National Association of Health Underwriters. Russ Gronewold, CFO Bryan Health April 20, 2017

Size: px

Start display at page:

Download "National Association of Health Underwriters. Russ Gronewold, CFO Bryan Health April 20, 2017"

Pamela Cox
5 years ago
Views:

1 National Association of Health Underwriters Russ Gronewold, CFO Bryan Health April 20, 2017

2 Themes Hospitals do cool stuff Rx is a problem ACA is not working, but it doesn t keep me up So what keeps me up? What s important to you? 2

3 Hospitals (and doctors) Do Cool Stuff Did you know Nebraska is #1 in the nation for access? 3

Finances Health Spending on the Rise Again 10% 9% Annual Growth in National Health Expenditures U.S. Health-Care Spending Is on the Rise Again 8% 7% 6.5% 6.

4 Finances Health Spending on the Rise Again 10% 9% Annual Growth in National Health Expenditures U.S. Health-Care Spending Is on the Rise Again 8% 7% 6.5% 6.3% Health care spending growth hits 10-year high 6% 5% 4% 3% 4.8% 3.8% 3.9% 3.9% 4.1% 3.6% 5.0% 2% Health Spending Is Rising More Sharply Again 1% 0% Source: Altarum Institute, Health Sector Trend Report, March 2015, accessed April 2015; Tozzi J, U.S. Health-Care Spending Is on the Rise Again, Bloomberg Businessweek, February 18, 2015, available at: Davidson P, Health care spending growth hits 10-year high, USA Today, April 1, 2014, available at: Altman D, Health Spending is Rising More Sharply Again, The Wall Street Journal, February 27, 2015, available at: Health Care Advisory Board interviews and analysis.

5 But Hospital Price Growth Down for First Time Higher Spending Does Not Equate Price Growth for Hospitals 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% Annualized Hospital Price Growth, Jan Jan % 2.7% 2.9% 1.5% 1.6% -0.1% Jan. '10 Jan. '11 Jan. '12 Jan. '13 Jan. '14 Jan. ' Hospital Price Growth Down Across All Payer Classes (2.9%) Medicare price growth (0.1%) Medicaid price growth 1.6% Commercial price growth (lowest growth rate since 2002) Source: Altarum Institute, Health Sector Economic Indicators: Price Brief, March 2015, March 2014, March 2013, March 2012, available at: Health Care Advisory Board interviews and analysis.

Orthopedic Bundling Now Mandatory CMMI 1 Program Requires Orthopedic Bundling in 67 Select Markets The Comprehensive Care for Joint Replacement (CJR) Model Key Program Features

Center for Medicare and Medicaid Innovation. 2) Critical Access Hospitals. 3) Bundled Payments for Care Improvement Initiative.

reconciliation process Program Timeline July 2015 Program announced; comment period through September 8th April 2016 First performance year begins; no episode discount for first

6 Orthopedic Bundling Now Mandatory CMMI 1 Program Requires Orthopedic Bundling in 67 Select Markets The Comprehensive Care for Joint Replacement (CJR) Model Key Program Features Focus on joints Average expenditure varies from $16,500 to $33,000 by geography Mandatory in 67 markets No application process; CAHs 1 and BPCI 2 Phase II participants exempt 1) Center for Medicare and Medicaid Innovation. 2) Critical Access Hospitals. 3) Bundled Payments for Care Improvement Initiative. Comprehensive episode Includes all related Part A and Part B services for 90 days post-discharge Retrospective bundle CMS will pay each provider separately, conduct annual reconciliation process Program Timeline July 2015 Program announced; comment period through September 8th April 2016 First performance year begins; no episode discount for first year Downside risk incorporated; 1% discount in 2017, 2% for 2018 onward $153M Estimated savings to Medicare over the 5 years of the model Source: Centers for Medicare and Medicaid Services; Advisory Board interviews and analysis.

