Healthcare Reform Industry Advocacy, Stakeholder Impacts & Outlook APPENDIX M: GLOSSARY OF KEY HEALTHCARE REFORM TERMS N: DETAILED IMPLEMENTATION TIMELINE JULY 2010
The material provided is excerpted from authoritative sources and is believed to be current through the date set forth below. While every effort has been made to ensure the accuracy of this material, readers should obtain appropriate advice from qualified staff, consultants and professionals and should rely on official documents when making any decision that may have significant financial consequences. The material is offered for the information and convenience of the readers and should not be construed as advice. The Healthcare Reform: Industry Advocacy, Stakeholder Impacts & Outlook Appendix: M: Glossary of Key Healthcare Reform Terms, N: Comprehensive Implementation Timeline is published by the Health Industry Distributors Association, copyright 2010. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without prior written consent of the publisher. For more information about HIDA membership, products, or services, please contact HIDA at (703) 549-4432. Health Industry Distributors Association (HIDA) 310 Montgomery Street Alexandria, Virginia 22314-1516 Phone: (703) 549-4432 Fax: (703) 549-6495 www.hida.org Printed 7/2010
. APPENDIX VIII M. Glossary of Key Healthcare Reform Terms * Accountable Care Organization (ACO) An organization of healthcare providers (e.g., physicians, nurse practitioners, hospitals, etc.) that agrees to work together to meet quality measurements and share in any achieved Medicare cost savings through coordinating patient care. The primary concept of ACOs is to integrate care to slow the growth of healthcare costs while improving the quality of care delivered. Bundled Payments A single, fixed payment to healthcare providers to cover all services associated with a patient s condition and treatments over an episode of care. The single payment could span multiple providers in a variety of settings, motivating providers to reduce costs and the volume of services. Cadillac Insurance Plan A high-cost insurance policy defined by the total cost of premiums, rather than what the insurance plan covers or how much the patient must pay out-of-pocket for a doctor or hospital visit. Healthcare reform legislation defines high-cost health plans as anything valued above $10,200 for an individual or $27,500 for a family annually; including worker and employer contributions to flexible spending or health savings accounts. Community First Choice Program An optional state-based program to provide community-based attendant services and support to disabled individuals who would otherwise require care in a hospital, nursing facility, or intermediate care facility. Community Health Centers Federally qualified health clinics that provide comprehensive primary care services to patients regardless of the individual s income or insurance status. Federal law requires that the health centers be located in or targeted to serve medically underserved communities, provide a variety of primary care services, establish sliding fee scales based on a patient s ability to pay for care, and have community boards. Community Living Assistance Services and Supports (CLASS) Act Included in healthcare reform, the CLASS Act establishes a voluntary, self-funded long-term care insurance program to provide functionally disabled individuals with lifetime cash benefits for non-medical expenses. Comparative Effectiveness Research (CER) Research designed to inform healthcare decisions by providing evidence on the effectiveness, benefits, and harms of different treatment options. The evidence is generated from research studies that compare drugs, medical devices, tests, surgeries, and/or ways to deliver health care. * All sources are listed on the inside back cover. 3
Congressional Budget Office (CBO) A non-partisan congressional agency established to develop budgetary and economic information independent of the executive branch of the federal government. The CBO issues studies and reports on the federal cost of legislation, as well as the impact on state and local governments and the private sector. Disproportionate Share Hospital (DSH) Payments A funding adjustment that provides federal compensation to hospitals that serve a significantly higher number of lowincome Medicaid and/or Medicare patients. FDA Class I Medical Devices Devices that present minimal potential harm to the patient, and are not life-supporting or life-sustaining (e.g., tongue depressors, bedpans, or examination gloves). These medical devices are simpler in design than Class II and III devices and are only subject to general federal controls that are deemed sufficient to provide reasonable assurance of the safety and effectiveness of the device. FDA Class II Medical Devices Devices that are held to a higher level of assurance that they will perform as indicated and will not cause injury or