Healthcare Reform: Where is this all headed?

Patrick CahillGovernment Affairs

September 12, 2014

© 2014 Harvard Pilgrim Health Care

Agenda

MA Payment Reform after 2 years.

Substance Abuse; key legislation for 2014.

MA rate trends.

Federal and State elections; impact on the future of health reform.

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Chapter 224: Payment Reform after 2 years

Chapter 224: The MA payment reform law has been in place for over 2 years.

The Center for Health Information and Analysis (CHIA) recently released its annual report on the performance of the MA health care system. Key findings:– From 2012- 2013 total health care expenditures (THCE) grew by 2.3%.

This is less than the state mandated health care cost benchmark of 3.6%.– THCE totaled $50.5 billion in 2013, or $7,550 per resident.– Public spending, which includes Medicare, MassHealth and

Commonwealth Care, accounts for 60% of THCE.– Alternative Payments, such as global payments or risk based payments,

account for payment of approximately 34% of commercial members. This number is flat year over year, but coincides with an increase in commercial members moving to self-insured and PPO style products.

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Chapter 224 continued.

Chapter 224 also created the Health Policy Commission

Main task is to review the market impact of all acquisitions in the health care system and make recommendations to the Attorney General.

Key Test; the Partners acquisitions of South Shore Hospital and Hallmark Health.– The HPC found that the acquisition of South Shore Hospital

acquisition would increase cost to the system and would not achieve the savings that Partners proposed.

– The HPC found that the acquisition of Hallmark Health would increase cost to the system and not achieve the savings Partners proposed.

© 2014 Harvard Pilgrim Health Care

Chapter 224 continued.

Attorney General’s settlement with Partners– Permits Partners to acquire South Shore Hospital and Hallmark

Health. – Partners is prevented from acquiring additional hospitals in

eastern Massachusetts for 7 years. – Partners cannot raise its costs across its network more than the

rate of general inflation, which over the last several years has averaged between 1%-2% for 6 ½ years.

– Payers will be allowed to contract with Partners Network providers on a component basis, reducing Partners’ bargaining power in the market. Those components will include: academic medical centers, community hospitals and physicians, South Shore Hospital, and Hallmark Health Systems.

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Chapter 258: Substance Abuse Law

Comprehensive substance abuse legislation passed July 31. 2014, effective October 1, 2015.

Requires insurers to pay for addiction treatment from licensed counselors, to improve access to treatment for those struggling with addiction.

Removes prior-authorization requirements for outpatient substance abuse treatment and provides for coverage of up to 14 days in an inpatient setting. Health plans may begin utilization review procedures on day 7.

Requires coverage for abuse deterrent opioid products.

Gives the Department of Public Health (DPH) new regulatory authorities to reduce abuse of opioids and provides emergency scheduling powers to temporarily ban dangerous substances like bath salts and K2, when circumstances warrant.

Requires chief medical examiners to report overdose deaths to DPH and the U.S. Food and Drug Administration, improving the ability of public health agencies to quickly identify and implement measures to reduce the risk of further overdoses.

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MA rate trends

MA received an extension from CMS for the transition period for continued use of state rating factors for the merged market until 2017. The factors, such as group size and industry, are used at the same level for 2015 as they were in 2014.

Composite rating; the state received permission to continue to utilize composite rating in the small group market in 2015. The state will set the tier ratios: – employee @ 1.0; employee & spouse @ 2.0; employee & child(ren) @

1.85; employee & spouse & children @ 2.85)

Rates are being significantly impacted by federal 3Rs program, especially the risk adjustment and risk corridor program.

Average base rate increase in the merged market for Jan. 1, 2015 is 3.1%

Nationally, large employers rate increase trends between 6-10% for 2014.

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2014 Federal Elections

U.S. Senate control is a toss up, with the pundits leaning to Republican control. – Control will likely come down to North Carolina, Kansas, Alaska,

Colorado and Iowa.

U.S. House will stay under Republican control with increasing tea party strength in the majority.

Everything is a prelude to the 2016 Presidential elections, which will begin in earnest in the fall of 2015.

Key health care question is do they try to improve ACA (such as repeal the premium tax, the Cadillac tax) or is it 2 more years of repeal the ACA.

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2014 Massachusetts state elections

Martha Coakley vs. Charlie Baker– Similar rhetoric around the importance of transparency, but

likely very different fundamental approaches to how the state should administer health care.

– Winner will have key choices to make about how the Health Connector moves forward, and how the state continues to implement payment reform.

State House changes more subtle:– Transition to Senate President Rosenberg; the MA Senate likely

continues to become a more progressive chamber.– Overall a large turnover in key legislators and staff involved in

the major health care laws the past 10 years.

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Questions?

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