rachel nuzum, m.p.h. assistant vice president, federal health policy the commonwealth fund

THE COMMONWEALTH

FUND

Fulfilling the Promise of Coverage and Care for the Underserved:

Resources, Tools, and Opportunities Under the ACA

Rachel Nuzum, M.P.H.

Assistant Vice President, Federal Health Policy

The Commonwealth Fund

Colorado Commission for the Medically Underserved Annual Meeting

October 8, 2010

2

THE COMMONWEALTH

FUND

The Commonwealth Fund

Established in 1918, The Commonwealth Fund (www.commonwealthfund.org) is a private, not-for-profit foundation that aims to promote a high performing health care system by supporting and conducting independent research on health care issues and making grants to improve health care practice and policy.

Broad charge to “enhance the common good”

Mission: To promote a high performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, minority Americans, young children, and elderly adults.

3

Communications

Commonwealth Fund Program Areas

Health Reform Policy

Delivery System Improvement

& Innovation

Health System Performance Assessment

& Tracking

International Health Policy & Innovation

Payment & System Reform

State Health Policy & Practices

Patient-Centered Coordinated Care

Health System Improvement &

Efficiency

Measurement & Tracking

Affordable Health Insurance

Federal Health Policy

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THE COMMONWEALTH

FUND

Setting Down the Path to a High Performance Health System

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THE COMMONWEALTH

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Before Reform, Uninsured Projected to Rise to 61 Million by 2020,Not Counting Underinsured or Part-Year Uninsured

3844

49

5661

0

25

50

75

2000 2005 2010 2015 2020

Number of uninsured, in millions

Data: U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement, 2001 and 2006;Projections to 2020 based on estimates by The Lewin Group.

Projected Lewin estimates

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THE COMMONWEALTH

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Premiums Rising Faster Than Inflation and Wages

* 2008 and 2009 NHE projections. Data: Calculations based on M. Hartman et al., “National Health Spending in 2007,” Health Affairs, Jan./Feb. 2009 and A. Sisko et al., “Health Spending Projections Through 2018,” Health Affairs, March/April 2009. Insurance premiums, workers’ earnings, and CPI from Henry J. Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits Annual Surveys, 2000–2009.Source: K. Davis, Why Health Reform Must Counter the Rising Costs of Health Insurance Premiums (New York: The Commonwealth Fund, Aug. 2009).

Average Family Premium as a Percentage of Median Family Income,

1999–2020

0

25

50

75

100

125

2000 2001 2002 2003 2004 2005 2006 2007 2008* 2009*

Insurance premiums

Workers' earnings

Consumer Price Index

Cumulative Changes in Components of U.S. National Health Expenditures and

Workers’ Earnings, 2000–09

Percent Percent

108%

32%

24%

1112

1314

1617

18 18 18 1819 19 19

20 2021 21

22 2223

24

18

0

5

10

15

20

25

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Projected

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THE COMMONWEALTH

FUND

29

21

52 55

45

35

72 71

0

25

50

75

Total Insured all year Insured now, timeuninsured in past year

Uninsured now

2001 2007

Cost-Related Problems Getting Needed Care Have Increased, 2001–2007

Percent of adults ages 19–64 who had any of four access problems*in past year because of cost

*Did not fill a prescription; did not see a specialist when needed; skipped recommended medical test, treatment, or follow-up; had a medical problem but did not visit doctor or clinic.Source: The Commonwealth Fund Biennial Health Insurance Surveys (2001, 2003, 2005, and 2007).

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THE COMMONWEALTH

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Insured all year(128 million)

Uninsured anytime

(50 million)

In the past 12 months:

Had problems paying or unable to pay medical bills

19%24 million

48%24 million

Contacted by collection agency forunpaid medical bills

11%14 million

29%14 million

Had to change way of life to pay bills12%

16 million32%

16 million

Any of the above bill problems25%

32 million56%

28 million

Medical bills being paid off over time24%

31 million36%

18 million

Any bill problems or medical debt33%

42 million61%

30 million

Source: M. M. Doty, S. R. Collins, S. D. Rustgi, and J. L. Kriss, Seeing Red: The Growing Burden of Medical Bills and Debt Faced by U.S. Families (New York: The Commonwealth Fund, Aug. 2008).

