2016 FEDERAL ELECTION INSIGHTS AND LEGISLATIVE UPDATES. Chad Mulvany, FHFMA Director, Healthcare Finance Policy, Strategy and Development HFMA
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1 2016 FEDERAL ELECTION INSIGHTS AND LEGISLATIVE UPDATES Chad Mulvany, FHFMA Director, Healthcare Finance Policy, Strategy and Development HFMA 1
2 Agenda The Election What Changes As a Result? What Comes After? 2
3 2016 Elections Current Political Landscape Republicans 247 Democrats 186 Vacancies 2 Republicans 54 Democrats 44 Independent 2 3
4 2016 Elections Gridlock 4
5 2016 Elections Republican Policy Proposals ACA, Medicaid, Commercial, and Malpractice Proposed Legislation and Policy Whitepapers Share Common Themes Title I: Title II: Title III: Title IV: Title V: Title VI: Repeal the ACA Replace the ACA with Sustainable Patient Centered Reforms Modernize Medicaid Reduce Defensive Medicine Increase Price Transparency to Empower Consumers Reduce Distortion in the Tax Code that Increases Health Costs Source: 5
6 2016 Elections Republican Policy Proposals Medicare If Enacted, Republicans Would Make Significant Changes to Medicare Source: 6
7 2016 Elections Democrat Policy Proposals ACA, Medicaid, and Commercial Democrats Will Continue Supporting the ACA an Attempt to Expand on Its Reforms Area Medicaid ACA Affordability Proposed Policy Support increased federal match rates (100% match for the first three years) in order to encourage all states to expand Medicaid. Repeal the Cadillac tax. Enhance affordability. Allow all immigrants to buy ACA marketplace coverage. Create a tax credit up to $2,500 for individuals and $5,000 for families to help pay high out-of-pocket medical costs. Prohibit providers from charging out-of-network rates when a patient visits a facility covered by their insurance plan. Require insurers pay for at least three doctors visits. Cap monthly ($250) and annual out-of-pocket costs for prescriptions drugs (only applies to prescription drugs covered by insurance). Allow individuals to buy in to Medicare at a certain age. Sources: 1) Trump vs. Clinton: Policy Perspectives, Ernst and Young; August ) 7
8 2016 Elections Democrat Policy Proposals Pharmaceuticals and Medicare A Democrat Administration Would Aggressively Address Pharma Costs While Making Incremental Medicare Changes Area Pharmaceuticals Medicare Proposed Policy Lower biologic exclusivity period from 12 to 7 years. Allow re-importation of drugs from countries with safety standards as strong as those in America. Use the results of private sector comparative effectiveness research (CER) analyses to hold drug companies accountable for their costs. Prohibit pay-for-delay deals. Continue implementing alternative payment models. Allow Medicare to negotiate drug and biologic prices. Extend Medicaid drug rebates to Part D low income subsidy (LIS) beneficiaries. Sources: 1) Trump vs. Clinton: Policy Perspectives, Ernst and Young; August ) 8
9 2016 Elections The Presidential Election Both Candidates Have Historically High Unfavorable Ratings Source: 9
10 2016 Elections How Did We Get Here? Only 9% of the Total U.S. Population Voted for Either Mr. Trump or Secretary Clinton in the Primary Whichever Candidate Can Best Appeal to and Turnout Passive Members of the Electorate Will Win the Election. Source: 10
11 2016 Elections Current Polling Coming Out of the Conventions, Secretary Clinton Appears to Be Building A Lead Source: ?mod=wsj_streaming_latest-headlines 11
12 2016 Elections A Word of Caution About Polls Source: 12
13 2016 Elections Predicted Outcomes Models Based on Polling and Economic Data Show Secretary Clinton Winning the White House RCP Electoral College Map As of Aug. 11, 2016 Quantitative Models Clinton: 256 Toss-up: 128 Trump:154 July, Electoral College Votes Required to Win Moody s Analytics is forecasting that Hillary Clinton, the presumptive Democratic nominee, will easily win the presidency in November over Republican Donald Trump, the June forecast predicts. Sources: 1) )
14 2016 Elections House Race 218 Seats Are Required for A Majority in the House. Republicans Will Likely Hold the Chamber. Current: Projected: Safe R Likely R Leans R Toss-up IND Likely D Leans D Safe D Source: 14
15 2016 Elections Senate Race The Senate Race Is Up in the Air. While 51 Seats Are A Majority, Moving Legislation Along Party Lines Requires 60 Votes. Current: Projected: Safe R Likely R Leans R Toss-up IND Likely D Leans D Safe D Source: 15
16 Agenda The Election What Changes As a Result? What Comes Immediately After? 16
17 What Changes? Future Political Landscape White House? House of Representatives Senate 17
18 What Changes? More Gridlock 18
19 What Changes? Opportunities to Compromise? While There Are Few Big Opportunities for Compromise There Is Potential for Changes to the Medicare Program Potential Policy Common Ground Between Republicans and Democrats Repeal Medical Device Tax Repeal the Independent Payment Advisory Board Further Adjustments to the Cadillac Tax Outcome-Based Payments Medicare Paper-Cuts Medicare Tweaks Beneficiary Cost Sharing/Medigap Short Stays Uncompensated Care Payments 19
20 What Changes? Supreme Impact Regardless of Who Wins the Next President Will Nominate at Least One Supreme Court Justice 20
