introduction to the health care major reform bill...and the healthcare system that substantially...

INTRODUCTION TO THE

HEALTH CARE

MAJOR REFORM BILLRep. Jim Butler

THE PROBLEM2

MEDICAID CONSUMING INCREASING

SHARE OF STATE BUDGET

14%

16%

18%

20%

22%

24%

26%

28%

30%

197

5

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0

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201

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201

3

201

4

201

5**

201

6**

*

201

7**

*

State Medicaid Spending as percentage of State GRF

Source: LSC Historical Expenditures by Program, Table 2 and 3 (GRF)

3

FEWER RESOURCES FOR EDUCATION,

ECONOMIC DEVELOPMENT, AND PUBLIC SAFETY

4

2013 MEDICAID EXPANSION - ADDITIONAL STATE

SPENDING PROJECTIONS *(ENROLLMENT IS 34% OVER PROJECTIONS)

Sources: (for projections) Health Policy Institute of Ohio, Policy Briefing, March 1, 2013, http://www.healthpolicyohio.org/expanding-medicaid-in-ohio-analysis-of-likely-effects/; (for

underestimation) Columbus Dispatch, Feb. 12, 2015

5

PER CAPITA MEDICAID SPENDING

PER CAPITA COSTS INCREASING WHEN ABLE-BODIED, LOWER COST, ADULTS JOINING ROLES

OHIO’S PER CAPITA COSTS HIGHER THAN NATIONAL AVERAGE FOR LAST TWO DECADES*

Sources: LSC, Baseline Forecast of GRF Revenues & Medicaid Expenditures FY 2016-FY 2017 Biennial Budget; Kaiser Family Foundation

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

$8,000

$8,500

$9,000

Per capita Medicaid spending

6

SOLUTION HAS BEEN TO CUT REIMBURSEMENTS =

LESS ACCESS TO CARE

Source: National Center for Policy Analysis, An Economic and Policy Analysis of Medicaid Expansion in Ohio, September 19, 2013, http://www.ncpa.org/pub/ib128

7

THREE GOALS

1) Significantly lower Medicaid spending, while

improving patient health

2) Significantly lower overall healthcare

spending, while improving patient health

3) Apply Medicaid savings below current funding

levels to pools to care for needy populations

8

1) Skin in the Game - Healthy Ohio Plan

2) Lower Defensive Medicine - Medical Injury Compensation System (MICS)

3) Proper Utilization - ER Diversion

4) Medical Device and Prescription Purchasing Pool

5) Price Transparency – Advertising and Cost Estimates

6) Quality Incentives - Value Based Purchasing

7) Cost incentives – MMCC bonus and Hospital Network Entry

8) Competitive Marketplace - Reimbursement parity

9) Promote Small Business Health Coverage – MEWA Assistance

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Create cost consciousness

“skin in the game”

Healthy Ohio Plan*

Ensure competitive marketplace

10% limit on reimbursement variation

Promote hospital and

MMC competition -

Quality

Continuous competition on objective health outcomes (6% Medicaid redistributed)


MMC competition -

Cost

Flat rate reimbursements for acute conditions at state

median rates

20% bonus for MMC if beats regional Medicaid cost (lose

contract if above)

Hospital can run MMC network if price/patient 20% <

MMC

•Negotiate Medicaid waiver to use savings to cover certain pools

•Honorably discharged veterans (no access to VA)

•Severely mentally ill

•Developmentally disabled

•Addicted

•Chronic disease maintenance therapies

•Parents (90-100%) poverty

•Childless adults (50-100% of poverty)

•DSH reimbursement to hospitals to pre ACA levels

•Return additional savings to tax-payers

Use savings

to benefit

Ohioans

Low

er

ov

era

ll

he

alth

ca

re c

ost

s

Reduce waste due to defensive

medicine

Medical Injury Compensation System (MICS)

Lower preventable

medical errorsData clearinghouse of errors

Divert unnecessary ER

visitsEscort system

Encourage free market

competition (price

transparency)

Written estimates before non-emergent service

Advertising of health costs

Published out-of-pocket costs for top 20% of services

Leverage strong purchasing

power

Central purchasing for everyone accepting state

dollars

Promote small business health

coverage

State umbrella insurance guarantee for 5 years

Ohio has a unique opportunity to take advantage of the recent focus on health care to devise and implement reforms to Medicaid and the healthcare system that substantially curtail Medicaid and overall health care costs, improve health outcomes and provideadditional coverage for Ohioans who need it

* Modeled after the Healthy Indiana Plan. Participant contributes $99 ($149 smokers), state contributes $1000. Account used for co-pays etc. Balances carry forward and can be used for future premiums, credits for health outcomes

I have a slight

headache today

after drinking a lot

last night.

