USI– Phil is the senior specialist for medical professional liability

services within Kibble & Prentice’s Integrated Health Management Services.

– Phil has 30 years of experience in medical professional liability for physicians, surgeons, group practices and hospitals - having served in various capacities for physician-owned and commercial insurers in this field. He also served as a VP for a major Hospital insurer.

– He was a founding Board Member of the National Professional Liability Underwriting Society (PLUS).



• John Feltz – Vice President of Select Sales, Cigna– Prior to joining Cigna, John was Senior Vice President of

Kibble & Prentice, responsible for Employee Benefits, Property and Casualty, and Professional Liability in the Middle Market division.

– John also spent seven years as VP of Sales and Marketing for the region’s leading Third Party Administrator, Healthcare Management Administrators. His role in Senior Management included developing corporate strategy, market strategy, and new business relationships with clients and vendors.



• Bob Perna - Senior Director of Health Care Economics and Practice Support for the Washington State Medical Association (WSMA).– Bob oversees the WSMA’s Practice Management Seminars and related

educational efforts for physicians, practice managers and administrative staff. He is a frequent contributor to the WSMA’s publications WSMA Reports and Membership Memo, providing information and updates on health policy and reimbursement issues.

– Bob has over 40 years’ experience in the health care industry, having held positions in professional relations with a major health insurer and in managerial positions in private medical practices, and in hospital and community health organizations. He also has taught instructional programs on medical practice administration and on procedural and diagnosis coding.


Emerging Changes in Healthcare Delivery

Presented by:

Phil Dyer


The U.S. Healthcare Industry

0

500

1,000

1,500

2,000

2,500

3,000

0

2

4

6

8

10

12

14

16

18

20

National Health Expenditures (Billions USD)

National Health Expenditure as Share of GDP

(Percent)

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group

In 2012:

• $2.8 Trillion dollars

• $8,937 per person

By 2020:

• $13,709 per person (projected)

13

Currently under enormous financial strain and demographic pressure, healthcare will have to reinvent itself over the next few decades.


ARRA – HITECHThe first step to major changes

American Recovery and Reinvestment Act (ARRA) including the Health Information Technology for Economic and Clinical Health Act (HITECH)

Signed into Law February 17, 2009


Patient Protection and Affordable Care Act (PPACA)

Signed into law March 23, 2010


Unprecedented Change: Drivers of Fundamental Disruption in Healthcare Delivery Systems and Payment

Methodologies

Fundamental Disruption

Medicare

Medicaid

Federal Rules on Health

Insurance

Health Insurance

Exchanges


“No One Ever Washes A Rental Car”

P r o f e s s i o n a l L i a b i l i t y U n d e r w r i t i n g S o c i e t y 18

Exchange Value – Specific Functions

I. Issuers of QHPs

II. Health Care Market

III. Public and State

• Marketing & Outreach• Eligibility Determination for tax

credits• Enrollment• Premium Aggregation

• Easy plan comparison and purchase of health insurance

• Reporting of cost/quality metrics

• Awareness of need for health insurance

• Appeals of eligibility determinations and individual responsibility

• Information on health insurance carriers

• Customer Service• Enrollment reconciliation with

HHS• New Membership opportunity –

previously uninsured

• Supporting use of innovative product designs and payment methodologies

• Expanded access to health insurance coverage

• Reduced charity care

• Trustworthy source of health care reform information

• Broad-based Public Information • Other impacts of ACA


The Pace of Change

Cultural Transformation of Institutions – 30 years

Reimbursement

Reform – 10 years

Network Changes/ Budget Impacts (Federal/State) –

1 year, recurring annually


The current ‘calm’ in healthcare professional liability

•An unprecedented period of ‘stability’ in the low frequency of claims and a steady, predictable severity trend, coupled with record levels of financial capacity.

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

100%107%108%

116%

130%134%

154%142%137%

112%

96% 91%84%

78% 83% 81%

Medical Malpractice Industry Combined Ratio


Percentages of Practices Owned by…

Doctors Hospitals0%

10%

20%

30%

40%

50%

60%

70%

80%

200220032004200520062007200820102011

MGMA DATA

Source; Medical Group Management Association


Pressures on Providers

Providers

Legal & Business

Complexity

Emphasis on

Margins, Costs & Resource

Allocations

Uninsured Patients

Reimburse-ments and

Overall Medical Spending

Moving away from patient care as top priority

Dramatic increases

Demand grows unabated

Growing population adding to financial and system stress


Reform ‘Stressors’

Drinking out of a ‘Firehose’

Not enough doctors,

expanded mid-levels

Undiminished demand for

specialists and no one ‘on call’

Resource constraints

Absence of tort reform


HC Reform

EHRsCompliance (HIPAA-HITECH), RAC/ZPIC,

MetaData

Value Based Purchasing MCO Liabilities

Evidence-Based Medicine

Scope of Practice

Anti-Trust

Stark

Patients as Consumers? Missed

Expectations?

