v2: federal issues impacting hospitals promedica health system fall symposium october 31, 2011
TRANSCRIPT
v2: Federal Issues Impacting Hospitals
Promedica Health System
Fall Symposium
October 31, 2011
Presentation Overview
•Some guiding principles
•Affordable Care Act (ACA) 101
•National debate about the deficit and the “Super Committee”
•AHA’s strategy
• What you can do to help
AHA’s Mission
“…advance the health of individuals and
communities…[through] organizations that are
accountable to the community and committed to
health improvement.”
• $12.9 billion prevention fund• Increases coverage of preventive services • No cost sharing for recommended preventive services • Annual Medicare wellness visits • Grants for workplace wellness programs• Creates a national public health council with advisory groups
• Comparative effectiveness• Hospital Value-Based Purchasing (VBP)• Enhanced public reporting• Numerous provisions to reduce health disparities• National quality center
• Pilot programs on payment bundling• Accountable Care Organizations • Center for Medicare and Medicaid Innovation (CMI)• Independent Payment Advisory Board (IPAB)• Administrative Simplification
• HIT Medicare/ Medicaid Incentive programs • Expansion of broadband technology• Funding for HIT infrastructure
• 32 million more people with health coverage• Shared responsibility • Insurance reforms• Medicaid expansions• Tax credits
What’s Missing?• Clinical Integration
– Ethics in Patient Referral Act – Stark Laws
– Anti-Kickback Law
– Civil Monetary Penalty
– Antitrust – Sherman Act
– IRS Tax-Exempt Laws
• Medical Liability Reform
• Controlling/Reducing Costs
• Comparative Effectiveness
• Addressing Utilization– Physician self-referral
– Patient/public demand
• Physician Supply… primary care, residency slots
• Wellness, prevention
Health Reform
Source: Conway, P., Goodrich, K., Machlin, S., Sasse, B. and Cohen, J. , Patient-Centered Care Categorization of U.S. Health Care Expenditures. Health Services Research, no. doi: 10.1111/j.1475-6773.2010.01212.x
51% of spending for 45-64 is for chronic conditions; 56% for 65+.
Cost of Chronic Diseases Expected to Climb…
Primary Care
Physicians
Specialty Care
Physicians
Outpatient Hospital Care and
ASCs
Inpatient Hospital
Acute Care
Long Term Acute
Hospital Care
Inpatient Rehab
Hospital Care
Skilled Nursing Facility
Care
Home Health Care
Medical Home
Acute Care Bundling
Acute Care Episode with PAC Bundling
Post Acute Care Episode Bundling
Existing Models of ServiceAccountable Care Organizations
Historical Perspective…Once you have made up your mind, facts are but a mere annoyance. - Unknown
“Once you have made up your mind, facts are but a mere annoyance”. – Unknown
“Take from the altars of the past the fire - not the ashes”. ~Jean Jaures, 20th century French politician
Projected Budget DeficitSOURCE: White House Office of Management and Budget; GRAPHIC: Wilson Andrews, Jacqueline Kazil, Laura Stanton, Karen Yourish - The
Washington Post
Budget Control Act (BCA)
• Immediate budget reductions of $917 billion...extends debt limit by $900 billion to February/March– No cuts in Medicare, Medicaid and Social
Security (except fraud and abuse initiative)– No new revenues
Stage IStage I
Budget Control Act
• Special bipartisan congressional committee to make additional $1.5 trillion in deficit reduction recommendations by Thanksgiving– Guaranteed up-or-down vote (and no filibuster) on
recommendations if majority of panel support recommendations by Christmas
– Enforcement process…debt limit extended by another $1.5 trillion thru 2012 IF: Recommendations of special committee adopted with
resolution of disapproval; OR Congress passes a Balanced Budget Amendment; OR Automatic across-the-board cuts…sequester
of $1.2 trillion
Stage IIStage II
Budget Control ActPotential Sequester Impact:Potential Sequester Impact:
$1.2 trillion$1.2 trillion• No revenues• Defense $ 492 billion• Total non-defense $ 492 billion• Medicare $ 123 billion
– No cuts in benefits− Provider and insurer cuts limited to 2 percent
($43 billion from hospitals including CAHs)
• Medicaid exempt• Net interest savings $ 216 billion
TOTAL $ 1,200 billion
= $43 billion
At the same time…
• “Jobs” initiative…$447 billion• Expiring “Extenders”
− Unemployment compensation− Taxes:
Alternative minimum tax patch R&D tax credits Accelerated depreciation
– Medicare Moratorium on Medicare
physician reductions Or will these be dealt with at the
end of the year?
Demands for INCREASED SpendingDemands for INCREASED Spending
The Super Committee
• House– Republicans
(Speaker Boehner) Dave Camp (MI) Jeb Hensarling (TX) Fred Upton (MI)
– Democrats (Minority Leader Pelosi) Xavier Becerra (CA) James Clyburn (SC) Chris Van Hollen (MD)
• Senate– Democrats
(Majority Leader Reid) Max Baucus (MT) John Kerry (MA) Patty Murray (WA)
– Republicans (Minority Leader McConnell) Jon Kyl (AZ) Rob Portman (OH) Pat Toomey (PA)
The Super Committee
• First, impact of markets on prospect of Super Committee reaching agreement…or going further on a “big deal.”
