Affordable Care Act: Up Next for Health Reform PwC’s Health Research Institute

www.pwc.com
Affordable Care Act:
Up Next for Health Reform
PwC’s Health Research Institute
February 2015
Table of Contents
Section Topic
Slide #
I
ACA timeline
3
II
ACA access/coverage
5
III
ACA fees and taxes
13
IV
Industry shifts
18
V
Regulatory/legislative issues
32
VI
What remains?
36
PwC Health Research Institute
2
ACA timeline
PwC Health Research Institute
3
ACA roll out hit its stride in 2014
2014 brought new coverage:
– Medicaid expansion
– Insurance exchange coverage
– Individual mandate takes effect
–
Additional consumer protections
pre-exist condition coverage, no annual limits,
waiting periods < 90 days for coverage (Jan 2014)
Insurer
Provider
Consumer
Pharma/Life Sciences
Employer
Medicare payments for hospital acquired
conditions reduced by 1% (Oct 2014)
End of Medicare Advantage
Star payment demonstration (Dec 2014)
2014
Employer mandate kicks in
2015
Medicare Part D
donut hole closed
(Jan 2020)
2020
High cost plan
excise tax (Jan 2018)
ICD-10
Enhanced wellness
incentives (July 2014) Implementation
(Oct 2015)
Source: PwC Health Research Institute
PwC Health Research Institute
4
ACA access/coverage
PwC Health Research Institute
5
Most will get coverage in the first few years of ACA
expansion
Projected Enrollment by Year
45
42
Millions of People
40
35
30
25
20
36
Actual 2015
enrollment:
11.4M
Marketplace
10.8M Medicaid*
15
10
5
7
31
12
21
11
13
2015
2016
30
30
25
25
13
14
29
29
25
24
15
16
6
0
2014
2017
2018
Exchanges
2019
Medicaid
2020
Uninsured
* Marketplace enrollment as of February 15, 2015; Medicaid enrollment as of December 2014.
Sources: Congressional Budget Office January 2015 Budget and Economic Outlook; Congressional Budget Office April 2014 Baseline.
Numbers could change if more states expand their Medicaid programs.
PwC Health Research Institute
6
The 2015 health exchange landscape
2015 national
premium
increase of
around 5.4%
Average 2015
pre-subsidy
premium about
$389
Among
finalized states,
premiums
rising by about
3.7%
To access HRI’s interactive premium map, visit: www.pwc.com/hri
PwC Health Research Institute
7
Most 2014 exchange enrollees selected mid-level
coverage
• Silver plans were the most popular choice among exchange shoppers
• About 85% of those who selected an exchange plan were eligible for
financial assistance
Platinum
5%
No
Assistance
15%
Catastrophic
2%
Gold
9%
Financial
Assistance
85%
Bronze
20%
Silver
65%
Source: ASPE, “Health Insurance Marketplace: Summary Enrollment Report for the Initial Open Enrollment Report”, May 2014.
PwC Health Research Institute
8
Medicaid Expansion by State*
States Expanding Medicaid
States Not Expanding Medicaid
States to Watch
WA
MT
ND
MN
OR
ID
WI
SD
NY
MI
WY
PA
IA
NE
NV
OH
UT
IL
IN
KS
VA
MO
OK
NM
DC
NC
AR
SC
AK
MS
TX
RI
CT
DE
MD
KY
TN
AZ
N
J
WV
CO
CA
ME
N
V
T H
MA
AL
GA
LA
FL
HI
*As of February 25, 2015
Source: http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/
PwC Health Research Institute
9
Across for-profit and non-profit hospitals, the
Medicaid and self-pay mix improved in expansion
states and held steady in non-expansion states
% of Total Charges by Payer
in Medicaid Expansion
States
Commercial /
Other
% of Total Charges by Payer
in Medicaid Non-Expansion
States
40.8%
39.3%
39.6%
39.3%
39.2%
38.8%
42.0%
42.1%
Medicaid
15.3%
18.8%
13.6%
13.6%
Self-Pay
4.7%
3.1%
4.8%
5.0%
Q1 2013
Q1 2014
Q1 2013
Q1 2014
Medicare
Source: HRI analysis, Center for Health Information and Data Analytics , Colorado Hospital Association, June 2014.
PwC Health Research Institute
10
In Medicaid expansion states, the shifts between
Medicaid and self-pay admissions were dramatic
Medicaid Expansion States
Community
Healthy
System
HCA
IA SIS
Medicaid Non-Expansion States
Tenet
Healthcare
Community
Healthy
System
HCA
IA SIS
Tenet
Healthcare
17.0%
10.0%
4.0%
-28.0%
Same Facility Admissions
(Q1 2014 vs Q1 2013)
Same Facility Admissions
(Q1 2014 vs Q1 2013)
22.3%
5.9%
0.9%
-1.0%
-1.3%
-8.1% -8.1%
2.0%
-9.7%
-29.0%
-33.0%
-40.8%
Medicaid admissions
Self-pay admissions
Source: HRI analysis of hospital public financial data.
http://www.pwc.com/us/en/health-industries/health-research-institute/assets/pwc-hri-medicaid-report-final.pdf
PwC Health Research Institute
11
The future of federal exchange subsidies
Halbig v. Burwell
King v. Burwell
DC Circuit Ct
Supreme Ct to review in
March 2015
Ruling: ACA does not
authorize subsidies
Full en banc review
No subsidies
Ruling: IRS has authority
to apply subsidies to FFM
Pruitt v. Burwell
Indiana v. IRS
US District Ct - OK
US District Ct - IN
Ruling: Subsidies, employer
mandate, and individual
mandate only legal under
SBE
Ruling: Not decided.
