Navigating the Post-Health Care Reform Landscape
- 1. NAVIGATING THE POST-HEALTH CARE REFORM LANDSCAPE
- 2. THE RISE OF THE “ACCOUNTABLE CARE ORGANIZATION” –“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
- 3. THE HOSPITAL AS THE NEW “DOMINANT” PLAYER • 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
- 4. HORIZONTAL INTEGRATION •Acceleration of an existing trend for hospitals to merge into larger and larger “health systems” – Nearly 40% of hospitals – 50% increase post-ACA
- 5. VERTICAL INTEGRATION •Health systems becoming more aggressive in acquiring ancillary/downstream services – Rehab and long-term care hospitals – SNFs – Ambulance?
- 6. EMS ACQUISITION ACTIVITY • 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!!
- 7. A SUCCESS STORY •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
- 8. ON THE OTHER HAND… •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
- 9. THE RISE OF THE FREE-STANDING ED • 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
- 10. “SPOKE AND WHEEL” MODEL
- 11. COST-CONTAINMENT • 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%
- 12. COMMUNITY PARAMEDICINE •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
- 13. THE HEALTH EXCHANGE MARKETPLACES
- 14. 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
- 15. 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
- 16. 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 – $94,200 • Subsidies will be a sliding scale based on income – e.g., individual making up to 133% of the FPL will be required to pay no more than 2% of income – e.g., individual making 400% of the FPL will be required to pay up to 9.5% of income NOTE: premium subsidies can be applied to any level of insurance
- 17. Operation of Subsidies • Law sets the maximum amount an individual or family must pay – As a percentage of household income – 4% of household income at 150% of FPL – 9.5% of household income at 300% of FPL • Subsidy then makes up difference between that amount and cost of second lowest priced silver plan sold in your area
- 18. Premium Subsidies Examples Income (% of FPL) Income ($) Premium as % of Income Insurance Premium Family Contribution Amount of 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
- 19. 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
- 20. The Bumpy Road to Implementation
- 21. ENROLLMENT DATA State/Federal Marketplace Plans Medicaid 9,000,000 4,377,932 51.4% Sources: CBO Projections Actual Data % of Projections 7,000,000 ~8,000,000 114% Marketplace: President Obama Press Conference, April 14, 2014 Medicaid: HHS Press Release, March 11, 2014
- 22. SELECTED STATE ENROLLMENT DATA State Enrolled in Marketplace Plan Source: HHS Press Release, March 11, 2014 Medicaid Eligible 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
- 23. ENROLLMENT DATA Source: HHS Press Release, March 11, 2014
- 24. ENROLLMENT DATA LEVEL OF INSURANCE Bronze Silver Gold Platinum Catastrophic Florida 14% 65% 9% 12% 1% Texas 21% 62% 11% 4% 1% Nation 19% 62% 12% 7% 1% Source: HHS Press Release, February 12, 2014
- 25. INDIVIDUAL MANDATE HARDSHIP EXEMPTIONS •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
- 26. IMPLEMENTATION DELAY EMPLOYER MANDATE • 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%
- 27. IMPLEMENTATION DELAY OUT-OF-POCKET CAPS •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
- 28. Premiums v. Deductibles Deductibles Premiums
- 29. Comparison of Anthem Plans Milwaukee, WI Plan Monthly Premium Annual Deductible Max Out-of- Pocket DirectAccess Bronze (POS) $730 Individual: $6,300 Family: $12,600 Individual: $6,350 Family: $12,700 DirectAccess Silver (POS) $904 Individual: $3,000 Family: $6,000 Individual: $3,600 Family: $7,200 DirectAccess Gold (POS) $1,221 Individual: $750 Family: $1,500 Individual: $6,000 Family: $12,000
- 30. Comparison of Dean Plans Madison, WI Plan Monthly Premium Annual Deductible Max Out-of- Pocket Value Focus Bronze (EPO) $667 Individual: $6,000 Family: $12,000 Individual: $6,000 Family: $12,000 Classic Silver (HMO) $721 Individual: $4,500 Family: $9,000 Individual: $4,500 Family: $9,000 Copay Plus Gold (EPO) $966 Individual: $1,000 Family: $2,000 Individual: $3,000 Family: $6,000
- 31. Strategies for Handling Patient Deductibles
- 32. 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, or 2. Timely filing limit is hit
- 33. 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”
- 34. 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
- 35. 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)
- 36. 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
- 38. Brian Werfel, Esq. A.A.A. Medicare Consultant 631-265-5650 bwerfel@aol.com
- 39. The Lighter Side of EMS
Editor's Notes
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