Percent of adults ages 19–64

Insured and Uninsured Americans Have Problems with Medical Bills or Accrued Medical Debt, 2007

92009 State Scorecard Summary of Health System Performance

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THE COMMONWEALTH

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Key Features of the Patient Protection & Affordable Care Act, as Modified by the Health Care & Education Reconciliation Act (ACA)

• Individual mandate to obtain insurance

• Guaranteed issue, modified community rating, and prohibitions on rescissions

• Insurance exchanges as marketplace for individuals and small groups; establish minimum benefit standards

• Medicaid expansion to 133% FPL with improved FMAP for all states for newly eligible populations (e.g., nonelderly childless adults)

• Employer contribution to premiums or employer fee if no coverage offered and employees access premium tax credits

• Improved affordability for individuals and families: premium and cost-sharing subsidies on a sliding scale; premium caps on a sliding scale up to 9.5% income for 300–400% FPL

• Reforms to the delivery system to improve quality and contain costs

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THE COMMONWEALTH

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CBO estimate of Affordable Care Act

Total Net Impact on Federal Deficit, 2010–2019 –$143

Total Federal Cost of Coverage Expansion and Improvement $820

Gross Cost of Coverage Provisions $938

• Medicaid/CHIP outlays 434

• Exchange subsidies 464

• Small employer subsidies 40

Offsetting Revenues and Wage Effects –$117

• Payments by uninsured individuals –17

• Play-or-pay payments by employers –52

• Associated effects on taxes and outlays –48

Total Savings from Payment and System Reforms –$511

• Productivity updates/provider payment changes –160

• Medicare Advantage reform –204

• Other improvements and savings –147

Education System Savings –$19

Total Revenues –$432

• Excise tax on high premium insurance plans –32

• Surtax on investment income for high income earners –123

• Other revenues –277

Dollars in billions

Note: Totals do not reflect net impact on deficit due to rounding.Source: The Congressional Budget Office Cost Estimate of H.R. 4872, Reconciliation Act of 2010, Mar. 20, 2010, http://www.cbo.gov/doc.cfm?index=11379.

Major Sources of Savings and Revenues Compared with Projected Spending, Net Cumulative Effect on Federal Deficit, 2010–2019

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THE COMMONWEALTH

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Payment and System Reform Savings from ACA Provisions, 2010–2019

Dollars in billions

CBO estimate of Affordable Care Act

Total Savings from Payment and System Reforms –$511

• Productivity improvement/provider payment updates –160

• Medicare Advantage reform –204

• Primary care, geographic adjustment 6

• Payment innovations –8

• Hospital readmissions –7

• Disproportionate share hospital adjustment –36

• Prescription drugs 29

• Home health –40

• Independent Payment Advisory Board –16

• Other improvements and interactions –75

Source: The Congressional Budget Office Cost Estimate of H.R. 4872, Reconciliation Act of 2010, http://www.cbo.gov/doc.cfm?index=11379.

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THE COMMONWEALTH

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Trend in the Number of Uninsured Nonelderly, 2013–2019,Before and After Reform

55 56 57 58 59 6053

2631

21 22 2321

0

20

40

60

80

2013 2014 2015 2016 2017 2018 2019

Pre-reform

Post-reform

Millions

Note: The uninsured includes unauthorized immigrants. With unauthorized immigrants excluded from the calculation, nearly 94% of legal nonelderly residents are projected to have insurance under the new law.Source: The Commonwealth Fund Commission on a High Performance Health System, The Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way, (New York: The Commonwealth Fund, February 2009); The Congressional Budget Office Cost Estimate of H.R. 4872, Reconciliation Act of 2010, Mar. 20, 2010, http://www.cbo.gov/doc.cfm?index=11379.

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THE COMMONWEALTH

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Source of Insurance CoverageWith and Without Health Reform, 2019

* Employees whose employers provide coverage through the exchange are shown as covered by their employers (5 million), thus about 29 million people would be enrolled through plans in the exchange. Note: ESI is Employer-Sponsored Insurance. Source: The Congressional Budget Office analysis for the amendment in the nature of a substitute for H.R. 4872, Reconciliation Act of 2010, March 20, 2010 http://cbo.gov/doc.cfm?index=11379.

