1 Vermont Health Care Reform Update September 17, 2013 Paul Harrington, EVP Vermont Medical Society

Patient Protection and Affordable Care Act (ACA) H.R. 3590, 3/23/10 Individual Mandate – Requires all U.S. adult residents to obtain and maintain “ acceptable coverage” for themselves and their children beginning in 2014 (phased-in tax penalty for those without insurance) Insurance Market Reforms – Require all health insurers to offer basic plans that are guaranteed issue, with no health status underwriting, with no pre-existing condition exclusions and maximum rating bands of 3:1. Subsidies to purchase insurance available through exchanges to low-income individuals – Up to 400% of Federal Poverty Level ($44K individual, $60K couple & $92K family of four in 2012) Health Insurance Exchanges – Exchanges available in 2014 to give individuals the ability to choose from a variety of private plans and receive subsidies. State can set insurance company participation and set conditions for participation. 2

Federal Areas of Controversy ACA creates Independent Payment Advisory Board (IPAB) for health care using base-closing model. Starting in 2015, estimated saving = $23.4 billion over 10 yrs. Fails to reform Medicare Sustainable Growth Rate (SGR). Absent additional Congressional action, Medicare physician payments will be cut by approximately 24% in January of Failure to enact medical liability reform. Sequestration will decrease spending by $1.2 trillion over 10 years or $109 billion every year. Payments to Medicare providers were cut by 2% on 4/1/13. 3

Supreme Court Upholds ACA’s individual mandate on 6/27/12 “The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax.” (5 to 4 vote) Court rejected the argument that the law’s individual mandate was justified by Congress’s power to regulate interstate commerce (5 to 4 vote) Court agreed that Congress had exceeded its constitutional authority by coercing states into participating in the ACA Medicaid expansion by threatening them with the loss of existing federal payments (7 to 2 vote) 4

“Meaningful use of Certified EHR Technology” $44K Medicare/$64K Medicaid bonus, Penalties (1-5%) EHR meets established standards and includes: –patient demographics and clinical data –medical history and problem lists –clinical decision support –physician order entry –capture/query quality health care data Use e-prescribing; electronic exchange of patient information; integration with other systems; and, EHR reporting of clinical quality data Increased coding complexity due to need to be HIPAA 5010 compliant by Jan. 1, 2012 (enforcement June 1, 2012) and the change from ICD-9 to ICD-10 by Medicare on Oct. 1, ICD-9 has 15,000 codes while ICD-10 has 68,000 codes. Stage 2 of Meaningful Use starts in

2011 Health Care Reform Bill H Act 48 Green Mountain Care Board: 5 person established to oversee cost containment strategies Vermont Health Connect: Benefit Exchange created in Medicaid Dept. to help achieve universal insurance coverage, as required under the federal Patient Protection and Accountable Care Act (ACA). Green Mountain Care: Anticipates the evolution of the Health Benefit Exchange into Green Mountain Care: the state’s publicly financed single-payer health care system for all Vermonters beginning in

Act 171: 2012 Health Care Reform Bill Established Vermont Health Connect Exclusive Health Benefit Exchange Beginning on Jan. 1, 2014, the exchange will help provide qualified health benefit plans to eligible individuals and small businesses with 50 or fewer employees and employers with 100 employees or fewer in DHVA/Medicaid Dept will contract with BCBSVT and MVP. Federal premium subsidies will be available to individuals who enroll in exchange plans (at silver plan level) – provided that their income is above 133 % of FPL and no more than 400 % of FPL. Estimated enrollment in 2014 = 115,000 (626,000 total) Medicaid will cover individuals and families up to 133% FPL 7

Vermont Blueprint for Health Primary care practices become Patient Centered Medical Homes in accordance with NCQA standards Community Health Teams in each Hospital Service Area. PMPM from $1.29 to $2.39 payments to practices that involve all major insurers including Medicaid and Medicare Practices’ information systems connected with the Blueprint’s DocSite registry 8

VITL Hospital Interfaces for HIEN 9

10 Specialty Care = 65% (1,199) Anesthesiology = 5% (97) Emergency Medicine = 6% (108) Spec.Internal Medicine = 12% (217) Psychiatry = 9% (172) Radiology = 7% (129) Surgery = 9% (162) Other = 17% (314) Primary Care = 35% (634) Family Practice = 15% (279) General Internal Medicine = 10% (175) OB/GYN = 4% (75) Pediatric = 6% (105) Vermont’s Fragile Health Care System 14 Hospitals and Approx. 1,833 physicians Due to expanded insurance coverage, State estimates the current shortage of 25 primary care physicians will increase to 63 in 2015.