7 Micra Pacemaker System

8 Heart Flow 3D Image of Vessel

9 TAVR 9

10 Rx is a Problem Or is it the solution?

12 ACA is not Working But some stuff works

13 Which is it? Optimist Pessimist More covered Rate of cost increases have slowed Quality is up Coverage gains are modest Cost increases for many have skyrocketed Choice is down (narrow networks, mergers, closings) Solution: Tweak with a public option Solution: Hyper competition 13

14 MSSP 1 Continues to Grow Despite Mixed Results 89 ACOs Join in 2015, Few Generating Shared Savings in First Year Medicare ACO Program Growth Continues As of April One-Quarter of MSSP ACOs Share in Savings First Performance Year 2 26% Held Spending Below Benchmark, Earned Shared Savings 46% 19 Pioneer ACO MSSP ACO Total Medicare ACOs Did Not Hold Spending Below Benchmark 27% Reduced Spending, Did Not Qualify for Shared Savings 1) Medicare Shared Savings Program. 2) For the 2012 and 2013 cohorts; percentages may not add to 100 due to rounding. Source: Spitalnic P, Certification of Pioneer Model Savings, CMS, April 10, 2015; available at Shared Savings Program Fast Facts, CMS, April 2015, available at: CMS, Fact Sheets: Medicare ACOs continue to succeed in improving care, lowering cost growth, September 16, 2014, available at McClellan M et al., Changes Needed to Fulfill the Potential of Medicare s ACO Program, Health Affairs Blog, April 8, 2015, available at Health Care Advisory Board interviews and analysis.

In Year Three, Premium Adjustments Abound Exchange Options Reflect Tougher Economic Reality for Insurers Average Premium Increases Modest, but High Market-by-Market Variability Statewide

5% Fewer Options Number of products decreased by 12% 1) For 40-year-old, non-smoker.

15 In Year Three, Premium Adjustments Abound Exchange Options Reflect Tougher Economic Reality for Insurers Average Premium Increases Modest, but High Market-by-Market Variability Statewide Average Premium Changes for Benchmark Silver Plans, 2015 to Takeaways More Expensive Average premiums in 37 states using Healthcare.gov increased by 7.5% Fewer Options Number of products decreased by 12% 1) For 40-year-old, non-smoker. Source: CMS, 2016 Marketplace Affordability Snapshot, October ; Kaiser Family Foundation, Monthly Silver Premiums for a 40 Year Old Non-Smoker Making $30,000/Year, available at kff.org; CNBC, Fewer plans to be on biggest Obamacare exchange for 2016, available at cnbc.com; Health Care Advisory Board interviews and analysis.

16 Estimated National Market Share 16

17 Annual Benefit Costs $58,000 5% $12,000 15% $2,900, 30% $400 50%

18 Factors Influencing Health Status Source: McGinnis, Williams-Russo & Knickman Health Affairs 21.2 (2002): % 5% 15% 30% 40% Environment Behavior Genetics Social Status Health Care Svcs

Continuum of Medicare Risk Models Pay-for- Performance Bundled Payments

Readmissions Reduction Program HAC Reduction Program Bundled Payments for

2 (60% sharing) MSSP Track 3 (up to 75% sharing) Next-Generation ACO

Medicare Advantage (providersponsored) Merit-Based Incentive Payment

19 Continuum of Medicare Risk Models Pay-for- Performance Bundled Payments Shared Savings Shared Risk Full Risk Hospital VBP Program Hospital Readmissions Reduction Program HAC Reduction Program Bundled Payments for Care Improvement Initiative (BPCI) MSSP Track 1 (50% sharing) MSSP Track 2 (60% sharing) MSSP Track 3 (up to 75% sharing) Next-Generation ACO (80-85% sharing) Next-Generation ACO (optional full performance risk) Medicare Advantage (providersponsored) Merit-Based Incentive Payment System Increasing Financial Risk Source: Health Care Advisory Board interviews and analysis.

Medicare Advantage Continues MA 1 Enrollment to Nearly Double by 2025 Total Enrollment and Percentage of

0M (40%) MA Penetration Varies by State Total MA Enrollment as a Percent of Total Medicare Population, 2015

4M (13%) 2005 2015 2025 of newly eligible 24% beneficiaries chose MA in 2012 39 states currently have

Advantage. Source: KFF, Medicare Advantage Fact Sheet, June 29, 2015, available at: www.kff.

20 Medicare Advantage Continues MA 1 Enrollment to Nearly Double by 2025 Total Enrollment and Percentage of Total Medicare Population Record Growth 30.0M (40%) MA Penetration Varies by State Total MA Enrollment as a Percent of Total Medicare Population, M (31%) 10.4M (13%) of newly eligible 24% beneficiaries chose MA in states currently have provider-led plans in their markets 69% of provider-led plans offer MA coverage options 1) Medicare Advantage. Source: KFF, Medicare Advantage Fact Sheet, June 29, 2015, available at: McKinsey & Co., Provider-Led Health Plans: The Next Frontier Or the 1990s All Over Again?, January 2015, available at: healthcare.mckinsey.com; MedPac, Do new Medicare beneficiaries choose Medicare Advantage right away? Sept. 15, 2014; Health Care Advisory Board interviews and analysis.

