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Healthcare Reform

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Healthcare Reform

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  1. Alamance Regional Medical Center • Albemarle Health • Alleghany Memorial Hospital • Angel Medical Center • Annie Penn Hospital • Anson Community Hospital • Ashe Memorial Hospital, Inc. • Betsy Johnson Regional Hospital • Blowing Rock Hospital • Blue Ridge Regional Hospital • Broughton Hospital • Brunswick Community Hospital • Caldwell Memorial Hospital, Inc. • Cape Fear Valley - Bladen County Hospital • Cape Fear Valley Health System • CarePartners Rehabilitation Hospital • CarolinaEast Health System • Carolinas Medical Center • Carolinas Medical Center - Lincoln • Carolinas Medical Center - Mercy • Carolinas Medical Center - Northeast • Carolinas Medical Center - Pineville • Carolinas Medical Center - Union • Carolinas Medical Center - University • Carolinas Rehabilitation • Carteret County General Hospital • CaroMont Health, Inc. • Catawba Valley Medical Center • Central Carolina Hospital • Central Regional Hospital • Charles A Cannon, Jr. Memorial Hospital • Chatham Hospital • Cherokee Indian Hospital • Cherry Hospital • Cleveland Regional Medical Center • Coastal Plain Hospital • Columbus Regional Healthcare System • Cone Health Behavioral Health • Davie County Hospital • Davis Regional Medical Center • Department of Veterans Affairs Medical Center Asheville • Department of Veterans Affairs Medical Center Durham • Dorothea Dix Hospital • Duke Raleigh Hospital • Duke University Hospital • Durham Regional Hospital • FirstHealth Montgomery Memorial Hospital • FirstHealth Moore Regional Hospital • FirstHealth Richmond Memorial Hospital • Forsyth Medical Center • Franklin Regional Medical Center • Frye Regional Medical Center • Grace Hospital • Granville Health System • Halifax Regional Medical Center • High Point Regional Health System • Highland-Cashiers Hospital • Highsmith-Rainey Specialty Hospital • Holly Hill Hospital • Hugh Chatham Memorial Hospital • Iredell Health System • J. Arthur Dosher Memorial Hospital • Johnston Medical Center - Smithfield • Kings Mountain Hospital, Inc. • Lake Norman Regional Medical Center • Lenoir Memorial Hospital, Inc. • Lexington Memorial Hospital, Inc. • LifeCare Hospitals of North Carolina • Margaret R. Pardee Memorial Hospital • Maria Parham Medical Center • Martin General Hospital • The McDowell Hospital • Medical Park Hospital • MedWest - Harris • MedWest - Haywood • MedWest - Swain • Mission Health System • Morehead Memorial Hospital • Murphy Medical Center, Inc. • Nash Health Care Systems • New Hanover Regional Medical Center • North Carolina Specialty Hospital • Northern Hospital of Surry County • Onslow Memorial Hospital • Our Community Hospital • The Outer Banks Hospital • Park Ridge Health • Pender Memorial Hospital • Person Memorial Hospital • Presbyterian Healthcare • Presbyterian Hospital Huntersville • Presbyterian Hospital Matthews • Presbyterian Orthopaedic Hospital • Randolph Hospital • Rex Healthcare • Rowan Regional Medical Center • Rutherford Regional Medical Center• Sampson Regional Medical Center • Sandhills Regional Medical Center • Scotland Health Care System • Select Specialty Hospital-Durham • Select Specialty Hospital-Winston-Salem • Southeastern Regional Medical Center • St. Luke’s Hospital • Stanly Regional Medical Center • Stokes-Reynolds Memorial Hospital, Inc. • The Moses H. Cone Memorial Hospital • Thomasville Medical Center • Transylvania Regional Hospital • UNC Hospitals • Valdese Hospital • Vidant Beaufort Hospital • Vidant Bertie Hospital • Vidant Chowan Hospital • Vidant Duplin Hospital • Vidant Edgecombe Hospital • Wake Forest Baptist Medical Center • Vidant Medical Center • Vidant Pungo Hospital • Vidant Roanoke-Chowan Hospital • Wake Forest Baptist Health – Davie Hospital • Wake Forest Baptist Health – Lexington Medical Center • WakeMed • WakeMed Cary Hospital • WakeMed Fuquay-Varina • WakeMed Zebulon/Wendell SNF and Outpatient Diagnostic Center • Washington County Hospital • Watauga Medical Center • Wayne Memorial Hospital • Wesley Long Community Hospital • Wilkes Regional Medical Center • Wilson Medical Center • Women’s Hospital of Greensboro • Yadkin Valley Community Hospital Healthcare Reform North Carolina Hospital Association

  2. Agenda Introduction to NCHA State of the State Overview of Healthcare Reform Impact on North Carolina A New Political Day

  3. NCHA: Our Mission Is Quality NCHA promotes improved delivery of quality healthcare in North Carolina through leadership, advocacy, information, and education in its members' interest and for public benefit.

