The Next Era of Health Reform

Transcription

1 Virginia Center for Health Innovation January 4, 2017 The Next Era of Health Reform Early Thoughts on Implications of the 2016 Elections research technology consulting

2 2 Congratulations, Mr. President Trump Wins in Stunning Upset Congress and Executive Branch Now in Republican Control 52/100 Senate Republicans 241/435 House Republicans 2016 Advisory Board All Rights Reserved advisory.com 33590A

3 3 The ACA at a Turning Point Two Repeal Options on the Table Wholesale Immediate Repeal A full repeal of the ACA through a congressional vote in both the House and the Senate Piecemeal Change Changes to specific components of the ACA; most likely through budget reconciliation which only requires a majority vote in Congress Key Considerations of Each Approach Potentially requires filibuster proof majority in Senate Complicated by entangled ACA policies Must contend with Republican governors in states supporting Medicaid expansion May have to contend with widespread industry pushback Budget reconciliation options limit repeal to tax-related measures Requires line-item specific transition planning 2016 Advisory Board All Rights Reserved advisory.com 33590A

4 4 GOP Reform Efforts Taking Center Stage Trump Administration Reframing the Health Care Conversation Five Health Policy Issues to Watch in 2017 Possibilities Include. Coverage Expansion Payment Reform Medicare Reform Medicaid Reform Deficit Reduction Expansion of HSAs Insurance market protections Tax credits for individual market purchasers Capping employer tax exclusion Adjusting reform programs to drive greater savings Eliminating CMMI, scaling back associated programs Implementing MACRA, with potential tweaks Expanding Medicare Advantage Increasing age of eligibility to 67 Implementing premium support model Rolling back Medicaid expansion Transitioning financing to per capita allotment Transitioning financing to state block grants Maintaining ACA-related payment cuts Expanding payment cuts 2016 Advisory Board All Rights Reserved advisory.com 33590A

5 5 Trump s Plan Departs from Orthodoxy Public Statements Diverge from Traditional Conservative Policy Platform Repeal and Replace Paramount Pillars of the Trump Health Care Platform Insurance Coverage Repeal Affordable Care Act Allow insurance to be sold across state lines Reform health insurance tax deductions Prescription Drugs Allow Medicare to negotiate drug prices and allow import of drugs Payment Initiatives Convert Medicaid into block grant program Mandate price transparency by providers The one thing we have to do is repeal and replace Obamacare. It is a disaster. People's premiums are going up 35 percent, 45 percent, 55 percent. Their deductibles are so high nobody's ever going to get to use it. So Obamacare is turning out to be a bigger disaster than anybody thought. But Often Breaking with the Party Line Everybody s got to be covered. This is an un-republican thing for me to say I would make a deal with existing hospitals to take care of people. The government is going to pay for it, but we re going to save so much money on the other side Advisory Board All Rights Reserved advisory.com 33590A Source: "Donald Trump on Health Care, CBS News, "Trump Gets down to Business on 60 Minutes," Healthcare Reform to Make America Great Again, Health Care Advisory Board interviews and analysis.

6 6 Meet the Nominees President-Elect Trump Selects Health Policy Team HHS Secretary: Rep. Tom Price CMS Administrator: Seema Verma Six-term Representative from Georgia and current chairman of House Budget Committee; retired orthopedic surgeon Sponsor of the Empowering Patients First Act, a proposed GOP alternative to the ACA National health policy consultant from Indiana Helped shape Medicaid expansion in IN, OH, KY, TN including implementation support through federal waivers Together, Chairman Price and Seema Verma are the dream team that will transform our healthcare system. President-Elect Donald Trump 2016 Advisory Board All Rights Reserved advisory.com 33590A Source: Jackson, D. and Solis, S., Rep. Tom Price is Trump's pick for Health and Human Services Dept.. USA Today, Nov. 29, 2016; Trump picks Seema Verma to head Centers for Medicare and Medicaid Services, Politico, Nov. 29, 2016; Health Care Advisory Board interviews and analysis.

7 Ryan s Plan Adheres to Traditional Conservative Aims 7 A Better Way Plan Likely to Form Basis of Republican Policies Comparison of Ryan Plan to ACA Provisions Ryan Proposals Change from ACA Insurance Market Regulation Preserve pre-existing coverage protections if individual maintains continuous coverage Preserve ability for children to remain on parents plans through age 26 Fund state-run high risk pools Largely maintains ACA-based reforms Medicaid Reform Allow states to choose between two funding options: 1. Per capita allotment of funds similar to managed care plans 2. Block grant so state can implement customized program Significant shift from status quo with states granted flexibility to change benefit design, reduce coverage Medicare Reform Combine Medicare Parts A and B Increase eligibility age to 67 Create a Medicare Exchange with traditional and private plans Repeal IPAB, CMMI, and ACA-mandated cuts to MA Shift from delivery system reform focus to consumer purchasing in Medicare population Affordability Expand availability of HSAs Provide tax credits toward purchase of coverage Cap tax exclusion of employer-provided health benefits Allow purchase of insurance across state lines Supports low-income beneficiaries through tax credits instead of subsidies and supports greater consumer-driven health care Innovation Reform FDA processes Boost NIH funding Encourage interoperability Largely consistent with Obama-era initiatives 2016 Advisory Board All Rights Reserved advisory.com 33590A Source: A Better Way, abetterway.speaker.gov; Health Care Advisory Board interviews and analysis.