21 What s Next in Healthcare Reform? Four Commonalities in Proposals (source: Paul Keckley) Delegate more to the states regarding toughest issues (e.g., block grants, high-risk pools) Give funding to states to stabilize markets through 2018 elections State line proposals (average admin cost for individual insurance = 27%) Continue value-based payment systems; voluntary vs. mandatory Status: Rand Paul vs. Paul Ryan vs. Tom Price

22 What Keeps Me Up

23 MACRA, MIPS and APM

24 These People 24

Medicare No End in Sight for Inpatient Price Cuts Continue Unabated 1) Inpatient Prospective Payment System. 2) Disproportionate Share Hospital.

Reimbursement Cuts Hospitals Bearing the Brunt of Payment Cuts Reductions to Medicare Fee-for-Service Payments 2013 2014 2015 2016 2017 2018 2019

($67B) ($76B) ($86B) ($94B) New Proposals Continue to Emerge President s FY2016 Budget Proposal Includes Significant Cuts to Providers $30.

5B Savings from moving to siteneutral payments $720M Cuts to critical access hospitals Source: CBO, Letter to the Honorable John Boehner Providing

25 Medicare No End in Sight for Inpatient Price Cuts Continue Unabated 1) Inpatient Prospective Payment System. 2) Disproportionate Share Hospital. 3) Medicare Access and CHIP Reauthorization Act of Reimbursement Cuts Hospitals Bearing the Brunt of Payment Cuts Reductions to Medicare Fee-for-Service Payments ($4B) ($14B) ($24B) ($29B) ($38B) ($54B) ACA IPPS 1 Update Adjustments ACA DSH 2 Payment Cuts MACRA 3 IPPS Update Adjustments ($67B) ($76B) ($86B) ($94B) New Proposals Continue to Emerge President s FY2016 Budget Proposal Includes Significant Cuts to Providers $30.8B Reduction in Medicare bad debt payments $14.6B Cuts to teaching hospitals and GME payments $29.5B Savings from moving to siteneutral payments $720M Cuts to critical access hospitals Source: CBO, Letter to the Honorable John Boehner Providing an Estimate for H.R. 6079, The Repeal of Obamacare Act, July 24, 2012; CBO, Cost Estimate and Supplemental Analyses for H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015; Budget of the United States Government (Proposed) FY 2016; Health Care Advisory Board interviews and analysis.

26 Trading Low Premiums for Average Public Exchange Deductibles by Tier, 2016 Bronze: $5,731 Silver: Gold: 2016 $3, $1, Platinum : $ High Deductibles $5, $2, $1, $ Enrollees Favor Higher Deductibles Annual Deductibles as Percentage of All Individual Plans Selected on ehealth Platform, % 16% 10% 23% 30% 39% 34% 34% <$1,000 $1,000-$2,999 $3,000-$5,999 $6, Source: ehealth, Health Insurance Price Index Report for the 2015 Open Enrollment Period, March 2015, available at: HealthPocket.com, 2016 Affordable Care Act Market Brings Higher Average Premiums for Unsubsidized, November 2, 2015, available at: Health Care Advisory Board interviews and analysis.

27 Higher Deductibles Driving Increased Price Sensitivity Consumers Increasingly Soliciting Pricing Information Many Americans Lack Cash Flow to Cover Potential OOP Costs Households Without Enough Liquid Assets to Pay Deductibles 35% 24% More Consumers Attempting to Find Pricing Information 56% Consumers who have tried to find out how much they would have to pay before getting care Mid-range deductible 1) $1,200 Single; $2,400 Family 2) $2,500 Single; $5,000 Family 1 2 Higher-range deductible A surprising percentage of people with private insurance simply do not have the resources to pay their deductibles. Drew Altman, President, Kaiser Family Foundation 67% 74% Those with deductibles of $500 to $3,000 who have solicited pricing information Those with deductibles higher than $3,000 who have solicited pricing information Source: Altman D, Health-Care Deductibles Climbing Out of Reach, Wall Street Journal, March 11, 2015, available at: Health Care Advisory Board interviews and analysis.

28 How Do You Measure Value? And what do you think of ratings?

The Changing Rules of Growth

NETWORK DEVELOPMENT The Changing Rules of Growth Navigating the Tension Between Integrating and Unbundling the Delivery System Rob Lazerow The Advisory Board Company 2 A Return to the Good Old Days? Health