harm to the patient (e.g., x-ray machines, surgical needles, or suture materials). Class II devices are subject to special controls, in addition to the general controls of Class I devices, which may include labeling requirements, mandatory performance standards, and post-market surveillance. FDA Class III Medical Devices Devices for which insufficient information exists to assure safety and effectiveness solely through the general or special controls applied to Class I or Class II devices (e.g., replacement heart valves, implanted cerebral stimulators, or implantable pacemaker pulse generators). Class III devices require pre-market approval. Federal Poverty Level (FPL) Also known as federal poverty guidelines, the measure is primarily used to determine an individual s financial eligibility for certain federal programs. The guidelines are updated annually. Currently, the poverty guideline for a single person is $10,830, and for a family of four it is $22,050. Fee-for-Service (FFS) A healthcare payment method based upon a fee schedule that specifies rates for each service provided to a patient over the course of care. Health Information Technology (Health IT; HIT) The electronic management and exchange of comprehensive medical information between healthcare providers and patients. 4
Health Professional Shortage Area (HPSA) An area designated by the Department of Health and Human Services that lacks a sufficient number of healthcare providers and services to meet the primary care needs of the residents. The classification allows the federal government to direct supplemental funding and resources to these areas to support and strengthen healthcare services. Independent Payment Advisory Board (IPAB) A 15-member independent panel charged with enforcing a limit on annual Medicare spending growth. Beginning in 2015, Medicare spending will be limited to a fixed growth rate, initially set at a mix of general inflation in the economy and inflation in the health sector. By 2018, the spending ceiling limit will be set permanently at per capita gross domestic product growth plus one percentage point. IPAB recommendations will automatically become law unless Congress reverses them with a majority vote and presidential approval. Insurance Exchange A state-based entity designed to offer enrollees private health insurance plan options. An exchange is intended to provide consumers with transparent information about plan provisions such as premium costs and covered benefits, as well as a plan s performance in encouraging wellness, managing chronic illnesses, and improving consumer satisfaction. Meaningful Use Criteria developed by the Centers for Medicare & Medicaid Services (CMS) that demonstrate that the electronic health record technology utilized by healthcare providers is connected in a manner that provides for the electronic exchange of health information in accordance with all applicable laws and standards that govern the exchange of information to improve the quality of healthcare (e.g., coordinated care). Providers must meet the requirements outlined by the criteria in order to qualify for federal health IT incentive payments; providers must pay monetary penalties in 2015 if meaningful use is not achieved. Medical Home A team-based model of care led by a personal physician who provides continuous and coordinated care throughout a patient s lifetime. Also known as a patient centered medical home, it is responsible for providing for all of a patient s healthcare needs or appropriately arranging care with other qualified professionals. Medicare Payment Advisory Commission (MedPAC) An independent congressional agency established to advise the U.S. Congress on issues affecting the Medicare program, such as payments to providers, access to care, quality of care, and other issues affecting Medicare. Medicare Shared Savings Program A new program that allows for accountable care organizations to form and share a percentage of any savings should the actual per capita expenditures of their assigned Medicare beneficiaries fall below their specified benchmark amount. 5
Minimum Data Set 3.0 (MDS 3.0) A comprehensive screening and assessment tool used to measure the functional capacity for all residents of Medicare or Medicaid certified nursing homes. Not only does MDS standardize communication regarding resident problems and conditions, it is also tied to reimbursement groupings and is used to monitor and assess the quality of care provided to nursing home residents. Part D Coverage Gap ( Doughnut Hole ) Prior to healthcare reform, Medicare Part D beneficiaries were required to pay 100% of their total prescription drug costs after their spending exceeded the initial coverage limit and before reaching the catastrophic coverage limit that would trigger public assistance. Physician Quality Reporting Initiative (PQRI) A Medicare program that incentivizes physicians to report data on quality measures by providing bonus payments