21 What Changes? What s Next on The Docket? An ACA Case Over Funding for Cost Sharing Subsidies in the Exchange Is Likely to Be Decided By the Supreme Court May 12, 2016 Judge Strikes Down Obama Health Law Insurance Subsidy in Victory for House GOP A federal judge struck down a portion of President Obama s Signature Affordable Care Act Health Law Thursday, ruling that the Obama exceeded his authority in unilaterally funding a provision that sent billions of dollars in subsidies to health insurers. Source: 21
22 Agenda The Election What Changes As a Result? What Comes Immediately After? 22
23 What s Next? The Lame Duck 23
24 What s Next? Site Neutral Payment Sec.603 of the BiBA of 2015 Imposes A Moratorium on New Provider Based Clinics By Codifying CMS s Definition of Provider Based Clinic: Main Provisions of Sec. 603 BiBA 2015 Not on main campus and more than 250 yards from main campus Not a dedicated emergency department Excludes: New PBD HOPD defined as entity that executed CMS provider agreement after enactment date (Nov 1, 2015) Effective Jan. 1, 2017 new entities will not eligible for outpatient Prospective Payment System (OPPS) reimbursement; rather, reimbursement will be paid through ASC or PFS schedules 24
25 What s Next? Provider Based Proposed Rule The 2017 OPPS Proposed Rule Aggressively Interprets Section 603 Main Provisions of OPPS Proposed Rule 1. Clinic Relocation: Off-campus PBD would lose its excepted status if it is moved or relocated from the physical address. 2. Expansion of Services: If a excepted clinic adds services they are not payable under OPPS. 3. Change of Ownership: The excepted status of an off-campus PBD transfers to new ownership only if (1) the main provider is also transferred, and (2) the provider agreement is accepted by the new owner. 4. Transitional Payment Policy: Unless the non-excepted clinic converts to a freestanding provider type (e.g. physician clinic or ASC) there will be no payment made directly to the hospital for the next 12 months. 24
26 What s Next? Hospital Readmissions Reduction Program More than Half of PPS Hospitals in FY 2018 Are Penalized Under the HRRP Losing More than $500m in Payments Source: 26
27 What s Next? No Surprise: Patient SES Matters MedPAC Data Shows Hospitals with More Economically Challenged Patients Have Higher Readmission Rates Share of Beneficiaries on SSI Heart Failure Readmission Rates By SSI Percentage HF Readmissions Rate as A Share of National Avg Median Penalty Share w/ No Penalty 1-2% % 57% Over Source: 27
28 What s Next? Legislative Relief? The House Passed A Bill Providing Limited Relief to Non-Excepted HOPDs and Addresses SES Adjustment in the Readmissions Penalty Source: 22
29 What s Next? MACRA Delay? Source: 29
30 What s Next? Physician Reported Patient Relationship Codes MACRA Requires Physicians to Report Patient Relationship Codes on Claims Filed as of January 1, 2018 Draft Patient Relationship Categories 1. Clinician who is the primary health care provider responsible for providing or coordinating the ongoing care of the patient for chronic and acute care (Acute Care) 2. Clinician who provides continuing specialized chronic care to the patient (Acute Care) 3. Clinician who takes responsibility for providing or coordinating the overall health care of the patient during an acute episode (Continuing Care Relationship) 4. Clinician who is a consultant during the acute episode (Continuing Care Relationship) 5. Clinician who furnishes care to the patient only as ordered by another clinician (Acute Care or Continuing Care Relationship) 30
31 What s Next? IPAB Timeline 2018 The Most Recent CMS Actuary Report Suggests the IPAB Threshold Could be Triggered Next Year April Sept 1 Jan 2019 Mar 1 April 1 Aug 15 Oct 1 Jan 1 Medicare actuaries determine if Medicare growth rate exceeds target growth rate IPAB submits draft recommendations to MedPAC & HHS Sec. HHS Sec. & MedPAC report on IPAB proposal HHS Sec. implements recommendations CY payment rate recommendations effective 15 th : IPAB submits proposal to President & Congress 25 th : HHS Sec. submits proposal to Congress (if IPAB doesn t) Deadline for Congressional committees to act FY payment rate recommendations effective Source: 31
32 What s Next? Economic Conditions A Recession Is Likely in the Next 24 Months. June Conference Board Leading Economic Indicator Index Bringing with it a Negative Impact on Provider Rates It could be that Medicare prices are held flat or cut. The one thing that the federal government can control is prices; it can t really control utilization. Charles Roehrig, PhD Founding director at Altarum s Center for Sustainable Health Spending Sources: 1) 2) 32
33 What s Next? Unsustainable Debt Reducing Outstanding Federal Debt to the Historic Average Would Require $4 Trillion in Deficit Reduction 33 Source:
34 On the Menu The Most Recent Bowles-Simpson Plan Suggests $585 Billion in Healthcare Savings Potential Federal Healthcare Savings: Bowles-Simpson Deficit Plan 3 Post Acute: Reduce Market Basket Update Site Neutral Payment Policy Value-Based Purchasing Post Acute Bundling 1 $70B $190B Beneficiaries: Reform Cost Sharing - $90B Increase Eligibility Age - $65B Income Relate Part B & D Deductible - $65B Hospitals: Medicaid Provider Tax - $65B Phase Out Bad Debts - $35B Reduce IME/GME - $20 Reduce CAH - $10B 2 $130B $60B 4 Delivery System: Penalties for HACs/Readmits Payment Bundling Increase Transparency Strengthen IPAB Beneficiary Delivery System Fraud Abuse Hospital Malpractice Pharma Post Acute Care 34
35 Questions? Chad Mulvany Director, Healthcare Finance Policy, Strategy and Development HFMA 1825 K St NW Suite 900 Washington, DC Office: dmulvany@hfma.org 28
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