The Reform After the Reform How Payers Will Be Impacted by the New Healthcare Reform Law and What to Do Now May 19, 2010
Nov 28, 2014
The Reform After the ReformHow Payers Will Be Impacted by the New Healthcare Reform Law and What to Do Now
May 19, 2010
Agenda
• Introductions
• Health Reform Overview
• Implications and Recommendations
• Questions
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 2
With You TodayRon Wince, President/CEO, Guidon Performance Solutions, LLC
• Two decades of experience in application of Lean and Six Sigma
• Co-founder of Guidon Performance Solutions – the pioneer in
applying LeanSigma® in non-industrial and non-traditional
companies
• Client experience in healthcare, insurance, financial services,
retail, information technology, telecommunications and hospitality
• B. S. Engineering, U.S. Naval Academy in Annapolis, MD
David Merritt, Vice President and National Policy Director, Center for
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 3
David Merritt, Vice President and National Policy Director, Center for Health Transformation and the Gingrich Group
• Advises Speaker Gingrich and leads the Center’s work on
national health reform and health information technology
• Editor of Paper Kills: Transforming Health and Healthcare with
Information Technology, winner of the 2007 book of the year
award by the Health Information Management Systems Society
(HIMSS)
• Master’s degree in political science and government from Loyola
University Chicago
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
David Merritt
Health Reform and Health Transformation: What Happened, What’s Next, What’s Needed
Copyright © 2010 The Center for Health Transformation
David MerrittCenter for Health Transformation
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
Health ReformHealth Reform
� Lower Costs
� Improve Quality
Copyright © 2010 The Center for Health Transformation5
� Improve Quality
� Expand Coverage
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
Expand CoverageExpand CoverageHealth “Insurance” Reform
� Medicaid expansion
� Subsidies
Copyright © 2010 The Center for Health Transformation6
� Subsidies
� Insurance rules
� 50+ insurance exchanges
� Individual mandate
� Employer penalties
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
FinancingFinancing� Taxes - $500 billion
� Payroll taxes, investment income, employer penalties
Copyright © 2010 The Center for Health Transformation7
penalties
� “Cadillac” plans
� Device manufacturers, pharma, health plans
� Medicare cuts - $500 billion� Home health ($39 billion); hospitals ($131 billion); skilled nursing facilities ($22 billion); Medicare Advantage benefits ($101 billion)
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
What’s Next What’s Next –– Immediate Immediate ImplementationImplementation� Rescissions prohibited
� Lifetime coverage limits eliminated and annual limits
Copyright © 2010 The Center for Health Transformation8
� Lifetime coverage limits eliminated and annual limits restricted
� Insurers barred from excluding children with preexisting conditions from coverage
� Medicare Part D beneficiaries in the “doughnut hole” will get $250 rebate
� $5 billion program created for employers to provide coverage for retirees between 55-64
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
Immediate ImpactImmediate Impact� “Adult children” can remain on their parents’ health plans
until they are 26
� Tax credit available for some small businesses (under 25
Copyright © 2010 The Center for Health Transformation9
Tax credit available for some small businesses (under 25 employees) for employee coverage
� $5 billion high-risk pool created to provide insurance to individuals with qualifying preexisting conditions who have been uninsured for at least 6 months
� 10% tax on indoor tanning services that use ultraviolet lamps begins on July 1, 2010
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
20112011� Medicare Advantage payments to insurers frozen at 2010
levels
� Annual fee of $2.5 billion imposed on pharmaceutical manufacturers
Copyright © 2010 The Center for Health Transformation10
manufacturers
� Insurers required to provide rebates to enrollees if they spend less than 85% of large-group premium dollars and 80% of individual and small-group premiums on care as opposed to administration, profits, salaries, etc.
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
20122012� Annual fee on pharmaceutical manufacturers increases to
$3 billion
� Cap of $2500 in contributions to tax-advantaged Flex Spending Account
Copyright © 2010 The Center for Health Transformation11
Spending Account
� Medicare tax rate increases by 0.9% to 2.35% on earnings over $200,000 for individuals and $250,000 for families
� CLASS program created
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
20132013� Companies with 50 or more employees will pay a fine of
$2000 per employee if one full-time employee receives federal healthcare subsidy
� A 2.9% excise tax is imposed on the sale of medical
Copyright © 2010 The Center for Health Transformation12
� A 2.9% excise tax is imposed on the sale of medical devices – anything generally purchased at the retail level by the public is excluded from the tax
� New fee assessed on health insurance plans to fund comparative effectiveness trust fund
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
20142014� Individual mandate requires individuals to purchase qualified
health insurance or pay a fine of $95 for each family member or 1% of taxable household income, whichever is greater
� Health plans can no longer exclude people from coverage
Copyright © 2010 The Center for Health Transformation13
� Health plans can no longer exclude people from coverage based on pre-existing conditions
� Federal subsidies based on income available for qualified individuals/families
� Annual fee totaling $8 billion imposed on insurers
� State-based health care exchanges created
� Medicaid eligibility expands to 133% of the federal poverty level ($29,327 for a family of four)
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
20152015� Mandate penalty for not having qualified health insurance
increases to $325 for each family member or 2% of taxable household income, whichever is greater
� The annual fee on insurers increases to $11.3 billion
Copyright © 2010 The Center for Health Transformation14
� The annual fee on insurers increases to $11.3 billion
20162016� Mandate penalty for not having qualified health insurance
increases to $695 for each family member or 2.5% of taxable household income, whichever is greater