ACO: CMS & Private Providers become

Payors?

Payors become Providers?


ACO AC-SCHMO?

CMS Model Private Sector

27

Driving the Value Proposition

Center of Excellence/Specialty Institutes

Managed CareShared Risk

SpecialtyCo-management

Medical Home

Clinical Integration

Bundled Payments

Accountable Care

Integrated Delivery Network/Health Plan

Impa

ct o

n Va

lue

IntegrationLimited Full

Low

High

Providers are focused on moving from volume to value, which means more integration along the care continuum.


ACOs New

or Old?

Integrated Delivery System

PHO (Physician Hospital Organization)

or more?

No standardized model in the private sector

By 2013, only 30% of physicians will be independent


Exposures associated with ACO activities and services may outweigh traditional insurance coverage

Exposures & Mechanisms

Insurance

Accountability for quality of care

Increased involvement in coordination of care

Increased control over ACO participantsMedical treatment

Coordination of care/

case management

Medical necessity or

other coverage determinations

Utilization review (if applicable)Provider selection/

contracting/ termination/payment

Claims processing/ payment (if applicable)

Billing Employment practices

Compliance with state and federal

laws, including HIPAA, HITECH and

PPACA


P/P/P

Patient Provider Payment


ROLE PLAY ?

Providers Becoming Payors

Payors Becoming Providers


It’s Happening!

Some hospital networks also become insurers–By Roni Caryn Rabin–Kaiser Health News, August 25, 2012


“Follow the Money!”

Aetna acquires Coventry Health $5.6B

Wellpoint buys Amerigroup $5.0B

Cigna buys Wellspring $3.8B

United buys Monarch Health $5.6B

Highmark acquires West Penn Allegheny $470M


Increased Liability Issues

New Standards

of Care

More Causes of Action Direct Liability

ACO Vicarious Liabilities

More Stringent Informed Consent

Integration Challenges


“Corporatization” of Medicine

•Will increased “institutionalizing” of medicine make patients feel more disconnected from their providers, and

more willing to bring action against “nameless, faceless”

corporations?

Professional Liability Historic Claim Etiology

Anger

Resentment

Communi-cation

Missed Expectations

P r o f e s s i o n a l L i a b i l i t y U n d e r w r i t i n g S o c i e t y36

Strategic Risks Financial Risks

• Patient Safety/Quality Initiatives & Outcomes• Ethics• Planning• Technology• Union relations• Competition (Private/Public)• Healthcare Delivery System evolution/changes• Media coverage• Product design

• Debt rating, Liquidity/cash, Asset valuation• Federal Regulatory Impacts; (CMS), Health Care Reform• State Regulatory Impacts; DSHS, DOH, Health Care Reform• Payors Reimbursements/Contract Terms/Provider

Panels & Standards• Interest rates• Economic growth• Changing patient demographics • Changing Provider demographics

Operational Risks Hazard Risks

• Physician Recruiting • Professional Staffing and Personnel Retention• Discrimination• Embezzlement & Employee Dishonesty• Workplace violence• Service provider failures, such as phone or utility service• Supplier business interruption

• First Party Liabilities (Assets, Cyber, Brand)• Third-party General Liabilities (GL, Cyber, Bio-Tech, etc.)• Professional Liability • Mgmt. Liability (Directors and Officers/EPL)• Health and safety (Occupational)• Catastrophic Natural hazards, (e.g. flood/ EQ)• Catastrophic hazards; Terrorism, war, radioactivity, intentional

bio-release, etc.• Mass Torts; e.g. medical products, technology,

procedures, methodology

Healthcare Enterprise Risk Management


Questions?


PPACA & Exchanges

PPACA & Exchanges: Impact on the Landscape of WA Insurance

Presented by:

John Feltz


Global Perspective of PPACA and Exchanges

Effects of PPACA, particularly Exchanges, on Employers

Carrier Perspective: Opportunities Moving Forward

PPACA and “Exchanges”:


Who is eligible to purchase coverage through a

Health Insurance Exchange?

