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UPDATE ON HEALTH CARE REFORM

UPDATE ON HEALTH CARE REFORM. Presented by: Jeremy N. Miller, JD to the Medical Oncology Association of Southern California, Inc. April 25, 2012. MILLER HEALTH LAW GROUP A Professional Law Corporation. 1901 Avenue of the Stars, Suite 1750 Los Angeles, California 90067 (310) 277 – 9003

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UPDATE ON HEALTH CARE REFORM

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  1. UPDATE ON HEALTH CARE REFORM Presented by: Jeremy N. Miller, JD to the Medical Oncology Association of Southern California, Inc. April 25, 2012

  2. MILLER HEALTH LAW GROUPA Professional Law Corporation 1901 Avenue of the Stars, Suite 1750 Los Angeles, California 90067 (310) 277 – 9003 (310) 277 – 8214 www.millerhealthlaw.com info@millerhealthlaw.com 2

  3. The Forces Behind Health Reform • $2.6 Trillion in 2010 and growing. “Slowed” to 3.9% increase in 2010 • 18% of GDP; projected increase to 20% by 2020 • Medicare and Medicaid are 23% of Federal spending and growing • Project $1 Trillion Medicare cost by 2021 • Cancer drugs are 40% of total Medicare Rx costs • Estimate that cancer treatment costs are $40,000 - $100,000 per patient (imaging, MDs, chemo, surgery, radiation) • As boomers age predict 45% increase in cancer cases from 2010 – 2030; but shortage of oncologists 3

  4. The Forces Behind Health Reform • 52 Million uninsured in 2010 • Need to shift from volume to value-based payment • Study: US MD’s spend 4x > Canadian MDs on administrative costs (e.g., dealing with payors) • Current path is unsustainable (Bipartisan view) 4

  5. Patient Protection and Affordable Care Act • CMS’ Goals: • “Triple Aim” (Better care for individuals, better health for populations, reduced per capita cost) • Reduce huge variations in cost and quality (e.g., Miami 66% > national average) • Pay for cost-efficient care • Create organizations at risk for population health • Move from accountable care to integrated care • Move from a sickness system to a wellness system 5

  6. Patient Protection and Affordable Care Act • PPACA became law March 23, 2010 – “Only” 900 pages • Implementing regulations have been rolling out, e.g., ACOs • Key provisions in place • Minimum medical loss ratios for insurance companies • Dependant children can stay on parents’ coverage until age 26 (1 Million have signed up) • High risk pools established (modest participation) • No pre-existing conditions exclusion if under age 19 6

  7. Patient Protection and Affordable Care Act • Key Provisions In Place • Restrictions on annual limits on payments by insurance companies • Restrictions on recissions unless fraud or material intentional misrepresentation • Small business tax credits • Medicare preventive services without cost sharing (includes cancer screening) • Fraud and abuse and program integrity (discussed below) • ACOs (discussed below) • Center for Medicare and Medicaid Innovation • Rx companies annual fee (2012) • Value-based purchasing (October 2012) 7

  8. Provisions Yet to Come • State Exchanges (2014) for individual and small group markets • Individual Mandate – “pay or play” (2014) • No pre-existing condition exclusions for adults (guaranteed issue) (2014) • Elimination of all annual and lifetime caps for “essential health benefits” (2014) • EHBs to provide meaningful coverage and comparison shopping • EHBs must be fully defined • October 2011 IOM issued its EHB recommendations to HHS • Obama Administration giving states flexibility within its guidelines 8

  9. Provisions Yet to Come • Taxes to pay for expanded coverage • Annual fee for insurance companies (2014) • Sales tax on device manufactures (2013) • Increased Medicare payroll tax (2013) • Medicare contribution tax on investment income (2013) • Raised floor for medical expense deductions (2013) • “Sunshine Act” (2013) (discussed below) • Tax on “Cadillac” plans (2018) 9

  10. Provisions Yet to Come • Provider payment reductions • Are chemo cuts moving patients from MD offices to hospital infusion centers? • Recent study by Avalere Health that chemo cost for privately insured patients average 24% more for hospital outpatient vs. MD offices • Hospital-based radiation therapy also more costly • Penalties for excessive readmissions (2013) • Penalties for excessive hospital-acquired conditions (2015) • Independent Payment Advisory Board (2014) 10

  11. Challenges to the Affordable Care Act • Defunding • Repeal (and replace? “Ryan Plan”) • Constitutional challenge: Possible outcomes • Upheld entirely • Overturned entirely • Overturned in part • Decision expected late June 2012 • Health reform is not just Medicare 11

