HEALTH CARE REFORM, GOVERNMENT RELATIONS, AND TRANSPLANTATION

Maryl R. Johnson, M.D.Professor of Medicine

University of Wisconsin School of Medicine and Public Health

Medical Director, Heart Failure and TransplantationUniversity of Wisconsin Hospital and Clinics

Madison, WI

HEALTH CARE REFORM:

The changes in the health care financing and delivery system enacted through the Patient Protection and Affordable Care Act and the associated reconciliation bill.

HEALTH CARE REFORM GLOSSARYAccountable Health Care Organization (ACO): A group of providers (physicians, hospitals, nursing facilities, ancillary care) that create an organized delivery system to achieve cost savings and improve quality.

Cadillac Plans: Expensive health care plans which provide low deductibles and cost sharing.

Carve Out Contracts: Contracts for highly specialized services (transplant) which are separated from general coverage and managed by separate firms for a portion of the premium collected (limits insurance company’s liability through re-insurance provisions for very expensive cases).

Community Rating: Health premiums based only on age, smoking and local community medical costs but not health status of the beneficiary.

Comparative Effectiveness Research (CER): Research examining the relative health and cost implications of competing techniques for treating the same condition.

Disproportionate Share Hospital Payments: Funds paid by Medicare to hospitals which provide high levels of uncompensated (charity) care.

HEALTH CARE REFORM GLOSSARY (Cont.)

Guaranteed Issue Coverage: Requirement to provide coverage without regard to health status.

Health Insurance Exchange (SHOP): State-based insurance exchanges which offer insurance plans meeting specified requirements to individuals and businesses with fewer than 100 employees. (Based on community rating, adjusted for age and smoking).

Individual Mandate: Requirement that all citizens purchase and maintain health insurance coverage or face a fine. (Includes provisions for religious objections and inability to pay).

Medical Loss Ratio (MLR): Ratio of the health care premium paid to health care providers (hospitals, physicians, DME suppliers) to total premiums collected.

Reinsurance: Coverage for high cost cases (outliers) purchased by insurance carriers from other insurers.

Sustainable Growth Rate (SGR): Results in automatic reductions in Medicare physician payments if the rate of increase in total physician payments exceeds a goal targeted to the growth in GDP.

GOALS OF HEALTH CARE REFORM

• Expand coverage– 32 million by 2019

• ½ Medicaid, ½ exchanges/employer based• Individual/employer mandates

– No lifetime/annual limits– No exclusion for preexisting conditions (for adults

in 2014)– Price adjustments allowed only for age/smoking– Caps on out of pocket costs/deductibles– Young adults on family plan to age 26

GOALS OF HEALTH CARE REFORM (CONT.)

• Limit growth in health care costs– MLR ≥80% for small and ≥85% for large

group market– Tax on Cadillac Plans

• Reform delivery and insurance systems– ACOs– Essential health benefits– CER

HEALTH CARE REFORM AND TRANSPLANT

Reform Element

Advantages Concerns

Expand access to private insurance

• Earlier specialist referral• Improved access to

transplant evaluation and listing

• Reduced risk of nonadherence from loss of drug coverage

• Restrictions on premiums may increase market power of large networks

• Stronger ‘in-network’ provisions may limit access to some centers

• Elimination of high cost, high choice plans

Expand Medicaid coverage

• Improved access to transplant

• Coverage for uninsured patients posttransplant

• Reduced organ loss to medication nonadherence

• Expansion in patients with inadequate coverage

• Shift in patients with private insurance to lower cost or free public care

Axelrod et alAm J Transplant 2010;10:2198

HEALTH CARE REFORM AND TRANSPLANT (Cont.)

Reform Element Advantages Concerns

Medicare reforms

• Better drug coverage (reduction in donut hole)

• Stabilization of the SGR• Creation of medical

homes• Shift to episode of care

reimbursement• CER

• New reimbursement reductions by independent medical board

• Reduction in disproportionate share payments

• Penalties for re-admissions and hospital acquired infections

• Fails to address the cuts under the SGR

Tax increases

• Spread across a wide range of entities including pharmaceutical manufacturers and insurance companies

• Likely to predominantly affect high-cost medical and surgical staff

• May reduce pharmaceutical support for education and research

• Reduces competition among insurers increasing market power of larger national networks

Axelrod et alAm J Transplant 2010;10:2198

TAXES TO HELP FINANCE HEALTH CARE REFORM

Tax Provisions Description Implementation

Date

1. Tax on individuals without coverage

• $695 to 2.5% of household income Phased inbeginning

2014

2. Change in Medical Savings account practice

• Limit to $2500• Exclude over the counter medications

Jan 2011

3. Increase tax on wages for Medicare part A

• From 1.45% to 2.35% for earnings over $200,000 for individuals, $250,000 for couples

• 3.8% tax on unearned income for higher income taxpayers

Jan 2013

4. Excise tax on Cadillac plans • Up to 40% on plans which cost more than $10,200 per individual, $27,500 per family

Jan 2018

5. Annual fee on pharmaceutical manufactures

• Range $2.8 billion to $4.1 billion per year Jan 2012

6. Annual fee on health insurance sector

• Range $8 billion to $14.3 billion per year• Indexed by rate of premium increase• Reduced for nonprofit insurers

Jan 2012

7. Excise tax on taxable medical device

• 2.3% of sale price Jan 2013

8. Limit deduction for executive and employee compensation for health insurers

• Limited to $500,000 per individual Jan 2009

9. Tax on providers of tanning services

• 10% tax Jan 2010Axelrod et al

Am J Transplant 2010;10:2205

QUESTIONS REMAIN. . .

