update on expanded coverage and impact on rural …...changes in utilization - state demand for...
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Update on Expanded Coverage and Impact on Rural Hospitals11:15 a.m. — 12:15 p.m.
Amber KempVice President, Health Care CoverageCalifornia Hospital Association
Affordable Care Act Implementation: Year 1 –National Perspective
Key Elements of Health Reform
3
Medicaid and CHIP Enrollment Growth – A National Perspective
4Source: Medicaid & CHIP November 2014 Application, Eligibility, and Enrollment Report, Office of The Assistant Secretary for Planning at HHS
U.S. Uninsured Rate Drops to 12.9 %
Percentage Uninsured in the U.S., by Quarter
5
Current Status of State Medicaid Expansion Decisions
6
State Health Insurance Marketplace Types, 2015
7
2015 Premium Changes in the Marketplaces
8
Public Opinion on the ACA Remains Stable
9
Vast Majority of Americans Do Not Know What the Fine is for Not Having Health Insurance in 2015
10
Partisans Divided on Future of Law
11
Affordable Care Act Implementation: Year 1 –California Perspective
2014 Medi-Cal Enrollment
13
Medi-Cal
2.2 million enrolled in
2014
12 million currently enrolled
1 in 3 Californians
on Medi-CalBy 2017
Covered California 2014 Enrollment
14
55% of the workers in the state are employed by firms of less than 100 employees, firms most likely to push employees to the exchange
Exchange Exposure
Potential Movements to the Exchange by Firm Size
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
0-49 50-99 100-999 1000+ TotalFirm Size
Num
ber o
f Em
ploy
ees
Source: State of California, Employment Development Department, Labor Market Information Division, Deloitte AnalysisNote: Conversion rates are estimates based on national conversations with employers, payers, and opinion leaders. Actual conversion rates will depend on the state of the legislation post-Supreme Court decision and existing incentives
ExchangeCommercial
Up to 50%Conversion
Up to 25%Conversion
Up to 10%Conversion
Up to 5%Conversion
Up to 38%Conversion
Profitability Challenges at Medicare Rates
While many hospitals report operating profits today, most will likely be unprofitable as reimbursement approaches Medicare rates
Perc
enta
ge o
f Cal
iforn
ia H
ospi
tals
Source: OSPHD 2010, Deloitte AnalysisMethodology: Percentage of CA hospitals profitable under Medicare calculated using per episode Market Basket cost and revenue
80%
26%
20%
74%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Today Simulated Medicare Rates
Not profitableProfitable
A substantial proportion of the hospitals that are profitable todaywill not be profitable at Medicare rates
Changes in Utilization - State
Demand for hospital services surge for Medi-Cal patients
Post-ACA on track for 200K more Medi-Cal discharges compared to pre-ACA uninsured
Post-ACA on track for 3.6M more Medi-Cal outpatient visits compared to pre-ACA uninsured Includes an estimated increase of 1M Medi-Cal
emergency room visits per year
Surge in Medi-Cal demand is greater than decrease in uninsured demand for services
17Estimates based on Q3 California Office of Statewide Health Planning and Development Hospital Utilization data
Changes in Utilization - Rural
Results for inpatient are not similar to statewide results, but are for outpatient
Post-ACA on track for the same level of demand for Medi-Cal inpatient services as seen in the uninsured population
Post-ACA on track for 380K more Medi-Cal outpatient visits compared to pre-ACA uninsured
18Estimates based on Q3 California Office of Statewide Health Planning and Development Hospital Utilization data
Financial Impact to Hospitals
Creating the Future:2015 and Beyond
Environmental Scan: National Health Expenditures
Environmental Scan: National Health Expenditures
Hospital Care, 42.67% Hospital Care, 32.58%
Physician Services, 20.25%Physician Services, 21.71%
Other Professional,(4) 7.1%Other Professional,(4) 7.3%
Home Health Care, 1.01%Home Health Care, 2.93%
Prescription Drugs, 5.11%Prescription Drugs, 10.73%
Other Medical Durables and Non-durables, 5.88% Other Medical Durables and
Non-durables, 3.35%
Nursing Home Care, 6.48%Nursing Home Care, 5.88%
Other,(3) 11.4% Other,(3) 15.5%
1980 2009
$235.6B $2,330.1B
Environmental Scan: National Health Expenditures, by Category
Source: American Hospital Association
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6,535 6,683
5,8075,4835,2935,2835,092
4,569
3,972
4,638
CA U.S. averageNV NJ NY MAFLILWAUT
8%
Per capita health expenditures, 2009Dollars
CA growth of 5.7% CAGR
vs. 5.9% CAGR for U.S. overall from 1994-2009
Environmental Scan: California Health Care Cost and Growth
California per capita costs historically below many other states, 8% below the U.S. average, and growing at slower rate
Environmental Scan: California Utilization Rates
Consistently lower utilization levels have been a major contributor to California’s healthcare cost advantage
468
294
92
1,388
2,108
614
412
114
Outpatient visits
Inpatient days
ER visits
Admission
Utilization rates in 20101
Number of encounters/days per 1,000 population
U.S.