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Green Mountain Care: Vermont Single-Payer Occurs after Affordable Care Act waiver (Jan. 1, 2017 under current law) and other requirements are met – Section 1332 provides waiver for state innovation allowing states to opt-out of specific provisions of ACA – Collect all federal funding for exchange ($267 million). – Coordination with Vermont’s Global Commitment Medicaid section 1115 waiver. All Vermonters covered by virtue of residency Minimum benefits set by Green Mountain Care Board Overall health care budget set by GMC board subject to legislative appropriations 12

The Purpose of Green Mountain Care 33 V.S.A The purpose of Green Mountain Care is to provide, as a public good, comprehensive, affordable, high quality, publicly financed health care coverage for all Vermont residents in a seamless and equitable manner regardless of income, assets, health status, or availability of other health coverage. Green Mountain Care shall contain costs by: (1) providing incentives to residents to avoid preventable health conditions, promote health, and avoid unnecessary emergency room visits; (2) establishing innovative payment mechanisms to health care professionals, such as global payments; (3) encouraging the management of health services through the Blueprint for Health; and (4) reducing unnecessary administrative expenditures. 13

Financing Green Mountain Care Debate to take place during 2015 legislative session Section 9 of Act 48 requires that the administration bring to the legislature 2 financing plans One plan shall recommend the amounts and necessary mechanisms to finance any initiatives which in order to provide coverage to all Vermonters in the absence of a waiver from ACA Section 1332 The second plan shall recommend the amounts and necessary mechanisms to finance Green Mountain Care and any systems improvements needed to achieve a public-private universal health care system. Financing must maximize federal funds and spread costs fairly Many issues to be resolved, including What will the overall costs/savings be? How much federal funding will Vermont receive? How does the state deal with border issues? How are public and private coverage integrated? How do does Vermont incorporate ERISA plans? 14

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State of Vermont Health Care Financing Plan Beginning Calendar Year 2017 Analysis, Jan. 24, 2013 Prepared by: University of Mass. Medical School Center for Health Law and Economics and Wakely Consulting Group, Inc. Total GMC Base Costs = $3,498 million (636,244 est. pop.) – 306,584 GMC Primary (not eligible for Medicaid-match) $1, ,922 GMC Primary - Medicaid-Match Eligible $1,230 – Total GMC Primary = 437,506 = 68.8% of population – GMC Secondary – Medicaid-Match Eligible$645 – 128,739 seniors GMC Secondary - Medicare Primary $83 – GMC Secondary – ESI or Other Primary $21 – 69,998 Vermonters not included in GMC 16

GMC Savings in 2017 = $35 million (1.0%) Provider reimbursement $155 million lower $1.61 billion of GMC costs needs to be raised by new financing plan. – Top 5 State Revenue Streams = $1.28 Billion (Personal Income = $624.6, Sales &Use =$349.2, Meals &Rooms = $132.2, Corporate Income = $94.1, Purchase and Use = $83.7). Key Assumptions: – GMC as primary pays health care providers 105 percent of Medicare rates. – The GMC plan has an actuarial value of 87 percent; that is, GMC covers 87 percent of the average cost of essential health benefits for a standard population. Financing Plan to be presented on 1/15/15 to Legislature 17