Maybe I have a

brain tumor.

11

Better ask for a

CAT scan to make

sure.

Why not? It

doesn’t cost

anything…

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Healthy Ohio Plan*




MMC competition -

Quality



MMC competition -

Cost


median rates


contract if above)


MMC





•Addicted






Use savings

to benefit

Ohioans

Low

er

ov

era

ll

he

alth

ca

re c

ost

s


medicine


Lower preventable



visitsEscort system


competition (price

transparency)





power


dollars


coverage


Ohio has a unique opportunity to take advantage of the recent focus on health care to devise and implement reforms to Medicaid and the healthcare system that substantially curtail Medicaid and overall health care costs, improve health outcomes and provide additional coverage for Ohioans who need it

* Modeled after the Healthy Indiana Plan. Participant contributes $99 ($149 smokers), state contributes $1000. Account used for co-pays etc. Balances carry forward and can be used for future premiums, credits for health outcomes

HEALTHY OHIO PLAN (HOP)

-BASED ON SUCCESSFUL HEALTHY INDIANA PLAN (HIP)

Skin in the Game – Enrollees pay yearly premium - $99 adults, $49 children, $149 smokers

State adds $1,000 into Health Care Savings Account (“Buckeye Account”) – Debit card issued to each participant to use for co-pays and deductibles

Encourage cost-consciousness and preventative care - Money in Buckeye Account rolls over to next year and can be used for premiums if patient gets required preventative care

Reward healthy outcomes - Bonuses awarded for measurable health outcomes, like lowering blood pressure, losing weight – can be used for non-covered services

Increased Access to Care – Providers paid a much higher Medicare rates, so more doctors will accept Medicaid patients.

Mobility up and out of Medicaid – Buckeye Account frozen into “Bridge Account” that can be used for private insurance premiums and other health care expenses

14

Okay, a CT scan

will cost me, but I

have no idea

how much.

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Healthy Ohio Plan*




MMC competition -

Quality



MMC competition -

Cost


median rates


contract if above)


MMC





•Addicted






Use savings

to benefit

Ohioans

Low

er

ov

era

ll

he

alth

ca

re c

ost

s


medicine


Lower preventable



visitsEscort system


competition (price

transparency)





power


dollars


coverage



PRICE TRANSPARENCY CREATES COST

CONSCIOUSNESS AND LOWER SPENDING

In a recent JAMA study, relative claim payments

for searchers on a pricing website were lower for

searchers than non-searchers by 13.93% for

laboratory tests, 13.15% for advanced imaging,

and 1.02% for clinician office visits.

Another recent study found an 18.7% savings in

diagnostic testing when patients could compare

costs.

Source: JAMA, Association Between Availability of Health Service Prices and Payments for These Services, October 2014; Health Affairs, Price Transparency For MRIs Increased Use

Of Less Costly Providers And Triggered Provider Competition, August 2014,

http://content.healthaffairs.org/content/33/8/1391.full?ijkey=ATeYKvxsnfVdc&keytype=ref&siteid=healthaffReferring%2520URL%2520=%2520http://www.aimspecialtyhealth.com/ne

wsroom/news/price-transparencyExpiration%2520Date%2520=%25206%2520Aug%25202015

17

SKIN THE GAME AND COST

CONSCIOUSNESS MATTER

80

100

120

140

160

180

200

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Cosmetic Medicine vs. Ohio Overall

Healthcare Inflation

Cosmetic Surgical Procedure Cosmetic Non-Surgical Procedure

Overall Ohio Healthcare Costs

18

He is only 20 years

old and just got a

headache today

(after drinking last

night).

Probably one in a

million chance of a

tumor.

19

But what if he

actually does

have a tumor,

then I get sued?

Better order it.

20

DEFENSIVE MEDICINE

Defensive Medicine: the practice of ordering medical tests, procedures, or consultations of doubtful clinical value in order to protect the prescribing physician from malpractice suits

90 percent of physicians reported practicing positive defensive medicine in the past 12 months

92.5 percent of surgeons indicate they have ordered imaging tests to protect themselves from lawsuits

Physicians in other major countries do not practice defensive medicine because they are no personally liable (they cannot be sued).

