Patient Protection and Affordable Act (Pub.Law.No.111-148): Challenges and Opportunities for AMCs

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Patient Protection and Affordable
Act(Pub.Law.No.111-148) Challenges and
Opportunities for AMCs

• Sibu P. Saha, MD, MBA
• Professor of Surgery
• University of KY

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Educational Goals

• Review the rationale and historical background of
  healthcare reform
• Obama Care What is in it?
• AMCs Challenges and Opportunities
• Is Fee-For-service DEAD?
• Preparing for the Future!

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Why Do We Need Healthcare Reform?

• We are Broke !!

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National Health Expenditures per Capita,
1990-2016
12,782 (2016)
7,498 (2007)
2,813 (1990)
Note Figures from 1990 through 2005 represent
historical data data from 2006-2016 are
projected. Source Centers for Medicare and
Medicaid Services, Office of the Actuary,
National Health Statistics Group, at
http//www.cms.hhs.gov/NationalHealthExpendData/
(Historical data from NHE summary including share
of GDP, CY 1960-2005, file nhegdp05.zip
Projected data from NHE Projections 2006-2016,
Forecast summary and selected tables, file
proj2006.pdf).
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Increases in Health Insurance Premiums Compared
to Other Indicators, 1988-2007
Estimate is statistically different from
estimate for the previous year shown (plt0.05).
No statistical tests are conducted for years
prior to 1999. Note Data on premium increases
reflect the cost of health insurance premiums for
a family of four. The average premium increase is
weighted by covered workers. Source
Kaiser/HRET Survey of Employer-Sponsored Health
Benefits, 1999-2007 KPMG Survey of
Employer-Sponsored Health Benefits, 1993, 1996
The Health Insurance Association of America
(HIAA), 1988, 1989, 1990 Bureau of Labor
Statistics, Consumer Price Index, U.S. City
Average of Annual Inflation (April to April),
1988-2007 Bureau of Labor Statistics, Seasonally
Adjusted Data from the Current Employment
Statistics Survey, 1988-2007 (April to April).
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Composition of Federal Spending
1966
1986
2006
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40 of this budget is borrowed money!
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Saving our Future requires tough choices
Today!

• our single largest domestic policy challenge is
  healthcare.
• The truth is, our nations healthcare system is
  in critical condition. Its plagued by growing
  gaps in coverage, soaring costs, and below
  average outcomes for an industrialized nation on
  basic measures like error rates, infant
  mortality, and life expectancy.

The Honorable David M. Walker Comptroller
General of the USA
Slide 8
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Historical Background
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President Nixon

• 1973 Health Maintenance Organization Act
• Created rules for firms wishing to be designated
  federally qualified HMOs
• Requires firms that offer HMOs to offer a
  federally qualified plan.
• When President Nixon signs the bill, he says,
  "This legislation will enable the federal
  government to help demonstrate the feasibility of
  the HMO concept over the next 5 years."

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President Carter

• Carter Ted Kennedy killed healthcare

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President Reagan

• 1988 Medicare Catastrophic Coverage Act
• Short-lived piece of legislation singed into law
  by President Reagan
• It was repealed the following year amidst
  widespread public dissatisfaction

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COBRA-1985

• 1985 The Consolidated Omnibus Budget
  Reconciliation Act (COBRA)
• Amended the Employee Retirement Income Security
  Act of 1974 (ERISA)
• Gave some employees the ability to continue
  health insurance coverage after leaving
  employment.

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President Bush 41

• Can you tell me what he was saying?

Healthcare was not one of his priorities!
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President Clintons Healthcare Reform
Bill Clinton made health care reform one of the
highest priorities of his administration. He
asked the First Lady to chair the Task Force on
National Health Care Reform.
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President Bill Clinton
1996 - Health Insurance Portability and
Accountability Act Becomes LawHIPAA sets
national nondiscrimination and portability
standards for individual health insurance
coverage, HMOs, and group health plans. The image
shows President Bill Clinton signing the bill.
Senators Nancy Kassebaum and Edward Kennedy, who
co-sponsored the bill, are among the observers.
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President Clinton
1997 - CHIP and Medicare Choice EstablishedThe
Balanced Budget Act funds the Children's Health
Insurance Program (CHIP), a state-run program
designed to make sure all children have health
coverage. The BBA also gives Medicare
beneficiaries the freedom to enroll in private
health programs, including HMOs and PPOs. The
image shows the logo for Utah's CHIP program.
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President George W Bush

• 2003 - Medicare Modernization Act
• Establishes Part D drug benefit
• Establishes HSAs
• Renames Medicare Choice program to Medicare
  Advantage
• Increases payment rates to Medicare Advantage
  plans

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President Obama-2010

• Patient Protection and Affordable
  Act(Pub.Law.No.111-148)
• Bending the Curve Will that happen?

