View from Washington

AAHAM MarylandSeptember 15th, 2009

Update from theAmerican Hospital Association

OverviewOverview

• Recent regulatory action

• Health reform–political environment–Current Status–Future Timeline

Medicare Inpatient PPS Rule• Sets rates for FY 2010…starting

October 1, 2009

• Final rule issued July 31

• Key issues: – Behavioral offset– Capital IME

FY 2010

Market basket 2.1 %Coding - 1.9 %Outliers - 0.3 %508 - 0.2 %“Other” - 0.2 %

Net update + 1.6 %

Child Health CareChild Health Care

American Recovery and Reinvestment Act of 2009American Recovery and Reinvestment Act of 2009

Reform: Harder than it looks

Financial BailoutsFinancial Bailouts

“Something” likely to happen this year

Need to stayengaged

KEY ISSUES AT A GLANCE

Issue President House Direction Senate Finance Committee Direction

Coverage 95-97 percent of all Americans

95-97 percent of all Americans

95-97 percent of all Americans

Total hospital payment reductions

$224 - $254 billion in revised budget…agreed to $155 billion cap

$155 billion + $36 billion per year (public program) in WM/EL

$155 billion

Update factors $110 billion reduction $119 billion reduction $103 billion reduction

DSH $106 billion reduction $16 billion reduction $50 billion reduction

Public program in exchange using Medicare rates

Not specific WM/EL: included

EC: included with negotiated rates and state co-ops option

Co-op approach with negotiated rates

Readmissions Broad policy that penalizes hospitals ($8.4 billion)

Broad policy that penalizes hospitals ($19 billion)

Targeted policy according to AHA principles ($2 billion)

Delivery system reforms

Specific timetable for broad implementation

Pilot projects and demonstrations

Pilot projects and demonstrations

IMAC Support Dropped “Super MedPAC”

VBP $12.1 billion reduction Under consideration Budget neutral according to AHA principles

On the House side…Tri Committee Bill

• Achieves coverage expansion (97 percent)• Use of national exchange with

public program linked to Medicare rates– $36 billion per year in reduced hospital

revenue (Lewin)• Market-basket reductions of $119 billion

over ten years for all elements (MB-1.3)• Aggressive readmission policy ($16

billion over ten years)

America’s Affordable Health America’s Affordable Health Choices Act of 2009 (H.R. 3200)Choices Act of 2009 (H.R. 3200)

[Major Financing Provisions][Major Financing Provisions]

Financing provisions in H.R. 3200

• DSH– Medicare: $10.2 billion starting in 2017 linked to

expanded coverage…and readjustments– Medicaid: $6.4 billion starting in 2017 and HHS

Secretary to make recommendations to Congresson appropriate targeting

• No cuts in the indirect medicaleducation adjustment

• Revenue: surcharge on high-incomeindividuals

• Total savings: $155 billion pluspublic program impact

Three House committees report bills

• House Education and Labor Committee

• House Ways and Means Committee

• House Energy and Commerce Committee– Allows the HHS Secretary to negotiate public plan

payments to providers based on rates between “current aggregate Medicare rates” and “aggregate rates paid by private insurers”

– Also allows states to set up cooperatives– No Independent Medicare Advisory Council

America’s Affordable Health America’s Affordable Health Choices Act of 2009 (H.R. 3200)Choices Act of 2009 (H.R. 3200)

Next step in the House• House leadership and Rules

Committee to merge three bills

• Key hospital issues:– “Public” program design– Readmissions policy

• Challenge: striking balance betweenBlue Dogs and Progressive Caucus

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Reform: Harder than it looks

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“Any bill that does not provide,at a minimum, for a publicoption with reimbursementrates based on Medicare

rates—not negotiated rates—is unacceptable.”

AHA Take on House Bill• But, we have several concerns:

– An expansive, new government program that reimburses providers based on Medicare rates;

– An overly aggressive policy on readmissions that penalizes hospitals for readmissions that are not avoidable; and

– Accountable care organizations that do not permit hospitals to play a leadership role

• HELP Committee– Mark-up complete

• Finance Committee– Chairman’s mark unveiled in outline.– Legislation expected this week.– Mark up week of September 21.

• The Kennedy Factor

In the SenateIn the Senate

“It’s very clear that there are not enough votes in the United

States Senate for a public option.”

Sen. Kent Conrad(D-ND)

Congress Daily AMAugust 20, 2009

Senate Finance Committee

Gang of SixGang of Six

Max Baucus Chuck Grassley (D-MT) (R-IA)

Jeff Bingaman Kent Conrad Mike Enzi Olympia Snowe (D-NM) (D-ND) (R-WY) (R-ME)

• “Public Program is a “co-op” alternative.

• Insurance Market Reforms

• Medicaid Expansions to $133% of FPL

• Subsidies and Individual Mandate.

• Revenue package– Tax on “Cadillac”

plans– Super MedPAC– MA Competitive Bidding– $155 from hospital

Senate Finance Committee Outline

NEXT STEPS

“There are no compromises on many of the issues. However, if

you’re not at the table, you’re on the menu.”

Sen. Mike Enzi(R-WY)Politico

August 26, 2009

“…But yes, I do believe it’s possible to reach an agreement. …But if other members of Congress are hearing what I’m hearing, people are saying, “Slow down. Do it a little more carefully. Make sure you know what you’re doing. And maybe

even do it a little more incrementally.””

Sen. Charles Grassley(R-IA)

Congress Daily AMAugust 25, 2009

“I think we should disregard timetables…

I don’t want it to be a rush to judgment, at least on my part.”

Sen. Olympia Snowe (R-ME)

Bureau of National AffairsAugust 4, 2009

Plan B: Reconciliation?

On reconciliation…

“That’s not the best way, but that could be the only way.”

Former Sen. Tom Daschle

(D-SD)Congress Daily AM

August 21, 2009

“If the Republicans are not able to produce an agreement…we will have contingencies

in place…these plans will likely be considered only as a last resort, but make

no mistake about it: they remain on the table. Health care reform is just too

important to let this window pass by.”

Washington Times August 4, 2009

Reform: Harder than it looks

Paying For Paying For Health CareHealth Care

•Once they agree on substance, the “payfors” remain controversial.

•Taxes on Individuals ?•‘Cadillac’ Health Plans ?•Other Options ?

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Presidential Push

Speech to Joint Session of CongressSpeech to Joint Session of Congress

•New Details ??•Not much on substance.

•New Momentum•Congress is energized!

•Bi-partisanship??•Ted Kennedy Factor?•Joe Wilson (R-SC)?TIME WILL TELL

Going Forward• Bipartisanship• Balanced approach• Phase-ins and transitions

are very important• Reforms must enhance—not undermine—

the medical advancements and innovation that Americans value

• Hospitals need to be prepared for:– More transparency– More accountability– More integration– More risk

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View from Washington

AAHAM MarylandSeptember 15th, 2009

Update from theAmerican Hospital Association