1. Fasten Your Seat Belts: Health Reform in Turbulent Times Bob Doherty SVP, Governmental Affairs and Public Policy, ACP Nevada Chapter, ACP January 9, 2013

2. Health reform: getting from here to there  Here: tens of millions uninsured, uneven quality, rising costs  There: near universal coverage--with better quality at a price we can afford?  How smooth or rough will the journey be?

3. How we would like it to be...

4. What we expect it will be...

5. What we fear it will be...

6. Turbulence  Political environment/election  Affordable Care Act: Federal rules State discretion  Entitlements  Fiscal cliff/sequestration  Payment/delivery system reform

7. Because of the election 1. No plausible scenario where the ACA will be repealed 2. State engagement/ resistance may determine the law’s effectiveness in expanding coverage

8. 2012 elections: views on health care  Only 25% of voters favored “full” ACA repeal  Slightly more (47%) favored keeping or expanding it over repealing all or some of the law (45%)  It remains deeply unpopular in many GOP- controlled states http://www.dailykos.com/story/2012/11/06/1157266/-EXIT-POLLS-majority-do- not-repeal-Obamacare http://www.dailykos.com/story/2012/11/06/1157266/-EXIT-POLLS-majority-do- not-repeal-Obamacare http://www.kaiserhealthnews.org/Daily-Reports/2012/November/07/exit-polls-and- the-health-law.aspx

9. The role of the states  Medicaid: Accept/reject federal dollars  Exchanges: Set up own exchange, partner with federal government, or turn it over to the feds  Benefits: Establish “benchmark” for plans to be offered through state-exchanges or let feds determine  Enrollment: help/encourage people to get coverage thru Medicaid or exchanges, or do nothing to help

10. Expanding Medicaid is a good $ deal for the states

11. Sarah Kliff, Wonkblog, Washington Post, July 3, 2012 http://www.washingtonpost.com/blogs/ezra- klein/wp/2012/07/03/why-hospitals-heart-the- medicaid-expansion-in-one-chart

12. More on Medicaid=Fewer Deaths, Better Health Medicaid expansions were associated with a significant reduction in adjusted all-cause mortality (by 19.6 deaths per 100,000 adults, for a relative reduction of 6.1 %). Mortality reductions were greatest among older adults, nonwhites, and residents of poorer counties. Sommers and Baicker, Mortality and Access to Care after State Medicaid Expansions, NEJM, July 25, 2012, http://www.nejm.org/doi/full/10.1056/NEJMsa1202099http://www.nejm.org/doi/full/10.1056/NEJMsa1202099

13. ACP’s Medicaid Patient Advocacy Campaign  Cover letter from College leadership, seeking 100% U.S. chapter participation  Concise action plan with one-click links to all supporting materials, presentation slides, instructions and timetable  Customized state-specific reports (available now!) and press releases to be issued by all chapters http://www.acponline.org/cln/medicaid_campaign.htm  Template and web interface to send the report to each state’s governor and legislators

14. States and health exchanges  State-run exchanges must meet federal standards by early 2013, ready to enroll by 10/1/2013 Deadline for submitting plan extended to 12/14  Some are ready to go, many are behind, some are opting out and letting feds run them

16. Enrollment “States are rushing to decide whether to build their own health exchanges and the administration is readying final regulations, but a growing body of research suggests that most low-income Americans who will become eligible for subsidized insurance have no idea what is coming. Supporters of the health-care law say the plan will not be a success without a massive public relations campaign to build awareness.” Many Americans Unaware of Health-care Law Changes, Sarah Kliff, Washington Post, November 21, 2012, http://www.washingtonpost.com/business/economy/many-americans-unaware-of-health- care-law-changes/2012/11/20/ee02b0bc-3272-11e2-9cfa-e41bac906cc9_story.html?hpid=z2http://www.washingtonpost.com/business/economy/many-americans-unaware-of-health- care-law-changes/2012/11/20/ee02b0bc-3272-11e2-9cfa-e41bac906cc9_story.html?hpid=z2

17. New proposed rules  Defines benefits that all new individual and small groups must provide  States must select “benchmark” for plans offered through exchanges About half the states have already selected the plan they will use as a model, meaning that insurers there can now start designing plans for sale States that do not choose a “benchmark” plan will default to one selected by the federal government

18. New proposed rules  Instructions to insurers how to determine whether their plans can be sold as “bronze,” “silver,” “gold,” or “platinum” in state exchanges The law spelled out ratios for how much money individuals could be asked to spend out of pocket in each of those categories—bronze plans will have lower premiums and the highest deductibles and co-payments, while platinum plans will cover and cost more. The regulation includes a detailed calculator.