  4. History • Created in 1918 by regrouping the North Carolina Committee on Hospital Standardization • First meeting in Greensboro • First year membership: 26 physicians and nurses • Total revenues: $82 expenses $58 Historic marker on the campus of Moses Cone Hospital, Greensboro

  5. Make Up of NCHA NCHA – Overall lead non-profit NC Hospital Foundation NC Center for Hospital Quality and Patient Safety NC Center for Rural Health Innovation and Performance NC Healthcare Enterprises: Strategic Partners NCHA Political Action Committee Advocacy Needs Data Initiative - ANDI

  6. Staff Services • Clinical • Education • Financial • Information Technology • Legal • Public Relations • Regulatory • Quality Improvement and Patient Safety

  7. NCHA Supports Our Members Core Services Transformation Mission: NCHA promotes improved delivery of quality healthcare in North Carolina through leadership, advocacy, information, and education in its members’ interest and for public benefit. Principles: Transparency, Collaboration, Innovation, Evidence-Based, Patient-Centered + Healthcare Cost Reduction Center Public Health/Hospital Collab. Advocacy & Representation Communication & Public Relations Financial Services Education Center for Rural Health Quality Center Policy Development Payment Systems

  8. State of the State Current State of Healthcare in North Carolina

  9. Hospital Patient Revenues Below 0 Recession Source: NCHA ANDI. Quarterly average margins for all NCHA hospitals 2007 through Q3 2011

  10. Operating Margins

  11. Profit Margins by Industry Vendors Payors Vendors Hospitals Source: CNN Money, http://money.cnn.com/magazines/fortune/fortune500/2008/performers/industries/profits/

  12. Cost Rise 26.5%, 2006 — 2010 Sources: NCHA ANDI, US Census and 2011 America’s Health Rankings. Notes: Health conditions based on AHR Core Measures, All Determinants score, which includes measures such as air pollution, obesity, tobacco use and violent crime. Age based on changes in median age for NC. Inflation measured from US BLS CPI, seasonal adjustment. ANDI hospital expense response rate 86%. Missing responses imputed using acute licensed beds.

  13. This Pie Is Actually Shrinking 993 999 1,000 969 955 Total Source: NCHA ANDI 2012

  14. Outpatient Surgeries Waning 1,000 991 Total Source: NCHA ANDI 2012

  15. ED Visits Continue Climbing 1,154 1,152 1,115 1,054 1,000 Total Source: NCHA ANDI 2012

  16. Government Payments Decline Source: NCHA ANDI 2012

  17. Government Payments Part Ways

  18. Uncompensated Care Climbing

  19. Overview of Healthcare Reform Why Reform?

  20. Health Care Reform What is the biggest problem with American health care? It Costs Too Much! Source: Lucian Leape presentation at NC Quality Conference, March 12-13, 2009

  21. Healthcare Spending 1997-2015 Source: CMS/USDHHS, 2007

  22. NC Uninsured Source: US Census Bureau, Cecil G Sheps Center for Health Services Research

  23. VA Who’s Healthy, Who’s Not ND WA MT MN ME WI ID SD VT OR MI NH MA WY NY IA NE CT IL PA RI OH IN NV UT NJ CO MD KS MO WV DE CA KY 35th OK TN NC AR NM AZ SC MS AL GA LA TX FL Alaska #28 Hawaii #5 Source: www.americashealthrankings.org, 2010

  24. Why 35th? • Children in Poverty 42nd • Violent Crime 30th • Prevalence of Obesity 39th • Prevalence of Smoking 36th • Premature Deaths 37th • Infant Mortality 44th • Lack of Health Insurance 38th • Since 1990, the uninsured population rate has increased by 27% Source: www.americashealthrankings.org, 2010

  25. What We Waste Source: Thomson Reuters, February 25, 2010 • $600 -- $850 billion • Unnecessary Care: $250 -- $325 billion • Unwarranted treatment • Overuse of antibiotics • Diagnostic lab tests to protect against tort claims • Fraud: $125 billion • Administrative Inefficiency: $100 -- $150 billion • Healthcare Provider Errors: $75 -- $100 billion • Preventable Conditions: $25 -- $50 billion

  26. Drivers of Health Care Reform Cost Quality Access These are actual areas of agreement between Democrats and Republicans.