8 8 Unclear Future for CMMI Reviewing CMMI s Role Test new payment and service delivery models Evaluate results and advance best practices Upon validation and proven cost savings, expand to broader Medicare program Congress Seeking Control The broad powers vested in CMMI, and the agency s interpretation of that authority, have the potential to further degrade Congress s lawmaking authority by shifting decision-making away from elected officials into the hands of unelected bureaucrats. Representative Tom Price (R-GA) Chairman of the House Budget Committee Key CMMI Programs Pioneer ACO Model Next Generation ACO Model Comprehensive ESRD Care Model Nursing Home Value-Based Purchasing Demonstration Bundled Payments for Care Improvement Initiative Vermont All-Payer ACO Model CJR and EPM bundled payment models Comprehensive Primary Care Plus Oncology Care Model 2016 Advisory Board All Rights Reserved advisory.com 33590A Source: Price T, Obamacare Agency Escapes Congressional Oversight, available at: Health Care Advisory Board interviews and analysis.

9 9 Approaching a Critical Decision Point Congress Choosing Between Payment Reform and Payment Cuts Continue Payment Reforms Providers accept alternative payment models and move rapidly away from fee-forservice status quo Shift to Payment Cuts Providers remain in fee-forservice but face ever-more stringent reimbursement cuts Strategic Imperatives Business model transformation Integration and system-wide care coordination Risk-based contracting strategy Strategic Imperatives Radical cost-efficiency Asset and service rationalization Fixed cost restructuring 2016 Advisory Board All Rights Reserved advisory.com 33590A

10 10 The Next Era of Health Care Reform Four Key Principles Likely to Guide GOP Reform Efforts Reduce Federal 1 2 Entitlement Spending More assertive focus on reduction in federal health care spending Devolve Health Policy Control to States Reduce federal role in health care, provide states more autonomy to make decisions, cut spending Embrace Free Markets and 3 4 Consumer Choice Usage of free-markets to promote private sector competition in payer, provider markets Promote Transparency of Cost and Quality Mandate greater consumer choice and shopping at the point-of-care and point-of-coverage through improved transparency 2016 Advisory Board All Rights Reserved advisory.com 33590A

11 11 Hope and Change, Eight Years On Surely President Obama s Signature Achievement A Grand Promise for Change The bill I m signing will set in motion reforms that generations of Americans have fought for and marched for and hungered to see. Barack Obama, on the Affordable Care Act, March 23, 2010 This is a big [expletive] deal Joe Biden, on the Affordable Care Act, March 23, 2010 Source: Solberg S and Pear R, Obama Signs Health Care Overhaul Bill, With a Flourish, New York Times, March 23, 2010; Health Care Advisory Board interviews and analysis.

12 12 Evaluating the ACA Against its Intentions Major Reform Goals Replace Costly Fee-for- Service Incentive Structures Improve Health Care Quality Achieve Universal, Affordable Coverage Chosen Method: Medicare-led Payment Reform FFS cuts New payment models Intent to catalyze broader commercial market change Chosen Method: Incentives + Transparency IT mandates Pay-for-Performance programs Market-facing transparency Chosen Method: Expansion of Existing System Insurance market regulation Expanded public coverage Market-based exchanges Obama-era Enabling Legislation February 17, 2009: Health Information Technology for Economic and Clinical Health (HITECH) Act March 23, 2010: Patient Protection and Affordable Care Act April 16, 2015: Medicare Access and CHIP Reauthorization Act (MACRA)

13 13 Replacing Fee-for-Service: A Stalled Transition 1 MACRA: Large, limited-time incentive to adopt Grade: downside risk models Replace Costly Fee-for- Service Incentive Structures Wide range of potential impact in? complex MIPS track Chosen Method: Medicare-led Payment Reform FFS Cuts New payment models Intent to catalyze broader commercial market change Overall Grade: C- Bundled Payments Noticeable cost savings to Medicare Significant provider interest Limited scalability without further mandates ACO Programs Very little cost savings in aggregate so far Constant battle to retain participants while also accelerating migration to downside risk Unattractiveness of ACO programs driving many to Medicare Advantage Grade: B Grade: C-

14 14 Improving Health Care Quality: Mixed and Complex 2 Improve Health Care Quality IT Infrastructure and Interoperability EHR implementation proceeding; likely much more aggressively than without intervention Costs crowding out other investment Grade: B- Chosen Method: Incentives + Transparency IT mandates Pay-for-Performance programs Market-facing transparency Overall Grade: Pay-for-Performance Programs Providers responded quickly to readmission, HAC incentives Infrastructure in place to scale up financial consequence if needed Overengineered metrics proving burdensome Grade: B+/C- B Market Transparency Government-run transparency platforms of limited use, infrequently used Grade: C