19. New proposed rules  Describes how much prices can vary according to patients’ ages and health histories Hews closely to the requirements of the law. According to the rule, insurers can charge the oldest patients three times as much as the youngest, and no more.  More detailed analysis on ACP state advocacy web page http://www.acponline.org/advocacy/state_pol icy/hottopics/side_by_side.pdf http://www.acponline.org/advocacy/state_pol icy/hottopics/side_by_side.pdf

20. 2012 elections: entitlement reform  Having campaigned against Medicare premium support and Medicaid block grants, no prospect that President Obama will agree to them, or that the Senate majority would enact them  But something has to be done: Grand Bargain tied to tax reform/revenue deal? Incremental adjustments?

22. $60,000 $170,000 $60,000 $357,000 $119,000 $357,000 $0 $50,000 $100,000 $150,000 $200,000 $300,000 $250,000 $350,000 A Beneficiary Lifetime Perspective: Payroll Contributions < Expected Benefits $400,000 AverageAverage Wages Medicare Expected Benefits, Lifetime Medicare Payroll Taxes, Lifetime $188,000 Female Male Source: Steuerle CE and Rennane S. "Social Security and Medicare Taxes and Benefits Over a Lifetime.” Washington, DC: The Urban Institute. June 2011. Single, Average Wage One-Earner Couple, One-Earner Wage Couple, Average Wage Two-Earner Couple, Average Wage

23. Hospital & Physician Sectors Accounted for More than 70 Percent of Private Premium Growth Over Past Five Years $48.3 $108.5 $20 $0 $40 $120 $100 $80 $60 Hospital CarePhysician & Clinical Services Prescription Drugs & DME Dental & Other Professional Services Home Health & Other LTC Facilities & Services Net Cost of Health Insurance Total Change in Premiums 45% of net change 26% of net change $28.0 14% of net change $15.4 9% of net change $9.5 4% of net change $4.0 2006-2010 % Change 20.3%13.2%14.5%14.3%20.5%3.1%14.7% 3% of net change $3.1 Source: NIHCM Foundation analysis of data from the National Health Expenditure Accounts. 97 percent of change in premiums was due to growth in insurers’ spending for health care services 2006 to 2010 Change ($ Billions

27. 2011 Debt Limit Crisis: Timeline of Events Source: National Journal Research, 2012. 27 Debt Limit Reached U.S. hits $14.3T debt limit; U.S. Treasury Secretary Timothy Geithner asks Congress to raise debt ceiling Deal Reached Obama and House Speaker John Boehner agree to legislation that will cut the deficit and prevent default U.S. Credit Downgraded Standard & Poor’s downgrades the U.S. credit rating from AAA to AA+ for the first time in history. Download the U.S. Credit Rating Primer for more information.U.S. Credit Rating Primer Cuts Demanded by GOP Leadership Republican leadership calls for balanced budget amendment and measures to cut and cap spending; certain GOP members of Congress argue that U.S. should default on debt obligations Budget Control Act Passed Obama signs the Budget Control Act into law, increasing the debt- ceiling by $400B to $16.4T

28. 2011 Debt Limit Crisis Led to Sequestration Threat Source: Budget Control Act of 2011, “Here’s What’s in the Fiscal-Cliff Deal,” Catherine Hollander, National Journal, January 1, 2013. 28 Raised U.S. debt ceiling to prevent default Established 12-member Joint Select Committee (“Super Committee”) charged with reducing deficit by $1.2T to $1.5T over 10-year period Mandated long-term debt reduction through sequestration if Super Committee failed to reach goals Because Super Committee failed to reduce the deficit, U.S. faces threat of sequestration. Congress postponed the sequester for two months in legislation passed to address the fiscal cliff. Absent further negotiation, automatic spending cuts will take effect in March. Budget Control Act of 2011 Updated 1/3/13