  27. Overview of Healthcare Reform Reform History

  28. Health Reform History 1970-2008 Discover health care system is in crisis Identify potential solutions Debate reforms Do nothing (or not much) Re-discover health care system is in crisis

  29. Overview of Healthcare Reform The Law

  30. PPACA: March 23, 2010 Patient Protection and Affordable Care Act (PPACA) changes healthcare delivery and insurance over five years with: Expanded coverage Creation of state Health Benefit Exchange (HBE) Insurance reform and regulation Medicare payment cuts Payments tied to quality Some delivery system reforms National evidence-based quality strategy Increased focus on fraud and abuse

  31. PPACA: Summary • By 2014, the bill requires most people and employers to have and provide health insurance or pay a penalty • Prohibits: • Dropping coverage to people when they get sick • Denying coverage to children under age 19 with pre-existing conditions or imposing pre-existing condition exclusions • Imposing lifetime caps; and restricts use of annual caps Requires: • Coverage for young people up to 26th birthday through parents plan • Large employers (50+) to offer insurance coverage or pay penalty • No cost sharing for preventative services (Medicare, Medicaid, and non-grandfathered private plans)

  32. Expansion of Public Programs Expands Medicaid to cover all low income people under age 65 (including childless adults) with incomes up to 133% FPG, based on modified gross income (begins FY 2014) No asset tests for children and most adults Undocumented immigrants not eligible for Medicaid

  33. Individual Mandate • Citizens and legal immigrants will be required to pay tax penalty if they do not have qualified health insurance • If don’t enroll, pay tax penalties. • Must pay the greater of: $95/person or 1% taxable income (2014); $325 or 2.0% (2015); or $695 (up to a maximum of $2,085) or 2.5% (2016), increased by cost-of living adjustment. • Exemption/Affordability defined: • Individuals who are not required to file taxes • Individuals without coverage for less than three months • Those for whom the lowest cost plan exceeds 8% of an individual’s income (hardship waiver)

  34. Individual Mandate • Individuals not required to change coverage under group plan or individual policy that person enrolled in as of March 23, 2010 • Individuals can enroll in qualified health plans in or outside the HBE • Premium subsidies only offered inside HBE

  35. Subsidies to Individuals • Federal government would provide premium refundable and advanceable premium credits to individuals with incomes up to 400% FPL on a sliding scale basis ($43,320/yr. for one person, $88,200 for a family of four in 2009) • Subsidies based on the second lowest cost silver plan • Must verify income and citizenship or legal status • Subsidies cannot be used to purchase abortion coverage • Only offered through HBE

  36. Employer Responsibilities • Employers with more than 50 employees will be required to pay into fund if do not provide coverage that meets minimum requirements • If employer does not offer coverage, must pay $2,000 per full-time employee, excluding first 30 employees • If employer does offer coverage, but at least one employee receives a subsidy, must pay the lesser of $3,000 for each employee receiving the subsidy or $2,000 for each FT employee • Employers with 50 or fewer employees exempt from penalties.

  37. CBO Cost Estimates Bloomberg, Runningen; January 25, 2009 • Price-tag for PPACA: $938 billion from 2010-2019 • Reduce the federal deficit by $143 billion from 2010-2019 • Perspective… • In 2009, the United States spent $2.5 trillion on health care or 17.3% of GDP • By 2019, national health spending is expected to reach $4.5 trillion or 19.3% of GDP • 2010 US Deficit: $1.5 trillion • Projected 10 year deficit: $9.05 trillion

  38. Can we Really Know the Score? 1The World I Know, Daniel Ng; January 4, 2009 2 Kaiser Health News; October 19, 2009 • CBO has mis-estimated the effects of the changes in law. Director CBO April 12, 2010 • CBO’s estimate of the cost of Medicare Part D was off by 40% 2 • Original 2010 projection for SCHIP $5.7B, now $12.6B • “The numbers are almost certainly wrong – CBO’s margin of uncertainty is 20%...” Phil Ellis, CBO, October 19, 20092 • “Some of the projected savings may be unrealistic…. Medicare cuts could drive about 15 percent of hospitals and other institutional providers into the red, possibly jeopardizing access to care for seniors.” Richard Foster Chief Actuary, CMS

  39. US Supreme Court • US Supreme Court heard challenges to the constitutionality of the ACA in March • Chief Justice Roberts issued the opinion for the majority of the court • Upheld the constitutionality of the individual mandate – Congressional Power to Tax • Held that the Medicaid expansion, as initially enacted, was unconstitutionally coercive to the states. • Essentially, created a voluntary Medicaid expansion. • Left the rest of the ACA intact.

  40. Most Low-Income Uninsured are Ineligible for Subsidies • The ACA envisioned that most low-income people would gain coverage through Medicaid. • If states chooses not to expand Medicaid, low income people (with incomes <100% FPL) will not be eligible for subsidies in the Health Benefits Exchange. • The ACA limits subsidies to individuals with incomes that exceed 100% FPL (Sec. 1401, amending Sec. 36B(c)(1) of the Internal Revenue Code).

