The ACA and Exchanges: Becker s Hospital Review A Catalyst for Change and Emerging Liability Issues WAMSS Lake Chelan Waterfront Resort Phil Dyer, Senior Vice President Healthcare Management Services Kibble & Prentice/USI
The U.S. Healthcare Industry Currently under enormous financial strain and demographic pressure, healthcare will have to reinvent itself over the next few decades. National Health Expenditures (Billions USD) 3,000 2,500 2,000 1,500 1,000 500 National Health Expenditure as Share of GDP (Percent) 20 18 16 14 12 10 8 6 4 2 In 2012: $2.8 Trillion dollars $8,937 per person By 2020: $13,709 per person (projected) 0 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 0 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group 2
ARRA HITECH The first step to major changes American Recovery and Reinvestment Act (ARRA) including the Health Information Technology for Economic and Clinical Health Act (HITECH) Signed into Law February 17, 2009
Patient Protection and Affordable Care Act (PPACA) Signed into law March 23, 2010
Unprecedented Change: Drivers of Fundamental Disruption in Healthcare Delivery Systems and Payment Methodologies Medicaid Federal Rules on Health Insurance Medicare Fundamental Disruption Health Insurance Exchanges
The Pace of Change Network Changes/ Budget Impacts (Federal/State) 1 year, recurring annually Reimbursement Reform 10 years Cultural Transformation of Institutions 30 years
The current calm in healthcare professional liability An unprecedented period of stability in the low frequency of claims and a steady, predictable severity trend, coupled with record levels of financial capacity. Medical Malpractice Industry Combined Ratio 154% 130% 134% 142% 137% 100% 107% 108% 116% 112% 96% 91% 84% 83% 78% 81%
Percentages of Practices Owned by 80% 70% 60% 50% 40% 30% 20% 10% 2002 2003 2004 2005 2006 2007 2008 2010 2011 0% MGMA DATA Doctors Hospitals Source; Medical Group Management Association
ACO s New or Old? Integrated Delivery System PHO (Physician Hospital Organization) or more? No standardized model in the private sector for care coordination (Merritt Hawkins) :By 2013, only 30% of physicians will be independent
Now add; EXCHANGES Additional 25-27 million people in the system Some states have their own, others default to the Feds Increased pricing of healthcare in individual and small group markets (bigger increases for younger enrollees Community Rating) Enrollees with skin in the game greater point of service cost sharing No provider pricing transparency (missed expectations) Narrow Networks Lack of Health Literacy (of the H/C system, of Insurance) languages and cultural barriers
Source: Deloitte
The Current Marketplace MARKET % Employer Direct Purchase Medicaid Medicare Military Uninsured 4% 13% 14% 47% 14% 8%
The Metallics 60/40 70/30 80/20 90/10 Bronze Silver Gold Platinum Four Levels of Benefits
Subsidies in the Exchanges under the ACA Household Size 100% 133% 150% 200% 300% 400% 1 $11,170 $14,856 $16,755 $22,340 $33,510 $44,680 2 15,130 20,123 22,695 30,260 45,390 60,520 3 19,090 25,390 28,635 38,180 57,270 76,360 4 23,050 30,657 34,575 46,100 69,150 92,200 5 27,010 35,923 40,515 54,020 81,030 108,040 6 30,970 41,190 46,455 61,940 92,910 123,880 7 34,930 46,457 52,395 69,860 104,790 139,720 8 38,890 51,724 58,335 77,780 116,670 155,560 For each additional person, add $3,960 $5,267 $5,940 $7,920 $11,880 $15,840
No One Ever Washes A Rental Car
Pressures on Providers Legal & Business Complexity Dramatic increases Demand grows unabated Reimbursements and Overall Medical Spending Providers Emphasis on Margins, Costs & Resource Allocations Moving away from patient care as top priority Uninsured Patients Growing population adding to financial and system stress
Reform Stressors Drinking out of a Firehose Undiminished demand for specialists and no one on call Not enough doctors, expanded mid-levels Resource constraints Absence of tort reform
EHRs Compliance (HIPAA-HITECH), RAC/ZPIC, MetaData ACO: CMS & Private Providers become Payors? Payors become Providers? HC Reform Value Based Purchasing MCO Liabilities Evidence- Based Medicine Scope of Practice Patients as Consumers? Missed Expectations? Anti-Trust Stark
Driving the Value Proposition Providers are focused on moving from volume to value, which means more integration along the care continuum. High Impact on Value Managed Care Shared Risk Specialty Co-management Bundled Payments Medical Home Clinical Integration Accountable Care Integrated Delivery Network/ Health Plan Low Center of Excellence/ Specialty Institutes Limited Integration 25 Full
Exposures associated with ACO and Integrated Delivery Systems activities and services may outweigh traditional insurance coverage
P/P/P Patient Provider Payment
ROLE PLAY? Providers Becoming Payors Payors Becoming Providers
It s Happening! Some hospital networks also become insurers By Roni Caryn Rabin Kaiser Health News, August 25, 2012
Hospitals Plot the End of Insurance Companies
Follow the Money! Aetna acquires Coventry Health Wellpoint buys Amerigroup Cigna buys Wellspring United buys Monarch Health $5.6B $5.0B $3.8B $5.6B Highmark acquires West Penn Allegheny $470M
Increased Liability Issues New Standards of Care More Causes of Action Direct Liability ACO Vicarious Liabilities More Stringent Informed Consent Integration Challenges
Corporatization of Medicine Missed Expectations Anger Professional Liability Historic Claim Etiology Communication Resentment Will increased institutionalizing of medicine make patients feel more disconnected from their providers, and more willing to bring action against nameless, faceless corporations?
Exchange Value Specific Functions I. Issuers of QHPs Marketing & Outreach Eligibility Determination for tax credits Enrollment Premium Aggregation Customer Service Enrollment reconciliation with HHS New Membership opportunity previously uninsured II. Health Care Market Easy plan comparison and purchase of health insurance Reporting of cost/quality metrics Awareness of need for health insurance Supporting use of innovative product designs and payment methodologies Expanded access to health insurance coverage Reduced charity care III. Public and State Appeals of eligibility determinations and individual responsibility Information on health insurance carriers Trustworthy source of health care reform information Broad-based Public Information Other impacts of ACA 34
The Shifting Sands of Reimbursements
Summary Fundamental Disruption Pace of Change Varies Exchanges as Catalysts for Change More Patients/Different Patients/Provider Shortage Reimbursement Pressures
Questions?