29. Sources: “The ‘fiscal cliff’: How the House voted,” Aaron Blake, Washington Post, Jan. 2, 2013; National Journal Research. Senate Passed Fiscal Cliff Deal with Bipartisan Support Senate Votes For and Against American Taxpayer Relief Act of 2012 by Party Quick Takes 90% of voting Dems, 88% of voting Republicans, and all Independents voted in favor of the American Taxpayer Relief Act of 2012 Tea party had far less splintering effect among Senate than House Republicans, with only three tea party Senators voting against the bill: Marco Rubio (R-FL), Mike Lee (R-UT), and Rand Paul (R-KY) Totals Yes: 89 No: 8 N/A: 3 51 votes needed for passage GOP Yes Dem No N/A Dem Yes GOP No Independent Yes 4740 2 3 5 3

30. Sources: “The ‘fiscal cliff’: How the House voted,” Aaron Blake, Washington Post, Jan. 2, 2013; National Journal Research. Most House Republicans Voted Against Fiscal Cliff Deal House Votes For and Against American Taxpayer Relief Act of 2012 by Party Quick Takes 64% of voting House Republicans voted against the American Taxpayer Relief Act of 2012 Divisions in party leadership on important votes are rare, but House Majority Leader Eric Cantor (R-VA) and House Majority Whip Kevin McCarthy (R-CA) voted against the bill, splitting from House Speaker John Boehner (R-OH) and signifying a possible ideological split within the Republican party House Tea Party Caucus members accounted for 50 of the GOP’s 151 votes against the fiscal cliff deal (33%) Totals Yes: 257 No: 167 N/A: 11 217 votes needed for passage GOP Yes Dem No N/A Dem Yes GOP No 172 85 11 151 16

31. Policy AreaNegotiable LegislationFiscal Cliff Deal Taxes Income Taxes Raises tax rates on individuals/households earning $400k/$450k or more Makes Bush-era tax cuts permanent for all other taxpayers Capital Gains and Dividends Taxes Raises tax rates from 15% to 20% for individuals/households earning $400k/$450k or more Keeps tax rates at 15% for all other taxpayers Estate Taxes Raises estate tax from 35% to 40%, with first $5M in assets exempted Personal Exemptions Phases out personal exemptions for individuals making over $250k and limits itemized deductions for individuals/households earning $250k/$300k Alternative Minimum Tax (AMT) Permanently indexes AMT to inflation Tax Breaks Extends American Opportunity Tax Credit, Child Tax Credit, and Earned Income Tax Credit for five years Preserves “extenders,” business tax breaks for research and development Payroll Tax Holiday Allows temporary 2% payroll tax cut to expire Spending Sequester Delays automatic spending cuts for two months Unemployment Benefits Extends unemployment insurance for one year Other Pay Cuts for Physicians (a.k.a. “Doc Fix”) Puts off scheduled cuts in Medicare payments to physicians for one year Farm Bill Extension Extends certain portions of the Farm Bill for 9 months Congressional Pay Freeze Freezes congressional pay for the remainder of 2013 Fiscal Cliff Deal At a Glance Sources: National Journal, Jan. 1, 2013, “Here’s What’s in the Fiscal-Cliff Deal,” Catherine Hollander, National Journal, Jan. 1, 2013; “House votes to extend federal pay freeze,” Tom Shoop, Government Executive, Jan. 1, 2013. Updated Jan. 2, 2013

32. Fiscal cliff deal: impact on physicians No 27% Medicare pay cut (through 2013) Does not advance permanent SGR reform Paid for by cuts in disproportionate share payments to hospitals, Medicare Advantage, ambulance services, other non- physician providers Reduces physician practice expense payments for advanced imaging

33. Fiscal cliff deal: impact on physicians  Does NOT cancel Medicaid primary care increases to offset cost of blocking SGR cut  Directs HHS to improve advanced clinical data registries to clarify data tracking, reporting and transparency and implement quality improvements for services paid under SGR  Sequestration, postponed only until March, could result in cuts in critically important health programs