to participants. In 2015, physicians face a penalty if they do not participate. Recovery Audit Contractor (RAC) A Medicare program established to identify improper Medicare payments both overpayments and underpayments made to healthcare providers that may not have been detected through existing program integrity efforts. Resource Utilization Groups (RUGs) A Medicare Part A prospective payment system that categorizes nursing home residents into a payment group based upon his or her care and resource needs. Sustainable Growth Rate (SGR) A cost-containment formula that aims to control spending for physicians services provided under Medicare Part B. The formula sets an overall Medicare spending threshold and triggers automatic offsets (e.g., physician payment reductions) to the Medicare physician fee schedule when expenditures exceed the spending threshold. Tort Reform The process of changing the current medical liability and litigation system for resolving disputes over injuries caused by a healthcare provider, with the goals of improving patient safety, reducing medical errors, encouraging the efficient resolution of disputes, and improving access to liability insurance for healthcare providers. Value-based Purchasing (VBP) Purchasing practices aimed at improving the value of healthcare services, where value is a function of both quality and cost; as opposed to the fee-for-service model that bases provider reimbursements on volume of care. 6
N. Detailed Implementation Timeline Insurance Reforms Establishes a high-risk coverage pool for individuals with pre-existing medical conditions (effective until January 1, 2014) Extends health insurance eligibility for dependents to age 26 Requires qualified plans to offer coverage for preventive services rated A or B by the U.S. Preventive Services Task Force, recommended immunizations, and additional preventive care and screenings for women, infants, children, and adolescents Establishes a temporary reinsurance program to reimburse employers that provide health insurance to non-medicare eligible retirees over the age of 55 Prohibits health plans from having lifetime coverage limits, restricts annual coverage limits, and prohibits canceling coverage for individuals who get sick Implements the first phase of a small business tax credit program for contributions to purchase health insurance for employees Medicaid Allows state Medicaid plans to offer coverage to childless adults Increases the Medicaid drug rebate percentage to 23.1% for brand name drugs (except the rebate for clotting factors and drugs approved exclusively for pediatric use increases to 17.1%); increases the Medicaid rebate for non-innovator, multiple-source drugs to 13% of the average manufacturer price 2010 Medicare Gives senior citizens who reach the Medicare Part D coverage gap a $250 rebate; begins to shrink the donut hole Reduces annual market basket updates for inpatient, outpatient, and long term care hospital services, inpatient rehabilitation facilities, and psychiatric facilities Prohibits physician-owned hospitals without a Medicare provider agreement by December 31, 2010, from participating in the program; restricts growth among grandfathered facilities Extends the Physician Quality Reporting Initiative Quality Improvement Establishes non-profit Patient-Centered Outcomes Research Institute to conduct comparative effectiveness research Tax Changes Imposes several new requirements on 501(c)(3) tax-exempt hospitals to maintain their tax-exempt status Workforce Strengthens student loan and scholarship programs for the healthcare workforce Other Changes Authorizes the FDA to approve generic drugs and grants manufacturers of biologics a 12-year exclusive use period before generics can be developed 7
Insurance Reforms Establishes the Community Living Services and Supports program, a voluntary, national long-term care insurance program Prevention and Wellness Eliminates Medicare beneficiary out-of-pocket cost sharing for most preventive services covered by Medicare Provides access to a comprehensive health risk assessment and a personalized prevention plan for Medicare beneficiaries Encourages small employers to establish wellness programs with grants for up to five years Medicaid Prohibits federal Medicaid payments for services related to certain healthcare acquired conditions Establishes the State Balancing Incentive program to enhance federal matching payments to the states to increase noninstitutionally based long-term care services Creates the state-based Community First Choice program for disabled individuals to have home and community based services Medicare 2011 Requires pharmaceutical manufacturers to begin offering a 50% discount on brand-name drugs to senior citizens in the Medicare Part D coverage gap; begins system of federal subsidies for generic prescriptions filled in coverage gap Freezes Medicare Advantage at 2010 rates and begins process of aligning payments to traditional