Among 282 million people under age 65

Without Health Reform

162 M(57%)ESI

35 M(12%)

Medicaid

54 M(19%)

Uninsured

16 M (6%)Other

15 M (5%)Nongroup

159 M(56%)ESI

51 M(18%)

Medicaid

24 M (9%)Exchanges

(Private Plans)

16 M (6%)Other

10 M (4%)Nongroup

23 M (8%)Uninsured

With Health Reform

15

2010 2011 2013 2014 2015-2017

Timeline for ACA Implementation• Small business

tax credit

• Prohibitions against lifetime benefit caps & rescissions

• Phased-in ban on annual limits

• Annual review of premium increases

• Public reporting by insurers on share of premiums spent on non-medical costs

• Preventive services coverage without cost-sharing

• Young adults on parents’ plans

Source: Commonwealth Fund Analysis of the The Affordable Care Act (Public Law 111-148 and 111-152).

• Insurers must spend at least 85% of premiums (large group) or 80% (small group / individual) on medical costs or provide rebates to enrollees

• HHS must determine if states will have operational exchanges by 2014; if not, HHS will operate them

• State insurance exchanges

• Small business tax credit increases

• Insurance market reforms including no rating on health

• Essential benefit standard

• Premium and cost sharing credits for exchange plans

• Premium increases a criteria for carrier exchange participation

• Individual requirement to have insurance

• Employer shared responsibility penalties

• Penalty for individual requirement to have insurance phases in (2014-2016)

• Option for state waiver to design alternative coverage programs (2017)

•States adopt exchange legislation and begin implementing exchanges

•Phased-in ban on annual limits

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THE COMMONWEALTH

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Making the Promises of Reform a Reality:The Role of States

• Even before national health reform passed, many states were leading the way on expanding access, encouraging delivery system reform and improving quality.

• States have a variety of levers available to enact change:

• Policy Leadership

• Purchasers

• Regulators

• Provider

• Technical Support and Assistance

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THE COMMONWEALTH

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The Affordable Care Act Provides New Resources and Tools to States to Improve Coverage and Care

• Coverage Expansion • Medicaid Expansion• Health Insurance Exchanges• PCIPs

• Coverage Improvement • New Insurance Market Rules• New State Authority and Responsibilities

• Delivery System Reform• Funding for demos and grants at state level• CMS Innovation Center and new office focused on dual

eligibles• Continued investment in quality improvement, data collection

and HIT

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THE COMMONWEALTH

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Coverage Expansion

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THE COMMONWEALTH

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Medicaid Expansion, 2014

• Income eligibility for Medicaid is expanded to all individuals to 133 percent of poverty, or $29,327 for a family of four, $14,404 for an individual (Jan. 1, 2014)

• Benchmark coverage must include essential health benefits including Rx and mental health services

• Provides enhanced federal Medicaid matching payments for newly eligible enrollees 100 percent in 2014, 2015, and 2016;

– 95 percent in 2017;

– 94 percent in 2018;

– 93 percent in 2019;

– 90 percent thereafter.

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THE COMMONWEALTH

FUND

Projected Changes in Coverage from Medicaid Expansion in the ACA in 2019*

-20

-10

0

10

2015.9 Million

- 11.2 Million

Medicaid Uninsured

*Projections based on a 57% participation rate among newly eligible uninsured and lower rates across other coverage groups. Scenario assumes moderate levels of participation similar to current experience among those newly eligible and little additional participation among currently eligible individuals.

Source: J Holahan, I Headen. Medicaid Coverage and Spending in Health Reform: National and State-by-State Results for Adults at or Below 133% FPL. May 2010. Kaiser Family Foundation.

