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Health System Reform in Virginia Small Business Summit George Mason University September 20, 2013.

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Presentation on theme: "Health System Reform in Virginia Small Business Summit George Mason University September 20, 2013."— Presentation transcript:

1 Health System Reform in Virginia Small Business Summit George Mason University September 20, 2013

2 Source: Institute of Medicine: The Healthcare Imperative: lowering costs and improving outcomes 2

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5 Family Premium / Median Income 5 Author’s calculations, treating average employer contribution as income

6 Per Capita Total Current Health Care Expenditures, U.S. and Selected Countries, 2010 ^ 2009 data Notes: Amounts in U.S.$ Purchasing Power Parity, see; includes only countries over $2,500. OECD defines Total Current Expenditures on Health as the sum of expenditures on personal health care, preventive and public health services, and health administration and health insurance; it excludes Source: Organisation for Economic Co-operation and Development. “OECD Health Data: Health Expenditures and Financing”, OECD Health Statistics Data from internet subscription database., data accessed on 03/04/13. 6

7 70 percent of the uninsured in Virginia live in families with at least one full-time or part-time worker. Only 37 percent of small businesses (under 50 employees) offer health insurance in Virginia. 7 Are Uninsured Virginians Working?

8 8 Where do Uninsured Virginians Live?

9 9 1.Requires Most U.S. Citizens and Legal Residents to Have Health Insurance; – Offers enhanced federal dollars for states that choose to Expand Medicaid (at state option) for all individuals with income under 133 percent of poverty. (plus a 5% income disregard). – Reconfigures insurance industry requiring a larger pool of insured individuals to cover the cost of eliminating insurance underwriting (i.e., pre-existing conditions) while standardizing insurance benefits and pricing. 2.Creates Health Benefits Exchanges for Individuals and Small Businesses to compare and purchase health insurance; – Offers subsidies to low-income individuals with income between 100 and 400 percent of poverty to purchase insurance 3.Encourages Innovation The Patient Protection and Affordable Care Act 3 Major Components

10 Current (2013) Provisions Small Business Tax Credits: Businesses with fewer than 25 full time-equivalent employees, an avg. annual wage of less than $50,000, and providing at least 50% of employee self-only premium cost may qualify for a 35% federal tax credit (increases to 50% in 2014) Required provision of Summary of Benefits and Coverage to employees W-2 Reporting of Aggregate Health Care Costs: Employers must report the aggregate annual cost of employer-provided coverage for each employee on the Form W-2. Limits on Flexible Spending Account Contributions: Beginning January 2013, the maximum amount an employee may elect to contribute to health care flexible spending arrangements (FSAs) for any year will be capped at $2500, subject to cost-of-living adjustments Additional Medicare Withholding on Wages : ACA increases the employee portion of the Medicare Part A Hospital Insurance (HI) withholdings by.9% (from 1.45% to 2.35%) on employees with incomes of over $200,000 for single filers and $250,000 for married joint filers. Employer Notification of the New Health Insurance Marketplace: No later than October 1, 2013, employers covered by the Fair Labor Standards Act must provide notification to their employees about the new Marketplace. 10 Impact of ACA on Small Business

11 Provisions beginning in 2014 Small Business Health Options Program (SHOP) and Individual Marketplaces 90-Day Maximum Waiting Period Workplace Wellness Programs Provisions beginning in 2015 Employer Shared Responsibility Provisions Health Insurance Coverage Reporting Requirements 11 Upcoming Provisions

12 How the Exchange Works 12

13 13 Five Core Exchange Functions Eligibility DMAS will conduct eligibility for Medicaid and CHIP clients that enter through Federal Exchange Accept applications from individuals and small businesses; conduct verifications of applicant information; determine eligibility for enrollment in a Qualified Health Plan and for insurance affordability programs; determine employer and employee eligibility for SHOP enrollment; connect Medicaid and CHIP-eligible applicants to Medicaid and CHIP; and conduct redeterminations and appeals. Enrollment Federal Responsibility (DMAS will continue enrollment into health plans for Medicaid and CHIP clients) Enrollment of consumers into qualified health plans; transactions with Qualified Health Plans and transmission of information necessary to initiate advance payments of the premium tax credit and cost-sharing reductions. Consumer Assistance Federal Responsibility Consumer support assistors; education and outreach; Navigator management; call center operations; website management; and written correspondence with consumers to support eligibility and enrollment. Plan Management Bureau of Insurance and VDH perform plan functions Plan selection approach (e.g., active purchaser or any willing plan); collection and analysis of plan rate and benefit package information; issuer and QHP certification, monitoring and oversight; ongoing issuer account management; issuer outreach and training; and data collection and analysis for quality. Financial Management Federal Responsibility Premium aggregation for SHOP (option to administer individual consumer premiums); user fees; financial integrity; support of risk adjustment, reinsurance, and risk corridor programs.