Plaintiff argues IRS does
not have authority to apply
subsidies to FFM
PwC Health Research Institute
Subsidies
12
ACA fees and taxes
PwC Health Research Institute
13
ACA fees and taxes
Patient Centered
Outcomes Research
Institute (PCORI) fee
Fee is $1 times the average number
of lives covered under the plan for that
plan year. Applies to policy or plan
Health insurance
industry fee
Cadillac tax
Employers taxed 40% on
Assessed annually starting at
health plan benefits above a
threshold.
and gradually increasing to
$8B
$14.3B in 2018; indexed to
premium growth thereafter.
years ending on or after 10/1/12 and
before 10/1/19.
2012
2014
2011
2013
Pharmaceutical
industry fee
Started at $2.5B and
will peak in 2018 at
$4.1B.
Medical device
tax
2.8% excise tax
expected to bring in
$29.1B over 10 years.
2018
2015
Transitional
reinsurance
program fee
Intends to collect $25B
from group health plans
during 2014-2016.
Employer
mandate
Will hit employers with
100 or more employees
in 2015; it will impact
employers with 50 or
more employees in
2016.
PwC Health Research Institute
14
CMS readmissions penalties
According data released by CMS on October 1, 2014:
2,610
3%
5
hospitals fined for having too many patients
return within 30 days for additional treatments
amount of each Medicare payment that hospitals
with the highest readmission rates stand to lose—
up from the 2% maximum penalty last year
categories of patients for which Medicare evaluated
readmissions—up from 3 categories assessed in
prior years
Source: Jordan Rau. “Medicare Fines 2,610 Hospitals In Third Round Of Readmission Penalties.” Kaiser Health News. October 2, 2014.
http://kaiserhealthnews.org/news/medicare-readmissions-penalties-2015/
PwC Health Research Institute
15
Hospital-acquired condition penalties
1%
amount that hospitals are penalized for
acquired conditions
10
types of hospital acquired conditions
760
approximate # of hospitals expected to be
penalized for acquired conditions
Source: Jordan Rau. “Medicare Fines 2,610 Hospitals In Third Round Of Readmission Penalties.” Kaiser Health News. October 2, 2014.
http://kaiserhealthnews.org/news/medicare-readmissions-penalties-2015/
PwC Health Research Institute
16
Medicare Value-Based Purchasing Program
CMS initiative rewards acute-care hospitals with
Medicare incentive payments for quality care
Payment rates reduced to all hospitals by 1% in
FY2013, 1.25% in FY2014; 1.5% in FY2015
Last year, Medicare raised payment rates for 1,231
hospitals and decreased payments to another 1,451
PwC Health Research Institute
17
Industry shifts
PwC Health Research Institute
18
ACA Demonstration Programs
Medicare ACO
demonstrations
Comprised of four programs. In
2013, generated over $370M in
savings for Medicare.
Duals
demonstration
13 demonstrations in 12 states,
1.5M beneficiaries. Slow start
– first year mark in July 2014.
Medicare Advantage
Stars demonstration
Bonus payments for 3 or more
stars end Dec 2014. Number of
MA plans will decrease by 3% in
2015.