Millions of People

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THE COMMONWEALTH

FUND

Changes in Spending from Medicaid Expansion in the ACA, 2014-2019

$21.2 Billion (5%) State

$443.5 Billion (95%)

Federal

Total Change in Medicaid Spending

$464.7 Billion

Source: J Holahan, I Headen. Medicaid Coverage and Spending in Health Reform: National and State-by-State Results for Adults at or Below 133% FPL. May 2010. Kaiser Family Foundation. *Projections based a 57% participation rate among newly eligible uninsured and lower rates across other coverage groups. Scenario assumes moderate levels of participation similar to current experience among those newly eligible and little additional participation among currently eligible individuals.

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THE COMMONWEALTH

FUND

Estimated Change in Medicaid Enrollment, Uninsured Adults <133% FPL and Spending Over 2014-2019 as a Result of ACA Medicaid Expansion*

0

20

40

60

80

Increase inMedicaid

Enrollment2019

Reduction inUninsured

Adults <133%FPL

State Spending FederalSpending

Total Spending

27.4%

1.4%

22.1%

13.2%

*Projections based on a 57% participation rate among newly eligible uninsured and lower rates across other coverage groups. Scenario assumes moderate levels of participation similar to current experience among those newly eligible and little additional participation among currently eligible individuals.

Source: J. Holahan, I. Headen, Medicaid Coverage and Spending in Health Reform. Kaiser Family Foundation. May 2010.

44.5%

Percent

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THE COMMONWEALTH

FUND

Estimated Change in Medicaid Enrollment, Uninsured Adults <133% FPL and Spending Over 2014-2019 as a Result of ACA Medicaid Expansion:

Colorado*

0

20

40

60

80

Increase inMedicaid

Enrollment2019

Reduction inUninsured

Adults <133%FPL

State Spending FederalSpending

Total Spending

47.7%

1.8%

37.1%

19.4%

*Projections based on a 57% participation rate among newly eligible uninsured and lower rates across other coverage groups. Scenario assumes moderate levels of participation similar to current experience among those newly eligible and little additional participation among currently eligible individuals.

Source: J. Holahan, I. Headen, Medicaid Coverage and Spending in Health Reform. Kaiser Family Foundation. May 2010.

50.0%

Percent

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THE COMMONWEALTH

FUND

Health Insurance Exchanges

• Each state must establish an American Health Benefit Exchange and a Small Business Health Options Program (SHOP) Exchange by 2014 for individuals and small employers

• Individual and small-group markets are not replaced by exchanges, but same market rules apply inside and outside the exchanges

• If HHS determines in 2013 that a state will not have an exchange operational by 2014, HHS is required to establish and operate an exchange in the state

• In 2014, small businesses with up to 100 employees will be able to purchase plans for their employees through the exchanges, but states have option until 2016 to limit enrollment to small businesses with up to 50 employees

• After 2017 states may open the small business exchange to employers with more than 100 employees

• Small employer tax credits (2014), premium and cost sharing subsidies, can be used only for plans purchased through the exchanges

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THE COMMONWEALTH

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State Options for Exchanges• Merge the individual and small group exchanges, or leave separate

• Partner with other states to create a regional exchange

• Open to firms of 50 or 100 employees, expand to greater than 100 in 2017

• Tighter rules than ACA to prevent adverse selection against the exchange– Limit sale of health plans to at least silver/gold inside and outside

exchange

– Prevent sale of plans outside exchange

– Require only qualified plans be sold inside and outside exchange

– Impose same requirements for plans inside and outside

– Monitor plans to make sure they are not “lemon dropping” or moving high risk enrollees to exchanges

• Plan choice - States might further standardize plans beyond the ACA such as limiting deductible and coinsurance variation, or offer a standardized “benchmark” plan within each tier

• Regulatory Role– Allow all plans to participate that meet requirements for qualified health

plans, or

– Restrict participation to high value plans, raise consumer protections

Source: T.S. Jost, Health Insurance Exchanges and the Affordable Care Act: Key Policy Issues, The Commonwealth Fund, July 2010

26State Responsibilities for Exchanges

• After HHS issues regulations and sets standards for exchanges, states may adopt before Jan. 2014 the federal standard into their own laws or adopt similar standards that HHS finds equivalent

• HHS will award grants, March 2011- Jan. 1 2015, to states for planning and establishing the exchanges; after that exchanges must be self-sufficient and may charge assessments or user fees

