2018 Healthcare Industry Outlook:

Transcription

1 2018 Healthcare Industry Outlook: What Providers Need to Know Chris Emper, JD, MBA January 17, 2018

2 ON24 Interface

3 Your Presenter Chris Emper, JD, MBA President, Chris Emper, JD, MBA, is the founder and President of Emper Healthcare Advisors, a government affairs and healthcare consulting firm in Washington, D.C. that specializes in helping healthcare providers and technology companies successfully navigate complex regulations and new value-based reimbursement models. Prior to forming Emper Healthcare Advisors in 2016, Chris was Vice President of Government Affairs at NextGen Healthcare (NASDAQ: QSII) and Chair of the Electronic Health Record Association (EHRA) Public Policy committee. An expert in The Patient Protection and Affordable Care Act (ACA or Obamacare) and The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Chris is a frequent speaker at industry conferences and has written or appeared in articles in publications such as Politico, Health Data Management, Accountable Care News, and Medical Economics. Chris also currently serves as Chair of the HIMSS Government Relations Roundtable, a leading coalition of health IT government affairs professionals. Prior to joining NextGen Healthcare in 2013, Chris served as a Domestic Policy Advisor for former Massachusetts Governor Mitt Romney s 2012 Presidential Campaign, where he advised the campaign on policy issues including healthcare, technology and innovation. He holds a law degree and an MBA from Villanova University and a BA from Boston College.

4 Agenda 2017 year in review 2018 industry outlook Questions

5 2017 Year in Review LOOKING BACK

6 January 20, One Year Ago, This Week Inauguration of Donald Trump as the 45th President of the United States

7 Hours Later at the White House Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal It is the policy of my Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act (Public Law ), as amended (the Act ). President Trump, January 20, 2017

8 A Year of Repeal & Replace Drama January 20 - President Trump signs Executive Order signaling intent to repeal ACA March 6 - House GOP releases first version of the American Health Care Act March 24 - Lacking votes to pass, Speaker Ryan pulls bill from House floor before scheduled vote May 4 - House GOP passes amended bill June 22 - Senate GOP releases first version of Better Care Reconciliation Act July 27 - Senator McCain joins GOP Sens. Collins and Murkowski to oppose bill July 28- Leader McConnell admits defeat on healthcare and says it s time to move on September 26 - Graham-Cassidy bill abandoned following extensive talks and growing support September 30 - Senate reconciliation bill expires, requiring any ACA bill to gain 60 votes December 15 - Final version of GOP tax bill includes repeal of ACA individual mandate

9 Repeal probably not the most accurate term "They'll fix Obamacare I shouldn't have called it repeal and replace because that's not what's going to happen. They're basically going to fix the flaws and put a more conservative box around it This is not all that hard to figure out, except this: In the 25 years that I served in the United States Congress, Republicans never, ever one time agreed on what a healthcare proposal should look like. Not once. -former Speaker of the U.S. House of Representatives John Boehner speaking at HIMSS annual conference in February 2017

10 GOP ACA repeal/replace/revise/fix efforts target a small piece of the overall healthcare pie U.S. HEALTH INSURANCE COVERAGE Medicare 14% Medicaid 20% Employer 50% Individual 7% Uninsured 9%

11 Repeal & Replace Always Had Three Phases There are three phases of this plan One is the bill that was introduced last evening in the House of Representatives... Second are all the regulatory modifications and changes that can be put into place... And then there's other legislation that will need to be addressed that can't be done through the reconciliation process. former HHS Secretary Tom Price, 3/7/17 1 Reconciliation bill 2 Administrative action 3 Other legislation

12 Trump Administration s Focus: Limiting Regulations U.S. Department of Health & Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) U.S. Food & Drug Administration (FDA) Office of the National Coordinator for Health IT (ONC) Secretary* Tom Price, MD (*Alex Azar nominated as next HHS Secretary) Administrator Seema Verma Commissioner Scott Gottlieb, MD National Coordinator Donald Rucker, MD ACA says the secretary shall or may 1,442 times Executive orders issued on reducing regulations and impact of ACA White House s FY 2018 budget request includes 18% cut to HHS

13 2017 news headlines signaled uncertainty about the push towards value-based care MACRA 2018 Proposed Rule Reflects New CMS Flexibility 6/21/17 CMS will cancel major bundled payment initiatives 8/14/17 CMS seeks 'new direction' for innovation center 9/21/17 MedPAC Medicare advisory panel wants to scrap MIPS 10/6/17 Medical Groups Push Congress for Continued QPP Flexibility 10/9/17 CMS agrees with complaints about MACRA 10/13/17

