a post-election exchange and expansion update
DESCRIPTION
A Post-Election Exchange and Expansion Update. Health Policy Implications. Exchange Update. States are moving forward at differentiating paces while HHS extends deadlines. HHS Has Extended Deadlines. HHS to determine if states have complied with the provisions to establish an exchange. - PowerPoint PPT PresentationTRANSCRIPT
Health Policy Implications
Artia Advisor 2-7-13
States are moving forward at differentiating paces while HHS extends deadlines
Artia Advisor 2-7-13
Feb. 15, 2013
HHS Has Extended Deadlines
HHS will approve or conditionally approve the state-based exchange blueprints by January 1, 2013. Both declaration letters and blueprints will be accepted on a rolling basis until the final deadline of February 15, 2013.
Even despite these extensions, many state lawmakers remain concerned that these deadlines, in conjunction with the delayed release of guidance and regulation from HHS, are extremely prohibitive in allowing sufficient time to deliberate and choose the most appropriate implementation pathway.
Nov. 6, 2012
Original deadline to select a benchmark plan and declare intent
Dec. 14, 2012 Jan. 1, 2013
HHS to determine if states have complied with the provisions to establish an exchange
Jan. 1, 2014 Jan. 1, 2015
Exchanges must be self-sustaining
Exchanges become operational; Required standards must be in effect
Revised Deadline to submit Exchange Blueprint, Declaration Letter, and Application
Final deadline to submit exchange blueprints
Artia Advisor 2-7-13
State-based Exchange
State Partnership Exchange
Federally-facilitated Exchange
State operates all exchange activities; however, state may use federal government services for the following activities:
Premium tax credit and cost-sharing reduction
Exemptions
Risk adjustment program
Reinsurance program
State operates activities for:
Plan management
Consumer assistance
Both
HHS operates; however, state may elect to perform or can use federal government services for the following activities:
Reinsurance program
Medicaid and SHIP eligibility - assessment or determination
For those states that elect not to establish an exchange, HHS is required to establish an exchange on behalf of the state or in those states where HHS determines an exchange will not be operational by January 1, 2014.
Qualified health plans (QHPs) which will participate in the exchange markets must include items and services within at least the following 10 categories:
Ambulatory patient services
Rehabilitative and habilitative services
and devices
Prescription drugs Laboratory services
Preventive and wellness services
and chronic disease management
Maternity and newborn care Pediatric services
Artia Advisor 2-7-13
ImmunosuppressantsImmunosuppressants
AntidepressantsAntidepressants
AntipsychoticsAntipsychotics
AnticonvulsantsAnticonvulsants
AntiretroviralsAntiretrovirals
AntineoplasticsAntineoplasticsPa
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HHS previously indicated that it “does not intend to adopt the protected class of drug policy in Part D” and may consider a proposal that would permit EHB plans to cover only one drug in a particular category or class.
In the proposed rule, HHS referenced comments from various stakeholders such as patient advocacy groups and manufacturers who stated significant concerns that such a policy would not provide comprehensive or sufficient drug coverage
The proposed rule also referenced an Avalere study which showed that many plans are already offering more comprehensive coverage than a “one drug per class” policy
Artia Advisor 2-7-13
As part of the regulatory process for setting up exchanges and implementing other provisions of the ACA, the Administration is tasked with releasing guidance, or regulations, to states and health plans who are affected by the provisions.
These regulations are issued in the form of proposed rulemaking, a process through which the federal agency (in this case, the Department of Health and Human Services) issues its intended approach towards the provisions of the law in the form of a proposed rule. This is followed by a period for stakeholder comment and agency review of these comments, before HHS releases a final rule.
On November 20, 2012, HHS released a proposed rule which will regulate the provision of minimum coverage of essential health benefits (EHBs) to be offered in plans participating in the individual and small group markets.
Of importance to Salix, this guidance included HHS’s intended approach to defining adequate provision of prescription drugs as one of the ten required EHB’s.
