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Becker’s Hospital Review Chicago, May 2014 Phil Dyer, Senior Vice President Healthcare Management Services Kibble & Prentice/USI The ACA and Exchanges:

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Presentation on theme: "Becker’s Hospital Review Chicago, May 2014 Phil Dyer, Senior Vice President Healthcare Management Services Kibble & Prentice/USI The ACA and Exchanges:"— Presentation transcript:

1 Becker’s Hospital Review Chicago, May 2014 Phil Dyer, Senior Vice President Healthcare Management Services Kibble & Prentice/USI The ACA and Exchanges: A Catalyst for Change and Emerging Liability Issues

2 The U.S. Healthcare Industry National Health Expenditures (Billions USD) National Health Expenditure as Share of GDP (Percent) SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group In 2012: $2.8 Trillion dollars $8,937 per person By 2020: $13,709 per person (projected) In 2012: $2.8 Trillion dollars $8,937 per person By 2020: $13,709 per person (projected) 2 Currently under enormous financial strain and demographic pressure, healthcare will have to reinvent itself over the next few decades.


4 ARRA – HITECH The first step to major changes American Recovery and Reinvestment Act (ARRA) including the Health Information Technology for Economic and Clinical Health Act (HITECH) Signed into Law February 17, 2009

5 Patient Protection and Affordable Care Act (PPACA) Signed into law March 23, 2010

6 Unprecedented Change: Drivers of Fundamental Disruption in Healthcare Delivery Systems and Payment Methodologies Fundamental Disruption MedicareMedicaid Federal Rules on Health Insurance Health Insurance Exchanges

7 The Pace of Change Cultural Transformation of Institutions – 30 years Reimbursement Reform – 10 years Network Changes/ Budget Impacts (Federal/State) – 1 year, recurring annually

8 The current ‘calm’ in healthcare professional liability An unprecedented period of ‘stability’ in the low frequency of claims and a steady, predictable severity trend, coupled with record levels of financial capacity.

9 Percentages of Practices Owned by… Source; Medical Group Management Association

10 ACO’s New or Old? Integrated Delivery System PHO (Physician Hospital Organization) or more? No standardized model in the private sector for care coordination (Merritt Hawkins) :By 2013, only 30% of physicians will be independent

11 Now add; EXCHANGES  Additional 25-27 million people in the system  Some states have their own, others default to the Feds  Increased pricing of healthcare in individual and small group markets (bigger increases for younger enrollees –Community Rating)  Enrollees with ‘skin in the game’ – greater point of service cost sharing  No provider pricing transparency (missed expectations) – Narrow Networks  Lack of ‘Health Literacy’ (of the H/C system, of Insurance) – languages and cultural barriers

12 Source: Deloitte

13 The Current Marketplace


15 The “Metallics” Four Levels of Benefits 60/40 70/30 80/20 90/10 Bronze Silver Gold Platinum

16 Household Size 100% 133%150%200% 300%400% 1$11,170$14,856$16,755$22,340$33,510$44,680 215,130 20,12322,695 30,26045,39060,520 319,090 25,39028,635 38,18057,27076,360 423,050 30,65734,575 46,10069,15092,200 527,010 35,92340,515 54,02081,030108,040 630,970 41,19046,455 61,94092,910123,880 734,930 46,45752,395 69,860104,790139,720 838,890 51,72458,335 77,780116,670155,560 For each additional person, add $3,960 $5,267$5,940 $7,920$11,880$15,840 Subsidies in the Exchanges under the ACA




20 “No One Ever Washes A Rental Car”


22 Pressures on Providers Providers  Legal & Business Complexity  Emphasis on Margins, Costs & Resource Allocations  Uninsured Patients  Reimburse- ments and Overall Medical Spending Moving away from patient care as top priority Dramatic increases Demand grows unabated Growing population adding to financial and system stress

23 Reform ‘Stressors’ Drinking out of a ‘Firehose’ Not enough doctors, expanded mid-levels Undiminished demand for specialists and no one ‘on call’ Resource constraints Absence of tort reform

24 HC Reform EHRs Compliance (HIPAA-HITECH), RAC/ZPIC, MetaData Value Based Purchasing MCO Liabilities Evidence- Based Medicine Scope of Practice Anti-TrustStark Patients as Consumers? Missed Expectations? ACO: CMS & Private Providers become Payors? Payors become Providers?

25 25 Driving the Value Proposition Center of Excellence/ Specialty Institutes Managed Care Shared Risk Specialty Co-management Medical Home Clinical Integration Bundled Payments Accountable Care Integrated Delivery Network/ Health Plan Impact on Value Integration Limited Full Low High Providers are focused on moving from volume to value, which means more integration along the care continuum.

26 Exposures associated with ACO and Integrated Delivery Systems activities and services may outweigh traditional insurance coverage Exposures & Mechanisms Insurance Accountability for quality of care Increased involvement in coordination of care Increased control over ACO participants Medical treatment Coordination of care/ case management Medical necessity or other coverage determinations Utilization review (if applicable) Provider selection/ contracting/ termination/payment Claims processing/ payment (if applicable) Billing Employment practices Compliance with state and federal laws, including HIPAA, HITECH and PPACA

27 P/P/P PatientProviderPayment

28 ROLE PLAY ? Providers Becoming Payors Payors Becoming Providers

29 It’s Happening! Some hospital networks also become insurers By Roni Caryn Rabin Kaiser Health News, August 25, 2012

30 Hospitals Plot the End of Insurance Companies

31 “Follow the Money!” Aetna acquires Coventry Health$5.6B Wellpoint buys Amerigroup$5.0B Cigna buys Wellspring$3.8B United buys Monarch Health$5.6B Highmark acquires West Penn Allegheny$470M

32 Increased Liability Issues New Standards of Care More Causes of Action Direct Liability ACO Vicarious Liabilities More Stringent Informed Consent Integration Challenges

33 “Corporatization” of Medicine Will increased “institutionalizing” of medicine make patients feel more disconnected from their providers, and more willing to bring action against “nameless, faceless” corporations? Professional Liability Historic Claim Etiology AngerResentmentCommunication Missed Expectations

34 Exchange Value – Specific Functions 34 I. Issuers of QHPs II. Health Care Market III. Public and State Marketing & Outreach Eligibility Determination for tax credits Enrollment Premium Aggregation Easy plan comparison and purchase of health insurance Reporting of cost/quality metrics Awareness of need for health insurance Appeals of eligibility determinations and individual responsibility Information on health insurance carriers Customer Service Enrollment reconciliation with HHS New Membership opportunity – previously uninsured Supporting use of innovative product designs and payment methodologies Expanded access to health insurance coverage Reduced charity care Trustworthy source of health care reform information Broad-based Public Information Other impacts of ACA

35 The Shifting Sands of Reimbursements






41 Summary Fundamental Disruption Pace of Change Varies Exchanges as Catalysts for Change More Patients/Different Patients/Provider Shortage Reimbursement Pressures

42 Questions?

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