14 ACA payment & delivery system reforms have continued under Trump Administration In a single week in the fall of 2017, CMS issued 4,294 pages of final regulations impacting 2018 Medicare reimbursement! 2018 hospital outpatient rule: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs (1133 pages) 2018 home health rule: CY 2018 Home Health Prospective Payment System Rate Update and CY 2019 Case-Mix Adjustment Methodology Refinements; Home Health Value-Based Purchasing Model; and Home Health Quality Reporting Requirements (258 pages) 2018 physician fee schedule rule: Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2018; Medicare Shared Savings Program Requirements; and Medicare Diabetes Prevention Program (1250 pages) 2018 MACRA QPP rule: CY 2018 Updates to the Quality Payment Program; and Quality Payment Program: Extreme and Uncontrollable Circumstance Policy for the Transition Year (1653 pages) Focus of regulations is clearly on reducing the regulatory burden on providers while continuing the push towards value payment

15 2017 Industry Outlook LOOKING FORWARD

16 ACA FFS payment cuts scheduled to accelerate $ in billions ACA Medicare FFS Payment Adjustments ACA MA Payment Cuts ACA DSH Payment Cuts -6 Source: Congressional Budget Office In 2015, hospitals aggregate Medicare margin was 7.1 percent. Under current law, Medicare margins are projected to decline from 2015 to 2017 to approximately 10 percent. MedPAC, March 2017

17 Medicare FFS reimbursement rates for physicians were flat before MACRA $37.90 $ Medicare Physician Payment Rate (PFS Conversion Factor) *Code Relative Value Unit (RVU) x Geographic Adjustment x Conversion Factor = Code $ Reimbursement

18 MACRA continues this trend for the next decade $37.90 $35.93 $ Medicare Physician Payment Rate (PFS Conversion Factor) *Code Relative Value Unit (RVU) x Geographic Adjustment x Conversion Factor = Code $ Reimbursement

19 MACRA s Real Impact = Declining FFS Rates $ $ $37.90 $35.93 $ Medicare Physician Payment Rate (PFS Conversion Factor) Medicare Physician Payment Rate + Inflation (PFS Converstion Factor + CPI) [A]nd his proudest accomplishment, finding a permanent Doc Fix, which solved a nagging problem with the Medicare payment formula... -Politico Magazine feature on former House Speaker John Boehner, 10/29/17

20 FFS outlook unlikely to improve in short or long term The Medicare Access & CHIP Reauthorization Act (MACRA) House vote 92 8 Senate vote April 16, 2015 signed into law by President Obama Funding for Children s Health Insurance Program (CHIP), community health centers, and other healthcare extenders expired September 30, 2017* Additional two years of 2% Medicare sequester cuts under discussion as pay-for to offset spending increases* *As of 12/18/17 We're going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit...frankly, it's the health care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements because that's really where the problem lies, fiscally speaking. House Speaker Paul Ryan, December 6, 2017

21 Evolution of MACRA s Quality Payment Program (QPP) MIPS Exclusions MIPS Maximum Negative & Positive Adjustments 2017 Low-Volume Threshold Individuals or groups who: Bill < $30,000 in Part B allowed charges OR Provide care for < 100 Part B beneficiaries 2018 Low-Volume Threshold Individuals or groups who: Bill < $90,000 in Part B allowed charges OR Provide care for < 200 Part B beneficiaries Performance Year Payment Year Maximum Negative Adjustment Maximum Positive Adjustment % +12% % +15% % +21% % +27% MIPS Scoring System MIPS Performance Benchmark Quality 60% 50% 30% Cost 0% 10% 30% Advancing Care Information Improvement Activities 25% 25% 25% 15% 15% 15% MIPS Overall Performance Benchmark/Threshold MIPS Exceptional Performance Benchmark/Threshold /100 15/100 TBD- national average of all clinicians 70/100 70/100 TBD CMS made only minor tweaks to Advanced APM regulations in 2018, but significantly expanded opportunities for clinicians to participate in advanced APMs

22 CMS Innovation Center headed in new direction This administration plans to lead the Innovation Center in a new direction. On Wednesday we are issuing a request for information to collect ideas on the path forward. We will move away from the assumption that Washington can engineer a more efficient healthcare system from afar that we should specify the processes healthcare providers are required to follow. -CMS Administrator Seema Verma, The Wall Street Journal, 9/19/17 Focus of CMS Request for Information Consumer-directed care & market-based innovation Physician specialty models Medicare advantage models Prescription drug models State-based innovation Behavioral health models Expansion of Alternative Payment Models (APMs) under Trump Administration Comprehensive Primary Care Plus (CPC+) round two launched in January 2018 Medicare Shared Savings Program ACO Track 1 Plus launched in January 2018 Next Generation ACO program round two launched in January 2018 CMS recently cancelled an expansion of its mandatory bundled payment programs, but also announced its intention to relaunch a new voluntary bundled payment program 2018 MACRA QPP rule finalized policies to launch All-Payer Combination option in 2019