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
20172017--20182018� The annual fee on pharmaceutical companies increases to
$3.5 billion in 2017 and $4.2 billion in 2018
� The annual fee on insurers increases to $13.9 billion in 2017 and $14.3 billion in 2018
Copyright © 2010 The Center for Health Transformation15
2017 and $14.3 billion in 2018
� 40% excise tax on employer-provided plans (a.k.a. Cadillac plans) (2018)
� The first $27,500 of a family plan and $10,200 for individual coverage is exempt; higher exemptions for retirees and people in high-risk professions
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
QualityQuality� National Quality Improvement Strategy (2011)
� Center for Medicare and Medicaid Innovation (2011)
� 10% Medicare bonus payment to primary care physicians and other providers for certain services (2011)
Copyright © 2010 The Center for Health Transformation
and other providers for certain services (2011)
� Value-based purchasing programs for hospitals, home health, skilled nursing facilities, and ambulatory surgical centers (2011-2012)
� Medicare and Medicaid Accountable Care Organization pilots on shared savings and coordinated care (2012)
16
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
QualityQuality� National Quality Improvement Strategy (2011)
� Center for Medicare and Medicaid Innovation (2011)
� 10% Medicare bonus payment to primary care physicians and other providers for certain services (2011)
Copyright © 2010 The Center for Health Transformation17
and other providers for certain services (2011)
� Value-based purchasing programs for hospitals, home health, skilled nursing facilities, and ambulatory surgical centers (2011-2012)
� Medicare and Medicaid Accountable Care Organization pilots on shared savings and coordinated care (2012)
18
Center for HealthCenter for Health
TransformationTransformation
www.healthtransformation.net
Copyright © 2010 The Center for Health Transformation19
IMPLICATIONS & RECOMMENDATIONS
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 20
Can You Match the Legislation to its Length?
A. 1935 Economic Security Act
B. Civil Rights Act of 1964
C. Patient Protection and Affordable Care Act
1. 4 pages
2. 8 pages
3. 1 pageAffordable Care Act
D. 19th Amendment to the Constitution
E. Constitution
3. 1 page
4. 64 pages
5. 2074 pages
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 21
Welcome to “Implemageddon”
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 22
Implications for Payers
Key Themes
• Under the Microscope
• Regulatory Tsunami
• Funding, Fees &
Taxes
Actions
• Move fast on performance management and business intelligence
• How will matter as Taxes
• Coverage & Portability
• Explosion of Information Technology & Data
• How will matter as much as What…maybe more
• Product & Business Model Innovation
• Value Chain Alignment & Collaboration
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 23
Performance Management & BI• Few payers have sophisticated approach to data to manage
performance of people processes & technology
– Few recognize the gap
– Even fewer take effective action on the data they do have
• Fragmented and misaligned strategic initiatives including new
products and services, information technology & performance
improvement
– Vertical versus horizontal focus– Vertical versus horizontal focus
– Proliferation of strategic and technology projects consumes critical resources with un-measurable impact
• Negligible focus on leveraging business process intelligence
=> companies aren’t sure they get the outcomes they
expect…or need
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 24
Transparency & reporting requirements from new legislation will be painful for many
How vs. What
• MLR is driven by “how” things are done• Reclassifying expenses will draw scrutiny
• Most insurers will struggle to meet standards
– Median MLR has grown from 83% in 2007 to 84% in 2009
=> half of all plans likely exceed the cap
• Regulatory Tsunami • Litany of new regulations and implicit additional • Litany of new regulations and implicit additional
corrective legislation will require agility in operational,
risk, compliance and reporting processes
• Changing customer mix will put pressure on margins
• Expected shift from employer coverage to individual
coverage
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 25
How vs. What
Nearly 100% of Process Areas Impacted by 2018
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 26
Source: PwC Health Research Institute
Process focus may determine the winners from the losers
Innovation
• Competitive advantage from legacy products will be difficult as state health insurance exchanges drive commoditization and competition based on price and quality
• But…new market opportunities will emerge– Outsourcing of Expertise/Capabilities?
• Management of state health insurance exchanges
• Management & reporting of quality/cost data for health plans
– Value-add opportunities to providers • Advisory
• EMR implementation
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 27
Value Chain Focus
Wellness & Primary
CareDiagnosis Treatment Payment
Outcomes Reporting
• Opportunities abound in partnerships, alliances, “virtual” integration
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 28
• Wellness management and counseling in partnership with providers
• Chronic condition management
• Focus on continuous flow of value delivery to the
patient
Summary• Close gaps in performance management and business intelligence
– Accurate reporting is table stakes– “The right data to take the right actions”
– Imbed practices into the culture through Cycles of Use
• Pay attention to “how” things get done as much as “what” needs to get done– Lean Six Sigma/BPR to streamline key processes
– Build speed and agility in at every opportunity
– Engage the entire organization – those who know the process best do it every dayevery day
• Innovation and inspiration – Incorporate ideas from outside the industry – Ritz Carlton; 3M;
Skunkworks
– Maturity and understanding of VOC will be critical
• Basic element of business in the future will be the end-to-end Value Chain – systems thinking will replace functional thinking
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 29
Success in a post-reform world will require “implementation” beyond MEETING requirements
Questions
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 30
Guidon Performance Solutions
Thank YouThank You
© 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 31
Guidon Performance Solutions866-986-4414 or 480-986-4414
www.GuidonPS.com
Follow us on Twitter @GuidonPS