Anybody can purchase health insurance through an Exchange. The most likely

purchasers include:– Unemployed people– Self-employed people– People that work for businesses that don’t offer insurance– People with plans that are unaffordable


Health Insurance Exchanges must be “Qualified Health Plans” (QHPs). Name three attributes of a QHP.

1. They are certified by the Health Insurance Exchange through which they are offered.

2. They provide EHBs.

3. They offer one Silver Plan, one Gold Plan, and a Child-Only Plan.

4. They charge the same premium for a particular plan whether sold on or

off the Exchange.


Health Insurance Exchanges will offer standard health plans at four benefit levels. Name those levels and

give the associated cost share/actuarial value for each.

Plan Cost Share/Actuarial Value

Platinum 90%

Gold 80%

Silver 70%

Bronze 60%


A client offers health insurance coverage to all of its Full-Time Employees, with a contribution strategy in which

the employer pays $5,000/year per employee, leaving the employee to pay $3,000/year. Employee salaries range

from $25,000 to $140,000. Will some employees be likely to purchase insurance through an Exchange? If so, why?

Yes, depending on the total cost of coverage, the employer’s plan

may not be ‘affordable’ under PPACA (employee contribution <9.5%

of W-2 income.) Employees can purchase subsidized coverage through

the Exchanges.


Name three things that ‘large employers’ (more than 50 Full-Time Employees) must do to stay in compliance with

PPACA.

1. Make employees eligible for coverage within 90 days of hiring

2. Cover all Full-Time Employees (individuals working > 30 hours/week)

3. Offer coverage to employees dependents (but not spouses)

4. Automatically enroll new employees in employee-only coverage

5. Notify employees of Exchanges and their potential eligibility for subsidies.

6. Provide coverage that provides ‘minimum value’ – coverage at least 60%, and is ‘affordable’ (<9.5% of W-2 income).


What are some differences between a

Public Health Insurance Exchange and a

Private Health Insurance Exchange?

1. Private Exchanges do not provide any type of public assistance.

2. PPACA Exchange rules do not apply to Private Exchanges.

3. Private Exchanges are privately owned and operated.

4. Private Exchanges have more flexibility in benefits and services.


Why should a ‘large employer’ under

PPACA care about Exchanges?

If the health care plan it offers isn’t ‘affordable,’ or doesn’t provide a plan with

‘minimum value’ under PPACA rules, employees may choose to purchase subsidized

coverage through a State Health Insurance Exchange. The company would then incur

penalties.


How much is the penalty for a ‘large employer’ not offering coverage to its employees?

The Penalty is the lesser of:• $3,000 per Full-Time Employee receiving a tax credit for Exchange

coverage, or• $2,000 per Full-Time Employee (minus the first 30)


If you have a client that offers a high-value plan that is not ‘affordable’ for all employees under PPACA regulations, how would you recommend that the

client change its plan to avoid penalties?

Recommend that the client considers adding lower-cost plan options.


Global Perspective of PPACA

and Exchanges


EXCHANGES – PUBLIC VERSUS PRIVATE

State Health Benefit Exchanges Private Exchanges

Operating Model • Information Aggregator to Market Negotiator

• Private label offering to employers with participating carriers

Oversight • Government Agency, quasi-governmental agency or not for profit

• Privately owned and operated

Stated Objective • Assist individuals, families and small employers to purchase health insurance

• Provide assistance to those who qualify for enrollment in state Medicaid programs

• Offer services to the various individuals and groups in the purchase of healthcare coverage

• Defined Contribution

Subsidy Availability • Yes, for those individuals and families between 100-400% of FPL

• No, public subsidies tied to income levels are not available

Eligibility • Intended for individuals and small employers looking to purchase healthcare coverage

• Employers choosing to participate and their eligible employees

Rate Negotiation • Focus is on individual and small employer and rating regulations are very strict in these lines of business

• Negotiated with private exchange

Employer Size • Small employers as defined by state, either 1-50 or 1-100 until 2016 when all states go to 100

• Any size employer

Examples • Massachusetts and Washington • Bloom Health, and Aon Hewitt (1/1/13)• Over 100 private exchanges exist today in

small group


Employer Purchasing under PPACA

LOW HIGH

Employer Engagement and Control

Public Exchanges

PrivateMulti-Carrier Exchanges

PrivateCarrier RunExchanges

PrivateThird PartySingle andMulti-Carrier Exchanges

Private EstablishedCarrier Model


Private Exchange Value Proposition

• Employer

• Eliminates or minimizes healthcare procurement process

• Defined contribution - Allows an ER to commit specific amount of money for benefits with the option to tie increases to something other than trend

• Transparency of full cost of benefits, shared with EEs

• Employee

• Employer sponsored benefits continue, pre tax EE contribution

• Transparency of the full cost of benefits

• Increased choice and control


What is an ‘Exchange’ Anyway?