• Once exchange is operational state responsibilities include:

– Certify qualified health plans

– Operate toll-free hotline and Web site

– Rate qualified health plans, present plan options in a standard format

– Inform individuals of eligibility for Medicaid and the CHIP

– Provide an electronic calculator to calculate plan costs

– Grant certifications of exemption from the individual responsibility requirement

– Provide Treasury Dept. information necessary to enforce employer penalties

– Award grants to "navigators" to educate the public about qualified health plans, distribute information on enrollment and subsidies, facilitate enrollment, and provide referrals on grievances

• In 2017, states may opt out of insurance exchanges with a 5-year waiver, if they can offer all residents coverage at least as comprehensive/affordable

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THE COMMONWEALTH

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Other Coverage Expansions

• Young Adults: Young adults may stay on or come on to their parents' health plans up to age 26, effective for plan years beginning on or after September 23, 2010.

• Pre-existing Condition Insurance Plan (PCIP): A high-risk pool program for uninsured individuals. Runs through 2013 at which time enrollees will be transitioned into exchange coverage.

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THE COMMONWEALTH

FUND

HHS-Run State-Run

Alabama

Arizona

Delaware

Florida

Georgia

Hawaii

Idaho

Indiana

Kentucky

Louisiana

Massachusetts

Minnesota

Mississippi

Nebraska

Nevada

North Dakota

South Carolina

Tennessee

Texas

Vermont

Virginia

West Virginia

Wyoming

Pre-Existing Condition Insurance Plans by Governing Body

Alaska

Arkansas

California

Colorado

Connecticut

Illinois

Iowa

Kansas

Maine

Maryland

Michigan

Missouri

Montana

New Hampshire

New Jersey

New Mexico

New York

North Carolina

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Dakota

Utah

Washington

Washington, D.C.

Wisconsin

Source: www.HealthCare.gov

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THE COMMONWEALTH

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Coverage Improvement

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THE COMMONWEALTH

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Coverage Improvement

• Prohibition on pre-existing condition exclusions for children (Sept. 2010) and all enrollees (2014)

• Prohibition against rescissions of coverage (Sept. 2010)

• Prohibition against lifetime limits of coverage (Sept. 2010) and annual limits of coverage (gradual phase-in, 2010-2014) for essential health benefits

• Recommended preventive care and immunizations will be covered with no cost-sharing (non-grandfathered plans, Sept. 2010) and no Medicare coinsurance for preventive services rated A or B

31

THE COMMONWEALTH

FUND

Coverage Improvement cont’d.

Beginning with insurance plan years starting in 2010, the HHS secretary and states will establish a process for annual review of unreasonable premium increases.

– Health insurers will be required to submit to the secretary and the relevant state a justification for an unreasonable increase prior to implementation of the increase.

– The ACA appropriates $250 million to the secretary for grants ($1 million - $5 million) to states over the five year period 2010 - 2014 to review and approve carrier premium increases and provide required information and recommendations to the secretary

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THE COMMONWEALTH

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Delivery System Improvement

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THE COMMONWEALTH

FUND

Improvements in Care Delivery: What’s in the ACA for States?

• Demonstrations and pilots for payment and delivery system reform (e.g., bundled payments for episodes of care)

• Support for integrated delivery of care

• Funds to support providers serving underserved populations

• Efforts to expand the capacity of providers

• New federal resources and technical assistance

34

THE COMMONWEALTH

FUND

ACA Demonstrations and Pilots Focused on Delivery System and Payment Reform

• Medicaid Global Payment Demo – 5 states, for safety net hospital systems or networks to transition from FFS to capitated global payment structure

• Medicaid Integrated Care/Bundling Demo – 8 states, use bundled payment to promote integration of care around hospitalizations

• Medicaid Health Home – state plan option, provide health homes for enrollees with chronic conditions at 90% FMAP during first 2 years

• Pediatric ACO demo: allows pediatric providers to organize as ACOs and share in federal and state cost savings generated under Medicaid

35

• Medicare payment bonus (10%) to primary care physicians beginning 2011; Medicaid primary care reimbursement rates no lower than Medicare, 2013-2014