  12. Challenges to the Affordable Care Act • Will There Be a “Doc Fix”? • Implementation of Sustainable Growth Rate would cause reduction of > 30% • Delayed until December 31, 2012 • $316 Billion to stop cuts over next 10 years • MedPAC recommended cutting specialist fees and 10 year freeze for PCPs • Limbo until November election 12

  13. Fraud and Abuse Hyper-Enforcement • Estimate: 3-10% lost to fraud ($75-$250 Billion per year) • CMS estimates $48 Billion of $509 Billion in 2010 paid improperly • Enforcement is a money maker with bipartisan support • Increased funding for enforcement • Increased penalties for violators 13

  14. Fraud and Abuse Hyper-Enforcement • New enforcement tools and laws • Must report and refund payments within 60 days of identification (10 year look-back proposed) • Easier to bring whistle blower lawsuits • Suspend payments pending investigation if possible fraud • Claims resulting from a kickback are false claims • Screen out potential providers and suppliers 14

  15. Fraud and Abuse Hyper-Enforcement • Focus on prevention vs. “pay and chase” • RACs (lack of medical necessity, incorrect coding, etc.) and ZPICs (if fraud suspected) • Stark self-referral disclosure protocol 15

  16. Fraud and Abuse Hyper-Enforcement • The “Sunshine Act” • Begins March 31, 2013 (Will data collection start on time?) • Manufacturers of a covered drug, device, biological or medical supply who provide a payment to a physician, must submit to HHS electronically • Physician’s name and business address • Physician’s specialty and NPI • Amount of payment and when paid • Description of form of payment, e.g., cash or stock • Description of nature of payment, e.g., consulting fees, honoraria, travel and education • Whether payment relates to marketing, education or research of a specific drug, device, etc. • Starting September 30, 2013, above information will be available on a searchable website 16

  17. Fraud and Abuse Hyper-Enforcement • The “Sunshine Act” • Exclusions for: • Payments < $10 unless aggregate > $100 per year • Product samples for patient use and not to be sold • Educational materials for patients • Loan of a covered device for a trial period < 90 days • Discounts and rebates • Dividend in a publicly traded security and mutual fund • Significant penalties for failure to report 17

  18. Accountable Care Organizations • Mandated by PPACA to begin 2012 • Medicare shared savings program • Definition: Group of providers and suppliers who agree to be accountable for the overall quality, cost and care for > 5,000 Medicare FFS beneficiaries. If quality standards met, receive a share of savings achieved. • March 23, 2011 proposed rules poorly received. CMS listened, and revised rules issued October 20, 2011 are much improved • Greater flexibility in governance structure • Quality measures 33 vs. 65 • Increased share of savings • Can be no risk for first 3 years • Greater fraud and abuse protection • Specialists do not have to be exclusive • Will PCPs have the upper hand? 18

  19. Accountable Care Organizations • 32 “Pioneer ACOs” started January 1, 2012 • This month 27 organizations in 18 states awarded 3 year contracts to participate in MSSP • CMS is reviewing applications from 150 others • So far majority are physician-led • Significant private ACO activity (e.g., CALPERS, CHW, Blue Shield and Hill Physicians; Monarch Healthcare, Healthcare Partners and Anthem Blue Cross) • What role will physicians play in ACOs? 19

  20. Bundled Payments • PPACA mandates pilot project by 2013 • Definition: Make a single payment to cover applicable hospital, physician and other services during an episode of care around a hospitalization (e.g., CABG or hip replacement) • Bundled Payment for Care Improvement Initiative (August 23, 2011) • Private sector initiatives (e.g., UnitedHealthcare November 2010 pilot project for episode payment for cancer care) • See Health Affairs, April 2012 • Use of clinical pathways 20

  21. Hospital-Physician Alignment • Hospitals and physicians may need each other • Traditional models (e.g., medical directors, joint ventures) • New(er) models (e.g., ACOs, foundations, gain sharing, bundled payments, service line co-management, joint marketing, acquisitions, employment) 21

  22. Practice Purchases • Physicians joining larger groups • Physicians selling to hospitals (Santa Monica Bay Physicians to UCLA) • Physicians selling to insurance companies (e.g., CareMore and Monarch) • Purchase price and other key terms 22

  23. Electronic Health Records • Importance to care coordination • Incentive payments available for achieving “meaningful use” • Penalties for failure to adopt by 2015 • Pitfalls with EHR vendors • Interoperability problem • HIPAA concerns 23

  24. Conclusions • Health reform is not going away even if PPACA does • There will be a major restructuring of payment and delivery systems over the next 5 - 10 years • Physician independence and income are clearly at risk • Physicians need to lobby hard and assume leadership positions in hospitals, ACOs, etc. • Need to cut overhead because reimbursement will decline 24

  25. QUESTIONS 25

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