Muskie School of Public Service

1. Rural Issues in Implementing the ACA: Coverage, Exchanges, Health Homes and More… Muskie School of Public Service Andrew F. Coburn, PhD University of Southern Maine Presentation to New England Rural Health Roundtable Annual Symposium Meredith, NH October 27, 2011

2. Outline • Politics and policy…where are we? • Focus on selected ACA strategies and issues: • Health insurance expansions and State Exchange implementation • Transforming primary care: Patient Centered Medical Home demonstrations • Accountable Care Organizations and bundled payments

3. The Conflicting Politics of the ACA

4. Three of Four Adults Are Worried About the Future Percent very or somewhat worried when looking into the future: Will not get high-quality care when needed Will not be able to pay your medical bills in the event of serious illness Either/both of the above Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2011.

5. Majority of Americans Say the Health Care SystemNeeds Fundamental Change or Complete Rebuilding Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2011.

6. Views On Health Reform Remain Divided As you may know, a health reform bill was signed into law early last year. Given what you know about the health reform law, do you have a generally favorable or generally unfavorable opinion of it? Favorable Unfavorable Don’t know/Refused ACA signed into law on March 23, 2010 2010 2011 Source: Kaiser Family Foundation Health Tracking Polls

7. The Accomplishments of the Law Go Largely Ignored • No pre-existing conditions clauses for kids • No lifetime limits in individual market • Increase to age 26 in health plan eligibility for dependents • Expansion of preventive benefits under Medicare…. • And more

8. November 2011-12: What’s at Stake? • Without the provisions of the ACA, rising health care costs will threaten Medicare and Medicaid financing as Congress and President fight over deficit reduction. • Continued erosion of private coverage, especially among small employers, hurting rural populations.

9. Implementation of Coverage and Exchange Provisions

10. The Rural Insurance Context • Rural residents are more likely to be uninsured or covered through public sources • Those living in rural, not adjacent areas are at higher risk of being uninsured compared to persons living in rural, adjacent and urban areas • Rural residents are more likely to be underinsured.

11. The Rural Insurance Context • Rural children have made large gains in health insurance coverage since 1997, due to expanded public coverage • Rural adults are more likely to be not employed, self-employed, or to work for employers that do not sponsor health insurance coverage

12. The Rural Insurance Context • The rural uninsured often work for small firms and are paid low wages • Self-employed and part-time workers are more likely to be uninsured in remote rural areas.

13. How Would ACA Coverage Expansions and Health Insurance Exchanges Help Overcome These Challenges?

14. Framework for Expanding Coverage Universal Coverage Exchanges (subsidies 133-400% FPL) Medicaid Coverage (up to 133% FPL) Individual Mandate Health Insurance Market Reforms Employer-Sponsored Coverage Source: Kaiser Family Foundation, Overview of Health Reform Tutorial, http://www.kaiseredu.org/Tutorials-and-Presentations/Health-Reform-Overview.aspx

15. Insurance Improvements Already Implemented • No pre-existing conditions clauses for kids • No lifetime limits in individual market • Increase to age 26 in health plan eligibility for dependents

16. Health Insurance Exchange Functions • A structure and system for organizing insurance markets: • Standardizing products and rating rules, • Enrolling eligible individuals and small groups and • Administering subsidies

17. State Exchange Planning • Majority of states are planning and some have passed legislation to establish their exchanges. • Wide variation in expectations of the scope of exchange functions: passive versus active market shapers (e.g. Utah versus Massachusetts models) • Strong resistance in some states to the concept of exchanges and ACA generally.

18. State Insurance Exchanges: Issues in the Proposed Rules • Navigator standards and insurance brokers • Network adequacy standards • Definition of “Essential Community Provider” for purposes of plan network requirements

19. HIEs and Insurance Rating • ACA limits ability of health plans to vary rates but continues to allow those selling in the HIEs to geographically rate premiums • Rationale: adjust for price differences across geographic areas.

20. HIEs and Insurance Rating States shall establish one or more rating areas subject to review by the Secretary of HHS. If upon review the rating areas are deemed inadequate, the Secretary may establish rating areas for that State (Patient Protection and Affordable Care Act. (2010, May). Title I, Subtitle C, Part 1, Section 1201-2701)

21. State Regulatory Environments Vary

22. Small Group Area Factors in Two States Geographic rating may not uniformly favor rural or urban areas

23. Rural Issues • What are the appropriate factors that should be allowed for adjusting premiums? • Who will or should subsidize whom: urban to rural, rural to urban? • Implications of subsidy patterns for premium costs and coverage.

24. Final Thoughts: Insurance and Exchanges • Coverage expansions (Medicaid) and premium subsidies helpful in improving “demand-side” affordability • Fixing the “supply-side” problems in the insurance market more challenging • HIEs could address market problems but the devil(s) will be in the detail(s)

25. 2019 (estimated) 2008–2009 NH ME WA NH VT ME WA VT ND MT ND MT MN MN OR NY MA WI OR MA NY ID SD WI RI MI ID SD RI WY MI CT PA WY NJ CT IA PA NJ NE IA OH DE IN NE OH NV DE IN IL MD NV WV UT VA IL MD CO DC WV UT VA KS MO KY CA CO DC KS MO KY CA NC NC TN TN OK SC AR OK AZ NM SC AR AZ NM MS GA AL MS GA AL TX LA TX LA FL FL AK AK HI HI 23% or more 8%–13.9% 19%–22.9% 14%–18.9% Less than 8% Post-Reform: Projected Percent of Adults Ages 19–64 Uninsured by State Data:U.S. Census Bureau, 2009–10 Current Population Survey ASEC Supplement; estimates for 2019 by Jonathan Gruber and Ian Perry of MIT using the Gruber Microsimulation Model for The Commonwealth Fund. Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011.

26. Delivery System Reform Provisions: PCMH, ACOs, Bundling

28. Patient Centered Medical Homes • Transformation of primary care practice: can small practices be successful? • Performance incentives: the problem of measuring quality and efficiency in small practices. • PCMH Pilots in New England include small practices and FQHCs.

29. Accountable Care Organizations • Private and public sector push toward ACOs • Current independent, non-system based rural and urban systems are fragmented • Movement toward consolidation and integration • Will rural providers be included in developing ACOs and if so, how?

30. Medicare ACO Program • Hospitals and physicians involved and assume “performance risk” • Must provide all health care (Parts A and B) • 5,000 beneficiaries • Medicare pays FFS and shares gains after 3 years • ACOs meet performance levels

31. Different Forms of ACOs

32. Miller , (2009) From Volume to Value: Better Ways to Pay for Health Care, Health Affairs, 28:1418-1428.

34. ACOs and Bundled Payment • Like to work best in integrated systems with pre-existing hospital and post-acute care relationships • In non-integrated setting, how will rural providers become part of the bundle and how will they be paid: performance risk, FFS, cost-based? • Disincentive for urban-based providers to use rural providers (CBR for CAHs) • Will ACO and bundling programs lead to greater consolidation and with what rural impacts?

35. Final Thoughts • Challenges to ACA and deficit reduction talks represent a significant potential threat to rural health policy • Need to move from defense to offense and highlight rural models of payment and delivery system reform that are working (e.g. PCMH) • Need to imagine how new ACO and bundled payment could work in rural.

36. Contact Information Andrew F. Coburn, PhD Maine Rural Health Research Center Muskie School of Public Service University of Southern Maine PO Box 9300 Portland, ME 04104-9300 andyc@usm.maine.edu 207-780-4435