Lori Heim, MD, FAAFP

Heim Healthcare Consulting

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President Obama signs Affordable Care Act (ACA)

3/2010

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Feds

◦ Center for Medicare & Medicaid Services (CMS)

◦Health & Human Services (HHS)

Patient Centered Medical Home (PCMH)

Per-member-per-month payment (PMPM) or per-patient-per-month

Fee-for-Service (FFS)

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Identify changes & impact for:

1. Feds

2. States

3. Patients

4. Physicians

5. Business

Indirect impact of ACA due to pressure to reduce HC costs

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• Legislative

• Regulatory

• Payment focus

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Control health care costs

◦ This was #1 priority for many

◦Question has been how best to do this

Expand health insurance coverage

Improve health

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Attempts to shift delivery from volume to value

Capitation

Shared savings

Bundled

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Prospective payment

Risk falls to provider

◦ FFS risk is with payer

◦ Bundled payment is shared risk

Payment for patient includes:

◦ Complications

◦Utilization extremes

Managed Care

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Bundled payment synonym (sometimes)

Payment is bundled= single payment

Specific condition

All setting

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Episode related or condition related ◦Hip surgery, dialysis ◦Diabetic care for period of time ◦ Expected coordination of care and performance outcomes ◦ Physician & hospital

Medicare & Medicaid pilot ◦ Bundled Payment for Care Improvement

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Withheld money

◦ Payment given only if targets met

Bonus- “new money”

◦ If targets met

Medicare PQRI program

◦ Physician Quality Reporting Initiative

Criteria such as the National Quality Forum

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AAFP platform for PCMH payment FFS + Quality + PMPM PMPM ◦ Care management fee ◦Up front money to support transformation or back-end ◦ Adjusted based on risk (levels of care) and PCMH designation NCQA or others

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Parity of Medicaid to Medicare payment for primary care in all states

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Independent Payment Advisory Board

Was supposed to begin in 2013 with first report in Jan. 2014 – full authority in 2015

Funding blocked by Congress

Opposition by most medical orgs

More focus on physician value-based payment versus volume

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Delays Continue to Disrupt Full ACA Implementation

Source: Kelly Kennedy, “The 5 Key Obamacare deadline delays,” USA Today, March 6, 2014; Kyle Cheney, “Canceled health plans get reprieve,” Politico, March 5, 2014; Sam Baker, “Another Obamacare Delay,” National Journal, March 5, 2014; J.D. Harrison, “Obama administration permits

further delay to health exchanges for small businesses,” Washington Post, March 5, 2014.

Analysis

•Originally, the Affordable Care Act opened health insurance exchanges in Oct. 2013 and enacted most provisions in 2014, but delays have plagued the law’s rollout

•In addition to the delays listed above, the administration extended the exchanges’ open enrollment period for those who wanted coverage to begin in Jan. 2014 for

nine days in December after repairing the faulty HealthCare.gov

•Although the administration does not foresee further ACA delays or extensions, Republicans have seized on delays to suggest the law does not work

Employer Mandate

Requires employers with 50 or more

employees to provide health insurance

Delay Announced: July 2013

Pre-ACA Coverage

Allows individuals to keep or buy pre-ACA

plans if their state insurance regulators

permit

Delay Announced: November 2013

Small Business Health Options

Program

Allows small businesses to enroll employees

in health exchanges

Delay Announced: November 2013

2013 2014 2015 2016 2017

Employer Mandate

Requires companies with 50-100 employees

to provide employees health insurance

Delay Announced: February 2014

Pre-ACA Coverage

Allows individuals and small businesses to

buy pre-ACA coverage for an additional

year, if state insurance regulators permit

Delay Announced: March 2014

c

c

c

c

c

Businesses with more than 100

employees must comply with employer

mandate by providing coverage to 70%

of full-time employees or pay a penalty

Holders of pre-ACA plans received

cancellation notices, compromising the

administration’s previous promise to allow

individuals to keep pre-ACA plans

Delayed ACA Provisions and Expected Dates of Implementation

Original start date New start date Potential extension

Small businesses may enroll employees in

health exchanges via paper, but must wait

one year to enroll employees online

Cancellation notices will arrive in Oct.

2016, but plans that offer early renewals

could be extended into 2017

Community-based care funds grants

Programs to keep patients at home

Initiates payment reforms and pilots for PCMH,

ACO’s and bundled payment models

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Manage care for patients with high health needs;

Ensure access to care;

Deliver preventive care;

Engage patients and caregivers;

Coordinate care across the medical neighborhood

Looks like a PCMH

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Insurance Exchanges

◦ State run vs opted to have Feds

◦ Availability of robust competition

Tends to mirror pre-ACA monopoly of states by insurance companies

Medicaid Expansion

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NC & SC have opted not to expand Medicaid

Fewer lower income individuals covered

Most impact for PC where Medicaid parity with Medicare lost & hospitals who have greater lost revenue from “charity” unpaid care

Feds pay 100% costs then 90%

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Coverage for adults with chronic conditions expected to have significant impact on:

◦ Access

◦Usual Source of Care (especially PCP)

From 58 to 87%

◦Decrease unmet medical needs

Decrease by ¾

Source: The Expansion of Medicaid Coverage under the ACA:

Implications for Health Care Access, Use, and Spending for Vulnerable

Low-income Adults. Urban Institute

Increased total per capita spending $2,677 (uninsured) to $6,370 Medicaid covered

Decreased cost to patient $1,214 to $293

Shift of uninsured health costs to feds from state- especially with uncompensated care

Opportunity to target high risk patient populations

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• Low income appear to be biggest winners

• Political fallout from small number who’s plans will change

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Source: Kaiser Family Foundation, 2013;

Center for Medicare and Medicaid

Services, 2014.