Artia Advisor 2-7-13
A plan must cover the greater of:
1. One drug in every category and class, or
2. The same number of drugs in each category and class as the EHB-benchmark plan
QHPs will report drug list to the Exchange, an EHB plan operating outside of the Exchange must report its drug list to the state, and a multi-state plan must report its drug list to the Office of Personnel Management (OPM).◦ This reporting will take U.S. Pharmacopeia (USP) reporting
format Drugs must be “chemically distinct,” i.e. cannot offer brand-
name drug and its generic to satisfy requirements HHS proposes that plans “have procedures in place to ensure
that enrollees have access to clinically appropriate drugs that are prescribed by a provider but are not included on the plan’s drug list”
Artia Advisor 2-7-13
Artia Advisor 2-7-13
State Structure of Exchange
Contracting Type of Exchange
Governance
California Quasi-governmental
Active Purchaser 5-member Board
Colorado Quasi-governmental
Clearinghouse 12-member Board
Connecticut Quasi-governmental
Active Purchaser 14-member Board
District of Colombia Quasi-governmental
Active Purchaser 7-member Board
Hawaii Non-Profit Clearinghouse 15-member Board*
Maryland Quasi-governmental
To be decided by the Board of Directors
9-member board
Massachusetts Quasi-governmental
Active purchaser 11-member Board
Nevada Quasi-governmental
Not addressed in legislation
10-member Board
Oregon Quasi-governmental
Active Purchaser 9-member Board
Rhode Island Operated by State Active Purchaser 13-member Board
Vermont Operated by State Active Purchaser 5-member Board
Washington Quasi-governmental
Not addressed in legislation
11-member Board*Description of Hawaii’s Interim Board, which will be replaced on June 30, 2012. The ultimate Board of Directors will include eleven members.**Although Utah’s exchange doesn’t have a formal governing board, the state has created an executive steering committee to advise exchange staff on operations and transparency issues and a Defined Contribution Risk Adjuster Board to manage risk sharing mechanisms.
Artia Advisor 2-7-13
In light of the Supreme Court ruling, many states will opt out or delay expansion
Artia Advisor 2-7-13
States now have more options regarding how they will expand their Medicaid population. States may have the option of applying the expansion to sub-populations within their existing Medicaid program, while others are choosing not to participate altogether.
CBO has estimated that 6 million less individuals will receive coverage in 2014 as states opt-out of Medicaid expansion. CBO projects that 3 million of these will likely fall into exchanges while the other 3 million will be left uninsured.
17 million = Medicaid Expansion
Pre-SCOTUS
3M eligible for exchange
subsidies
30 million= Total Uninsured Post-
SCOTUS
3M uninsured
3M
Artia Advisor 2-7-13
Artia Advisor 2-7-13
Artia Advisor 2-7-13
The Supreme Court Ruling:
The Commerce Clause The Necessary and Proper Clause The Tax and Spending Clause
“Congress shall have power to regulate
Commerce with foreign Nations, and among
the several States, and with the Indian tribes”
“Congress shall have power to make all Laws which shall be
necessary and proper for carrying into Execution the foregoing Powers”
“Congress shall have Power to lay and collect Taxes, Duties,
Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States”
Unconstitutional Unconstitutional ConstitutionalThe Individual Mandate Moves Forward
The penalty will be calculated as the greater of either: 1. a percentage of the “applicable income,” defined as the amount by which an individual’s household income exceeds the applicable filing threshold for the applicable tax year, or
2. a flat dollar amount assessed on each taxpayer and any dependents
The Congressional Budget Office’s ten-year estimate of tax revenue generated from the individual mandate:
$117 billion
Artia Advisor 2-7-13
15
MA plans may look to vendors for savings by restructuring formularies or cost-sharing.
MA plans may look to vendors for savings by restructuring formularies or cost-sharing.
Source: Kaiser Family Foundation, Medicare Advantage 2012 Data Spotlight: Enrollment Market Update http://www.kff.org/medicare/upload/8323.pdf
Medicare Advantage Enrollment has grown by 10% in 2012 (~27% of Medicare population)
The MA program continues to be a popular government funded program despite recent activity by Democrats to modify the program.