14 —Federal Government is responsible for architecture and marketing aspects of the FFM —Navigator Grants to be awarded by August followed by training and certification before open enrollment begins in October, 2013. —Virginia’s Bureau of Insurance in partnership with Department of Health are conducting plan management reviews and will make recommendations to the federal government for plans applying to participate in the Virginia FFM 14 Exchange in Virginia Federally Facilitated Marketplace (FFM)

15 —Subsidies will only be available to those purchasing coverage through the exchanges, which includes people who do not have access to alternative insurance (such as Medicaid and affordable employer coverage). —Government subsidies to be paid towards the health insurance premium will be provided to people who are purchasing coverage on their own and have family income between 100% and 400% of the federal poverty level. —The amount that these families buying subsidized coverage in an exchange will pay towards a health insurance premium will range from 2.0% of income at 100% of poverty to 9.5% of income at 400% of poverty, with amounts at specific income levels specified in a table in the law. —Subsidies are tied to a benchmark level of coverage based on actuarial value. And, when an exchange determines that a person is eligible for a tax credit based on expected income, and that person enrolls in coverage, subsidies will be paid directly to insurers to lower the cost of premiums. 15 Exchange Subsidies

16 Open Enrollment Initial Open Enrollment period is October 1, 2013 through March 31, 2014. Coverage will begin January 1, 2014. After the Open Enrollment period, individuals will not be able to obtain coverage until the next OE period unless there is a qualifying event. For the SHOP exchange, employers must have less than 50 FTEs and may qualify for the tax credit. The same OE period applies to the SHOP exchange. 16

17 ACA Implementation: Interaction of 2014 Provisions Premiums/Cost of Coverage Premium Subsidies Health Insurance Tax Age Rating Compression Combined with No Underwriting Essential Benefit Changes Modest Incentives to Purchase Coverage Cost-sharing Subsidies Transitional Reinsurance Competition? 17

18 Some plans are only participating in the Individual Exchange. (Aetna plans) Benefit plans will be similar inside and outside the Exchange since the ACA applies to both markets. Provider networks may be more extensive and more options outside the Exchange. Inside Exchange mainly limited to HMO platform products. Self Funded options available to smaller employers outside the Exchange. Allows employer more control over costs, benefit design, and wellness programs. (“Skin in the Game”) Inside vs. Outside the Exchange 18

19 19 Penalties for Employers Not Offering Affordable Coverage Under the Affordable Care Act Start Here At least 50 full- time equivalent employees? Penalties do not apply to small employers. If the employer has 25 or fewer employees and average wage up to $50K, it may be eligible for a health insurance tax credit. No Yes Does the to its workers? employer offer coverage No Did at least one employee receive a premium tax credit or cost sharing subsidy in an Exchange ? Yes The employer must pay a penalty for not offering coverage. The penalty is $2K annually times the number of full-time employees minus 30. The penalty is increased each year by the growth of the insurance premiums. Yes No Does the insurance pay for at least 60% of covered health care expenses for a typical population? Employees can choose to buy coverage in an Exchange and receive a premium tax credit. Do any employees have to pay more than 9.5% of family income for the employer coverage? Those employees can choose to buy coverage in an Exchange and receive a premium tax credit. Yes No Yes There is no penalty payment required of the employer. The employer must pay a penalty for not offering affordable coverage. No The penalty is $3K annually for each full- time employee receiving a tax credit, up to a maximum of $2K times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums.

20 Should Your Company Pay or Play? No Penalty as affordable coverage is offered Does the insurance pay more than 60% of covered health care expenses? AND Do all full-time employees pay less than 9.5% of income for coverage? Does the employer offer coverage to > 95% of all full-time employees? Do any full-time employees obtain subsidized coverage on an Exchange? *Penalties are calculated and assessed monthly ($2000 will be $166.67/mo, $3,000 is $250/mo.). The maximum penalty is the lesser the two penalties. Penalties are expected to increase each year by the growth in insurance premiums. NO No Penalty for small employers YES Do any full-time employees obtain subsidized coverage on an Exchange NO $3,000 PENALTY Unaffordable coverage YES Start Recheck Monthly PayPlay Does the employer have at least 50 full- time equivalent employees? Total Penalty* = $2,000 x (full-time EE count - 30) Total Penalty* = $3,000 x each full-time employee receiving subsidized Exchange coverage YES Full-time = 30 or more hrs/wk Full-time equivalents = full-time ee’s + (all part-time hrs / 120) 20 $2,000 PENALTY Not offering coverage

