HEALTHCARE 2011 (and beyond)

1. HEALTHCARE 2011(and beyond) David Kloth, MD NANS 2010

2. Professional and Corporate Disclosure • Teaching and consulting agreement with St. Jude Medical • Previous consulting for Smith and Nephew and Medtronic • Consulting on VC start ups • Board Member ASIPP • Treasurer/Board Member NANS • Chair Neuromodulation Therapy Access Coalition - NTAC • President Conn Pain Society

4. Maxine on Healthcare reform

5. What are the biggest threats to Neuromodulation today?

6. Neuromodulation under ATTACK • WC Guidelines • HTA in WA • Coverage restrictions • Reimbursement • Competition from non-PM providers/poor quality PM • OIG/RAC’s • SGR

7. Will My Patient Have Access to SCS, PNS, DBS, and Pumps? Will I get Paid and How Much?

8. Spinal Cord StimulationImplantable Spinal Drug Delivery Systems 2011 Medicare Physician Fee Schedule Proposed Rule 2011 Medicare Outpatient Prospective Payment System Proposed Rule 2011 Medicare Ambulatory Surgical Center Prospective Payment System

9. Overview • Medicare updates the fee schedule annually • 2011 proposed rule released June 25 and comment period ends on August 24 • Final rule published in November and new rates take effect on January 1 Note: this information is for Medicare only. Non-Medicare payers may use the relative values and other payment policies for their own unique proprietary fee schedules Medicare Physician Fee Schedule

10. Physician Fee Schedule - Background The formula • Relative value x conversion factor (CR) = payment The CF impacts all procedures The Sustainable Growth Rate (SGR), found in Medicare statutes, dictates the CF. Since utilization, number of beneficiaries, etc. are part of the formula, negative updates have historically occurred Over last eight yearly cycles, Congress and the President have reduced or eliminated the reductions SGR does not account for increasing number of Medicare beneficiaries, longer life spans, or new technology Medicare Physician Fee Schedule

11. Conversion Factor – Status as of Dec. 2010 CF is still to decrease by @25% on January 1 Several congressional actions for temporary time-limited fixes Last fix (passed on December 1st) was to eliminate the decrease and provide a 2.2% increase from June 1 through November 30 For 2011, CMS proposes a -25% decrease (revised down by CMS from almost 30%). As in past, expect that some fix would be legislated The CF will likely continue to be an ongoing issue until a long term resolution is reached Cost to extend cut delays >$1 billion/month AMA calls for 13 month fix (cost $ 17 billion) 67% of physician practices say they will drop or restrict access to Medicare pts. if the cut goes through (source: MGMA) Medicare Physician Fee Schedule

12. CMS: Potentially Misvalued Codes In the summer of 2008, CMS identified areas of concern related to past methods of valuing codes. Some concerns were related to work relative values (The work value recognizes physician time and intensity to perform a procedure) One specific area of concern was the potential for site of service anomalies. Over 100 specific codes were identified as potentially mis-valued due to a site of service anomaly CMS agrees to not use the proposed reverse building block methodology on pain codes. COMMENT LETTERS DO HELP!!! Medicare Physician Fee Schedule

13. Reimbursement Changes for Neuromodulation • Physician fees relatively stable • For other IPM procedures prof. fees are mostly stable or increase by as much as 15% (Fac.) and 20% (office) www.asipp.org/documents/Physicians2011Final.pdf. • Fluoro to be bundled with TF ESI’s • Hospital OPPS SCS increase 3-6 % Implantable pump slight decrease for most codes DBS 2-6% increase Interstim @3% increase ASC mostly stable (1% decrease) except add-on codes with @ 21% decreases

14. Practice Expense Surveys • IPM has undergone review and now an increase in practice expense • Second of four years of transition • Should help protect pain codes over the next several years from drops related to changes in work value

15. PATIENT PROTECTION AND AFFORDABLE CARE ACT

16. Affordable Care Act - ACA • $938 Billion estimated cost (goal to keep less than $1T) • Increases our National debt to over $13 Trillion • Lobbying will explode in DC, big pie to divide - $652 million in 2009 (14% increase from 2008) • Gives new powers to federal agencies, removes congress from many decisions, much to be controlled by Executive Branch and Cabinet secretaries

17. What HCR of 2010 did not include • Tort reform • Controls on ins. rate increases • SGR fix • IPM credentialing • Positive ASC payment reforms • Honest estimate of cost – CMS says cost will be $750 Billion more than estimated. • New CBO estimate adds $115 billion and this doesn’t include the cost of dozens of misc. programs the legislation authorizes. • Adequate control of pharma costs