  41. ACA Creates Many Challenges • The ACA presents many new challenges to the state. • If state chooses not to expand Medicaid, the poorest people will lack insurance coverage and they will be ineligible for subsidies. • May not be sufficient provider supply in 2014 to handle health care needs of newly insured, and will continue to be mal-distribution issues. • Cuts in Medicare reimbursement for some providers and health plans. • We do not yet have the “magic bullet” that will ensure better quality and reduced health care costs.

  42. ACA Provides New Opportunities • However, ACA offers many opportunities, including: • Provides access to insurance for people with preexisting health problems • Expands coverage to more of the uninsured. • Makes health insurance coverage more affordable to many (although some people may have to pay more for coverage). • Expands coverage of preventive services and focuses more heavily on primary prevention. • Increases emphasis on improving quality of care. • Has potential to reduce longer term cost escalation.

  43. Impact on North Carolina • State data suggests that 700,000 uninsured people could gain coverage in 2014. Of these, • 300,000 (~43%) would be eligible for subsidized coverage through a newly created Health Benefits Exchange. (Milliman report, 2011) • 400,000 (~57%) would gain coverage through the Medicaid expansion, if the state chooses to expand Medicaid. (Division of Medical Assistance, preliminary estimates, 2011) • The federal government pays almost all (100-90%) of the costs of “newly eligibles,” but only ~64% of the costs of “existing eligibles.” • The Division of Medical Assistance is in the process of updating its estimates of the potential eligibles and costs.

  44. Impact – North Carolina • There will still be large numbers of uninsured • People will game the mandate requirement • Those without healthcare coverage will pay a penalty • But penalty phased in…little incentive to get insurance • 2014 - $95, 2015 - $325, 2016 – the lowest of $695 or • 1.0% of taxable income in 2014, 2.0% of taxable income in 2015, or 2.5% of taxable income in 2016 • Weak penalties create an adverse selection problem and low cost creates a disincentive to get insurance

  45. Impact – North Carolina • Significant undersupply of Primary Care Providers exist (PCPs) • For those that do comply with the mandate, they will face long wait times & delays when they try to see their primary care provider • Scope of practice battles loom • More doctors close practices to Medicare and/or Medicaid patients • Physicians have the ability to be more “selective” in their patient populations and will choose to do so

  46. Impact – North Carolina • Increased alignment • In North Carolina, 25% to 40% of the physician practices are “employed” by health systems • Hospitals are now willing to take payment cuts from Medicaid to protect physicians in hopes physicians will continue to see Medicaid patients • Hospitals will continue to align with practices to ensure new ‘eligibles’ have a PCP and/or keep the PCPs in communities

  47. NC Safety Net Coverage 133% FPL Beginning 2014, most people with incomes ≤400% FPL who do not have Medicaid, Medicare, Health Choice, TRICARE, or access to employer-based coverage can qualify for subsidies to purchase insurance in the Exchange

  48. NC Medicaid Enrollees: Current 1.4 Million Medicaid enrollees in 2009 A total equal to the total population of 51 of NC’s 100 counties CM A G CK G T r A S N T S U S O W R C S P O R C H T a PS V A G N PR H A W T W I CO Y A F O A V B R M I F R O R G U A L N A D R CL A E DI E D YN T Y M S W S IR D A D V M T W A B K W L R A C H M D C T R W B U P I B E HW H Y J O S W L I G E L E G R R U W Y H R C A J A HD M G S T M O C V P L G A C N L N T R M K M A C E P A C Y C B J N S A H O UN R I A N D U C R S C O N R O B L P E NH C U B S

  49. NC Medicaid Enrollees: Future With health reform in 2014, DHHS expects perhaps 1 million more enrollees. 2.4 million: A total equal to the total population of 67 of NC’s 100 counties CM A G CK G T r A S N T S U S O W R C S P O R C H T a PS V A G N PR H A W T W I CO Y A F O A V B R M I F R O R G U A L N A D R CL A E DI E D YN T Y M S W S IR D A D V M T W A B K W L R A C H M D C T R W B U P I B E HW H Y J O S W L I G E L E G R R U W Y H R C A J A HD M G S T M O C V P L G A C N L N T R M K M A C E P A C Y C B J N S A H O UN R I A N D U C R S C O N R O B L P E NH C U B S “Three years from now, in 2014, Medicaid, the SCHIP program and the State Employees Health Plan will cover one-third of the state’s population,” Lanier Cansler, Sec. DHHS March 18, 2011 Current Medicaid (51 Counties) Future Medicaid 16 more counties

  50. Reform’s Biggest Challenge Doctors’ Decision: Choose Primary Care and make $29.58 per hour, or Specialize and make $74.45 per hour. Lifetime impact of specializing: $3.5 million Source: http://www.washingtonpost.com/business/success-of-health-reform-hinges-on-hiring-30000-primary-care-doctors-by-2015/2012/02/06/gIQAnslQ4Q_story.html

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