The Affordable Care Act (ACA) – Medicare Updates

Agenda: Affordable Care Act (ACA) – General Introduction Focusing on the Quality of Care Improving Coverage Preventive Services Preserving the Medicare Hospital Insurance Trust Fund Review & Recap

Affordable Care Act (ACA) – General Introduction The Affordable Care Act (ACA) was signed into law on March 23, It was primarily created to extend health coverage to the uninsured and to make health care more affordable. −Designed to improve the health and health care of Medicare beneficiaries. −Initiated change in provider payment models to focus on quality of care vs. quantity/volume. Additionally, the ACA improves coverage and care to Medicare recipients by addressing gaps in preventive services and prescription drug benefits. −Covers preventive services without cost-sharing. −Provides a discount on brand prescription drugs in the Coverage Gap and closes the Coverage Gap*. −Strengthens chronic care management. −Extends the life of the Medicare Trust Fund. *Coverage Gap to be completely closed by 2020.

Provider Innovation ACA moves Medicare away from fee- for-service payment and holds health care providers accountable for quality and the cost of care to Medicare recipients. −The former payment system did not incentivize providers to provide better quality of care or patient care experiences. There was no reward for delivering better quality/service to patients. There was no penalty for duplicative or ineffective care. The result was overutilization. Affordable Care Act – Focusing on the Quality of Care Incentives to Encourage Quality ACA creates incentives to encourage the quality and value of care. −New initiatives support care coordination; Developed a program that gives extra payments to hospitals or providers w/ higher clinical quality and patient care experiences. May get additional resources to ensure treatment is consistent. −Implements penalties designed to reduce hospital readmissions and hospital- acquired conditions.

Affordable Care Act – Focusing on the Quality of Care The ACA establishes a new methodology to calculate benchmark levels of hospital readmission rates for various health conditions. −Health conditions such as heart attacks, heart failure, pneumonia and chronic obstructive pulmonary disease (COPD). If the readmission ratio for each condition is in excess of the national average given the hospital’s risk profile, the hospital will receive a reduced Medicare payment. The ACA also strengthens chronic care management by providing reimbursement for certain care management activities for patients with hospital stays related to major chronic conditions. Community-based Care Transition Program (CCTP) provides transition services to assist in reducing preventable, 30-day readmission rates to hospitals.

Under the MMA, Medicare Part D plan beneficiaries could obtain prescription drug coverage through private, prescription drug plans; however, the coverage gap stage created hardships for many beneficiaries. The coverage gap (also known as the “doughnut hole”) requires Medicare beneficiaries to pay the full cost of covered drugs during the coverage phase before catastrophic coverage (which requires that a certain out-of-pocket threshold be met). The ACA reduces the cost of covered drugs in the coverage gap. −Phases out the doughnut hole by the year The ACA enhances the coverage of preventive care. –Several preventive services are now fully covered – no cost to the beneficiary. –These new benefits have improved access to these services and increased the affordability of expensive screenings. Affordable Care Act – Improving Coverage

Affordable Care Act – Preventive Services PREVENTIVE SCREENING & SERVICES COVERED UNDER ACA Flu, Hep B & pneumococcal vaccines Tobacco use cessation counseling Depression / behavioral health screenings HIV, cancer & diabetes screening Annual “Wellness visit” –In addition to the one-time, “Welcome to Medicare” visit Mammograms Colonoscopies Medical nutrition therapy –To help people manage diabetes or kidney disease Bone density measurements Cholesterol and other cardiovascular screenings Obesity screening

April 2015 Medicare's Trust Fund is being financed by the payroll tax (1.45%) imposed on employers and workers.* Fund covers hospital and other facility charges that are paid for under Original Medicare. Today more Baby Boomers are drawing on their Medicare benefits with relatively fewer people paying in to the system. As a result, the gap between revenues and expenditures grows. The date at which the Trust Fund is projected to be depleted is known as the insolvency date. −Prior to the ACA, the Trust Fund’s insolvency date was Currently, the ACA has extended the insolvency date by an additional 13 years (2030). *Higher-income individuals pay a higher payroll tax. Affordable Care Act – Preserving the Medicare Hospital Insurance Trust Fund

Review & Recap The ACA changes affecting Medicare were intended to: Improve the health and health care of Medicare beneficiaries; Extend health coverage to the uninsured and to make health care more affordable; Improve coverage by addressing gaps in preventive services and prescription drug benefits; −Many preventive services and screenings are fully covered. −The coverage gap will be phased out by Change provider payment methods to focus on quality of care, not volume; Extend the life of the Medicare Hospital Insurance Trust Fund.