• From:

To:


Effects of PPACA, Particularly Exchanges,

on Employees


Employers’ Concerns

Two primary issues facing employers today:

The complexities of Health Care Reform

The escalation of costs associated with employee health care

Employers’ fundamental business concerns are:

Managing Risk

Increasing Revenue

Mitigating Expenses


The Washington State Marketplace

Cre

dib

ility

>

Past

Co

mm

uni

ty

Tru

sts

Da

ta

<50 employees

150-250 employees

50-150 employees

>250 employees

Pub

lic E

xcha

nge

Tru

sts

Cre

dib

ility

>

Car

rier

& 3

rd P

arty

Exc

hang

es

100

Future


Consider the Options

Involvement with benefits, health and productivity

Invo

lvem

ent

wit

h f

inan

cin

g

OptOut

Definedcontributionapproach &

Private Retail Exchange

Stay thecourse

Full throttle onhealth, wellness and productivity


Intended Consequences

Get uninsured covered

Leverage Federal subsidies

Migrate WSHIP model to standard PPACA model WA didn’t have some of the issue that the other states have had (recision practices, no

high-risk pool, limited mandated benefits)

How are we doing compared to other states?


Unintended Consequences

Increased regulatory appetite

Example: What’s happening with the trusts?

Long term affordability? Possibly, but costs in general are not going down


Carrier Perspective:

Opportunities Moving Forward


Employer Engagement and ControlLOW HIGH

Emerging group models: Private single carrier model

• Hosted by carrier or 3rd party, single carrier offered to customer

• Funding - ASO or Insured

• Delegation of plan oversight varies by model - Pre-packaged menu (e.g. medical, dental, supplemental) - Pre-packaged with employer discretion to offer all or a subset of menu - Products and plans determined by employer (defined contribution play vs ‘exchange’)

• Products and Plans - Increased employee product and plan choice to meet individual needs

• Defined contribution by employer

• Group plan underwritten based on employer’s experience

Increasing single-carrier development activity in marketplace


Questions to Consider

Can employers afford to give up more cost control? Do they have to?

Is the role of the broker / consultant changing?

Does a “Defined Contribution” model match with a strong desire to offer strong benefits at a competitive price?

Where have we seen this before?

Any other questions?


Impact on Healthcare Professionals & Professional Liability

Presented by:

Bob Perna


Exchange and Physician Practices

Topics• Enrollment levels in Medicaid and Individual QHPs• Individual Exchange; SHOP• Sources of health care services; Access to care• Network Adequacy and “Narrow Networks”• Financial Solvency of Physician Practices• Grace Period• ASO lines of business• Health Care Data “Transparency”



February Enrollment Report – Released March 20

Qualified Health Plans: 112,225

MedicaidNewly Eligible Adults: 235,079

Previously Eligible but not Enrolled: 122,302Redeterminations (Previously Covered): 370,469

Subtotal: 727,850

Total: 840,075

In-Process ApplicationsQualified Health Plan Applicants – Need to Pay: 71,787



Expanded Enrollment meets Limited Capacity = Low Access

These are not “new Washingtonians.”Uninsured:

Didn’t seek care, or sought care in sporadic, episodic manner ( ERs ) Result: ineffective care management.

Or sought care through Community Clinics / FQHCs / RHCs.

Now, with Medicaid expansion & Individual coverage through the Exchange:Adding a lot more people into the mainstream of the healthcare system.But we have not increased the number of primary care and specialty doctors at the same rate.

Could create access problems, especially in already underserved areas, as the newly insured seek care, increasing the demand on the delivery system.

Increased risk of professional liability claims?



Small Business Health Options Program (SHOP)

Only Kaiser participated in the SHOP Exchange in 2014, operating only in Clark and Cowlitz Counties (operations based in Portland).

Consider the amount of confusion and disruption that occurred in 2013 & 2014 in dealing with only the Individual Market Exchange.

Think how potentially disruptive it would have been if health insurers also had been heavily involved in the SHOP Exchange in 2014.