The new five-star rating system by CMS uses benchmarks and quality measures to rate plan performance.
MA plans may find mechanisms to save money while continuing to meet program requirements.
Artia Advisor 2-7-13
HHS and CMS’s renewed focus on value-based purchasing and quality
Artia Advisor 2-7-13
HHS: Essential Health Benefits Ruleproposed rule filed Friday, November 9
This regulation will offer further guidance regarding minimum benefits that plans offered in the health insurance exchanges must cover in 2013.
HHS: Definitions of Part-time and Full-time Workers
HHS must define part-time and full-time workers to guide eligibility standards for subsidized coverage in the newly established exchange market
HHS: Actuarial Value This regulation will finalize the regulatory approach that HHS will use to define actuarial value (AV) for coverage in the individual and small group markets
HHS: Rate disclosure and reviewEvery premium rate increase in the individual and small group market greater than 10% will be reviewed
HHS: Navigator Final guidance will define the role and parameters of Navigators, who will facilitate enrollment in exchanges
HHS: SHOP Exchanges
Federal rules will provide a framework for Small Business Health Options (SHOP) Exchanges, including options for how employers can provide contributions toward employee coverage that meet standards for small business tax credits
IRS: Exchange subsidiesIRS proposed that subsidies will be provided to eligible workers who choose to participate in either a state or federally-facilitated exchange. Congressional intent of this provision has been disputed
IRS: Medical Device TaxProviders are awaiting regulations on how the tax, which is scheduled to take effect in 2013, will be applied
FDA: Unique Device IdentifierCongress passed legislation in 2007 directing the FDA to develop regulations establishing a unique device identification (UDI) system for medical devices
17
Following Obama’s re-election, federal agencies are expected to issue the following regulations and guidance to facilitate implementation of Affordable Care Act (ACA) provisions:
Artia Advisor 2-7-13
Implementation Timeline
2.3 percent excise tax on medical devices effective January 1, 2013
Current Status
New tax expected to raise $29 billion over ten years Applies to all U.S. device sales except: eyeglasses, contact
lenses, hearings aids, and other retail sales. No exemption for Class I devices No small business exemptions Tax deductible
Implications
All device manufacturers will be required to pay the excise tax
Unlike the pharmaceutical tax, this tax is not based upon market share therefore small to mid size device manufacturers will likely experience the most significant impact of this provision
On June 7, 2012 the House passed H.R. 436, the Health Care Cost Reduction Act of 2012 by a vote of 270-146. There were 37 House
Democrats who supported the measure.33 Republican Senators have signed on to a similar repeal bill, S. 17, by
Sen. Orrin Hatch (R-UT).
Artia Advisor 2-7-13
19
Value-based purchasing (VBP) programs reflect CMS Triple Aim
Value-based purchasing (VBP) programs reflect CMS Triple Aim
Value-based purchasing links provider payments to quality measures and performance by healthcare providers.
This form of payment is designed to hold providers accountable for both cost and quality.
The ACA establishes a value-based purchasing program in Medicare for hospitals and requires the development of similar programs for skilled nursing facilities, home health agencies, and ambulatory surgical centers, and the testing of pilot programs for other providers
Payment Bundling National Pilot Project
Under the ACA, HHS is required to establish a national, voluntary pilot program for integrated care of Medicare beneficiaries with “applicable conditions” around a hospitalization
Hospital Value-Based Purchasing Program
The Hospital Value-Based Purchasing Program will pay approximately 3,500 hospitals across the country for inpatient acute care services based on care quality
Artia Advisor 2-7-13
Established through the ACA as a non-governmental not for profit governed by a 21-member Board of Governors.
Identify research priorities and establish a research project agenda. Carry out research (either in-house or via public and private partnership).
Leads comparative effectiveness research (CER) for HHS. Established U.S. Preventive Services Task Force. Defines quality indicators (QIs) to measure healthcare quality based on
based on hospital inpatient data. Sponsors, conducts, and disseminates research to improve the quality of
healthcare services and help patients make more.