• Primary Care Extension Program through grants to state hubs

• Grants/contracts to states to establish Community Health Teams to support medical home model

• Grants to develop community-based collaborative care networks: networks of providers to deliver care to low-income populations, with services including case management

• $11 billion for FQHCs beyond existing funds for 2011-2015, expected to increase annual patients served from 18.8 million in 2010 to 33.8 million in 2015; higher appropriations possible in future years

• Community-Based Care Transitions pilot program with $500 million for FY2011–FY2015

• Coordination of Care: $50 million authorized for grants for coordinated and integrated services through co-location of primary and specialty care in community-based mental and behavioral health settings

• State grant program to health care providers who serve a high percentage of medically underserved populations with $4 million for 2010-2013

ACA Provisions on Primary Care and Medical Homes

36Efforts to Expand Capacity of Providers• $1.5 billion for the National Health Service Corps over five years beyond $142 million

annual funding already in place• New National Health Care Workforce Commission announced Sept. 2010• State health care workforce development grants to enable state partnerships to plan

and to carry out comprehensive health care workforce development strategies at the state and local levels

• Primary Care Training and Enhancement programs to support programs with a good record of training providers who practice primary care and serve vulnerable populations

• Grants available to:– develop and operate training programs, provide financial assistance to trainees

and faculty, and enhance faculty development in primary care and physician assistant programs

– establish, maintain, and improve academic units in primary care – promote the community health workforce

• Loans and loan repayment for those who commit to 10 years of primary care practice or practice in HPSAs or MUAs

• Funding for new primary care residency slots, training primary care PAs, supporting nursing students, and establishing NP-led clinics in MUAs

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THE COMMONWEALTH

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Public Health and Prevention

• $100 million in grants for states to encourage healthy behaviors in Medicaid populations

– Weight control, tobacco cessation, lower BP/cholesterol, diabetes management

– Beginning January 2011

• Pilot for community health centers to test impact of individualized wellness plan to reduce risk factors for preventable conditions in at-risk populations

• Smoking cessation without cost sharing is a required Medicaid benefit beginning this month

• States can get a 1% FMAP increase in 2013 for adult preventive services rated A or B by USPSTF if they are covered with no cost-sharing

• Creation of National Prevention, Health Promotion and Public Health Council

• Creation of Prevention and Public Health Fund

38

THE COMMONWEALTH

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New Resources and Technical Assistance To Improve Health System Performance

• CMS Center for Medicaid and Medicare Innovation

• Federal Coordinating Council for Comparative Effectiveness Research

• Patient-Centered Outcomes Research Institute

• National Strategy for Quality Improvement in Health Care

39Challenges Ahead

• Securing and Maintaining Public Support

• Political Uncertainty at Federal and State Level

• Ambitious & Complex Implementation Process

• Resources, Resources, Resources

40

THE COMMONWEALTH

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Colorado is on the Path to High Performance

• Many activities underway to expand and improve coverage and reform delivery of care

• Coordination between various agencies and initiatives will be even more important during implementation

• Continuing to focus on improving value, efficiency and transparency by looking at models that have been tried and tested in other states

• Unprecedented opportunity to have input into how care is delivered in your community

41

THE COMMONWEALTH

FUND

A New Era in Health Care Delivery

• The U.S. has a historic opportunity to implement reforms that will achieve a high performance health system

• It is possible to expand coverage, improve quality of care provided while reducing the federal deficit and slowing the rate of health care cost growth

• Health reform sets us down the path of high performance

• States will play a key role in reaching the goals set form by reform

• Reform brings new tools and resources to use to expand and improve coverage, reform the delivery and payment systems and improve the quality of care provided

42

THE COMMONWEALTH

FUND

Commonwealth Fund Resources

Overview TimelineInteractive Timeline of Health

Reform Provisions

www.commonwealthfund.org

43

THE COMMONWEALTH

FUND

Thank You!

Karen Davis, President

Steve Schoenbaum,Executive Vice President

Stephanie Mika,Associate Policy Officer

Sara Collins,Assistant Vice President

Cathy Schoen,Senior Vice President

Melinda Abrams,Vice President