The Reform After the Reform Webinar Series - Session 1: How Payers Will Be Impacted by the New Healthcare Reform Law and What to Do Now

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In the post-reform world of healthcare, payers will be among the most heavily impacted by the new legislation. From new regulations and compliance issues to dealing with potential caps on premiums, payers may already be behind the curve on managing the impact to their business.

Join Guidon Performance Solutions and The Center for Health Transformation to learn more about the complexities of the new legislation and what payers must do now to prepare for the coming change.

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The Reform After the Reform Webinar Series - Session 1: How Payers Will Be Impacted by the New Healthcare Reform Law and What to Do Now

  1. 1. The Reform After the Reform How Payers Will Be Impacted by the New Healthcare Reform Law and What to Do Now May 19, 2010
  2. 2. Agenda • Introductions • Health Reform Overview • Implications and Recommendations • Questions © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 2
  3. 3. With You Today Ron Wince, President/CEO, Guidon Performance Solutions, LLC • Two decades of experience in application of Lean and Six Sigma • Co-founder of Guidon Performance Solutions – the pioneer in applying LeanSigma® in non-industrial and non-traditional companies • Client experience in healthcare, insurance, financial services, retail, information technology, telecommunications and hospitality • B. S. Engineering, U.S. Naval Academy in Annapolis, MD David Merritt, Vice President and National Policy Director, Center for Health Transformation and the Gingrich Group • Advises Speaker Gingrich and leads the Center’s work on national health reform and health information technology • Editor of Paper Kills: Transforming Health and Healthcare with Information Technology, winner of the 2007 book of the year award by the Health Information Management Systems Society (HIMSS) • Master’s degree in political science and government from Loyola University Chicago © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 3
  4. 4. www.healthtransformation.net Center for Health Transformation Health Reform and Health Transformation: What Happened, What’s Next, What’s Needed David Merritt Center for Health Transformation Copyright © 2010 The Center for Health Transformation
  5. 5. www.healthtransformation.net Center for Health Transformation Health Reform Lower Costs Improve Quality Expand Coverage 5 Copyright © 2010 The Center for Health Transformation
  6. 6. www.healthtransformation.net Center for Health Transformation Expand Coverage Health “Insurance” Reform Medicaid expansion Subsidies Insurance rules 50+ insurance exchanges Individual mandate Employer penalties 6 Copyright © 2010 The Center for Health Transformation
  7. 7. www.healthtransformation.net Center for Health Transformation Financing Taxes - $500 billion Payroll taxes, investment income, employer penalties “Cadillac” plans Device manufacturers, pharma, health plans Medicare cuts - $500 billion Home health ($39 billion); hospitals ($131 billion); skilled nursing facilities ($22 billion); Medicare Advantage benefits ($101 billion) 7 Copyright © 2010 The Center for Health Transformation
  8. 8. www.healthtransformation.net Center for Health Transformation What’s Next – Immediate Implementation Rescissions prohibited Lifetime coverage limits eliminated and annual limits restricted Insurers barred from excluding children with preexisting conditions from coverage Medicare Part D beneficiaries in the “doughnut hole” will get $250 rebate $5 billion program created for employers to provide coverage for retirees between 55-64 8 Copyright © 2010 The Center for Health Transformation
  9. 9. www.healthtransformation.net Center for Health Transformation Immediate Impact “Adult children” can remain on their parents’ health plans until they are 26 Tax credit available for some small businesses (under 25 employees) for employee coverage $5 billion high-risk pool created to provide insurance to individuals with qualifying preexisting conditions who have been uninsured for at least 6 months 10% tax on indoor tanning services that use ultraviolet lamps begins on July 1, 2010 9 Copyright © 2010 The Center for Health Transformation
  10. 10. www.healthtransformation.net Center for Health Transformation 2011 Medicare Advantage payments to insurers frozen at 2010 levels Annual fee of $2.5 billion imposed on pharmaceutical manufacturers Insurers required to provide rebates to enrollees if they spend less than 85% of large-group premium dollars and 80% of individual and small-group premiums on care as opposed to administration, profits, salaries, etc. 10 Copyright © 2010 The Center for Health Transformation
  11. 11. www.healthtransformation.net Center for Health Transformation 2012 Annual fee on pharmaceutical manufacturers increases to $3 billion Cap of $2500 in contributions to tax-advantaged Flex Spending Account Medicare tax rate increases by 0.9% to 2.35% on earnings over $200,000 for individuals and $250,000 for families CLASS program created 11 Copyright © 2010 The Center for Health Transformation
  12. 12. www.healthtransformation.net Center for Health Transformation 2013 Companies with 50 or more employees will pay a fine of $2000 per employee if one full-time employee receives federal healthcare subsidy A 2.9% excise tax is imposed on the sale of medical devices – anything generally purchased at the retail level by the public is excluded from the tax New fee assessed on health insurance plans to fund comparative effectiveness trust fund 12 Copyright © 2010 The Center for Health Transformation
  13. 13. www.healthtransformation.net Center for Health Transformation 2014 Individual mandate requires individuals to purchase qualified health insurance or pay a fine of $95 for each family member or 1% of taxable household income, whichever is greater Health plans can no longer exclude people from coverage based on pre-existing conditions Federal subsidies based on income available for qualified individuals/families Annual fee totaling $8 billion imposed on insurers State-based health care exchanges created Medicaid eligibility expands to 133% of the federal poverty level ($29,327 for a family of four) 13 Copyright © 2010 The Center for Health Transformation
  14. 14. www.healthtransformation.net Center for Health Transformation 2015 Mandate penalty for not having qualified health insurance increases to $325 for each family member or 2% of taxable household income, whichever is greater The annual fee on insurers increases to $11.3 billion 2016 Mandate penalty for not having qualified health insurance increases to $695 for each family member or 2.5% of taxable household income, whichever is greater 14 Copyright © 2010 The Center for Health Transformation