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DATA WATCHConsumer Price Index for Medical
Care up 124 Since 1990
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1990s

• Expansion of Managed Care
• Mergers and Acquisitions
• Capitation that failed
• Change in Payment Methods
• Second Opinion

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CMS Efforts in Cost Control

• DRG
• RBRVS Resource Based relative-value scale
• RVUS
• Other Methods

Regulation ----- Competition ------ Collaboration
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Obama Care What is in it?

• Coverage and Choice
• Affordability
• Shared Responsibility
• Controlling Costs
• Prevention and Wellness
• Workforce Investments

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Coverage and Choice

• A Health Insurance Exchange
• A Public health insurance option
• Guaranteed coverage and insurance market reforms
• Essential benefits

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Affordability

• Provides sliding scale affordability credits
• Caps annual out-of-pocket spending
• Increased competition
• Expands Medicaid
• Improves Medicare

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Shared Responsibility

• Individual responsibility
• Employer responsibility
• Assistance for small employers
• Government responsibility

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Prevention and Wellness

• Expansion of Community Health Centers
• Prohibition of cost-sharing for preventive
  services
• Creation of community-based programs to deliver
  prevention and wellness services
• A focus on community-based programs and new data
  collection efforts to better identify and address
  racial, ethnic, regional and other disparities
• Funds to strengthen state, local, tribal and
  territorial public health departments and programs

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Workforce investments

• Increased funding for the National Health Service
  Corp.
• More training of primary care doctors and an
  expansion of the pipeline of individuals going
  into health professions, including primary care,
  nursing and public health
• Greater support for workforce diversity
• Expansion of scholarships and loans for
  individuals in needed professions and shortage
  areas
• Encouragement of training of primary care
  physicians by taking steps to increase physician
  training outside the hospital, where most primary
  care is delivered, and redistributes unfilled
  graduate medical education residency slots for
  purposes of training more primary care
  physicians. The proposal also improves
  accountability for graduate medical education
  funding to ensure that physicians are trained
  with the skills needed to practice health care in
  the 21st century

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Controlling costs

• Modernization and improvement of Medicare
• Innovation and delivery reform through the public
  health insurance option
• Improving payment accuracy and eliminating
  overpayments
• Preventing waste, fraud and abuse
• Administrative simplification

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Healthcare Reform Timeline

• 2010 2011
• Insurance companies barred from dropping people
  from coverage when they get sick, ending the
  practice of rescission.
• Lifetime coverage limits eliminated and annual
  limits restricted
• Young adults able to stay on their parents
  health plans until age 26.
• Insurance companies cannot deny group or new
  individual coverage to children under age 19 due
  to a pre-existing condition.
• Others

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Healthcare Reform Timeline cont.

• Effective 2011
• Medicare provides 10 bonus payments to primary
  care physicians and general surgeons
• A new program under the Medicaid plan for the
  poor goes into effect in October that allows
  states to offer home and community based care for
  the disabled that might otherwise require
  institutional care.
• Others

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Healthcare Reform Timeline cont

• Effective 2012
• An incentive program is established in Medicare
  for acute care hospitals to improve quality
  outcomes.
• The CMS, which oversees the government programs,
  begins tracking hospital readmission rates and
  puts in place financial incentives to reduce
  preventable admissions.
• Others

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Healthcare Reform Timeline cont

• Effective 2013
• A national pilot program is established for
  Medicare on payment bundling to encourage
  doctors, hospitals and other care providers to
  better coordinate patient care.
• Others

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Healthcare Reform Timeline cont.

• Effective 2014
• Most people required to obtain health insurance
  coverage or pay a tax if they dont.
• Health plans no longer can exclude people from
  coverage due to pre-existing conditions.
• Health insurance companies begin paying a fee
  based on their market share.
• Others

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Healthcare Reform Timeline cont.