• Second—if the market and political environment do not change the dynamics-- is failure (or sequestration) preferable?– AARP…Medicare beneficiaries– Anti-tax lobby– Hospital community perspectives– Other sectors of health care community
Pharma Physicians
– Defense industry
Big QuestionsBig Questions
The Super Committee
• August 16: co-chairs and members of the committee must be appointedwithin 14 calendar days of enactment
• September: the committee held its organizing meeting 9/16…first public hearing Sept. 13
• October 14: recommendations by regular House and Senate committees to committee
• November 23: committee required to vote on recommendations in the form of legislative language scored by CBO
• December 23: House and Senate must voteup-or-down on committee recommendations
Important DatesImportant Dates
Joint Select Committee on Deficit Reduction
• Medicaid ($100 billion nationally)– Provider taxes/assessments– Blending rates/FMAP– Impact on OH?
Proposed OptionsProposed Options
Joint Select Committee on Deficit Reduction
• In 2011, OH’s hospitals contribute nearly $1.01 B over the biennium in 4 installments beginning 11/11
• • This franchise fee brings about $1.8 billion in federal match
• Total Medicaid funding pool (hospitals’ assessment plus federal match) = $2.81 B
• • Of this total, the state retains over $1.2 B
• Over $1.6 B is returned to hospitals for a net return to hospitals of $596.7 M over the biennium. But not all hospitals will get back their assessment.
Ohio’s Medicaid Provider Ohio’s Medicaid Provider Tax ProgramTax Program
Joint Select Committee on Deficit Reduction
• Medicare (national figures) – IME ($15 billion)– Bad debt ($15-30 billion)– IPPS retrospective coding offsets ($5 billion)– Rural adjustment cuts ($14-16+ billion)– Post acute care services ($50 billion)– Expansion of IPAB
Proposed OptionsProposed Options
• Increase retirement age ($125 billion)
• Means-testing Medicare ($38 billion)
• Reform and increase copayments for Part A & B ($110 billion)
• Medigap restrictions ($53 billion)
• Home health copayments ($40 billion)
• SNF copayments ($50 billion)
Joint Select Committee on Deficit Reduction
Options to Raise RevenuesOptions to Raise Revenues
Federal cuts mean state cuts• FY 2011
– 43 states have taken action to cut Medicaid Provider cuts in 24 states
• FY 2012– 46 Governors proposed Medicaid cuts
Provider cuts in 33 states Benefit restrictions in 25 states Increased beneficiary cost sharing
in 21 states
Our message
• Access to services and longer-waits
• Inability to invest− Upgrading facilities− New technology− Research and education− Performance improvement initiatives
• Jobs…impact on hospitalemployment
The ImpactThe Impact
Our message
• Hospitals already absorbing $155 billion in reductions…on top of:– Federal regulatory actions
(Medicare IPPS coding offset)– State cuts
• Protect the safety net (Medicaid)
• Federal programs already underpay hospitals
Enough is EnoughEnough is Enough
Be prepared for pushback
• Asking beneficiaries to contribute– AARP and senior groups
– Democrats
• Suggesting that revenues be part of the solution– Republicans
Our strategy• Must “work” the committee• Messages
– Enough is enough
– Cuts to providers = potential harm to beneficiaries
– Alternatives…reforms vs. ratcheting
• Membership engagement– Legislative Action ALERT
– Super Committee CEO Advisory Group
– Super Committee Grassroots Network
Coalition Advertising
ADJUSTMENT PROPOSED
• Inflation rate (hospital market-basket) + 2.8%
• Prospective coding adjustment - 3.15%
• Rural floor lawsuit (Cape Cod) + 1.1%
• PPACA reduction - 0.1%
• PPACA productivity adjustment - 1.2%
• NET UPDATE FACTOR -0.55%
Example of Advocacy Success: IPPS Update
ADJUSTMENT PROPOSED FINAL
• Inflation rate (hospital market-basket) + 2.8% + 3.0%
• Prospective coding adjustment - 3.15% - 2.0%
• Rural floor lawsuit (Cape Cod) + 1.1% + 1.1%
• PPACA reduction - 0.1% - 0.1%
• PPACA productivity adjustment - 1.2% - 1.0%
• NET UPDATE FACTOR -0.55% +1.1%
DOLLAR IMPACT - $498 M +$1.2 B (as compared to FY 2011 levels)
Bottom line for hospitals?
• Next year…2012– If sequester kicks in…deficit reduction package
alternative before January 2013– Expiration of Bush-Obama tax cuts
• 2013– “Boehner rule”…for future debt limit
extensions
Challenges…VulnerabilitiesChallenges…Vulnerabilities
The Big Issue Beyond 2012
• Fundamental questions:– What will Medicare and
Social Security look like?– How big will the military be?– How much will the wealthy pay in taxes?– How will the country care for the
sick and vulnerable (Medicaid)?
• Payment reform…hospital role– Specific policy options
v2: Federal Issues Impacting Hospitals
Promedica Health System
Fall Symposium
October 31, 2011
Kim Byas, Sr.Regional Executive