PwC Health Research Institute
19
Accountable Care Organizations
Medicare
Shared Savings
Program
Pioneer ACO
Model
Upside/downside risk
(optional)
Upside/downside risk
Supplementary
Recently announced
Cut down to 19 from 32
35 participants
Only 11 of 23
organizations earned
savings in year 1 (2012
or 2013)
Advance payments
that are repaid from
future shared savings
For ACOs
participating in the
MSSP
53 out of 220 earned
performance payments
of $300M in year 1
(2012 or 2013)
Advance Payment
ACO Model
ACO Investment
Model
Pre-paid shared
savings
Geared toward rural
and underserved
areas
Source: http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2014-Fact-sheets-items/2014-09-16.html
PwC Health Research Institute
Builds on Advance
Payment Model
Slide 20
20
CMS Innovation Center
Innovation Model Categories
Accountable Care
Bundled Payments for Care Improvement
Number of
Participants
275
6,820
Primary Care Transformation
962
Initiatives Focused on the Medicaid and CHIP Population
204
Initiatives Focused on the Medicare-Medicaid Enrollees
19
Initiatives to Speed the Adoption of Best Practices
179
Initiatives to Accelerate the Development and Testing of New Payment
and Service Delivery Models
204
Source: http://innovation.cms.gov/initiatives/index.html#views=models
PwC Health Research Institute
Slide 21
21
CMS expands reimbursement for telehealth
services
Payments to
telehealth
will increase
by 0.8% in
2015
PwC Health Research Institute
Increased
payments for
chronic care
management and
7 new covered
procedure codes
22
Physicians tell us their payment models are
changing
51%
24%
Of clinicians said that in 5 years, 3/4 of
their total revenue will come through
channels other than fee-for-service
Said their practice was likely to
partner or merge with a hospital,
resulting in full employment by
the hospital
Source: HRI Clinician Survey, 2014
PwC Health Research Institute
23
Public release of Physician Sunshine data prompts
scrutiny of provider/pharma relationships
Pharma/med device payments to providers,
per resident (2010 - 2013)
MA
DC
FL
MD
SC
MO
PA
NY
CA
GA
CO
KY
ND
MN
ID
OK
MI
LA
WI
NH
DE
NM
IA
MS
HI
WY
$0.00
MA: $28.48
From Aug –
Dec 2013, pharma and
med device companies
spent a total of
OR: $9.80
$3.5B
on
hospital and physician
payments
WY: $1.02
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Source: PwC analysis, ProPublica Dollars for Docs database, 2013 US Census bureau population estimates
PwC Health Research Institute
24
Patient Centered Outcomes Research Institute
(PCORI)
$674 million
awarded
400
research projects
approved
42
states with research
funded
• Average requested project budget in 2014 was $2.3 M
• Largest requested budget ($30 M) for a clinical trial on fallrelated injury prevention
• Five national priorities for PCORI research
• Average duration of 2.5 years for projects funded to date
• Average of four projects per state (2012 – 2014)
• CA has most funded projects (54), followed by MA (42)
Source: PwC analysis of PCORI data. October 2014. http://www.pcori.org/researchresults?combine=&state=All&area=All&research=All&program=All&order=field_award_year&sort=desc
PwC Health Research Institute
25
ACA encourages competition in the biologics
market
Biologic: any
therapeutic product
derived from a
biological source
Biosimilar: subsequent
version
of an original biologic that
has the same mechanism but
isn’t an identical product
Spending on the top seven
biologics alone represented
about
Competition from biosimilars
would reduce drug spending by
roughly
of Part D spending in 2010.
over 10 years.
43%
$25 billion
Source: Health Affairs. Health Policy Brief. Biosimilars. October 10, 2013. http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_100.pdf
PwC Health Research Institute
26
New entrants are aiming to disrupt the $3 trillion
US health economy
Source: HRI analysis and Centers for Medicare and Medicaid Services National Health Expenditures (2012)
PwC Health Research Institute
27
Venture funding of digital health outpaces
traditional healthcare sectors
Growth in venture funding (2013 vs. 2012 and 2014 vs. 2013)
127%
Legend
2013 vs. 2012
2014 vs. 2013
77%
61%
30%
29%
29%
Med Device
21%
10%
9%
All Venture Funding
Software
Digital Health
Biotech
-17%
Source: http://www.slideshare.net/RockHealth/rock-health-2014-year-in-review-funding-1
PwC Health Research Institute
28
Regulatory/legislative issues
PwC Health Research Institute
29
Medical Device Tax
What it is
Current Impact
• 2.3% excise tax that
manufacturers and
• $29B over a decade
importers will pay on
sales of medical devices
2015 Possible Changes
• Potential repeal with
bipartisan opposition
to the tax in Congress
PwC Health Research Institute
2015 Impacts
• If repealed, there is a
need to determine how
to recoup the revenue
from the tax
30
Individual Mandate
What it is
• Requires that all
eligible Americans have
at least basic coverage
starting January 1,
2014
Current Impact
• If individual does not
maintain coverage, fee
is issued for each
month individual is not
covered
2015 Expected Changes
• Tax penalties for
individuals rise in the
next year
PwC Health Research Institute
2015 Impacts
Tax Penalties:
• 2014: $95/ adult 
• 2015: $325/ adult
31
Employer Mandate
What it is
• All businesses with
over 100 FTEs must
provide health
insurance to full-time
employees
Current Impact
• If employer does not
offer coverage,
business is penalized
2015 Expected Changes
• Employers must start 2015 Impacts
insuring workers by
• The annual fee is
2015 (large business)
$2,000 per employee if
and by 2016 (small
insurance isn’t offered
business)
(first 30 FTEs exempt)
PwC Health Research Institute
32
What remains?
PwC Health Research Institute
33
Even in 2015, certain elements of reform have yet
to unfold
Cadillac
tax
Medicaid
expansion
2015 and
beyond
Federal
subsidies
?
King v.
Burwell
Employer
mandate
Exchange
market
PwC Health Research Institute
34
For more information
www.pwc.com/hri
PwC Health Research Institute
35