Wednesday, February 27, 2013

Life Sciences Conference: Effects of the Election on Healthcare Reform



State Sen. Patricia Miller discusses how healthcare reform has affected Indiana.
Editor's note: This is a summary of the Indiana Life Sciences Collaboration Conference on the Effects of the 2012 Election on Healthcare Reform, presented Feb. 8 by the Kelley School's Center for the Business of Life Sciences.

By Matthew D. VossMBA Class of 2013, CBLS Student Associate


Doug Badger
Keynote Speaker: Doug Badger, former partner, The Nickels Group LLC in Washington, D.C.

The Mayans Were Wrong and the World Won’t End in 2013 Either!

Most of the current crises are the long term build-up of both Democrats and Republicans.  The cumulative effect of decades of indecision got us here.  This particular speaker indicated he brings a Republican view.

Crises Averted Fiscal Cliff raised income taxes, yet it didn’t reduce the deficit.  In fact, since the tax breaks were set to expire anyway, the CBO views this effect as a $4.6T deficit increase!  1-year Medicare physician payments were patched, across the board healthcare spending cuts were deferred, medical device tax implemented and Federal default was postponed.  This was done not by increasing the debt ceiling, but rather by suspending it until May 19th.

Crises to Come Sequestration on March 1st ($9.9B/2% Medicare cut, $247M/5.3% FDA and $1.96B/5.3% NIH cuts EACH year for the next 8 years!), Government Shutdown on March 27th (Medicare and other healthcare entitlements will not be affected), Budget Resolution on April 15th (no effect on healthcare, but might suspend pay for congressmen), Potential Future Default, TBD (the cycle repeats). 

Why all these crises?  It comes down to numerical and philosophical differences between the Dems and Reps.  Numerically, it is what is being projected for the federal revenues vs. spending.  Philosophically, do we have a spending problem?  Should we raise taxes?  Should we eliminate the deficit, and if so, over what timeframe?

Heath Care and the Continuing Crisis If an agreement is made, these things might happen: raise Medicare age to 67, increase premiums, cuts for nursing homes and home health, Medigap reform, competitive bidding on new products, resolution of physician payments, repeal independent payment advisory board, device tax, and public health fund.  If no agreement is made, temporary extensions and expiring provisions will likely continue.

An audience member asks the panel a question.
Panel – Expansion of Coverage, Next Steps, Challenges & Ramifications: Panel Members Charlotte MacBeth, Senator Patricia Miller, John Barth, Vicki Perry, Moderated by Kevin Woodhouse.

Moderator spoke about the PPACA and the ensuing law suits that were brought against it. He showed a map of states that will or will not participate in the Medicare expansion.  Indiana will only expand Medicare if it can use the Healthy Indiana Plan (HIP) as the basis for the expansion, and it can be done in a fiscally responsible way to handle the ~$2B in increased costs.

John Barth.  Managed Health Services helps states in the decision making process with regard to expanding Medicare. // The managed care plans were costing quite a bit in the fee-for-service population (disability, elder care, etc.). HIP was created to address this, however, the expectation is still a rapid increase in costs. // Why can’t the state simply negotiate with the Federal government to be able to use its own program?  It comes down to the “power account” that pays out based upon certain quality and cost metrics.  There is disagreement on the metrics, magnitude, and responsibility of payments. // Concern about behavioral and mental health access upon the expansion of coverage.

Charlotte MacBeth. MDwise is an ACO model of 9 large provider systems, supporting ~300,000 Hoosiers. // Indiana Medicaid program has joint responsibility between federal government (2/3rds of cost) and state government (1/3rd) for ~1M members of 6.5M population.  Hoosier Healthwise Program serves children and low income moms.  HIP helps drive preventative care to reduce emergency care.  Care Select Program is a care management model to serve complex disease states within the Medicare system.  Everything else is a fee-for-service. // Doesn’t understand CMS’s opposition to HIP because it meet the payment requirements of the ACA. // Federal exchange should be up and running in Jan 2014, as expected, but the process is not easy and there are likely to be a lot of operational challenges.