California
California ranking2
2nd
7th
5th
13th
Environmental Scan: Hospital Inpatient Care
1.05
1.10
1.15
1.20
1.25
1.30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CMI
Inpatient Case-mix Index (CMI) for the years 2001-2010
Environmental Scan: California’s Population Growth
3.03.1
Population Growth Rate
California US
Environmental Scan: California’s Population Growth
Virtually all projected growth in the state will be driven by seniors (aged 55+)
29
29
4
5
4
7
0 10 20 30 40 50
2010
2020
CAGR: 0% 6%3%
Under 5555 to 65Over 65
Population in Millions
Year
Environmental Scan: Chronic Illness
Beyond coverage shifts, aging will also drive a significant increase in the utilization of inpatient services
120
140
160
180
200
220
240
260
25% 30% 35% 40% 45% 50% 55%
Chronic Disease Incidence by CA County
Med
icar
e In
patie
nt U
tiliz
atio
n / 1
000
For every 1% change in the incidence of
chronic disease there is a
corresponding increase in
utilization of 6%
Source: California HealthCare Foundation
Environmental Scan: Caregiver Shortage
Primary care physician supply could constrain the ability to manage the increase of chronic disease and other increases in utilization in several parts of the state
Source: AMA Physicians Master File, California Health Care Foundation
Caregiver SupplyHealth StatusPercentage of adults with one or more chronic illnesses Number of primary care physicians per 1,000
San Francisco
San Jose
Los Angeles
28-35%35-39%39-43%44-49%No data
San Francisco
San Jose
Los Angeles
1.3-2.51.1-1.30.8-1.10.2-0.7No data
The combination of low caregiver supply and are
poor health status is evident
throughout California
30
Private payer
Medi-Cal Medicare
Reductions in Medicare and Medi-Cal reimbursement have required hospitals to increase charges to
private payers to maintain overall profitability
Environmental Scan: Cost Shift
Cost of Providing Care and Services
1Estimates
Financing Mechanisms to Close the Gap
Despite the Hospital Fee Program:
• 2014 Losses $3.0 billion• 2015 Losses $3.6 billion• 2016 Losses $4.1 billion
The hospital fee has lessened the cost-shift dynamic, but it has not eliminated it and never will
be able to so.
Creating the Future
If it’s happening today, it’s not the future…
From Providing Care to Managing Health
From Providing Care to Managing Health
Fee-for-service costs the entire health care system. When paying for volume, a sick patient is worth more than a healthy patient, and this status quo results in uncoordinated care, duplication of services, and fragmentation. After all, the more doctors and providers do, the more they get paid.
The Business Model Is Changing Because it Has to Change
From Providing Care to Managing Health
Source: Kaufman Hall and Assoc.
From Providing Care to Managing Health
Health Plan and/or TPA
EnrollmentIndividual and
Employer Enrollment
Health Benefit Exchange
Population Manager
Population Manager
Population Manager
Government
Hospital Physicians Ancillary Pharmacy
A New Strategic Construct
Source: Kaufman Hall and Assoc.Behavioral
Post Acute
Other
Mega–System Formation to Manage HealthFull Integration Partial Integration
Acceleration of Number of Large Health System Transactions –
Targets Over $1 Billion in Revenue
From Providing Care to Managing Health
Source: Kaufman Hall and Assoc. and Modern Healthcare
From Providing Care to Managing Health
Shaping the Future
Characteristics of Change
• Leadership
• Stakeholder Participation
• Common Goal/Principles
• Ambitious but Realistic Reforms
• Multi-Payer (Public and Private)
• Expanded Coverage
• Funding and Other Investment
From Providing Care to Managing Health
Questions?