Medicare Advantage Plans and Distribution Among MA Enrollees

Health

Maintenance

Organization

(HMO) Plan

Provides care and services from doctors

and providers in the plan’s network,

excluding emergency care, out-of-area

urgent care, or out-of-area dialysis

Preferred

Provider

Organization

(PPO) Plan

Provides less expensive care and

services from doctors and providers in

the plan’s network, although care from

out-of-network providers is allowed at

a higher price; can be local or regional

Private Fee-

for-Service

(PFFS) Plan

Provides health care and services from

any Medicare-approved doctor or

provider that accepts the plan’s payment

terms; some PFFS plans have networks

Special Need

Plan (SNP)

Provides limited eligibility to people with

specific diseases or characteristics, such

as people who live in nursing homes, are

dually eligible for Medicare and Medicaid,

and have specific chronic conditions

Plan Description

Analysis

Since the 1970s, Medicare beneficiaries have had the option to get Medicare benefits through private health plans; the Medicare

Modernization Act of 2003 renamed this option “Medicare Advantage”

ACA Reassesses Payment Structure, Could Cost Patients More

25 Source: MEDPAC, 2012; Kaiser Family Foundation, 2013; Robert Pear, “U.S. Proposes Cuts to Rates in Medicare Payments,” February 21, 2014; Dana Davidsen, “First

on CNN: Republican committees tie Democrats to proposed Medicare Advantage cuts,” CNN, February 26, 2014.

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Analysis

•Medicare pays for MA plans via a bidding

process; plans submit “bids” on estimated

costs per enrollee and bids are accepted if

they meet all requirements and are then

compared to benchmark amounts

•If the bid exceeds the benchmark,

enrollees pay the difference between the

benchmark and bid via their monthly

premium

•If the bid is lower than the benchmark, the

MA plan and Medicare split the difference,

with the plan providing a rebate to

enrollees comprised of additional benefits

•The Affordable Care Act (ACA) reduces

benchmarks, which in turn increases

premiums when bids are higher and

reduces rebates when bids are lower

•According to the Center for Medicare and

Medicaid Services (CMS), the

administration intends to cut benchmarks

by 1.9% in 2015

•Cuts will continue over the next decade

as part of a $716 billion reduction in

Medicare

Bid

Assess difference

between bid and

benchmark

Medicare Comparison of Bids with Local Benchmarks

Benchmark

vs.

Bid Benchmark

Bid Benchmark

If bid exceeds benchmark…

Before the ACA

Difference is

monthly

premium

Difference

is a rebate

If bid is lower than benchmark…

Bid Benchmark

Bid Benchmark

Difference is

a reduced

rebate

If bid is lower than reduced benchmark…

Under the ACA

If bid exceeds reduced benchmark…

Difference is

higher monthly

premium

Based on income level

Cornerstone of expanding insurance and health care coverage

Without subsidies, average premiums would double

“Estimated 6.5 million fewer Americans would have health insurance”

Negative “impact on remaining enrollees as well."

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Source: amicus brief Jenner & Block 2/17/14

Effort to make spending more transparent and engage consumer in decisions

Effect often to delay or avoid expenditures by patients

◦ Especially preventive care

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Efforts to control cost have led to insurance plans controlling networks

◦ Impacts patients & physicians

◦ Limits on availability

◦ Limits on payment to physcians

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Difficult to determine in many areas as impact not fully realized

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Depends on state

Patient mix (payor status)

Physician employment status (compensation model of employment)

Specialty mix

Decision to participate in ACO or other bonus payment plans or other cost sharing models

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Less than 50 employees

Delay in requirement

Less direct impact on physicians as number of employed physicians grows

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Primarily through regulatory efforts of CMS but also legislative

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Sustainable Growth Rate

Goal is to avoid cuts to Medicare payments

repeal SGR formula & give 0.5% payment updates 2014-2018

2019- choose alternative payment methodology or remain in a new merit-based fee-for-service payment system

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PCMH

◦ Example of combination of payments linked to quality/access and meeting set goals

◦ Payments per patient to assist with care coordination and team approach

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Sunset separate payments for quality, meaningful use and value based payments

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FFS + drivers for quality & efficiency

PQRS

Meaningful use of electronic health records

Value-based modifier

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Different formulas and returns

Based on projections or historical baseline

Paying for improved pt outcomes

◦ Fewer ER visits

◦ Fewer hospitalizations

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Accountable Care Organizations

Takes concept of PCMH “neighborhood”

PCMH are foundational to success

Minimum of 5,000 beneficiaries

3 year commitment

◦ Financial risk and savings issues

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Quality Matters Improving Population Health Through Communitywide Partnerships

Examples of community initiatives

More common with new payment models and change in incentives

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