May have “dodged a bullet.”

But what about 2015??? Not hearing a lot of interest.



Dramatic increase in covered Medicaid lives

Where will these Medicaid patients go for care?* Traditional resources: Community Health Clinics. Sufficient capacity?

* “Mainstream” physician practices? Unprepared, ill-equipped to address the needs of Medicaid patients. Patients’ medical needs that were not addressed will require more intensive initial assessment and treatment: * Higher initial expenditures of time and resources. * Potential for less favorable care outcomes. * Increased professional liability?

Increased percentage of Medicaid patients ( “patient mix” ):* Lower payment rates. Destabilize the financial solvency of practices?




WA Office of Financial Management study, conducted by the University of Washington: Washington State Primary Care Provider Survey, 2011-2012

We potentially do not have enough primary care providers to adequately care for all new Medicaid enrollees.

University of Washington Center for Health Workforce Studies and Rural Health Research Center

Sue Skillman, Deputy Director

http://depts.washington.edu/uwchws/

http://depts.washington.edu/uwrhrc/

http://depts.washington.edu/uwchws/

http://depts.washington.edu/uwrhrc/




Wait times As the demand for health care services increases, without an increase in the number of providers and the capacity to offer services, patients could experience longer lead times in obtaining needed appointments, especially in already underserved areas.

Delays in obtaining care could:* Result in less favorable health outcomes* Increase professional liability.



Network Adequacy vs. “Narrow Network”

WA OIC reviews and monitors carriers’ networks to ensure that the carriers have engaged an adequate network to meet the care needs of patients enrolled in that plan.

Some carriers are using a “narrow network” strategy, providing a very limited choice of providers, and making lower payments – or no payments – for care rendered “out of network”.

Physicians and practice staff need to consider this “out of network” provision when assessing a contract offering from a carrier, and when verifying a patient’s enrollment prior to providing services.



Network Adequacy vs. “Narrow Network”

Past: * Health Insurers sought to develop the largest possible networks; * Selling point with Purchasers: Greater access; happy subscribers

Health Insurers then migrated to “tiered” networks: * Assign providers to different tiers, based on some form of assessment. * Varied payment levels.

Current:Moving to “narrow networks”:* Does a “narrow network” satisfy Network Adequacy standards?* Opportunity for Health Insurers to roll back payment amounts?* What options can Physician Practices consider?



Grace Period – SB 6016 PASSEDACA sought to provide greater assurance of continuity of coverage, and guard against health insurers’ unfair terminations of insurance coverage when the enrollee falls behind in paying premiums.

Insurers typically had allowed a 30 day grace period. ACA raised that grace period to 90 days.

Unintended consequences: * Patient could be up to 90 days in arrears in payment premiums;* Provider not notified of this by patient or health insurer. Any “prior authorization” assumes patient will catch-up on payments.* Provider continues to give services, believing coverage is in force.* If patient does not pay premiums, health insurer reverses coverage back to last paid month. Provider must then pursue Patient for unpaid balances, assuming Patient is not eligible for other coverage, such as Medicaid.



Grace Period – SB 6016 PASSED

Bill established:* Notice to Patient when behind on premiums.

* Notice to Provider when Patient is behind on premiums .



Other issues:Rise of ASO arrangementsRegulatory oversight role of the WA OIC in protecting consumers: diminished?

“Transparency” Sharing of health care data is essential to the success of emerging payment models ( e.g.: Accountable Care Organizations ) and in achieving control of health care expenditures, as well as improvements in care quality.

Failure to effectively share data: Increased risk of professional liability.

Very limited capabilities in Health Information Exchange (HIE). Large Integrated Health Delivery Systems, by default, become “hubs” for data sharing.

All Payer Claims Data Base?


Questions?


Gold Sponsor:

Northwest Chapter


Gold Sponsor:

Northwest Chapter


Gold Sponsor:

Northwest Chapter


Silver Sponsors:

Northwest Chapter

ADMIRAL INSURANCE

Cooper & McCloskey, Inc.

Griffin Underwriting Services

Regional Excess Underwriters, LLC

Skellenger Bender PS

Travelers Bond & Financial Products

Wells Fargo Insurance Services

A Special Thank You to:

Northwest Chapter

Phil DyerJohn FeltzBob Perna

Kara Masters

Documents

Your source for professional liability education and networking. ACA & Health Exchanges: The Changing Landscape of Health Care & What it Means for Professional