Medicare rates Begins to provide $400 million in Medicare payments to qualifying hospitals in counties with the lowest quartile of Medicare spending (across 2011-2012 only) Creates the Center for Medicare & Medicaid Innovation to test new payment methods and service delivery models Quality Improvement Establishes the Community-based Collaborative Care Network program to coordinate care services for low-income populations within healthcare consortiums comprised of safety net hospitals, community health centers, and other safety net providers Strengthens emergency and trauma center capacity with the creation of a new trauma center program to fund research on emergency medicine and develop demonstration programs to test new emergency care models Begins to provide funds for community health centers to build and expand services ($11 billion across 2011 2015) Establishes programs to support school-based and nurse-managed health centers Tax Changes Restricts health reimbursement accounts and health flexible spending accounts from reimbursing non-prescription overthe-counter (OTC) drugs; restricts health savings accounts and Archer Medical Savings Accounts from reimbursing OTC products on a tax-free basis unless they are doctor prescribed Increases the tax penalty from 10% to 20% for non-qualified medical expenses from a health savings account or an Archer Medical Savings Account Implements new annual fees on pharmaceutical manufacturers Workforce Provides a 10% Medicare pay bonus through 2015 for certain services performed in health professional shortage areas Expands funding for scholarships and loan repayment for primary care doctors working in medically underserved areas Redistributes unused graduate medical education training slots to ease primary care physician shortages 8
Medicaid Creates a Medicaid demonstration project to make bundled payments to hospitals (effective 2012-2016) Creates a Medicaid demonstration project to make global capitated payments (fixed-dollar payments for the care that patients may receive in a given time period, such as a month or year) to safety net hospital systems (effective 2010-2012) Creates a Medicaid demonstration program to allow pediatric medical providers organized as ACOs to share in Medicaid cost savings (effective 2012-2016) 2012 Medicare Allows accountable care organizations (ACOs) that achieve targeted quality improvements to share in the Medicare cost savings Reduces Medicare payments to hospitals who have high rates of preventable readmissions Reduces market basket updates for home health agencies, skilled nursing facilities, hospices, and other Medicare providers Creates the Medicare Independence at Home demonstration program to test the use of home-based primary care teams for certain chronically ill patients Establishes a hospital value-based purchasing program; the Department of Health and Human Services (HHS) is also tasked with submitting a plan to Congress on establishing value-based purchasing programs for home health agencies, skilled nursing facilities, and ambulatory surgical centers Medicaid Increases Medicaid payments to primary care physicians to 100% of Medicare rates for two years, across 2013 2014 Medicare Begins phasing-in federal subsidies for brand-name prescription drugs for Medicare beneficiaries in the Part D coverage gap (to 25% in 2020, in addition to the 50% manufacturer brand-name discount) Establishes a national Medicare pilot program for bundled payments for acute, inpatient hospital services, physician services, outpatient hospital services, and post-acute care services by January 1, 2013; expands the program, if appropriate, by January 1, 2016 2013 Quality Improvement Requires pharmaceutical, biological, medical device manufacturers, and group purchasing organizations (GPOs) to report payments and gifts to physicians and teaching hospitals Tax Changes Increases the threshold for claiming itemized deduction for medical expenses from 7.5% to 10 percent Increases the hospital insurance tax rate by 0.9% on individuals earning more than $200,000 ($250,000 for married and filing jointly) Imposes limits on flexible spending account contributions to $2,500 per year (amount will increase annually based on cost of living adjustments) Imposes 2.3% medical device tax on manufacturers and importers first sale Eliminates deduction for 28% business tax subsidy for employers that provide prescription coverage for retirees 9
