1. Health Care Reform Where we’ve been Where we are Where we’re going Health Care Reform Where we’ve been Where we are Where we’re going

2. Medicare Part A Part DPart B Part C Inpatient Hospital/ SNF/HHA/Hospice Services Prescription Drug Coverage Medicare Advantage Physician/Non- Physician Practitioner/ Ancillary Suppliers/ Outpatient Hospital Services

4. The U.S. Spends More on Health Care Than Other Developed Countries

6. Costs of Doing Nothing % Median Family Income to Purchase Health Insurance 1987 2006 2016 7% 17% 34%

7. Uninsured Numbers Continue to Grow

8. Quality – Variations in Care

12. Federal Government P & L (2012) (in billions) Revenues$2,469 (16% of GDP) Expenses Defense / Homeland SecurityDefense / Homeland Security $ 868 Medicare / MedicaidMedicare / Medicaid $ 733 Social SecuritySocial Security $ 773 Other Mandatory and TARPOther Mandatory and TARP $ 746 Other DiscretionaryOther Discretionary $ 450 Net Interest Net Interest $ 225 $ 3795 (24% of GDP) Deficit($1,326) (8% of GDP)

16. Medicare Bankrupt 2024 Options- Reduce Benefits Increase Taxes Reduce Payments to Providers Reduce Utilization

17. QUALITY TRANSPARENCY ACCOUNTABILITY INTEGRATION

18. Who Decides What Quality Is? CMS 1972- Social Security Act 1972- Social Security Act Professional Standards Review Organizations (PSRO) 1982-Tax Equity and Fiscal Responsibility Act (TEFRA) 1982-Tax Equity and Fiscal Responsibility Act (TEFRA) PSROs become PROs 1992- Health Care Quality Improvement Initiative 1992- Health Care Quality Improvement Initiative PROs become Quality Improvement Organizations (QIO) Focus on quality rather than cost. Each contract cycle- Revised Scope of Work or Statement of Work (SOW) Each contract cycle- Revised Scope of Work or Statement of Work (SOW) 1999- Aligned data elements and inclusion/exclusion criteria with JCAHO 1999- Aligned data elements and inclusion/exclusion criteria with JCAHO 2003- voluntary reporting of process measures 2003- voluntary reporting of process measures 2004- reporting tied to hospital payment 2004- reporting tied to hospital payment 2005-Hospital Compare rolled out 2005-Hospital Compare rolled out 2007-public reporting of risk-adjusted hospital mortality rates 2007-public reporting of risk-adjusted hospital mortality rates 2009-American Reinvestment and Recovery Act 2009-American Reinvestment and Recovery Act 2010-Patient Protection and Affordable Care Act 2010-Patient Protection and Affordable Care Act

19. What is VBP? VBP = Value Based Purchasing Part of the Patient Protection and Affordable Care Act (PPACA, 2010) Final rule April 29, 2011 Final rule April 29, 2011 Designed to reward hospitals with higher quality care Affects only CMS Medicare payments

20. What is VBP? (cont.) Money comes from trimming CMS base operating DRG payments (IPPS add-on payments excluded) to hospitals FY 2013: 1% FY 2013: 1% FY 2014: 1.25% FY 2014: 1.25% FY 2015: 1.5% FY 2015: 1.5% FY 2016: 1.75% FY 2016: 1.75% FY 2017: 2% FY 2017: 2% Money then given back to some hospitals based on performance

21. The Joint Commission IPPEOPPEFPPE

22. American Recovery and Reinvestment Act (ARRA) Summary of Legislation Health Care Provisions – Care Delivery Organizations: Federal Medicaid Funding $ 90 Billion Health Insurance – Extension of COBRA for early retirees$ 25 Billion NIH Scientific Research Grants$ 10 Billion HHS Wellness and Prevention Initiatives$ 10 Billion Health Information Technology for Economic and Clinical Health Act (HITECH)$ 23 Billion

23. Total Potential Physician Payment Impact PQRI1%0.5% (1.5%)(2%) MOC0.5% 0% E-Prescribing (ii) 1%(1%) – 1%(1.5%) – 0.5%(2%) Meaningful Use (iii) 0% (1%)(2%)(3%) Value-Based ModifierN/A TBD Maximum Risk/Reward2.5%(1%) – 2%(1.5%) – 1.5%(2%) – 1%(4.5%)(6%)(7%) Program 2011 2012 2013 2014 2015 (i) 2016 (i) 2017 (i)

24. Hospital Payments at Risk

26. “It’s not the strongest species that survives nor the most intelligent but the most adaptable.” Darwin