The Aftermath of Health Care Reform and How it Impacts Rural America

The North Country Health Consortium, Inc.

June 11, 2010

Health reform: From campaign promises to the law of the land.

• Largest health bill since Medicare.• Second largest tax increase in history.• Comprehensive health reform has eluded

Presidents since T. Roosevelt.

The Cost of Doing Nothing

• By 2015, there could be 59.7 million people uninsured; 67.6 million by 2020. An estimated 49.4 million individuals were uninsured in 2010.

• Middle-class households would suffer most without reform - - the percentage of without health coverage would rise from 19 percent today to 28 in 2020.

Robert Woods Johnson Foundation

The politics were tough.

At times it was a like a rollercoaster ride.

“It’s a big f*#%ing deal!”Vice President Joe Biden

• Health Reform will imminently impact patients, providers, employers. – And let’s not forget private insurance providers, pharmaceutical companies and the legal profession.

• Medicare and Medicaid programs both will experience change.

Is Health Care Reform the Right Prescription for Rural America?

Why Rural American NeedsHealth Care Reform

• A greater proportion of rural residents than urban residents are uninsured or covered through public sources. (23% compared to 19%)

• Fewer rural Americans receive insurance through their employer than their urban counterpart. (64% compared to 71%). A higher number of self-employed is in rural America.

• Rural workers pay higher costs for health insurance plans than their urban workers.

Despite that - - the gravest problem in rural health care is ACCESS

• Coverage does not equate to access. – Over 50 million Americans live in areas where there are too

few providers to meet their basic primary care needs. – Yet these rural patients face the most daunting of health

care challenges: per capita, rural populations are older, poorer and sicker.

• For health reform to be a success, the access crisis in rural America must first be resolved.

Three reforms were crucial:

–The workforce shortage crisis must be abated;

–Equity in reimbursement must occur;

–Disparities must be eliminated.

Education of Capitol Hill/ Rural Healthcare Disparities• 20% of population scattered over 90% of

landmass• 20% of population, yet only 9% of physicians

practice in rural America• Economic, cultural, educational,

demographic, insurance deficiency = major disparities in rural America.

• Disparities are compounded if you are minority in rural America.

What was in health care reform for rural America?

• Health Reform Does Not contain all provisions needed to combat access to care crisis in rural America.

Workforce Improvements• Significant Expansion of NHSC• Significant funding of Title VII and Title VIII• Rural Physician Training Grants• Graduate Medical Education Improvements• Increased Residency Slots in Rural Areas• Grants to Improve Primary Care Training• Health Care Workforce Commission (Sept.

2010)

• New Medicare provider payments

• New Medicare benefits

• Reductions in Medicare spending

• Long-term savings

Physician Payment Improvements• 10 percent incentive payment for primary care

physicians (2011-2015)

• 10 percent bonus payment to general surgeons (2011-2015)

• 5 percent incentive payment for mental health services (2011)

• Geographic Payment Improvements (GPCI) - 42 States will receive increased reimbursement.

Important Note: What’s not in there

• A Sustainable Growth Rate (SGR) Fix!

• Physicians are slated to take a 21.2% Medicare cut unless Congress acts.

– 9 times in past 7 years, physicians have faced Medicare payment cuts that were avoided only after Congress intervened.

– Each temporary congressional fix, merely put off cuts to some date in the future.

– Last 4 months, there have been 3 last minute reprieves, and two instances of Medicare holding of processes claims until Congress intervened.

– Long term fix - - replacing the formula - - $210 billion.

Important Rural Hospital Provisions

• Extension of the Medicare Rural Hospital Flex Program– Original authorizing language for the CAH program is extended for two years

Quality (low-cost) bonus payments, 2011-2012

• Low –Volume Hospital Payment Program Extended and Expanded.

• Extension of Medicare Dependent Hospital Program until 2012 and extends certain MDHs to decline reclassification through 2012.

• Extension and expansion of Rural Community Hospital Demonstration Program – 10 new states will be eligible.

• $400 for Low-cost Hospitals (to award to efficiency).

New Medicare Benefits Covered

• Beginning 2011, no coinsurance or deductibles for traditional Medicare for preventive services that are rated A (Substantial net benefit) or B (moderate net benefit) by the U.S. Preventive Services Task Force.

• Medicare will cover free annual comprehensive wellness visits and personal prevention plan.