Individual and Employer Requirements Requires individuals to have a minimum level of health insurance coverage or pay tax penalties Requires large employers (50+ FTEs) to provide health insurance for employees or pay a penalty of $2,000 per FTE (excluding the first 30 employees) Requires large employers (50+ FTEs) that offer coverage, but have at least one FTE receiving a premium tax credit, to pay a penalty of the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each FTE (excluding the first 30 employees) Requires employers with more than 200 employees to automatically enroll employees into health insurance plans; employees may opt-out Insurance Reforms 2014 Creates state-based health insurance exchanges through which individuals and businesses (up to 100 employees) can purchase coverage Limits deductibles to $2,000 for individuals or $4,000 for families for health plans in the small group market Expands Medicaid eligibility to 133% of the federal poverty level (FPL) Prohibits health plans from denying coverage based on preexisting conditions or because an individual participates in a clinical trial Subsidizes coverage in the insurance exchanges for low-income individuals and families (between 133% and 400% of FPL) Medicaid Expands Medicaid eligibility for individuals under the age of 65 with incomes up to 133% of the federal poverty level who are not eligible for Medicare Reduces state payments to Medicaid Disproportionate Share Hospitals Medicare Establishes the Independent Payment Advisory Board (IPAB) to develop Medicare payment policies to reduce Medicare spending Reduces payments to Medicare Disproportionate Share Hospitals initially by 75% and later increases payments based on the percent of the population uninsured and the amount of uncompensated care provided Prevention and Wellness Allows employers to incentivize employee participation in wellness programs and meeting health-related standards with rewards in the form of premium discounts or benefits that otherwise would not be provided of up to 30% of the cost of coverage (increasing to 50% if appropriate); establishes pilot programs in 10 states allowing a similar reward system in the individual insurance market Tax Changes Imposes fees on health insurance companies Insurance Reforms 2015 AND LATER Permits states to form health care choice compacts, allowing insurers to sell policies in all states involved in the compact (2016) Medicare Reduces Medicare payments to hospitals by 1% for certain hospital-acquired conditions (2015) Creates a physician value-based purchasing program (2015) Tax Changes Imposes a tax on employer-sponsored Cadillac health plans with aggregate values exceeding $10,200 for individual coverage or $27,500 for family coverage (2018) 10
Sources American Association of Homes & Services for the Aging American Clinical Laboratory Association American College of Cardiology American College of Physicians American Hospital Association American Health Care Association American Medical Association American Society of Clinical Oncology Business Roundtable Centers for Medicare & Medicaid Services Congressional Budget Office Congressional Research Service CQ Today Inside Health Policy Kaiser Family Foundation MedPac National Association of Community Health Centers National Association of Public Hospitals and Health Systems National Journal National Public Radio New York Times PricewaterhouseCoopers The New England Journal of Medicine U.S. Congress, House Committee on Energy and Commerce U.S. Congress, House Committee on Rules U.S. Congress, House Committee on Ways and Means U.S. Congress, Joint Committee on Taxation U.S. Congress, Senate Committee on Finance U.S. Department of Health and Human Services U.S. Government Accountability Office Wall Street Journal Washington Post About HIDA The Health Industry Distributors Association (HIDA) is the premier trade association representing medical products distributors. Since 1902, HIDA has provided leadership in the healthcare distribution industry. HIDA also works closely with the manufacturing community through the HIDA Educational Foundation. This outreach serves to build strong manufacturer/distributor relationships as well as to communicate the value of distribution in the healthcare supply chain. For more information on HIDA membership, products or services, call (800) 549-HIDA (4432) or visit www.hida.org. Business Tools & Information Consultative Selling Tools Market Research Acute Care Extended Care Physician Diagnostic Testing Distribution Home Care Influenza Vaccine Production & Distribution Ambulatory Surgery Centers Group Purchasing Organizations HIDA Daily Clips Physician Office Set-Up Guide Series HIDA Distributor Financial Performance Survey Disease State Guides Education & Training ADVANCE Sales Training Accredited in Medical Sales (AMS) Certification HIDA MedSurg Conference & Expo HIDA Educational Foundation Executive Conference HIDA Educational Foundation Manufacturers Seminar Distributor Education Network featuring video training Healthcare Distribution Summit Customer Tool Series Legislative & Regulatory Resources Members-only Information from HIDA Government Affairs (GA) Advocacy State Issues Tracking Pedigree Influenza Gift Disclosure Wholesale Licensure Issue-based Resource Centers on HIDA s Web site: www.hida.org Additional GA Reports Industry Initiatives NEW! www.streamlininghealthcare.org www.flusupplynews.com 11
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