Implication of Health Care Reformon Hospitals

National Capitol Healthcare ExecutivesFalls Church, VA

Ashley ThompsonOctober 2, 2010

Why Health Reform?• 51 million uninsured

• Insurance premiums have risen 131% over 10 yrs

• Annual premiums > $13,000 for family of four

• U.S. ranks 1st in health care spending… but 38th in health outcomes (in 2000)

• Current system rewards volume over value

• Care is provided across silos; it is not coordinated

• We have a “sick care” system, ratherthan a “health care” system

It’s the law – March 23, 2010

What’s In It?Coverage & Insurance Reform

• Insurance Reform

• Individual Mandate

• Employer “Play or Pay”

• Government Subsidies

• Administrative Simplification

Delivery System Reforms

• Hospital VBP

• Bundling

• ACO/Shared Savings

• Readmissions

• CMI – Innovation Center

Medicare & Medicaid Payment Changes

• Reductions to Annual Payment Update

• Reductions to DSH

• 340B Expansion

• Wage Index Changes

• Geographic Variation Adjustment

• Enhanced Rural Payment

• Medicare Extenders

Workforce and GME

Wellness and Prevention

Quality

• Hospital Acquired Conditions

• Disparities

• Comparative Effectiveness Research

Regulatory Oversight

• Tax-Exempt Status

Legislation Regulation

“The Secretary

shall”

7

Hospitals will be:

• More Integrated

• More Accountable

• More At-Risk

Changing Payment ModelsPayment system changes encourage greater provider collaboration …

•Bundling – voluntary pilot program for acute care hospitals, LTCHs, IRFs, doctors, SNF, and HHA to receive bundled Medicare Part A and Part B payments for selected conditions

•Accountable Care Organizations – allows physicians, hospitals and others to participate in “shared savings” for managing a population

•Patient-Centered Medical Home – allows capitated payment to interdisciplinary primary care teams

•Center for Medicare & Medicaid Innovation – $10 billion to test innovative payment and service delivery models

Key Competencies for Forming ACOs

• Leadership

• Organizational culture of teamwork

• Relationships with other providers

• IT infrastructure for population management/care coordination

• Infrastructure for managing, monitoring quality

• Ability to assess and manage financial risk

• Ability to receive and distribute payments and savings

• Resources for patient education and support

Key Components:• Personal physician

• Physician directed medical practice

• Whole person orientation

• Coordinated or integrated care

• Quality and safety

• Enhanced access

• Additional (capitated) payment

Patient-Centered Medical Home

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

PAC Episode Bundling

Models of Service DeliveryAccountable Care Organizations

Clinical Integration is Critical

Five legal hurdles:

- Antitrust

- Self referral (Stark)

- Civil monetary penalties

- Anti-kickback

- Internal Revenue Code

Reward Value not VolumePayment system changes encourage patient safety, quality, value …. not volume

•Value-Based Purchasing – pay hospitals for actual performance on quality measures (not just reporting). Payments reduced 1% growing to 2% over 5 years.

•Hospital-Acquired Infections – penalizes hospitals with high rates of hospital-acquired conditions (top 25%) with a 1% reduction in Medicare payment for all discharges

•Readmission Penalties – hospitals with higher-than-expected readmissions will have a 1% (growing to 3%) reduction in Medicare payment for all discharges

Core Competency: Manage quality, patient safety, costs, and patient experience during more of the

episode

Reach: Connections to other care givers, patients pre- and post-

Sharing: Share information on patients, quality, costs; share

incentives

Integration:Accepting Risk, Managing Care

Integration

Least

Greatest

Make Collaborate Buy

Other Implications

• Lower rates of reimbursement

• More patient volume (impact on ED?)

• Stronger focus on quality, patient safety and measurement

• Enhanced Health Information Technology

• Workforce shortages ?

• Focus on wellness & community health

• Care will be more integrated, coordinated

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Reform resources

• Special Bulletin…brief summary

• Financial calculator

• Detailed summary

• Timelines

• Hospitals as employers

• Power-point presentations− Consumer audience− Internal hospital audience

• Member tools

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Tools and Guides

What comes next politically?

• Democrats− Selling the plan to public− Implementing regulations− Protecting those that took

tough votes

• Republicans− Overall repeal

− Constitutional challenges

− Incremental efforts to repeal or “de-fund” provisions

“We all know that there is a hurricane coming for the Democrats. We just don’t know if it will be a Category 4 or a Category 5.”

Peter D. HartDemocratic PollsterNewsweekSeptember 20, 2010

Senate 2010GOP Needs 10

House 2010GOP Needs 39

Governors 2010Currently 24 GOP

Senate 2010+ 8-9 GOP

House 2010GOP + 47

Governors 2010+ 8 GOP

GOP Control of Congress

• New players on key committees• Hearings, investigations and

subpoenas• Stake in governance• Different dynamic on labor issues• Efforts to “defund” health care reform• Focus on deficit

reduction

ImplicationsImplications

Marginal control by Democrats

• No working majority• Blue Dogs key swing vote• No actions possible without

bipartisan support • Focus on deficit

reduction

ImplicationsImplications

Immediate issues (Fall Agenda)• Medicare IPPS final rule

– Coding offset– CAH provider taxes

• Health information technology rules…multi-campus

• Medicare outpatient rule (proposed)– Physician supervision of outpatient

therapeutic services

• Physician payment fix

Positioning for reform• Achieve solid hospital-physician

(clinical) alignment

• Measure, report and deliversuperior outcomes

• Attain a favorable cost position

• Strategic alliances

Implementation

• Strategic plan and framework• Key areas of focus

– Health insurance reform– Medicaid/CHIP expansion– Delivery system and payment reforms– Medicare/Medicaid payment changes– Quality– Workforce/Graduate medical education– Reporting information– Prevention and wellness– Program integrity and oversight

“Now is not the end.It is not even the beginning of the end. But, it is, perhaps the end of

the beginning.”

Winston ChurchillNovember 1942