34. Source: OMB Report Pursuant to the Sequestration Transparency Act of 2012. 11 Non-Defense Cuts Focus Heavily on Medicare, Medicaid Non-Defense Cuts: Health Care Estimated Department of Health and Human Services Cuts from Sequestration for FY2013 ($11,855M) ($2,529M) ($1,532M) ($605M) ($490M) ($275M) Centers for Medicare and Medicaid Services NIH Health Resources and Services Administration FDACDC Administration for Children and Families ($168M) Substance Abuse and Mental Health Services Administration Departmental Mgmt. Administration On Aging Office of the Inspector General Program Support Center ($319M) ($122M) ($5M) Total cuts: 54.6B

35. Source: OMB Report Pursuant to the Sequestration Transparency Act of 2012; “Hospitals’ Medicare Cuts Under Sequester: $5.8 billion – White House Report Breaks Down Looming Budget Sequestration.” The Advisory Board, Sept.17, 2012. 12 HHS Reductions Would Lead to Private Sector Strain Non-Defense: Health Care Sequestration’s Financial Impact on Public and Private Sector Health Stakeholders HHS Reductions Personnel reductions Reduced research on cancer and childhood diseases Reduction in services and nutrition assistance for women and children Reduced investment and grants dedicated to research projects Reduced funding for Affordable Care Act implementation Private Sector Impacts Hospitals Medical research institutions Nursing and residential care facilities Physicians and independent care contractors Outpatient care facilities Insurance carriers Pharmacies and health care equipment retailers Less government spending means reduced spend on health industry

36. Another Debt-Ceiling Crisis Looms Source: U.S. Treasury Department, “Here’s What’s in the Fiscal-Cliff Deal,” Catherine Hollander, National Journal, January 1, 2013. 36 Trajectory of Debt Relative to Debt Ceiling Current Debt Ceiling: $16.4T $16.1T $15.7T The U.S. hit the debt ceiling of $16.4T on December 31, 2012. The Treasury has begun to take “extraordinary measures” to keep the government running until February or mid-March. Current Debt Ceiling Reached in December $16.8 $16.0 $15.2 Updated 1/3/13 Debt in Trillions (May 2012 – Dec. 2012)..

37. 2012 Debt Limit Crisis Could Lead to Default Source: National Journal Research, 2012, “Analyst: Changes of U.S. Default Now 20%,” Damian Paletta, January 1, 2013, Wall Street Journal. 37 Debt Limit Reached U.S. hits $16.4T debt limit; U.S. Treasury Secretary takes “extraordinary measures” to avoid default Congress Passes American Taxpayer Relief Act Sequester delayed by two months; Congress postpones debt reduction deal and negotiations to raise the debt ceiling February 2013 Congress Negotiates Congress debates how to reduce the national debt and whether to raise the debt ceiling Updated 1/3/13 Possible Default on U.S. Debt Obligations Failure to reach a debt reduction deal or raise the debt ceiling could cause the U.S. to default on debt obligations, throwing financial markets into a tailspin March 2013

38. Potential risks to ACP priorities  Result in budget “offsets” contrary to ACP policy and/or damaging to some members: Repeal rule to increase Medicaid primary care payments GME/IME payments “Over-valued” procedures Lower non-primary care conversion factor Restrictions on in-office ancillary services Cuts in discretionary dollars (workforce, AHRQ), reductions in ACA’s coverage subsidies

39. ACP advocacy:  Opposes across-the-board sequestration  Identified ways to achieve hundreds of billions in savings in a responsible way (high value care, medical liability reform, payment/delivery system reforms, tax treatment of benefits)  Proposed plan to transition from SGR to better models aligned with value to patients

40. Future of SGR and FFS  Policymakers across the spectrum want to get rid of the SGR (but can’t agree on how to pay for it)  And move away from “volume” to “value”  But FFS will be a component of value-based payments, even as FFS itself will change

41. “New” approaches  ACOs  Episode-of-care bundles (new rule expected soon)  Risk-adjusted global capitation  PCMH and PCMH-N practices