21 Everyone will have access to coverage whether their employer provides it or not. Employers must decide how to use the ACA for their business. – How many employees work for the company and are there plans for expansion? – Are employees better off getting coverage through the Exchange? – Will the rate changes allow the company to hire older, more experienced individuals that have been a strain on the insurance expense in the past? – What are competitors doing? Upsides or Downsides? 21

22 22 The Supreme Court’s decision leaves it to state policymakers to decide whether or not to expand Medicaid’s income eligibility levels to cover all individuals up to 138% of the poverty level What does Medicaid Expansion Include?

23 23 ? Federal Match for Expansion Population The big question…will it remain? * Per the PPACA, federal financial participation will continue at a 90% rate beyond 2022. Expansion must include individuals up to 133% (plus a 5% income disregard) of the Federal Poverty Level (FPL). Savings highlights: – Community Behavioral Health Services (shift from local and state funds to enhanced federal funds) – Inmate Inpatient Hospital Savings (shift from local and state funds to enhanced federal funds) – Indigent Care Savings ( shift from state funds to enhanced federal funds) Estimated Cost of Expansion in Virginia

24 Mandatory Provisions ($142m) Optional Expansion $280m Estimated Costs of the Affordable Care Act for Virginia: 2014-2022 These costs and savings are already reflected in the Governor’s Introduced Budget These costs and savings are identified in the Fiscal Impact Statement for the ACA Expansion Annual Impact of Mandatory Provisions Annual Impact of Optional Expansion (only) 24 SFY 14: ($36,673,715) SFY 14: ($52,050,282)

25 Annual Impact of Mandatory Provisions AND Optional Expansion 25

26 2012 Estimate Mandatory Provisions Woodwork Costs ($142m) Foster Care Alumni ACA Insurance Tax Changes in Medicaid Drug Rebate Program Increase in Title XXI FMAP Elimination of Public Coverage Programs (FAMIS MOMS, Family Planning 133%+) Optional Expansion Medicaid Expansion Costs $280m # people estimated to ever enroll as of Jan 2014247,923 Behavioral Health Savings Inmate Inpatient Hospital Savings Indigent Care Savings Other Savings Administrative Costs Total Estimated Cost of Mandatory Provisions AND Optional Expansion $137,485,859$137m Estimated Costs of the Affordable Care Act for Virginia: 2014-2022 These costs and savings are already reflected in the Governor’s Introduced Budget These costs and savings are identified in the Fiscal Impact Statement for the ACA Expansion 26

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28 —No consideration of expansion until significant reforms are underway within the Medicaid program. —2013 Legislative Session —concluded with budget language authorizing three phases of Medicaid Reform —created the Medicaid Innovation and Reform Commission 28 Virginia’s Legislative Approach to Medicaid Expansion

29 29 Improve Service Delivery: Improve Quality, Predict Costs, and Innovate when Needed Improve Administration: Streamline Administration and Minimize Waste, Fraud, and Abuse. Increase Beneficiary Engagement: Showcase Wellness and Cost Sharing Objectives of Medicaid Reform

30 Savings accrued during the first five years of the expansion should be protected and reinvested to improve the health delivery system. —Reinvestment and Savings Strategies Include: – The flexibility to invest in high quality, cost saving health care innovation models – Improved analytical and oversight capability at DMAS Requirement of timely and accurate encounter data from contracted Medicaid managed care plans Creation of Data and Analytics Unit at DMAS – Need to identify structure to protect savings and ensure reinvestment Reinvestment of Medicaid Funding 30

31 NOW: Significant Cost-Shifting Medicaid Reform and Innovation Reinvestment of Funding into Value- Driven System IMPACT: Breaking the Cost Curve on Health Care Delivery Medicaid Reform Should Drive Public and Commercial Innovation 31

32 All Medicaid Populations Including LTC in Coordinated System Continued Stakeholder Engagement (Phase III) Value Based Purchasing in Managed Care for Medical Services, Administrative Simplification and Flexibility and Innovation (Phase II) Ongoing Reforms (Phase I) Three Phases of Medicaid Reform 32

33 33 Phase I: Continue Current Reforms – Dual Eligible Demonstration MOU signed – next steps include Plan Selection, Rate Setting, and 3 way contracts signed between DMAS, Selected Plans, CMS – Enhanced Program Integrity – Foster Care – New Eligibility and Enrollment System – Veterans Benefit Program Enhancement – Behavioral Health Awarded BHSA – contract to soon be signed Three Phases of Medicaid Reform