Partners for Health Care Reform (PHCR) PHCR is a group made up of health care providers, employers, and a health plan provider interested in providing essential information based on factual data and research-based analyses to shape the smart and effective reform of Vermont’s health care system. Group Members: – Fletcher Allen Health Care – Vermont Chamber of Commerce – Vermont Assembly of Home Health and Hospice Agencies, Inc. – Blue Cross Blue Shield of Vermont – Vermont Association of Hospitals and Health System – Vermont Medical Society – Vermont Business Roundtable Contacted with Avalere for an independent Evaluation of Vermont Health Care Reform Financing Plan. Report is due in fall. 18

Vermont’s State Health Care Innovation Plan (SIM grant request for $45 million, 4/13-12/16) VT payers (Medicaid and Commercial) will test three existing Medicare models: the Shared Savings Accountable Care Organization, Bundled Payments and Pay-for-Performance. The three models have four aims: 1. Increase both organizational coordination and financial alignment between advanced medical home primary care practices and specialty care; 2. Implement and evaluate the impact of value-based payment methodologies; 3. Coordinate a financing and delivery model for 22,000 Vermonters dually- eligible for Medicare and Medicaid; and 4. Accelerate development of a Learning Health System infrastructure 19

VT Shared Savings ACO Models Provider-based Delivery System Reform For 3 Years with no “downside risk” 50% of saving retained by CMS with 50% to ACO Reporting on 33 quality measures Accountable Care Coalition of the Green Mountains: An IPA- centric ACO consisting of 100 physicians statewide received designation as a CMS SSP-ACO beginning July 1, OneCare: A Hospital-centric ACO: Fletcher Allen and Dartmouth- Hitchcock, 13 of Vermont's Community Hospitals,3 FQHCs and a number of independent physicians have collaborated to become an ACO under the CMS SSP beginning Jan. 1, FQHCs: Six of the State’s eight Federally Qualified Health Centers (FQHCs) are organizing a Medicaid and Commercial SSP-ACO. 20

Act 75: Prescription Drug Abuse Effective October 1, 2013: Specific requirements for “replacement prescriptions” for controlled substances Effective November 15, 2013: – Prescribers must register with VPMS and Prescribers must query the VPMS in the following four circumstances: – “At least annually for patients who are receiving ongoing treatment with an opioid Schedule II, III, or IV controlled substance;” – “When starting a patient on a Schedule II, III, or IV controlled substance for nonpalliative long-term pain therapy of 90 days or more;” – “The first time the provider prescribes an opioid Schedule II, III, or IV controlled substance written to treat chronic pain;” and – “Prior to writing a replacement prescription for a Schedule II, III, or IV controlled substance. “ 21

Act 39: “Patient Choice at End of Life” Act 39 allows physicians to prescribe lethal doses of medication to terminally ill patients in order for the patient to end their lives. A physician would not be subject to any civil or criminal liability or professional disciplinary action if the physician prescribes to a patient with a terminal condition medication to be self-administered for the purpose of hastening the patient’s death and the physician affirms by documenting in the patient’s medical record that fifteen requirements were followed. The Vermont Department of Health has developed a number of documents related to Act 39. They can be found at: choice.aspx choice.aspx 22

VMS Education and Research Foundation Funding & Activities Cyrus Jordan, MD, Director Physicians Foundation Awards 2 nd Leadership Grant - $75,000 – Two Scholarships to VT Physicians to Maine’s Leadership Curriculum – Two Communities of Practices – Hospitalists and Rural Physicians – VMS Annual Meeting Session on Physician Leadership Vermont Department of Health - $12,000 – Conference - Improving Access and Quality of services to Children and Families, January 25th, 2014 Montpelier Green Mountain Care Board - $80,000 – Two White Papers: Allocation of health service resources across the state; Effective and efficient measurement. State and federal payment pilots Green Mountain Care Board - $14,500 – Vermont Radiological Society – Cranial CT scan Utilization and Best Practice Initiative New Hampshire Medical Society - $5,000 – CME sessions in NH and Maine on Chronic Pain White Paper – UVM Dana Medical Library Literature Review Vermont Department of Health - $25,000 – Antibiotic Stewardship – CDC and Association of State and Territorial Health Officers funding 23

Questions? Paul Harrington, EVP Vermont Medical Society