Manages accreditation of health plans (Medicaid Managed Care, Medicare Advantage, Federal Employee, and private plans), physician programs, and medical groups.
Administers the Healthcare Effectiveness Data and Information Sets (HEDIS), a tool used by health plans to measure performance on dimensions of care.
HEDIS contributes to CMS’ Medicare Advantage Five-star Rating System.
Founded in 1990 as a nonprofit to develop uniform standards for utilization reviews.
Accredits many types of healthcare organizations, including medical management organizations (disease/case management, call centers, independent review organizations), health plans, hospitals and health websites.
Some states recognize URAC accreditation to meet state regulatory requirements; some require it.
Each accreditation program has a separate cycle for revisions, and interested parties must contact URAC regarding proposed revisions to standards.
Draft standards are always open to public comment.
Artia Advisor 2-7-13
Although each of these organizations have a distinct direction and focus there are some overlaps in responsibility and organizational structure. Prior to the enactment of the ACA; AHRQ was responsible for CER, moving forward PCORI will lead this function for the private public partnership while AHRQ will continue to serve as the governmental organization for CER and quality
Similarly URAC and NCQA both accredit health plans and want to play a role in at the governmental level in certifying the QHPs. NCQA has also expressed interest in accrediting ACOs
NQF governs the quality benchmarking process and will continue to work with NCQA and physician groups to create new quality metrics.
Ultimately, organizations such as AHRQ and PCORI will lead efforts to collect clinical data while URAC, NCQA, and NQF will leverage that data to create quality standards, measurements, and benchmarks that will drive the definition of value and set new parameters for provider reimbursement models.
Artia Advisor 2-7-13
These policy drivers will work together to influence the health care
delivery system and life sciences companies
Artia Advisor 2-7-13
The number of consumers potentially affected by these reforms is significant, and the window of action for stakeholders will not
remain open for long.
Artia Advisor 2-7-13
Imperative for Reducing U.S.
Healthcare Spending
1. The U.S. System is unsustainably expensive• $8,000 per capita cost• 40% higher than every other country in the world• Cost growth 3X GDP• Old, sick baby boomers coming• Without change, the system will go bankrupt
2. ACA actually increases cost pressures• Expansion of coverage• MLR floors• Fewer levers to drive selection of lower-cost members
3. Private sector experiments are working• Investments in HIT are driven by incentives supported by
government• Integrated systems—Kaiser, Intermountain, Geisinger—have
shown traction on getting better quality for less cost the system will go bankrupt
4. The largest payers in the system – the state and federal governments- are out of money• Protracted economic slowdown, draining state and federal
coffers• Public sentiment is more hostile; large public indebtednes
system will go bankrupt Artia Advisor 2-7-13
Issue Drivers % of Revenue Impact
Shift to value/increasing role of providers
20% of payments flowing through channel
50% of those at risk with no response
10%
Diminished economic viability for payers
Potential of 8% rebates increase in private market (non-provider – 40%)
3%
Health insurance goes retail
Risk of non-response to exclusions from formulary
2% - 3%
States/exchanges Accelerated use of generics, exclusion from coverage
2% - 3%
Health Information Liquidity
Allowing others to disseminate information about generic use with no response
1% - 2%
Total 18% - 21%Artia Advisor 2-7-13
Physician Value-Based Payment: Initial Performance Period for determining payment modifiers begins
Physician Value-Based Payment: Initial Performance Period for determining payment modifiers begins
‘13
Bundling: Establishes a national voluntary pilot program starting with 10 conditions to bundle
payment for episodes of care delivered by disparate providers, such as hospitals, physicians, long-term
care, and post-acute providers
Bundling: Establishes a national voluntary pilot program starting with 10 conditions to bundle
payment for episodes of care delivered by disparate providers, such as hospitals, physicians, long-term
