HEALTH CARE REFORM, GOVERNMENT RELATIONS, AND TRANSPLANTATION

1. HEALTH CARE REFORM, GOVERNMENT RELATIONS, AND TRANSPLANTATION Maryl R. Johnson, M.D. Professor of Medicine University of Wisconsin School of Medicine and Public Health Medical Director, Heart Failure and Transplantation University of Wisconsin Hospital and Clinics Madison, WI

2. HEALTH CARE REFORM: The changes in the health care financing and delivery system enacted through the Patient Protection and Affordable Care Act and the associated reconciliation bill.

3. HEALTH CARE REFORM GLOSSARY Accountable Health Care Organization (ACO): A group of providers (physicians, hospitals, nursing facilities, ancillary care) that create an organized delivery system to achieve cost savings and improve quality. Cadillac Plans: Expensive health care plans which provide low deductibles and cost sharing. Carve Out Contracts: Contracts for highly specialized services (transplant) which are separated from general coverage and managed by separate firms for a portion of the premium collected (limits insurance company’s liability through re-insurance provisions for very expensive cases). Community Rating: Health premiums based only on age, smoking and local community medical costs but not health status of the beneficiary. Comparative Effectiveness Research (CER): Research examining the relative health and cost implications of competing techniques for treating the same condition. Disproportionate Share Hospital Payments: Funds paid by Medicare to hospitals which provide high levels of uncompensated (charity) care.

4. HEALTH CARE REFORM GLOSSARY (Cont.) Guaranteed Issue Coverage: Requirement to provide coverage without regard to health status. Health Insurance Exchange (SHOP): State-based insurance exchanges which offer insurance plans meeting specified requirements to individuals and businesses with fewer than 100 employees. (Based on community rating, adjusted for age and smoking). Individual Mandate: Requirement that all citizens purchase and maintain health insurance coverage or face a fine. (Includes provisions for religious objections and inability to pay). Medical Loss Ratio (MLR): Ratio of the health care premium paid to health care providers (hospitals, physicians, DME suppliers) to total premiums collected. Reinsurance: Coverage for high cost cases (outliers) purchased by insurance carriers from other insurers. Sustainable Growth Rate (SGR): Results in automatic reductions in Medicare physician payments if the rate of increase in total physician payments exceeds a goal targeted to the growth in GDP.

5. GOALS OF HEALTH CARE REFORM • Expand coverage • 32 million by 2019 • ½ Medicaid, ½ exchanges/employer based • Individual/employer mandates • No lifetime/annual limits • No exclusion for preexisting conditions (for adults in 2014) • Price adjustments allowed only for age/smoking • Caps on out of pocket costs/deductibles • Young adults on family plan to age 26

6. GOALS OF HEALTH CARE REFORM (CONT.) • Limit growth in health care costs • MLR ≥80% for small and ≥85% for large group market • Tax on Cadillac Plans • Reform delivery and insurance systems • ACOs • Essential health benefits • CER

7. HEALTH CARE REFORM AND TRANSPLANT Axelrod et al Am J Transplant 2010;10:2198

8. HEALTH CARE REFORM AND TRANSPLANT (Cont.) Axelrod et al Am J Transplant 2010;10:2198

9. TAXES TO HELP FINANCE HEALTH CARE REFORM Axelrod et al Am J Transplant 2010;10:2205

10. QUESTIONS REMAIN. . . • Will transplantation (and if so, of which organs) be considered an Essential Health Benefit? (Only end stage renal disease is currently an “entitlement program”). • Will increased access only increase the donor organ shortage? • What will the administrative burden be? • How will physician and hospital reimbursement be affected?

11. AREAS OF ACTIVE GOVERNMENT RELATIONS OF IMPORTANCE TO TRANSPLANT PROFESSIONALS • Defining “essential health benefit” • FDA involvement/approval of laboratory based diagnostic tests (implications for HLA typing, crossmatches, PRAs, etc.) • Biovigilance: Appropriate donor testing to prevent disease transmission (uniform guidelines being proposed for blood and organs which could decrease organ availability) • Immunosuppressive coverage for the life of the renal allograft • Transplant coverage for Arizona Medicaid recipients

12. COMPREHENSIVE IMMUNOSUPPRESSIVE DRUG COVERAGE FOR KIDNEY TRANSPLANT PATIENTS ACT Why is this legislation necessary? • Since 1972, Medicare has covered people with ESRD. There is no Medicare time limit for dialysis. However, kidney transplant recipients lose Medicare coverage 36 monthsafter transplant. • Extending immunosuppressive coverage would improve transplant outcomes resulting in a higher quality of life with a transplant, and recipients are more likely to return to work than dialysis patients. It also would enable many dialysis patients who do not have access to other coverage to consider a kidney transplant. • In 1972, it was estimated that the program would cost $250 million.  In 2008, the Medicare ESRD program cost nearly $27 billion. • This legislation will allow individuals who are eligible for immunosuppressive drugs whose insurance benefits under Part B have ended at 36 months to remain in the program only for the purpose of receiving immunosuppressive drugs. If they have group health insurance with this benefit, they would not qualify for coverage beyond the 36 months.

13. COMPREHENSIVE IMMUNOSUPPRESSIVE DRUG COVERAGE FOR KIDNEY TRANSPLANT PATIENTS ACT (Cont.) Cost benefits for the continuation of immunosuppressant coverage • Medicare spends $71,000 per year on a dialysis patient, indefinitely. • Medicare incurs an average first year cost for kidney transplant of >$100,000 and will pay for dialysis and re-transplantation in the case of organ failure. • Medicare only spends $17,000 on a kidney transplant recipient per year after the year of the transplant. How is the premium determined for individuals eligible due to ESRD? • A monthly premium rate will be determined based on the monthly actuarial rate for enrollees age 65 and over. How does this affect those with private insurance? • Coverage by private insurance varies widely; this legislation ensures Medicare is still the payer of last resort and will not usurp coverage offered by private insurers. Does this open transplant recipients up to the full benefits of Medicare? • No, this legislation would extend coverage for immunosuppressive drugs only. Beneficiaries would pay the Part B premium. All other Medicare coverage would end 36 months after transplant.

18. National Transplant Organizations Applaud Arizona Governor and Legislature for Restoring Life-Saving Medicaid Patient Coverages  April 8, 2011 – The Americn Society of Transplantation (AST) and the American Society of Transplant Surgeons (ASTS) strongly applaud Arizona Governor Jan Brewer and the State Legislature for restoring transplant services that were previously eliminated as part of the State's FY 2011 budget. The cuts, which took effect on October 1, 2010, resulted in the loss of Medicaid eligibility for approximately 100 patients awaiting life-saving donor organs. AST President Dr. Maryl Johnson and ASTS President Dr. Michael Abecassis commend Governor Jan Brewer and state leaders, including Representatives Anna Tovar, John Kavanagh and Dr. Matt Heinz, for working collectively to resolve this very challenging Medicaid issue. "When I met with Arizona leaders in Phoenix, it was obvious that no one wanted patients to go without coverage for life-saving transplants," states Dr. Johnson. “We are encouraged and pleased that Governor Brewer and the legislature were able to restore critical Medicaid coverage for transplant candidates....truly preserving the gift of life for those on the wait list in Arizona.” “The challenges faced by Arizona and many states attempting to preserve the long-term viability and stability of their budgets present many obstacles for all involved,” states Dr. Abecassis. “The AST and ASTS recognize the financial difficulties that states face, and therefore applaud the decision by the state of Arizona to restore coverage for transplantation services.”