34 34 Phase II: Improvements in Current Managed Care and Fee For Service programs – Commercial like benefit packages and service limits – Cost sharing and wellness – Coordinate Behavioral Health Services – Limited Provider Networks and Medical Homes – Quality Payment Incentives – Data Improvements – Standardization of Administrative Processes – Health Information Exchange – Agency Administration Simplification – Parameters to Test Pilots Three Phases of Medicaid Reform

35 Phase II (Process) New Medallion II (Managed Care) Contracts – Total reformat based on review of 13 state contracts – focus on life cycle – Technical manual – reporting, automation, encounter data, scoring – Quality incentive – Medallion Care System Partnership – focus on models – All Payer Claims Database (APCD) – Program Integrity collaborative incentives – Improved chronic care section – Maternity care – Foster care language – Wellness Three Phases of Medicaid Reform 35

36 Phase II (Process) Three Phases of Medicaid Reform Medicaid Managed Care “Breakfast Club” – Six Targeted Conversations – What You Get For The [Medicaid Managed Care] Dollar – Early Periodic Screening, Diagnosis, and Treatment (EPSDT) – Emergency Room Utilization – Personal Responsibility and Co-pays – Administrative Simplification – Innovation Models 36

37 37 Phase III: Coordinated Long Term Care – Move remaining populations and waiver recipients into cost effective and coordinated delivery models – Report due to 2014 General Assembly on design and implementation plans Three Phases of Medicaid Reform

38 MIRC Purpose: To review, recommend and approve innovation and reform proposals affecting the Virginia Medicaid and Family Access to Medical Insurance Security (FAMIS) programs, including eligibility and financing for proposals set out in Item 307 (Virginia Budget) in the Department of Medical Assistance Services. Specifically, the Commission shall review: (i)the development of reform proposals; (ii) progress in obtaining federal approval for reforms such as benefit design, service delivery, payment reform, and quality and cost containment outcomes; and (iii) implementation of reform measures. The Medicaid Innovation and Reform Commission 38

39 Chair of Senate Finance, or his designee & 4 members of Senate Finance Chair of House Committee on Appropriations, or his designee, & 4 members of House Appropriations —Walter A. Stosch —Janet D. Howell —Emmett W. Hanger, Jr. —John C. Watkins —L. Louise Lucas —R. Steven Landes —James P. Massie, III —John M. O'Bannon, II —Beverly J. Sherwood —Johnny S. Joannou MIRC Membership Ex Officio Members: Secretary of Health and Human Resources Secretary of Finance 39

40 – New policy criteria for Medicaid based on IRS (MAGI = Modified Adjustable Gross Income) – Move towards greater automation – VA Medicaid integrated with the Federal Data Hub for eligibility determination – Internal Revenue Service (IRS) – Social Security Administration (SSA) – Homeland Security – Coordination with the Health Benefits Exchange (Federally Facilitated Marketplace) – By law – applications must be accepted 10/1/13 and coverage begins 1/1/14 40 The Affordable Care Act Requires…

41 —CommonHelp Portal —Case Management System —Enterprise Data Management (EDM) —Business Rules Engine —Document Management System —Enterprise Service Bus (ESB) 41 eHHR Core Elements

42 Cost and Value Problems in the Healthcare Arena can’t be Solved without Significant Innovation ―Innovation opportunities within PPACA are lost in the uncertainties associated with the law. ―Virginia is already making progress in key innovation areas ―Virginia has created the Virginia Center for Health Innovation (501 (c)3) housed out of the Chamber of Commerce System Wide Innovation 42

43 Virginia Health Innovation Plan Improving Transparency and Availability of Data Improving Early Childhood Outcomes Payment and Delivery Reform: Improving Care Integration for Physical and Mental Health Educating and Engaging Consumers to Purchase Value Improving the Effectiveness, Efficiency, and Appropriate Mix of the Health Care Workforce Payment and Delivery Reform: Improving Chronic Disease Care Each priority has a dedicated workgroup assigned to explore pilot programs and to reach consensus on a recommended three- year implementation plan. Workgroups include members of the VHRI Advisory Council, the VCHI Board of Directors, as well as key thought leaders in each particular priority area. Virginia Center for Health Innovation Priorities 43

44 Virginia Health Innovation Plan VHIP concept presented June 6, 2013 at Virginia Chamber Health Care Conference

45 45 Health Reform Work Supported Through: $1 million federal planning Robert Wood Johnson Foundation, State Health Reform Assistance Network d df df df df df df d

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