Navigating the Post-Health Care Reform Landscape

NAVIGATING THE POST-HEALTH CARE REFORM

LANDSCAPE

–“Accountable Care Organization” is a network of hospitals and physicians that will share responsibility for providing care to patients– Would be responsible for pre-hospital,

inpatient acute care, and post-acute care of the patient

– Goal is to replace the insurance company as the “gatekeeper”

–Capitated payment regime

THE RISE OF THE “ACCOUNTABLE CARE

ORGANIZATION”

• ACA has upset prior equilibrium that existed between hospitals and physicians over who “controls” the patient

• Hospitals have emerged as the dominant player– More than 50% of physicians are now

employed by a hospital– 75% increase since 2000

THE HOSPITAL AS THE NEW “DOMINANT” PLAYER

•Acceleration of an existing trend for hospitals to merge into larger and larger “health systems”– Nearly 40% of hospitals – 50% increase post-ACA

HORIZONTAL INTEGRATION

•Health systems becoming more aggressive in acquiring ancillary/downstream services– Rehab and long-term care

hospitals– SNFs– Ambulance?

VERTICAL INTEGRATION

• AMR (EMSC)– Purchased by Clayton, Dubilier & Rice– $3.2 billion

• Rural Metro – Purchased by Warburg Pincus– $438 million

• Falck A/S– 2012 acquisition of American Ambulance (FL)– 2011 acquisition of Lifestar Ambulance (NY/NJ)– 2010 acquisition of Care Ambulance (CA)

Private Equity interest in EMS was one factor cited by MedPAC

as evidence of the industry’s health!!

EMS ACQUISITION ACTIVITY

•AMR’s parent company was purchased by Clayton, Dubilier & Rice for $3.2 billion•New parent company (Envision Healthcare) conducted a successful IPO in August 2013– Raised $966 million

A SUCCESS STORY

•Rural Metro – Purchased by Warburg Pincus– $676.5 million purchase price

– $263.3 million in assumed debt

•On August 4, 2013, Rural/Metro Corp. filed for bankruptcy protection in Delaware–July 15, 2013 – missed interest payment on $308 million in unsecured debt–S&P downgrade

ON THE OTHER HAND…

• Since 2000, the overall number of hospitals has decreased by 5% nationwide– 25% increase in the number of free-standing EDs during that same period

THE RISE OF THE FREE-STANDING ED

“SPOKE AND WHEEL” MODEL

• Expanded focus on hospital cost-containment• Hospital readmissions–Section 3025 of the Affordable Care Act• Effective October 1, 2012

– Hospitals face a penalty for certain patient readmitted within 30 days

– Acute MIs, Heart Failure, Pneumonia• Penalties

–October 2012 – 1%–October 2013 – 2%–October 2014 – 3%

COST-CONTAINMENT

•Hospitals looking to partner with EMS agencies to go into the community–Check up on patients–Confirm compliance with medications–Schedule and transport to follow-up care

COMMUNITY PARAMEDICINE

THE HEALTH

EXCHANGE MARKETPL

ACES

BACKGROUND

• The Affordable Care Act requires each state to offer a “health care exchange marketplace” (HCE) where individuals and small business can go to purchase health insurance– If state elects not to create its own

marketplace, federal government must operate the HCE in that state

TIERS OF INSURANCE

• Exchanges must offer plans falling within one of 5 specified benefit tiers

• Tiers cover the same minimum essential benefits, but have different cost-sharing structures:– Bronze (plan will pay 60% of actuarial value)– Silver (70%)– Gold (80%)– Platinum (90%)– Catastrophic Option – available only to those under age

30 that do not otherwise have access to affordable care

PREMIUM SUBSIDIES

• Premium Assistance Subsidies will be available for individuals and families with incomes between 100% and 400% of the FPL– Individuals = $11,490 – $45,960– Families = $23,550 – $94,200

• Subsidies will be a sliding scale based on income– e.g., individual making up to 133% of the FPL will be

required to pay no more than 2% of income– e.g., individual making 400% of the FPL will be required to

pay up to 9.5% of income

NOTE: premium subsidies can be applied to any level of insurance

Operation of Subsidies

• Law sets the maximum amount an individual or family must pay – As a percentage of household income– 4% of household income at 150% of FPL– 9.5% of household income at 300% of FPL

• Subsidy then makes up difference between that amount and cost of second lowest priced silver plan sold in your area

Premium Subsidies Examples

Income (% of FPL)

Income($)

Premium as % of Income

Insurance Premium

Family Contributi

on

Amountof Tax Credit

138% $32,500

3.3% $12,500 $1,070 $11,430

150% $35,325

4.0% $12,500 $1,410 $11,090

200% $47,100

6.3% $12,500 $2,970 $9,530

250% $58,875

8.1% $12,500 $4,740 $7,760

300% $70,650

9.5% $12,500 $6,710 $5,790

400% $94,200

9.5% $12,500 $8,950 $3,550

COST-SHARING SUBSIDIES

• Cost-sharing subsidies are available to help with out-of-pocket expenses for individuals and families making up to 250% of the federal poverty level– ~ $58,875 for a family of 4– Limits out-of-pocket expenses to between 6-