18. ACA continued • Exceptions granted for many companies who offer ‘Mini-med’ plans – minimal capped coverage for low wage employers with high employee turnover, i.e. – McDonald’s • Requirement that carriers spend 80% of premiums on medical care and quality improvement activities (increases to 85% for large group market) – starts 2011 • More small businesses offering health benefits because of tax credit incentives • Increased premiums to cover the cost of changes from ACA (pre-existing conditions, lifetime limits, kids to age 26) • Other exclusions being considered => undermining of the purpose of the bill

19. Health Care Reform Legislation of 2010 • Many hidden programs and committees which will effect reimb. • Ultimately the goal of this bill is to pay all MD’s the same • Medicare Indpt. Payment Advisory Board – MIPAB Reimbursement committees with no congressional oversight that will make changes to existing MFS – 15 members appointed by President (2015, 2/3 vote to override changes), hospitals exempt initially • Move toward Capitation • CER committee

20. Independent Payment Advisory Board (IPAB) • Establishes 15-member Board appointed by President (confirmed by Senate) to reduce per capita rate of growth in Medicare spending • In 2014, the Board will develop a proposal to reduce Medicare spending by targeted amounts compared to current law • For 2014-2018, the targeted reduction amounts equals the excess 5-yr average growth in per capita Medicare compared to the 5-year rate of change of CPI and CPI-M averaged • Beginning in 2018, the target growth rate is the nominal GDP per capita plus 1% • Board is to present a final proposal to Congress and the President by January 15, 2014 • Beginning in 2015 – Bi-annual recommendations to slow growth in national health expenditures • Cannot: ration care, increase revenues, beneficiary premiums or cost-sharing; restrict benefits; or modify eligibility criteria • Prior to 2019, cannot recommend Medicare payment rate reductions for providers and suppliers subject to update reductions (e.g. hospitals) • Congress must adopt total package of recommendations (or alternative that achieve comparable savings) within six months or they are implemented automatically

21. HCR 2010 will lead to many New Problems • Decreased access to Medicare patients • Decreased reimb to MD’s • Equalization of pay across specialty • Increased use of PA’s/NP’s a shift in the way medicine is practiced. The solution to the doctor shortage if many MD’s drop par with govt programs “Doctor shortage? 28 sates may expand nurses role”

22. What if you Tx. 75% Medicare • The govt’s dream. • Wont be able to afford to stay in business • Join Hospitals and larger groups or close their doors • Helps to move toward Capitation (ACO) • Many unseen hidden agendas in this bill

23. Medicare Participation? • Par – 80/20 • Non-par – 95/15, pt gets the check (net 9.25% increase) • Private contracting – once out, you are for 2 years • What % of your practice is Medicare? Volume and revenue, they are hopefully different. • State may mandate participation to have a license – MA • States may drop out or limit their participation in Medicaid

24. Hospitals and Physicians Increasingly Share Mutual Incentives About Service and Care DecisionsACOs and Other Reform Provisions Will Accelerate These Trends Source: Medical Group Management Association, Physician News (online digest) 2/4/09

25. Physicians move increasingly to employee model • Decreased financial risk • Steady pay-check • Patient access especially with ACO’s on the horizon • ACO’s will require cooperation between hospitals and physicians • Mostly primary care, general surgery, and other medical specialties (cardiology – 60%) • Surgeons and pain physicians continue to resist and prefer indpt. practice

26. Accountable Care Organizations ACO’s Intention is for providers to join together to coordinate care, share clinical information, and report on quality measures. The intended result is that this coordination will lead to improved quality of care, prevent costly hosp. visits, and thereby create a more cost effective heatlthcare delivery system.

27. ACO’s • Goal – high quality, low cost, and more efficient care • Meant for Medicare but will also be used by commercial carriers • Similar to capitation and original HMO/PPO withhold models • Integrated medical delivery system will push more MD’s into an employee role • ACO’s will likely replace MAP’s which lost sign. funding with ACA • Shared risk environment • Financial rewards for meeting certain cost-saving benchmarks and performance guidelines (quality measures) • Will control where patients are directed • Encourage limits on healthcare by incentivizing more restrictive treatment coverage policies

28. ACO’s • Hospital controlled • Physician controlled • Variable payment arrangements including fee for service • May effect viability of indpt. ASC’s • Anti-trust questions abound • Anti-kickback concerns • ACO’s could reduce competition in areas where there is only one choice allowing them to dictate fees and thereby increase the cost of healthcare

