Making Sense of Healthcare Reform: Insights From a HMMC Seminar

The following are excerpts from a HMMC (www.hmmc.com) seminar presented by Andrew Van Ostrand, HIDA VP Policy and Research.

Healthcare Reform Highlights

• 32 million will have access to some form of insurance
• Medicaid expansion, creation of insurance Exchange, premium subsidies, and subsidies to qualifying small businesses
• Projected to cost $940 billion over ten years; reduce deficit by $143 billion
• $420 billion in revenue through tax on high-cost insurance plans, Medicare cuts, penalty tax on employers and uninsured individuals, medical device tax
• Individual insurance mandate / Employer shared responsibility

What does reform mean for:

HOSPITALS

Win

• Millions in payments for “qualifying hospitals” in 2011-2012, located in traditionally low-cost Medicare service areas
• New financial incentives and reporting requirements to ensure higher quality of care, reduce hospital readmissions, and decrease medical errors and HAIs
• Uncompensated care provided by hospitals will decrease
• Final legislation reduces DSH cuts

Loss

• Hospitals agreed to billion in payment reductions and DSH cuts over ten years
• May be subject to recommendations by Independent Medicare Advisory Board
• Market basket update would be reduced 0.25% in FY10-11, 0.1% in FY12-13; conditional reduction of 0.2% FY14-19

PHYSICIANS

Win

• Medicaid payments will be equal to Medicare in 2013-14 for primary care physicians
• Medicare incentive payments to primary care physicians
• General surgeons in professional health shortage areas eligible for bonus payments
• Reallocation of vacant residency slots for states with doctor shortages
• Increased grants and scholarship opportunities for primary care doctors

Loss

• Primary care docs who see Medicaid patients will face a budget cliff in 2015
• No permanent fix for SGR
• Pilot program to bundle payment
• Pilot program for tort reform

EXTENDED CARE

Win

• No targeted reductions to the SNF market basket for 2010, 2011
• Mandates a GAO study on the Five-Star Quality Rating System
• Some funding for long term care facilities health IT investments
• Creates a new Medicare, home-based attendant program for people with disabilities, reducing strain on nursing homes
• CLASS Act creates new funding scheme for home- based, non-medical expenses

Loss

• Expands DMEPOS Competitive Bidding Program
• Expands the RAC audit program into Medicare part C and D
• Reduces the SNF market basket update in 2012, requires additional background checks for SNF employees
• Requires HHS to consider DME supplier volume when setting surety bond requirements/levels
• Eliminates 2% payment rate increases included in Round 1 of competitive bidding

MANUFACTURERS

MEDICAL DEVICE EXCISE TAX

• Excise tax is to be paid by manufacturers when they sell a medical device at the point of first product sale –to an end user or a distributor
• Class I device tax exemption was removed; narrow Class I exemptions remain for certain retail sales only
• Tax rate was reduced to 2.3% from 2.9%, and collection will begin in 2013 instead of 2011
• Federal government will see $20 billion in revenue from the tax, as opposed to $40 billion proposed initially

Medical Device Tax Advocacy: Distribution Impact

PHYSICIAN PAYMENTS SUNSHINE PROVISION

• Manufacturers of drug, device, biologics, and medical supplies covered under Medicare, Medicaid, or SCHIP must report payments made to physicians on an annual basis
• Requires manufacturers to begin reporting gifts or payments worth more than $10 no later than March 31, 2013
• Reports will be made publicly available online by HHS
• About 12 states have or are considering gift disclosure requirements; new law does not preempt state reporting requirements