  15. 15. www.healthtransformation.net Center for Health Transformation 2017- 2017-2018 The annual fee on pharmaceutical companies increases to $3.5 billion in 2017 and $4.2 billion in 2018 The annual fee on insurers increases to $13.9 billion in 2017 and $14.3 billion in 2018 40% excise tax on employer-provided plans (a.k.a. Cadillac plans) (2018) The first $27,500 of a family plan and $10,200 for individual coverage is exempt; higher exemptions for retirees and people in high-risk professions 15 Copyright © 2010 The Center for Health Transformation
  16. 16. www.healthtransformation.net Center for Health Transformation Quality National Quality Improvement Strategy (2011) Center for Medicare and Medicaid Innovation (2011) 10% Medicare bonus payment to primary care physicians and other providers for certain services (2011) Value-based purchasing programs for hospitals, home health, skilled nursing facilities, and ambulatory surgical centers (2011-2012) Medicare and Medicaid Accountable Care Organization pilots on shared savings and coordinated care (2012) 16 Copyright © 2010 The Center for Health Transformation
  17. 17. www.healthtransformation.net Center for Health Transformation Quality National Quality Improvement Strategy (2011) Center for Medicare and Medicaid Innovation (2011) 10% Medicare bonus payment to primary care physicians and other providers for certain services (2011) Value-based purchasing programs for hospitals, home health, skilled nursing facilities, and ambulatory surgical centers (2011-2012) Medicare and Medicaid Accountable Care Organization pilots on shared savings and coordinated care (2012) 17 Copyright © 2010 The Center for Health Transformation
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  19. 19. www.healthtransformation.net Center for Health Transformation 19 Copyright © 2010 The Center for Health Transformation
  20. 20. IMPLICATIONS & RECOMMENDATIONS © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 20
  21. 21. Can You Match the Legislation to its Length? A. 1935 Economic Security Act 1. 4 pages B. Civil Rights Act of 1964 2. 8 pages C. Patient Protection and Affordable Care Act 3. 1 page D. 19th Amendment to the 4. 64 pages Constitution E. Constitution 5. 2074 pages © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 21
  22. 22. Welcome to “Implemageddon” © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 22
  23. 23. Implications for Payers Key Themes Actions • Under the Microscope • Move fast on performance • Regulatory Tsunami management and • Funding, Fees & business intelligence Taxes • How will matter as much as What…maybe • Coverage & more Portability • Product & Business • Explosion of Model Innovation Information Technology & Data • Value Chain Alignment & Collaboration © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 23
  24. 24. Performance Management & BI • Few payers have sophisticated approach to data to manage performance of people processes & technology – Few recognize the gap – Even fewer take effective action on the data they do have • Fragmented and misaligned strategic initiatives including new products and services, information technology & performance improvement – Vertical versus horizontal focus – Proliferation of strategic and technology projects consumes critical resources with un-measurable impact • Negligible focus on leveraging business process intelligence => companies aren’t sure they get the outcomes they expect…or need Transparency & reporting requirements from new legislation will be painful for many © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 24
  25. 25. How vs. What • MLR is driven by “how” things are done • Reclassifying expenses will draw scrutiny • Most insurers will struggle to meet standards – Median MLR has grown from 83% in 2007 to 84% in 2009 => half of all plans likely exceed the cap • Regulatory Tsunami • Litany of new regulations and implicit additional corrective legislation will require agility in operational, risk, compliance and reporting processes • Changing customer mix will put pressure on margins • Expected shift from employer coverage to individual coverage © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 25
  26. 26. How vs. What Nearly 100% of Process Areas Impacted by 2018 Source: PwC Health Research Institute Process focus may determine the winners from the losers © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 26
  27. 27. Innovation • Competitive advantage from legacy products will be difficult as state health insurance exchanges drive commoditization and competition based on price and quality • But…new market opportunities will emerge – Outsourcing of Expertise/Capabilities? • Management of state health insurance exchanges • Management & reporting of quality/cost data for health plans – Value-add opportunities to providers • Advisory • EMR implementation © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 27
  28. 28. Value Chain Focus Wellness Outcomes & Primary Diagnosis Treatment Payment Reporting Care • Opportunities abound in partnerships, alliances, “virtual” integration • Wellness management and counseling in partnership with providers • Chronic condition management • Focus on continuous flow of value delivery to the patient © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 28
  29. 29. Summary • Close gaps in performance management and business intelligence – Accurate reporting is table stakes – “The right data to take the right actions” – Imbed practices into the culture through Cycles of Use • Pay attention to “how” things get done as much as “what” needs to get done – Lean Six Sigma/BPR to streamline key processes – Build speed and agility in at every opportunity – Engage the entire organization – those who know the process best do it every day • Innovation and inspiration – Incorporate ideas from outside the industry – Ritz Carlton; 3M; Skunkworks – Maturity and understanding of VOC will be critical • Basic element of business in the future will be the end-to-end Value Chain – systems thinking will replace functional thinking Success in a post-reform world will require “implementation” beyond MEETING requirements © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 29
  30. 30. Questions © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 30
  31. 31. Thank You Guidon Performance Solutions 866-986-4414 or 480-986-4414 contact@guidonps.com www.GuidonPS.com Follow us on Twitter @GuidonPS © 2010 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 31

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