Senator Patricia Miller. Most frustrating time in her 31 years of service because there is not enough information to make quality decisions for the healthcare system.  Indiana was one of the states that sued over the PPACA because it felt that the state could provide for its citizens better through block grants and waivers.  So far the Federal government has not been very flexible and has not been able to issue guidance. // Hospitals have stepped up to fight for what is right for patients.  Cuts in rates should be offset by reduced bad debt.  She is worried that the rural hospitals are not going to be able to absorb this loss of revenue, and often the rural hospital is a major employer in the area. // Three bills will be presented, one to deal with Medicaid, one for Insurance and one with both components.

Vicki Perry. Advantage Health Solutions provides insurance coverage (payer) for a wide variety of businesses, mostly through an ACO model across several states.  Focus is to use technology and data to drive cost reduction and improved patient outcomes. // How should Indiana address the Medicaid expansion?  She believes HIP model should be the basis for Indiana’s program expansion.  Holding providers accountable for quality service is critical.  Need to improve collaborations and focus on payment reform with penalties and assessments.  Stronger patient advocacy is needed in the process too. // How prepared is Indiana to be a provider to a greatly expanded covered population?  Several providers have embraced technology and made some major improvements.  There should be a broad enough base for coverage, but nurse practitioners and other professionals will need to manage much more of the routine care and allow the doctors to treat up to the highest standards.

Questions:

Indiana is ranked last in Public Health. Where does it fit into these programs and policy discussions?  Getting doctors to ask more about smoking cessation, but overall we need to increase coordination among the systems to deliver a consistent message to individuals.  This problem is very individual.  Starting a degree program for health coaches.  Payments systems propagate the issue because it is still fee-for-service and not accountable care.

How are the financial aspects of Medicaid expansion being determined?  The federal government indicated it would pay for 90%, but it doesn’t have money and it is taxing the states to get the funds.  A big issue is that it is really difficult to forecast and make reasonable assumptions.

It was mentioned that many children are uninsured even though there is a program to insure them.  Why is this?  It is perhaps that people in difficult transitions are not being able to navigate enrollment or barriers to start the process.  Eligibility requirements can be complex, and an electronic system has been implemented to make this easier.  Sometimes people just don’t know and some percentage of the population doesn’t want to be a part of government welfare.  The minimum fees actually can help people overcome this by making them feel they are paying for their services.

Seema Verma
Keynote Speaker: Seema Verma, Principal, SVC Inc., Indiana Health Care Reform Lead

Implications of Healthcare Reform
ACA is a step for reform, but more is needed, Access, Quality, and Cost.  ACA focuses on Access by addressing the underlying reasons for being uninsured—primarily patient cost handled by tax credits.  Affordability threshold is assessed for the individual, not including dependents, which can easily make it unaffordable.  Employers are mandated to provide insurance if there are more than 50 employees.  Medicaid market size is projected to increase from ~1M to ~1.5M in Indiana from 2010 to 2019.  The ACA limits insurance companies’ profits by forcing 80% of premiums to be spent on patients and eliminates pre-existing condition exclusions.  Only factors that can be considered are age/sex, location, and smoking status.  Due to this, individual market premiums are expected to increase 75-95% by 2019, since the risk pool is getting riskier and there is a floor for benefits that payers are required to offer.

Health Insurance Exchanges are the location where tax credits are actually issued.  Most states that are going with an exchange are electing to use a federal exchange vs. state because it is significantly cheaper to operate.  Each state must have at least two national plans, which means that all insurance companies will be competing with these plans, but without the access to the same pool of customers.  A major issue between Indiana and the Federal government is that Indiana wants to be able to charge low income people as a condition for eligibility. 

Panel – Providers and Suppliers, Next Steps, Challenges & Ramifications: Panel Members Jay Bonitt, Doug Leonard, Mike Rinebold, Rusty Ring, Moderated by Neil Pickett.

Providers say ~1/3 of doctors would not choose medicine as their profession if they had to do it over again.  The government’s solution to cost control is to cut payments to physicians.  Pharmaceutical industry is a popular target on which to impose fees, but is a fairly small part of the overall costs of healthcare.  Goal of Pharma is to make sure anti-innovation policies do not become law.  Key issue in hospitals is volume-based reimbursements.  Cuts imposed by Medicare to Hospitals were initially in exchange for increased patient volume, but then states were able to opt out after the Supreme Court ruling and this changed the financial dynamic for companies.  Device and Diagnostics companies’ most significant challenge is to maintain Medicare reimbursement.

Kelley School Center for the Business of Life Sciences
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http://kelley.iu.edu/CBLS
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