care, and post-acute providers
Hospitals: Start date for 11
cancer hospitals to report on
quality measures, as established by
the Secretary
Hospitals: Start date for 11
cancer hospitals to report on
quality measures, as established by
the Secretary
Reimbursement: Start date for state requirement to pay primary care physicians who provide Medicaid
patients certain services (evaluations, management, and immunizations) at a rate equal or greater to the
current Medicare rate
Reimbursement: Start date for state requirement to pay primary care physicians who provide Medicaid
patients certain services (evaluations, management, and immunizations) at a rate equal or greater to the
current Medicare rate States: Deadline for
HHS to provide regulations for states to allow health insurers to sell products
across state lines
States: Deadline for
HHS to provide regulations for states to allow health insurers to sell products
across state lines
Payment Methods: Deadline for the Secretary to establish a pilot program seeking alternative payment methods for Medicare based on quality and efficiency
of care
Payment Methods: Deadline for the Secretary to establish a pilot program seeking alternative payment methods for Medicare based on quality and efficiency
of care
Pharmaceuticals: Annual industry tax on brand-name pharmaceutical manufacturers increases to
$2.8 billion
Pharmaceuticals: Annual industry tax on brand-name pharmaceutical manufacturers increases to
$2.8 billion
‘14
Individual Mandate: Individuals are required to purchase qualified health insurance or pay a fine or a percentage of taxable household
income, whichever is greater (changes to fine and % in subsequent years)
Individual Mandate: Individuals are required to purchase qualified health insurance or pay a fine or a percentage of taxable household
income, whichever is greater (changes to fine and % in subsequent years)
Essential Benefits: As defined by law and the Secretary, all exchange plans must cover an
“essential health benefits package”
Essential Benefits: As defined by law and the Secretary, all exchange plans must cover an
“essential health benefits package”
Exchange: Exchange plans must offer at least one “silver” and “gold” plan to cover 70% and
80% of projected expenses for enrollees. Companies selling those plans may also offer a
“bronze (60%) and “platinum” plans (90%0. These plans must be sold at the some price in
or outside the exchange.
Exchange: Exchange plans must offer at least one “silver” and “gold” plan to cover 70% and
80% of projected expenses for enrollees. Companies selling those plans may also offer a
“bronze (60%) and “platinum” plans (90%0. These plans must be sold at the some price in
or outside the exchange.
Exchange: Exchange plans must consider all enrollees as part of a single risk pool
Exchange: Exchange plans must consider all enrollees as part of a single risk pool
Insurers: $8 billion industry tax levied on health insurers (increase in subsequent years)
Insurers: $8 billion industry tax levied on health insurers (increase in subsequent years)
Pharmaceuticals: Deadline for the Secretary to disseminate regulations to
standardize prescription drug information formats (3/23)
Pharmaceuticals: Deadline for the Secretary to disseminate regulations to
standardize prescription drug information formats (3/23)
Operating Rules: Deadline for the Secretary to adopt standardized operating rules for insurers
around health claims, enrollment/disenrollment, plan premium payments, and referral certification
and authorization transactions
Operating Rules: Deadline for the Secretary to adopt standardized operating rules for insurers
around health claims, enrollment/disenrollment, plan premium payments, and referral certification
and authorization transactions
Medicare Advantage: Deadline for private plans that participate in Medicare Advantage
to begin spending at least 85% of plan revenue on medical costs
Medicare Advantage: Deadline for private plans that participate in Medicare Advantage
to begin spending at least 85% of plan revenue on medical costs
Payment Reform
Health Information Technology
Delivery System Reform
Taxes/Fees
Cuts to Hospitals: Secretary must reduce the annual
inflation update to Medicare payments for outpatient
hospitals by 0.3%
Cuts to Hospitals: Secretary must reduce the annual
inflation update to Medicare payments for outpatient
hospitals by 0.3%