In a recent Gallup survey, physicians attributed 34 percent of overall healthcare costs to defensive medicine

Liability reform has been estimated to result in a 5 percent to 34 percent reduction in medical expenditures via a reduction in defensive medicine

In Ohio, even a 10 percent reduction in Medicaid costs would save $2.5B/year

Sources: Costly Defense: Physicians Sound Off on the High Price of Defensive Medicine, Jackson Healthcare, http://www.jacksonhealthcare.com/;AAOS Now, December 2010,

http://www.aaos.org/news/aaosnow/dec10/advocacy2.asp.

21

$247M

Ohio Total Medical

Liability Costs (verdicts,

settlements and defense

costs)

Source: Ohio Department of Insurance, 2012 Medical Professional Liability Closed Claim Report, April 2014,

22

$247M

Ohio Total Medical

Liability Costs (verdicts,

settlements and defense

costs)

$4B to $27B

Ohio Defensive

Medicine Costs

(unnecessary medical

tests, prescriptions,

procedures, and

consultations)

Source: 2012 Report from Insurers on Medical Malpractice Claims; Kaiser Family Foundation, 2009 overall health spending $81.6B (5-34%)

23

TRADITIONAL TORT REFORM IS INEFFECTIVE AT

DECREASING DEFENSIVE MEDICINE

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Signifcantly Decreased

Somewhat Decreased

Not Changed

Somewhat Increased

Significantly Increased

Physician Survey: How Have the Following Reforms

Affected the Practice of Defensive Medicine?

"I'm Sorry" Law Aggressive Statute of Limitations Joint and Several Liability

Attorney Fee Limits Certificates of Merit Pre-trial Screening Panels

Pain and Suffering Caps

Source: Survey Findings: Physicians on Tort Reform, Jackson Healthcare, http://www.jacksonhealthcare.com/media-room/surveys/physicians-on-tort-reform/

24

ACTIVE DUTY MILITARY CANNOT FILE LAWSUITS

AGAINST DOD PHYSICIANS

92%

19%

0

10

20

30

40

50

60

70

80

90

100

All Physicians DOD Physicians

Defensive Medicine Rates

Sources: Costly Defense: Physicians Sound Off on the High Price of Defensive Medicine, Jackson Healthcare, http://www.jacksonhealthcare.com/

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Healthy Ohio Plan*




MMC competition -

Quality



MMC competition -

Cost


median rates


contract if above)


MMC





•Addicted






Use savings

to benefit

Ohioans

Low

er

ov

era

ll

he

alth

ca

re c

ost

s


medicine


Lower preventable



visitsEscort system


competition (price

transparency)





power


dollars


coverage



Find lawyer

•Must have enough damages

•Children and Seniors have hardest time

Request medical records

File Complaint

Health care provider(s) file

Answer

Exchange of written information

(discovery)

Hire experts, expert draft reports

Take depositionsMotions for

summary judgmentSettlement

conferences

Trial Preparation/ Motions

TrialPost-trial

Motions/Appeal

Initial Administrative Review

•Medical Professional reviews file –short hearing possible

•If compensable, MICS economist calculates award (multiplied by ratio to hold payouts constant with pre-MICS total amounts)

Three-member panel

•Three medical professionals hold hearing – each side submits one expert report

•Award same as below

Common Pleas Court

•Appeals process same as workers compensation


Current System

More patients compensated

more often

•Legal standard makes it easier to receive compensation

•Reviewers must find by clear and convincing evidence that conduct was within standard of care to find medical injury not compensable

Patients compensation

is quick and easy

•Because of streamlined administrative process, patients can receive award within a few months instead of years

•Simpler process makes it easier to navigate and understand

2-3 months to

award

6 months

1 - 5 years

to award

3-9 months


6–24 months

Administrative claim filed –Insurer becomes only party Eventual lawsuit filed

against health care providers

MICS Healthcare

Oversight Board

More patients compensated

more often

•Legal standard makes it easier to receive compensation

•Reviewers must find by clear and convincing evidence that conduct was within standard of care to find medical injury not compensable

Patients compensation

is quick and easy

•Because of streamlined administrative process, patients can receive award within a few months instead of years