42. What is ACP doing to reform payment/delivery systems? It’s not just about new payment models—ACP advocacy has resulted in big wins for internists on improving Medicare and Medicaid fee-for- service

43. New CMS rules: big wins for IM!  New CPT codes 99495-99496: Medicare will pay physicians for transitional care management services, the non-face-to-face time they and their clinical staff spend on patient cases. Until now, only the face-to-face reimbursed National pay of $164-$231, depending on whether a patient is seen within 7 or 14 days of discharge, prior to geographic adjustment Combined with other changes in the Medicare fee schedule, total 2013 gain for IM of 4-5% in total Medicare payments [FPs average gain higher only because mix of services different) These gains are on top of ACA’s 10% Medicare primary care bonus (Average of $8000 more each year for qualified internists, 2011-15)

44. New CMS rules: big wins for IM!  Medicaid pay parity rule, effective 2013-2014: increases payments for evaluation and management and vaccine services to no less than Medicare rates, paid fully by federal government CMS agreed with ACP that increases should apply to both primary care internists and IM subspecialists Applies to E&M codes 99201 through 99499 to the extent that those codes are covered by the approved Medicaid state plan or included in a managed care contract Also, applies to services not covered by Medicare: New and Established Patient Preventive Medicine; Counseling Risk Factor Reduction and Behavior Change Intervention; and Consultations

45. Medicare to Medicaid fee ratios, by state <.60 (8 states. 61 ‐.75 (14 states.76 ‐.85 (16 states and DC).86 ‐ 1.00 (8 states) >1.00(3 states) How Much Will Medicaid Physician Fees for Primary Care Rise in 2013? Evidence from a 2012 Survey of Medicaid Physician Fees, Kaiser Family Foundation, December 2012 ORG

46. ACP: “go to” resource for members to prepare for changes  Practical guides  Social media  Policy summaries  Advocate newsletter  Coming soon: timeline of pending changes (regulation, payment, MOC) and promotion of resources from ACP

52. Summary  2012 election: the ACA is here to stay, only a minority of voters favor full repeal, but electorate remains divided, and law remains deeply unpopular in some states  States are the new battleground: decisions on Medicaid and exchanges may determine how effective the ACA is in covering uninsured

53. Summary  Fiscal cliff averted—for now  Coming up: new battles on spending and revenue  Entitlement reform will (must) happen—but how and when? Cuts in GME, other ACP priorities?

54. Summary  Payment and delivery system reforms will accelerate, standing still is not an option  Even as new models are developed, FFS continues to be part of the equation

55. Summary  ACP advocacy: design new models that recognize value of internists’ services (PCMH) and improve FFS payments  ACP advocacy is paying off: big wins for internists in Medicare and Medicaid pay

56. The destination “A nationwide program is needed to assure access to health care for all Americans, and we recommend that developing such a program be adopted as a policy goal for the nation. The College believes that health insurance coverage for all persons is needed to minimize financial barriers and assure access to appropriate health care services.” Ginsburg, et al, American College of Physicians, Position Paper, Annals of Internal Medicine, May 1, 1990 www.annals.org/search?fulltext=ACP+universal+health+insurance&submit=yes&x=15&y=9 www.annals.org/search?fulltext=ACP+universal+health+insurance&submit=yes&x=15&y=9

57. 3 Dorn, Uninsured and Dying Because of It: Updating the Institute of Medicine Analysis on the Impact of Uninsurance on Mortality, Urban Institute, 2008 Why does it matter? Because being uninsured is a matter of life and death AgeU.S. populatio n (millions) Percent uninsured within age group Total deaths Uninsured excess deaths ). : 2000 2001 2002 2003 2004 2005 2006 Total: 21,000 23,00 YearNumber of deaths due to uninsurance 2000 20,000 2001 21,000 2002 23,000 2003 24,000 2004 24,000 2005 25,000 2006 27,000 Total165,000 Dorn, Uninsured and Dying Because of It: Updating the Institute of Medicine Analysis on the Impact of Uninsurance on Mortality, Urban Institute, 2008

58. Elaine Dickinson (flight attendant): There's no reason to become alarmed, and we hope you'll enjoy the rest of your flight. By the way, is there anyone on board who knows how to fly a plane?