IPAB: Deadline for 15-member Independent Payment Advisory
Board to develop recommendations to reduce
payment spending, to be submitted to Congress and the
President (1/15)
IPAB: Deadline for 15-member Independent Payment Advisory
Board to develop recommendations to reduce
payment spending, to be submitted to Congress and the
President (1/15)
Expansion: States must expand eligibility to all individuals under
64 with family incomes at or below 133% FPL; newly eligibles
will be funded by the federal government through 2016
Expansion: States must expand eligibility to all individuals under
64 with family incomes at or below 133% FPL; newly eligibles
will be funded by the federal government through 2016
Exchanges: Deadlines for
states wishing to establish
partnership Exchange to
submit blueprints to HHS
Exchanges: Deadlines for
states wishing to establish
partnership Exchange to
submit blueprints to HHS
CMMI: Deadline for the Secretary to report to
Congress on the activities of CMMI
CMMI: Deadline for the Secretary to report to
Congress on the activities of CMMI
Exchanges: Deadline for states to declare
intention to establish a state-based exchange and submit blueprint
(12/14)
Exchanges: Deadline for states to declare
intention to establish a state-based exchange and submit blueprint
(12/14)
Artia Advisor 2-7-13
‘15 ‘16 ‘17 ‘18 ‘19
Exchange: Deadline for state exchanges to be self-sustaining and
not rely on federal subsidies
Exchange: Deadline for state exchanges to be self-sustaining and
not rely on federal subsidies
Cost-Sharing: Deadline for Medigap Part C and Part F plans to implement
cost-sharing standards requiring nominal cost-sharing to encourage the appropriate use of physician services
Cost-Sharing: Deadline for Medigap Part C and Part F plans to implement
cost-sharing standards requiring nominal cost-sharing to encourage the appropriate use of physician services
Spending: Start date for the Secretary to begin implementing
cuts in Medicare spending, as
recommended by IPAB, unless Congress enacts legislation to
block implementation
Spending: Start date for the Secretary to begin implementing
cuts in Medicare spending, as
recommended by IPAB, unless Congress enacts legislation to
block implementation
Pharmaceuticals: Annual industry tax on
brand-name pharmaceutical manufacturers
increases to $3 billion
Pharmaceuticals: Annual industry tax on
brand-name pharmaceutical manufacturers
increases to $3 billion
Employers: Start date for states to allow employers with 101+ employees to
purchase insurance through the exchange
Employers: Start date for states to allow employers with 101+ employees to
purchase insurance through the exchange
Pharmaceuticals: Annual industry tax on
brand-name pharmaceutical manufacturers
increases to $4 billion
Pharmaceuticals: Annual industry tax on
brand-name pharmaceutical manufacturers
increases to $4 billion
Cuts to Hospitals: Start date for the Secretary to
reduce the annual inflation update to
Medicare payments for outpatient hospital
services by 0.75% for 2017-2019
Cuts to Hospitals: Start date for the Secretary to
reduce the annual inflation update to
Medicare payments for outpatient hospital
services by 0.75% for 2017-2019
Eligibility: Start date for states to begin
paying a percentage of the cost of Medicaid coverage for newly
eligibles; the federal taxpayer will pay the remainder of the cost
(percentage changes in subsequent years)
Eligibility: Start date for states to begin
paying a percentage of the cost of Medicaid coverage for newly
eligibles; the federal taxpayer will pay the remainder of the cost
(percentage changes in subsequent years)
Pharmaceuticals: Annual industry tax
on brand-name pharmaceutical manufacturers
reduced to $2.8 billion (2019 and
beyond)
Pharmaceuticals: Annual industry tax
on brand-name pharmaceutical manufacturers
reduced to $2.8 billion (2019 and
beyond)
Insurers: For 2019 and subsequent
years, industry tax will be indexed to
the rate of premium growth of the prior
year
Insurers: For 2019 and subsequent
years, industry tax will be indexed to
the rate of premium growth of the prior
year
Payment Reform
Health Information Technology
Delivery System Reform
Taxes/Fees
Pharmaceuticals: Annual industry tax on
brand-name pharmaceutical manufacturers
increases to $4.1 billion
Pharmaceuticals: Annual industry tax on
brand-name pharmaceutical manufacturers
increases to $4.1 billion
Artia Advisor 2-7-13