•Simpler process makes it easier to navigate and understand

MIC

S C

laim

s a

uto

ma

tic

ally

fo

rwa

rde

d t

o H

ea

lth

ca

re O

ve

rsig

ht

Bo

ard

Membership

made up of

board

examiners

Investigates

repeated or

gross

negligence

Temporary or

permanent

suspension of

license

Similar to Ohio

Supreme Court

oversight over

attorneys

Accountability and oversight of healthcare

providers

Medical Injury

Prevention

Database

All reported

medical injuries

from MICS and

Oversight Board

analyzed for

improved

processes

Lower preventable medical injuries

Administrative claim filed –Insurer becomes only party

Initial Administrative Review

•Medical Professional reviews file –short hearing possible

•If compensable, MICS economist calculates award (multiplied by ratio to hold payouts constant with pre-MICS total amounts)

Three-member panel

•Three medical professionals hold hearing – each side submits one expert report


Common Pleas Court

•Appeals process same as workers compensation


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du

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Me

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Healthy Ohio Plan*




MMC competition -

Quality



MMC competition -

Cost


median rates


contract if above)


MMC





•Addicted






Use savings

to benefit

Ohioans

Low

er

ov

era

ll

he

alth

ca

re c

ost

s


medicine


Lower preventable



visitsEscort system


competition (price

transparency)





power


dollars


coverage



65% OF EMERGENCY DEPARTMENT

VISITS ARE UNNECESSARY

35%

41%

24%

Emergency Department Visits

Required Emergency Care

Required Primary Care

Required No Care

Source: Becker Hospital Report, http://www.beckershospitalreview.com/capacity-management/study-71-of-ed-visits-unnecessary-avoidable.html, citing study by Truven Health

Analytics, April 25, 2013.

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EMERGENCY DEPARTMENT VISITS ARE NEARLY

10X MORE EXPENSIVE

$1,316

$145 $0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Average Cost of ED Visit Average Cost of Primary Care Visit

Average Cost Difference

Source: Becker Hospital Report, http://www.beckershospitalreview.com/capacity-management/study-71-of-ed-visits-unnecessary-avoidable.html, citing study by Truven Health

Analytics, April 25, 2013.

31

THE EMERGENCY MEDICAL TREATMENT AND LABOR ACT (EMTALA) IS A

FEDERAL LAW THAT REQUIRES ANYONE COMING TO AN EMERGENCY

DEPARTMENT TO BE STABILIZED AND TREATED, REGARDLESS OF THEIR

INSURANCE STATUS OR ABILITY TO PAY

Emergency Department

Requires Emergency

Care Requires Primary Care

Requires No Care

Source: American College of Emergency Physicians, http://www.acep.org/News-Media-top-banner/EMTALA/

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EMERGENCY DEPARTMENT ESCORT SYSTEM:1) PATIENT REPORTS SYMPTOMS TO INTAKE NURSE

2) IF PATIENT REPORTS OBVIOUSLY NON-EMERGENCY SYMPTOMS, PATIENT IS SEEN IN ADJACENT

URGENT/PRIMARY CARE

3) CUSTODY OF PATIENT CONTINUOUSLY MAINTAINED SO NOBODY IS TURNED AWAY

4) IF URGENT CARE DETERMINES EMERGENCY EXISTS, PATIENT TRANSFERRED TO EMERGENCY

DEPARTMENT

Intake Nurse

Requires Emergency

Care

Urgent CareEmergency Department

Requires Primary

Care

Requires No Care

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Healthy Ohio Plan*




MMC competition -

Quality



MMC competition -

Cost


median rates


contract if above)


MMC





•Addicted






Use savings

to benefit

Ohioans

Low

er

ov

era

ll

he

alth

ca

re c

ost

s


medicine


Lower preventable



visitsEscort system


competition (price

transparency)





power


dollars


coverage



MARSHALLING OHIO'S PURCHASING

POWER FOR PRESCRIPTION DRUGS AND

MEDICAL EQUIPMENT CAN LOWER COSTS

Drugs account for 12 percent of all healthcare costs.

Drugs in the United States cost 50 percent more than in any other major country for the same or an equivalent drug.

When the drug mix is factored in, the U.S. spends 120 percent more for equivalent drugs.

Loose purchasing coalitions have resulted in savings for pharmaceuticals of tens of millions of dollars.