Donut Hole• Phases in coverage of Medicare Part D

drug benefit coverage gap.• 2010 – enrollees with any spending in coverage gap will receive $250

rebate (Checks are in the mail!)

• 2011 – enrollees with spending in coverage gap will receive 50% discount on brand-named drugs.

• 2020 – enrollees responsible for 25% of gap instead of current 100%.

• Beginning 2014 - Catastrophic coverage threshold reduced.

Reductions in Medicare spending.

Medicare Advantage• $136 billion in savings over 10 years.• Currently Medicare pays private insurance

companies who offer MA plans 95% to 115%. • Reduces federal payments to MA plans over time

relative to fee for service costs in each county.

• No cuts in actual Medicare benefits. Cuts in subsidies to insurance companies who offer these plans.

Hospital DSH Payments

• $22 billion savings over 10 years• As the number of uninsured grows smaller, the Medicare

disproportionate share payments to hospitals will be reduced.• Reductions will be based on a new formula that takes into

account factors such as the decreasing number of uninsured and the decreasing amount of uncompensated care hospitals will need to provide.

– Begins in 2014– Totals a 75% reduction– Will include an additional new payment for uncompensated care.

Market Basket Reductions• $157 billion in savings over 10 years.• Annual market basket update is based on growth in costs of good

and services (CPI).• Most facilities (physicians not included) get some type of market

basket increase. – “Productivity adjustment” will now be applied which may result in reduced

updates.– Reduce market basket adjustment for inpatient and outpatient hospital services,

long-term care hospitals, and inpatient rehabilitation facilities and psychiatric units beginning in 2010.

– Beginning in 2012, reduces market basket for home health agencies, skilled nursing facilities, hospices and other Medicare providers.

Other reductions in spending

• Imaging services

• Home health (grants authority to Secretary to take into account urban and rural providers)

• Part D – subsidy for higher income will be reduced.

New Advisory Board• Independent Payment Advisory

Board (IPAB)– $16 billion in savings over 10 years– 15 member board within HHS– Similar to MEDPAC

• Key difference…authority to implement rather than simply recommend to Congress

– HRSA Administrator – ex officio full time member– Hospitals free from IPAB authority until 2020

• Possible technical correction needed for CAHs

Medicaid Primary Care• Requires States to pay rates at least

equal to Medicare payment rates for primary care services furnished in 2013 and 2014. This includes:– E and M services– Immunizations– Primary Care as defined as Family

Practice, Internal Medicine or Pediatrics– FMAP is 100%

Other Important Provisions• Expansion of 340B Drug Program (CAHs,

SCH, RRCs)– Rural Health Clinics?

• Establishment of the Office of Minority Health• Community Health Center Funding Increases• Medical Liability Protection Grants• Insurance Administrative Simplification

Grant Opportunities

• Health Professions

• Health Care Systems

• Maternal and Childhood Health

• Primary Health Care

• Rural Health

Federal Grants/HRSA• Open Opportunities

• Sign up for e-mail notification each time a HRSA grant application becomes available at Grants.gov. – http://www.hrsa.gov/grants/default.htm

• http://www.Recovery.gov

• http://www.Grants.gov

What if I don’t like it?1) Repeal

– Legislation already filed.– Not votes to pass - - and even if it did - - likely not

votes to override presidential veto.

2) Opt Out – VA passed opt out law, several other starts are looking to pass similar laws.– Preemption Clause of the Constitution prohibits a

state from opting out of a constitutional law.

3) Declared unconstitutional by Supreme Court

Constitutional Challenges by various states

• State attorneys general filed suit against federal government.

• Claims health care overhaul is unconstitutional because federal government does not have constitutional authority to mandate coverage

• Additionally claims it mandates unfunded requirements on states.

A Constitutional Battle• 10th Amendment – “powers not delegated to the

United States by the Constitution…are reserved to the states respectively, or to the people.”

• Article 1 – Commerce Clause, grants authority to regulates interstate commerce has been enshrined in court decisions since Justice Marshall. New Deal tested Commerce Clause. Broadly interpreted.

• Likely to be decided by

Supreme Court.

Get Invovled!Our fight Continues

• Implementation in Critical!– Appointments for Workforce Advisory Committee– Appointments for IPAB– Grant opportunities

• Appropriations process is critical!• We must fight for what’s left out!• All politics are local - - you’re involvement is crucial.

Thank you!

• Join our health care reform webinars at www.ruralhealthweb.org