27% of actuarial value of the plan

NOTE: cost-sharing subsidies are only available for people purchasing “silver” level plans

The Bumpy Road to Implementation

ENROLLMENT DATA

Sources: Marketplace: President Obama Press Conference, April 14, 2014 Medicaid: HHS Press Release, March 11, 2014

CBO Projections

Actual Data % of Projections

State/Federal

Marketplace Plans

7,000,000

~8,000,000

114%

Medicaid 9,000,000

4,377,932

51.4%

SELECTED STATE ENROLLMENT DATA

Source: HHS Press Release, March 11, 2014

State Enrolled in Marketplace Plan

MedicaidEligible

California 868,936 1,136,000

New York 244,618 310,645

Florida 442,087 124,363

Wisconsin 71,443 68,655

Ohio 78,925 97,477

ENROLLMENT DATA

Source: HHS Press Release, March 11, 2014

ENROLLMENT DATALEVEL OF INSURANCE

Source: HHS Press Release, February 12, 2014

Bronze Silver Gold Platinum

Catastrophic

Florida 14% 65% 9% 12% 1%

Texas 21% 62% 11% 4% 1%

Nation 19% 62% 12% 7% 1%

•Administration will permit individuals that lose their existing coverage and who are unable to find affordable insurance through the exchanges to qualify for a “hardship exemption”•Permit them to either:–Purchase catastrophic coverage –Avoid penalty under individual mandate

INDIVIDUAL MANDATEHARDSHIP

EXEMPTIONS

• On July 2, 2013, the Obama Administration announced that it was delaying enforcement of the employer mandate for 1 year– Qualifying employers would have been exempted from

penalties for failing to provide insurance starting in 2015

• On February 10, 2014, the Administration announced a second delay– Firms with between 50 – 100 workers are now exempt until 2016–Firms with over 100 workers now required to offer insurance only 70% of their workforce• Down from 95%

IMPLEMENTATION DELAY

EMPLOYER MANDATE

•ACA imposed caps on out-of-pocket insurance costs– $2,000 deductible limit for individuals– $4,000 deductible limit for family plans

• In February, 2013, DOL published a rule delaying the implementation of these caps until 2015– Notional “concern” was that many companies use different companies to administer major medical vs. drug coverage, and no way existing to coordinate amongst plans

IMPLEMENTATION DELAY

OUT-OF-POCKET CAPS

Premiums v. Deductibles

Deductibles

Premiums

Comparison of Anthem PlansMilwaukee, WI

Plan Monthly Premium

Annual Deductible

Max Out-of-Pocket

DirectAccess Bronze(POS)

$730 Individual: $6,300Family: $12,600

Individual: $6,350Family: $12,700

DirectAccess Silver(POS)



DirectAccess Gold(POS)

$1,221 Individual: $750Family: $1,500


Comparison of Dean PlansMadison, WI

Plan Monthly Premium

Annual Deductible

Max Out-of-Pocket

Value FocusBronze(EPO)



ClassicSilver(HMO)



Copay PlusGold(EPO)



Strategies for Handling Patient

Deductibles

Option A

• Access to real-time deductible status• Review patient’s deductible status at

time you verify insurance eligibility• If deductible has been met, submit

claim immediately– If not, schedule a follow-up review and

retest deductible status periodically thereafter until either:1. Deductible is met, or2. Timely filing limit is hit

Option B

• No access to real-time deductible status• Time/expense in getting real-time

deductible status is prohibitive• Create guidelines on whether to hold a

claim, and if so, how long– Based on level of patient’s coverage• i.e., “Bronze” v. “Silver” v. “Gold”

Gold/Platinum Coverage

• Lower deductibles• Patient has voluntarily opted to pay higher

monthly premiums for “better” coverage

Lower probability of unmet deductible, combined with greater probability that patient has financial means to pay whatever deductible remains, suggests that immediately submitting claims for these

patients carries less risk than other levels of coverage

Silver Coverage• Higher deductibles• Patient has opted to pay “baseline” premium

Deductibles can be significantly higher than gold/platinum coverage. Patient has also elected not to pay more than legally required for their coverage. This may be because they wanted to take advantage of subsidies for out-of-pocket costs. Collectively, this suggests that holding claims for some period of time may make sense, particularly if the patient was transported for a medical condition that is likely to result in significant hospital expenses (e.g., an AMI or stroke)

Bronze Coverage

• Highest deductibles• Patient has opted to pay less than the federally

required maximum percentage of their income on monthly premiums

The fact that the patient has elected to pocket a portion of the federal premium subsidy suggests that they lack the financial means to pay a significant out-of-pocket expense. Combined with the highest deductibles, it

may make sense to hold claims for these patients for some period of time

Brian Werfel, Esq.A.A.A. Medicare

Consultant631-265-5650

[email protected]

The Lighter Side

of EMS

Navigating the Post-Health Care Reform Landscape

Health & Medicine

Transcript of Navigating the Post-Health Care Reform Landscape