A mandatory purchasing pool for pharmaceuticals and durable medical/diagnostic testing equipment has the potential to achieve significant saving for both Medicaid and state and local government plans.

Because all providers who contract with the state will be required to use the pool, overall healthcare savings should be significant.

Source: Accounting for the cost of US health care: A new look at why Americans spend more; McKinsey Global Institute, December 2008.

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Me

dic

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en

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Healthy Ohio Plan*




MMC competition -

Quality



MMC competition -

Cost


median rates


contract if above)


MMC





•Addicted






Use savings

to benefit

Ohioans

Low

er

ov

era

ll

he

alth

ca

re c

ost

s


medicine


Lower preventable



visitsEscort system


competition (price

transparency)





power


dollars


coverage



POSITIVE AND NEGATIVE INCENTIVES WILL

PROMOTE MANAGED CARE COST

INNOVATION

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

$8,000

$8,500

$9,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Per capita Medicaid Costs

Ohio per capita Expected based on Medicaid inflation Hospital Entry Level

20%

bo

nu

s

Lose

Co

ntr

ac

t

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en

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g



Healthy Ohio Plan*




MMC competition -

Quality



MMC competition -

Cost


median rates


contract if above)


MMC





•Addicted






Use savings

to benefit

Ohioans

Low

er

ov

era

ll

he

alth

ca

re c

ost

s


medicine


Lower preventable



visitsEscort system


competition (price

transparency)





power


dollars


coverage



HOSPITAL-OWNED OFFICES GET REIMBURSED

SIGNIFICANTLY MORE THAN INDEPENDENTLY-OWNED

PRACTICES FOR THE SAME SERVICE

Cardiac Stress Test –

Independent physician office - $2,100

Same office, same test, same patient, but owned by hospital - over $8,000

Office Visit –

Independent physician office - $20

Same office, owned by hospital - $65

Office visits and echocardiograms –

Medicare paid $1.5B more than it would have paid had same services been performed by independently-owned office

Source: Medical Economics, http://medicaleconomics.modernmedicine.com/medical-economics/content/tags/hospital-employment/monopolizing-medicine-why-

hospital-consolidation-?page=full; http://medicaleconomics.modernmedicine.com/medical-economics/content/tags/facility-fees/hospital-facility-fees-why-cost-

may-give-independent-ph?page=full

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du

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Me

dic

aid

Sp

en

din

g



Healthy Ohio Plan*




MMC competition -

Quality



MMC competition -

Cost


median rates


contract if above)


MMC





•Addicted






Use savings

to benefit

Ohioans

Low

er

ov

era

ll

he

alth

ca

re c

ost

s


medicine


Lower preventable



visitsEscort system


competition (price

transparency)





power


dollars


coverage



HELP FOR SMALL BUSINESSES TO

PROVIDE HEALTHCARE INSURANCE

MEWAs allow small businesses to pool risk to self-insure and avoid

expensive mandates

Umbrella Insurance guarantee phased down over five years

helps with up front reserve requirements – starts at $150,000

Businesses served represented on MEWA Board

Must use Reference-based pricing to control costs – 120% of

Medicare

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Me

dic

aid

Sp

en

din

g



Healthy Ohio Plan*




MMC competition -

Quality



MMC competition -

Cost


median rates


contract if above)


MMC





•Addicted






Use savings

to benefit

Ohioans

Low

er

ov

era

ll

he

alth

ca

re c

ost

s


medicine


Lower preventable



visitsEscort system


competition (price

transparency)





power


dollars


coverage



SAVINGS BELOW EXISTING

MEDICAID FLOWS INTO POOLS

$20,000

$21,000

$22,000

$23,000

$24,000

$25,000

$26,000

$27,000

2015 2016 2017

Total Medicaid Spending (in millions)

Medicaid Spending (State and Fed) Medicaid Spending After Reform

$3.1B goes to pools in 2017 – when pools full, goes back to budget/taxpayers

44

POOLS FUND NEEDED SERVICES

REST OF SAVINGS, BACK TO

BUDGET/TAXPAYERS

Honorably discharged veterans

(no access to VA)

Severely mentally ill

Developmentally disabled

Addicted

Chronic disease maintenance

therapies

Parents (90-100%) poverty

Childless adults (50-100% of

poverty)

DSH reimbursement to

hospitals to pre-ACA levels

Return additional savings to

taxpayers

45

introduction to the health care major reform bill...and the healthcare system that substantially...

Documents