23 Medicare Advantage (MA) enrollment continues to grow & the program continues to evolve Trump Administration s Focus on Medicare Advantage CMS issued a proposed rule that would update MA regulations and provide more flexibility to participating insurers by promoting innovation and empowering MA and Part D sponsors with new tools to improve quality of care and provide more plan choices for MA and Part D enrollees. CMS Since the ACA was passed in 2010, MA enrollment has grown 71 percent Source: Kaiser Family Foundation Half of new Medicare enrollees chose MA MA enrollment is projected to continue to grow, rising to 41 percent of all beneficiaries by 2027 CMS announced a 2019 expansion and changes to the MA Value-based Insurance Design (VBID) Model Model supports improved outcomes and cost savings through patient cost sharing and other health plan design elements that encourage enrollees to use high-value clinical services CMS is considering including MA as an advanced APM option for MACRA s QPP MA will also count towards QPP All-Payer Combination Option in 2019

24 CMS Administrator Seema Verma outlined her vision for Medicaid reform in November Streamline and improve 1115 demonstration, state plan amendments, and 1915 waiver processes Creation of first-ever state and federal Medicaid and CHIP scorecards Focus on program integrity and efforts to combat fraud and abuse GOP Medicaid legislative reform proposals focus on state block grants

25 Commercial market continues to move towards high deductible plans Employer-sponsored insurance: percentage of workers with > $1000 deductible Average deductible is $1,500 per individual in employer sponsored coverage Almost 30% of workers in employer sponsored plans are now selecting a high deductible plan Over the last five years, the % of covered workers with a general annual deductible of $1,000 or more for single coverage has grown from 34% to 51% Source: Kaiser Family Foundation High co-pays and deductibles are forcing providers to confront more patient payment responsibility!

26 21 st Century Cures Act Implementation The 21 st Century Cures Act (Cures) House vote 94 5 Senate vote Dec. 13, 2016 signed into law by President Obama HHS Office for the National Coordinator for Health IT (ONC) is expected to release a regulation in 2018 defining the practice of information blocking Technology vendors and providers will face civil monetary penalties of up to $1 million per violation Food and Drug Administration (FDA) will continue to implement various Cures provisions in 2018 Law included provisions intended to strengthen and clarify regulatory approval process for drugs and devices Cures provided $1 billion in new funding for grants to combat the opioid crisis On October 26, 2017, President Donald declared the opioids crisis a Nationwide Public Health Emergency Expect additional regulatory and potentially legislative actions targeting opioids in 2018

27 November 2018 Midterm Elections Loom 2018 Midterm Elections GOP holds majority in House All 335 seats are on the ballot in 2018 Democrats hold a double digit advantage in recent generic ballot polls GOP holds majority in Senate 33 seats are on the ballot in Democratic seats w/ 10 in Trump states (WI, PA, MI, FL, OH, MT, IN, MO, ND, WV) 8 Republican seats w/ 1 in Clinton state (NV) An advantageous GOP Senate map in 2018 could bring Obamacare repeal legislation back in early 2019 Does Democratic Senator Doug Jones December 2017 special election win in traditionally Republican Alabama foreshadow midterm election results across the country in November 2018?

28 More industry mergers on the horizon? &

29 SUMMARY 2018 & BEYOND

30 Evolution of Value-Based Reimbursement under Obamacare Regulatory Freedom Shared Savings Shared Savings & Losses Partial Capitation Full Capitation New targets have been set for value-based payment: 85% of Medicare fee-for-service payments should be tied to quality or value by 2016, and 30% of Medicare payments should be tied to quality or value through alternative payment models by 2016 (50% by 2018). -HHS Secretary Sylvia Burwell, The New England Journal of Medicine, 1/26/15 FFS +/- Value Financial Risk for Cost & Quality Baseline FFS reimbursement rates expected to remain flat

31 Evolution of Value-Based Reimbursement under Obamacare Trumpcare Regulatory Freedom Shared Savings Shared Savings & Losses Partial Capitation Full Capitation We must shift away from a feefor-service system that reimburses only on volume and move toward a system that holds providers accountable for outcomes and allows them to innovate. Providers need the freedom to design and offer new approaches to delivering care. Our goal is to increase flexibility by providing more waivers from current requirements. FFS +/- Value -CMS Administrator Seema Verma, The Wall Street Journal, 9/19/17 Financial Risk for Cost & Quality Baseline FFS reimbursement rates expected to remain flat

32 Healthcare consumerism will continue to be driven by rising deductibles, co-pays & the information age Employer-sponsored insurance: percentage of workers with > $1000 deductible Average deductible is $1,500 per individual

33 Summary A year into the Trump Administration, the healthcare policy agenda of the Administration and the GOP Congress has become clear While the focus in 2017 was on legislative activity, expect the focus in 2018 to be on regulatory activity The transition to value-based reimbursement will continue, but with a focus on reducing the regulatory burden of programs on physicians Declining FFS reimbursements linked to cost and quality metrics will be the new normal Consumerism will continue to force providers to compete on cost & quality The 2018 midterm elections could have a significant impact on the healthcare policy agenda of Congress & President Trump in 2019

34 Questions? Contact Information Chris Emper, JD, MBA

35 Thank You! Contact Information Chris Emper, JD, MBA