29. ACO’s • Pilot programs starting • Commercials payors moving forward already • Steering of business • Integrated delivery system will require multiple components including pain care to properly control costs • Increases pressures on hospital health systems to acquire practices • Single specialty ACO’s? more likely to develop around chronic high cost disease states

30. ACO’s • NEJM 11/13/2010 “Physicians vs. Hospitals as Leaders of Accountable Care Organizations” “He who hesitates has lost” “If you are not at the table, you are on the menu”

31. AMA • Supported HCR • Wont support temp fixes to SGR only long term fixes • Less than 15% of practicing MD’s are members • 90% of revenues ($300m/yr) come from the govt. exclusive license to the AMA on CPT, a sanctioned monopoly on codes and reimb. • Any govt. threat to pull this could end the AMA. • AMA’s support demonstrates their COI and financial ties, not what the membership or physicians in general think

33. A View From Obama’s Perspective “If you like what you have, we want you to keep it.”

34. What Obama really wants? Single Payer system

35. How do you force a change to a single payer system? • Make private insurance unaffordable to companies and individuals • No review of premium increases • Minimize penalty to corporations • Tax good plans • Make requirements so expensive that co. cannot (or don’t want to) afford • Create govt. sponsored and controlled buying cooperatives

36. ObamaCare’s Incentive for Employers to Drop insurance • Federal subsidies to purchase insurance through “exchanges” • Exchanges available starting 2014 • No pre-existing condition exclusions • Penalty $2000/employee • 170 million Americans get employer sponsored group insurance • Increased incentives include tax on better plans and increasing requirements that even basic plans must meet • Large companies, including state and municipal employers will be incentivized to shift the cost of health benefits to the federal govt.

37. Debt Reduction Commission • Bipartisan • Appt. by Obama • Proposed “doc fix” that would spread the pain • Physicians • Medicare and Medicaid patients • Drug companies • Plaintiff attorneys

38. What do the GOP gains mean? • Gains occurred both on federal and state level • ACA will not be repealed • Parts of ACA may be changed or unfunded in an attempt to kill it (lack of appropriations killed NASPER) • Increased number of lawsuits challenging legality of ACA • Some states may choose to drop out of Medicaid • Fiscal responsibility and the may economy may => decreased MD reimbursement • Tort reform? Still unlikely in the short term

39. Other pressures on the healthcare system • Recession – medicine may not be as recession proof as we once believed • High unemployment • National Debt • Increasing aggressiveness of health insurers • Increasing fraud and abuse => more OIG, RAC’s • Estimated $800 Billion in waste, abuse, fraud ($200B), and administrative costs (18%) • Medical mistakes $50-100 Billion

40. EHR/HIT give back • At least 50% of encounters must be Medicare or • At least 30% of encounters must be Medicaid • Up to $44k/MD through Medicare • Up to $63,750/MD through Medicaid • Paid over 5 years • “Meaningful Use” = Must meet 25 distinct measures – 15 core, 10 from a ‘menu of options’ • Medicare penalty for delay - % reduction that progressively increases • Hospital based MD’s not eligible (90%) • http://cms.gov/EHRIncentive Programs/.

41. NANS Outreaches • Lobbying jointly with ASIPP 6/10 • ASIPP 6/25-28/2011 – Legislative day 6/28 • NTAC • Active participation in WA state HTA process • Joint society meeting • Joint SCS course with ASIPP • Participation in NLF through NTAC • Intersociety collaboration

42. Public Relations Initiative • Media outreach to change the public perception of what we all do. • We need more stories • Celebrity spokespersons • Public advocacy and lobbying are not the same and are equally as important.

43. Over 5,000 years ago,  Moses said to the children of Israel ,  Pick up your shovel, mount your asses and camels, and I will lead you to the Promised Land".    Nearly 75 years ago,  Roosevelt said, "Lay down your shovels, sit on your asses, and light up a Camel, this is the Promised Land".   

44. Now Obama has stolen your shovel, taxed your asses, raised the price of Camels, and mortgaged  the Promised Land!    I was so depressed last night thinking about health care reform, the economy, the wars, lost jobs, savings, social security, retirement funds, U.S. debt etc.  So, I called Lifeline , the suicide help line.  Got a call center in  Pakistan and when I told them I was suicidal, they all got excited and asked if I could drive a truck . . .  

45. THANK YOU