• Will transplantation (and if so, of which organs) be considered an Essential Health Benefit? (Only end stage renal disease is currently an “entitlement program”).

• Will increased access only increase the donor organ shortage?

• What will the administrative burden be?• How will physician and hospital

reimbursement be affected?

AREAS OF ACTIVE GOVERNMENT RELATIONS OF IMPORTANCE TO TRANSPLANT PROFESSIONALS

• Defining “essential health benefit”• FDA involvement/approval of laboratory based

diagnostic tests (implications for HLA typing, crossmatches, PRAs, etc.)

• Biovigilance: Appropriate donor testing to prevent disease transmission (uniform guidelines being proposed for blood and organs which could decrease organ availability)

• Immunosuppressive coverage for the life of the renal allograft

• Transplant coverage for Arizona Medicaid recipients

COMPREHENSIVE IMMUNOSUPPRESSIVE DRUG COVERAGE FOR KIDNEY TRANSPLANT PATIENTS ACT

Why is this legislation necessary?•Since 1972, Medicare has covered people with ESRD. There is no Medicare time limit for dialysis. However, kidney transplant recipients lose Medicare coverage 36 months after transplant.•Extending immunosuppressive coverage would improve transplant outcomes resulting in a higher quality of life with a transplant, and recipients are more likely to return to work than dialysis patients. It also would enable many dialysis patients who do not have access to other coverage to consider a kidney transplant. •In 1972, it was estimated that the program would cost $250 million.  In 2008, the Medicare ESRD program cost nearly $27 billion.•This legislation will allow individuals who are eligible for immunosuppressive drugs whose insurance benefits under Part B have ended at 36 months to remain in the program only for the purpose of receiving immunosuppressive drugs. If they have group health insurance with this benefit, they would not qualify for coverage beyond the 36 months.

COMPREHENSIVE IMMUNOSUPPRESSIVE DRUG COVERAGE FOR KIDNEY TRANSPLANT PATIENTS ACT

(Cont.)Cost benefits for the continuation of immunosuppressant coverage • Medicare spends $71,000 per year on a dialysis patient, indefinitely.• Medicare incurs an average first year cost for kidney transplant of >$100,000 and

will pay for dialysis and re-transplantation in the case of organ failure. • Medicare only spends $17,000 on a kidney transplant recipient per year after

the year of the transplant. How is the premium determined for individuals eligible due to ESRD?• A monthly premium rate will be determined based on the monthly actuarial rate for

enrollees age 65 and over. How does this affect those with private insurance?• Coverage by private insurance varies widely; this legislation ensures Medicare is still

the payer of last resort and will not usurp coverage offered by private insurers. Does this open transplant recipients up to the full benefits of Medicare?• No, this legislation would extend coverage for immunosuppressive drugs only.

Beneficiaries would pay the Part B premium. All other Medicare coverage would end 36 months after transplant.

Senators Introduce AST Supported Comprehensive Immunosuppressive Drug Coverage for Kidney Transplant Patients Act of 2011

  Today, Friday, July 29th, Assistant Senate Majority Leader Dick Durbin (D-IL) and Senator Thad Cochran (R-MS) are introducing the Comprehensive Immunosuppressive Drug Coverage for Kidney Transplant Patients Act of 2011. This important bipartisan and bicameral legislation will ensure kidney transplant recipients are able to maintain Medicare Part B coverage of immunosuppressive drugs necessary to avoid organ rejection and a return to more costly treatments....a win-win for patients and the U.S. Treasury. As you know, AST has been working very closely with Senators Durbin and Cochran as well as transplant champions in the House of Representatives to introduce and advance this important patient advocacy focused legislation. Congressmen Dr. Michael Burgess (R-TX) and Ron Kind (D-WI) will soon be introducing similar companion legislation in the House. AST applauds these Members of Congress for their strong and steadfast support of transplant patients.

National Transplant Organizations Applaud Arizona Governor and Legislature for Restoring Life-Saving Medicaid Patient Coverages April 8, 2011 – The Americn Society of Transplantation (AST) and the American Society of Transplant Surgeons (ASTS) strongly applaud Arizona Governor Jan Brewer and the State Legislature for restoring transplant services that were previously eliminated as part of the State's FY 2011 budget. The cuts, which took effect on October 1, 2010, resulted in the loss of Medicaid eligibility for approximately 100 patients awaiting life-saving donor organs. AST President Dr. Maryl Johnson and ASTS President Dr. Michael Abecassis commend Governor Jan Brewer and state leaders, including Representatives Anna Tovar, John Kavanagh and Dr. Matt Heinz, for working collectively to resolve this very challenging Medicaid issue. "When I met with Arizona leaders in Phoenix, it was obvious that no one wanted patients to go without coverage for life-saving transplants," states Dr. Johnson. “We are encouraged and pleased that Governor Brewer and the legislature were able to restore critical Medicaid coverage for transplant candidates....truly preserving the gift of life for those on the wait list in Arizona.” “The challenges faced by Arizona and many states attempting to preserve the long-term viability and stability of their budgets present many obstacles for all involved,” states Dr. Abecassis. “The AST and ASTS recognize the financial difficulties that states face, and therefore applaud the decision by the state of Arizona to restore coverage for transplantation services.”