• Effective 2015
• Medicare creates a physician payment program
  aimed at rewarding quality of care rather than
  volume of services.

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Healthcare Reform Timeline cont.

• Effective 2018
• An excise tax on high cost employer-provided
  plans is imposed. The first 27,500 of a family
  plan and 10,200 for individual coverage is
  exempt from the tax. Higher levels are set for
  plans covering retirees and people in high risk
  professions.

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Will It Bend the Curve?

• Doubtful!
• CBO Report
• Cost of this reform is 940 billion over ten
  years
• Will reduce the deficit by 143 billion over the
  first ten years
• Reduce the deficit by 1.2 trillion dollars in
  the second ten years
• Provide coverage for 30 million uninsured people.

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Unnecessary Care?
Fee for Service promotes overutilization. Supply
creates demand
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New Methods of Payments

• 4 New Ways Doctors Will Get Paid
• Accountable Care Organizations fee-for service
  method but can split savings with Medicare if you
  reach certain quality benchmarks
• Global Payments
• Bundled Payments
• Prometheus Payment fee-for service method
  debited against a predetermined case rate.

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Simply cutting Drs Fee will not bend the curve

• Moral hazard
• Lifestyle
• -Drugs and Alcohol
• -Obesity and Type II Diabetes
• -Smoking

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AMCs Challenges and Opportunities

• Facts
• 131 U.S. Medical Schools
• 400 AMCs
• 5815 AHA Registered Hospitals
• Provide nearly half of all clinical care for
  underinsured and indigent patients
• Operate 47 of organ transplant centers
• 60 of Level I Trauma Centers
• Provide 60 of Burn Beds
• Politics and Power

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End of Life Care

• Case Report
• This 69 years old man was transferred to our
  hospital with a
• diagnosis of bleeding tumor of the right lung.
  He had tracheostomy
• and was on a ventilator.

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Charges and Net Revenue
MR 017679697 had an MSDRG of 166 and a
principal diagnosis of 162.3 Malignant Neoplasm
Upper/Lobe Lung and a principal procedure 33.27
Closed Endo Lung Biopsy. The FY 2010 and FY 2011
cases had the same MSDRG, principal diagnosis and
principal procedure as the case analyzed.
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Charges and Net Revenue by Payor
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AMCs Challenges and Opportunities

• High costs (AMCs support expensive technology,
  education and research)
• Decreasing revenue and outside funding
• Costs of regulation
• Competition from Community Hospitals
• Costs of caring for homeless, disabled, mentally
  ill and substance abusers
• Titanic bureaucracy
• Service

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Cost of New Capacity

• Typical cost of new capacity
• -Inpatient beds - 1M in capital and 250K-800K
  annual operating expense
• -Operating rooms - 2 7Million, 250K annual
  operating expense
• -Major imaging (CT,MRI,PET/CT, etc.) approx.
  1M
• -Cardiac Catheterization Lab approx.2M
• Nursing and other provider shortages?

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Challenges and Opportunities

• Great in Rescue Intervention but not as well in
  elective care
• Delay in Delivery of Timely Care
• Slow in Adapting Hospitality Approach to
  Healthcare
• Dealing with Perception

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Perception is reality!
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Opportunities

• Section 6301 Patient Centered Outcomes
  Research Institute
• Participate in Clinical Effectiveness Research
• Institution Based Healthcare Delivery System
• Reimbursement For Uninsured Patients

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Preparing for the Future

• Purpose Driven Organization with Transparency and
  Accountability
• Control the Variable Cost of Service
• Build a Culture of Caring and Innovation
• Responsive Bureaucracy

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Preparing for the Future

• Understanding of changing time
• -Commercialization of Healthcare
• -Shift from Non-profit to profit
• -Drive for globalization by multi-nationals

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Remember 3 Cs

• Caring
• Competence
• Communication
• Remember 3 Ps
• People
• Place
• Process

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Patient Focused Care

• Safety
• Service
• Process of Care
• Outcome
• Patient Satisfaction

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THE HEALTHCARE IMPERATIVE Lowering costs and
improving outcomes
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• Surgeons must be very carefulWhen they take
  the knife!Underneath their fine incisionsStirs
  the Culprit - Life!Emily Dickinson

Thank you
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To Pass a Law and to Enforce it are two
Different Things!