15 15 Universal, Affordable Coverage: Clear Progress 3 Achieve Universal, Affordable Coverage Chosen Method: Expansion of Existing System Insurance market regulation Expanded public coverage Market-based exchanges Overall Grade: A- Insurance Regulation Guaranteed issue, other provisions fundamentally reshaped coverage access Political fights persist; mandates weak Insurance Exchanges Enrollment stable Premium growth reasonable; death spiral largely avoided Market-driven value dynamic accelerating Medicaid Expansion 31 states + DC have expanded coverage 19 states not yet expanding 16 million more Medicaid/CHIP enrollees, largely in expansion states Waivers offer flexibility to some state models Grade: A- Grade: B+ Grade: B

16 16 Final Grade: Incomplete Progress Toward Obama Administration s Goals Only Part of the Picture Replace Costly Fee-for- Service Incentive Structures Improve Health Care Quality Achieve Universal, Affordable Coverage C- B A- Unfinished Business: Reengineer health care delivery system, not just payment system, to generate greater value Catalyze private market reform, not just entitlement program reform

17 17 Serving Two Masters Public, Private Markets Demanding Different Value in Different Ways Purchaser Approach to Value: Public Utility Rate setting Regulation Accountability controls Public Sector Medicare, Medicaid High cost per capita Chronic illness, comorbidities Rising share of population Provider Approach to Value: Population-level Focus Total cost control Care management Market Commodity Market dynamics Consumer preference Private Sector Insurers, employers, individual consumers Generally healthy with episodic care needs Access, experience, convenience paramount Large share-of-wallet opportunity End-user Focus Unit cost control Consumer-oriented innovation

18 18 Defined Contribution the Next Major Shift? Private Exchange Enrollment Continues to Grow Private Exchange Enrollment Still Grows in 2016, But Lags Behind Initial Projections Projected Private Exchange Enrollment Among Pre-65 Employees and Dependents 40-60% Employees on private exchanges who select a high-deductible health plan option 19M 2015 projection 2013 projections Newer Market Entrants Hitting Their Stride 9M 6M 12M 8M 50% (800kà 1.2M) Enrollment growth for Towers Watson s exchange solutions, M 3M 500 (220kà 1M) Enrollment growth for Mercer s exchange solutions, % Source: Accenture, Eight Million U.S. Employees Enrolled in Private Health Insurance Exchanges for 2016 Benefits, According to Accenture January 20, 2016; Accenture, Private Health Insurance Exchange Enrollment Doubled from 2014 to 2015, April 7, 2015, available at: Towers Watson, Enrollment in Health Benefits Through Towers Watson s Exchange Solutions Expected to Reach About 1.2 Million in 2015, March 19, 2015, available at: Mercer, Mercer Marketplace-the flexible private exchange-posts individual participant and client gains, October 13, 2014, available at: Private Insurance Exchanges: What You Need to Know Health Care Advisory Board 2015; Health Care Advisory Board interviews and analysis.

19 19 Higher Deductibles Driving Increased Price Sensitivity 1 Consumer Responses Generally Dangerous for Provider Economics Forgo Care? 2 Fail to Pay? 3 Shop Carefully? Spending Reductions Following Implementation of High-Deductible Health Plans 25% Reduction in physician office spending 18% Reduction in ED spending Households Without Enough Liquid Assets to Pay Deductibles 24% Mid-range deductible 35% % Consumers searching for price information before getting care 74% Consumers with deductibles higher than $3,000 who have solicited pricing information 1) $1,200 Single; $2,400 Family. 2) $2,500 Single; $5,000 Family. Source: Brot-Goldberg Z et al., What Does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics, The National Bureau of Economic Research, October 2015, available at: Altman D, Health-Care Deductibles Climbing Out of Reach, Wall Street Journal, March 11, 2015, available at: Health Care Advisory Board interviews and analysis.

20 20 The Implications of a Consumer Market Financial Exposure Shift of health care cost exposure to end consumer expands Following the Dollars $3.9B Venture capital funding for digital health, first six months of 2016 Radical Transparency Consumer- Oriented Marketplaces Non-Hospital Innovators Proliferation of thirdparty transparency vendors continues New online marketplaces connecting consumers directly to out-of-market providers New market entrants providing attractive alternatives at low prices Patient/consumer experience remains a dominant market in the first half of the year [2016], leading significantly in both funding amount and deal amount. StartUp Health Insights 2016 Midyear Report Source: StartUp Health Insights, Health Care Advisory Board interviews and analysis.

21 21 Path Forward Not Dependent on Politics No-Regrets Priorities for Next Era of Health Care Reform Accessibility Multi-channel navigation platform, including search, price estimation, and triage/ scheduling helps streamline transactions Development of diverse network of access points (e.g. urgent care, retail, enhanced access to specialty care, primary care) to meet varied consumer access demands Reliability System-wide commitment to and investment in service delivery and quality improvement drives broad engagement in delivering superior outcomes High-reliability approach to both service delivery and clinical quality ensures baseline of performance Affordability Willingness to partner with lower-cost providers offers patients affordable options, helps prevent markets from becoming overbuilt When markets are already overbuilt, commitment to scale back excess capacity ensures affordability in the long-term