The meeting was called to order at 5:27 by the Chairman of the Executive Committee, Joseph Szot, M.D.

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Carver College of Medicine Fall Faculty Forum:

Health Care Reform Legislation - Its Implementation and Impact on

UI Health Care

Tuesday, October 26, 2010

Presenters: Vice-President Jean Robillard, Assistant Vice President for Health Policy Stacey Cyphert and Director, and MPH Program in Health PolicyBrian Kaskie The meeting was called to order at 5:27 by the Chairman of the Executive Committee, Joseph Szot, M.D.

Dr. Robillard’s power point presentation can be viewed at: ex.html

Brian Kaskie noted that further information is available at the College of Law website in the form of healthcare reform act seminars. The power point slides and podcast of the lectures are available at:

The following information in black is condensed from the power point presentation. The items in red print represent discussion at the meeting.

Dean Robillard began with a historical perspective, going back as far as1912 when Theodore Roosevelt endorsed social insurance including health insurance. Congress passed the Social Security Act in 1935. Military Medicare is created in 1956. In 1965 Medicare and Medicaid programs are signed into law.

The primary goals of health care reform are:

 Expand access to affordable health insurance to those without coverage,

 Improve the affordability and stability of insurance to those who already have it  Control rising health care costs while reducing/ not adding to the federal budget


Key benefits of the new health care law are:

1. Uninsured individuals will have increased ability to get and afford the coverage and care they need.

Insured population will increase from 83% to 94% 31-31 million additional people will be covered

2. Young adults will be eligible to stay on parents’ health insurance plan or receive subsidies to purchase coverage.


4. Small business owners will be better able to offer health coverage by receiving a tax credit.

Employee health insurance expense is predicted to remain the same while tax credit and employer contributions will change in 2014

5. More families will face fewer difficulties paying out-of-pocket expenses. 6. Beginning in 2014, insurers will be prohibited from charging higher premiums

because of gender, health status, or family history.

7. Access to preventive care and cancer screening for early detection will be increased.

8. Coverage no longer denied because of health problems and preexisting conditions.

Older adults with preexisting conditions who have been uninsured for at least six months will be eligible for subsidized insurance through a

national or state “high-risk pool” until 2014. Older adults will pay no more than four times what younger adults pay for coverage.

In 2014, insurance companies will be required to cover all individuals regardless of health status and charge the same premium regardless of preexisting conditions.

9. Individuals with functional limitations will have increased ability to continue living at home.

10. Medicare beneficiaries will receive free preventive care, including annual wellness visit, without any cost-sharing, and the prescription drug “doughnut hole” will decrease over time.

Impact of health care reform on Iowans

 Improve coverage for Iowans with private health insurance • Prohibit annual and life time limits

• Ban coverage denial for pre-existing conditions

• Eliminate recessions for individuals who become ill while insured  Extend coverage to 59,000 uninsured Iowans

 Allow 247,000 young adults to obtain coverage on their parents’ insurance plans  Potentially provide $93.3 million to the 73 community health centers in Iowa. The case for reform in Iowa

 Chronic diseases are the leading cause of death and disability in Iowa. – > one million Iowans—38% suffer from at least one chronic disease.  The significant economic cost of chronic disease to state and local governments,

communities, employers and individuals in Iowa is $7.6 billion.

 Even modest (this generated discussion as Dean Robillard clarified modest as chronic disease decreased by a third) improvements in preventing and treating disease would, by 2023, avoid 40 million cases of chronic disease in the U.S. and reduce the economic impact of chronic disease by 27 percent, or $1.1 trillion annually.


Impact on education - A concerning association was pointed out:

Each new $1.00 in State Medicaid spending takes out about $0.70- $0.80 from higher education – Brooking Institution Policy Brief , 2003

Implications for healthcare delivery

1. Health improvements through increased emphasis on prevention and wellness. 2. Health improvements through new incentives for safety, quality and care


1. Quality and Safety initiatives

2. Reward for achieving benchmark levels of performance in heart attack, heart failure, pneumonia care etc …

3. Incentive to reduce Hospital –acquired infections

4. Development of Accountable Care Organizations (ACO) 1. Reward to improve quality and decrease costs 2. Moving away from fee for service to a single

reimbursement that covers an entire hospital stay 3. Better access to community health centers

4. Electronic medical records ensure more complete and accessible records when needed.

5. Improvement of the discharge process and reduction of preventable readmissions. Accountable Care Organizations

Three Keys Attributes

– Organized care and local accountability: ACOs are teams of providers that work together to coordinate care across health care settings to improve quality for a patient and reduce costs for the entire patient population.

– Performance measurements: Participating ACOs are required to meet performance and patient outcome standards and may share in the savings. – Payment reform and share savings: ACOs change the model for taking

care of patients by integrating care, improving quality, and reducing costs. ACOs generated the vast majority of discussion in the meeting with the following


1. Who decides if an organization meets the goals (performance and outcomes)? The payor decides, whether that is Medicare, Medicaid or insurance company.

2. Is this a DRG capitated payment? To an extent with 2 differences being a. the measure of quality

b. not being part of an HMO.

3. Will outpatients be handled differently than inpatients? This is unclear at this point, but likely will start with very specific disease management. 4. Will the reform make a bigger difference to small private practice groups


5. We are rewarded for streamlining, but The Joint Commission and other regulators drive the price up. Will reform change this? The Joint Commission may accredit ACOs.

6. Is the focus on hospitals? It will be several years before this concept of ACOs actually will work. Defining what is covered by bundling will be key for transplants, dialysis patients, etc.

7. Will we have to become or join an ACO? There is no requirement to become an ACO, but incentives will be there. ACOs have been likened to a unicorn (mythical creature). The secretary of health needs to write the rules.

8. Who creates the ACO? It is believed that the payors will come to the University of Iowa, rather than us deciding how we become an ACO. 9. Will this lead to consolidation of a few big organizations? Very likely

since this is already happening in the Northeast.

10. Will payments be averaged for states or throughout the country? It is speculated that reimbursement will decrease, but is likely to benefit rural states.

11. Why are ACOs such news in Texas? There is a big rush to form ACOs in states like Texas who have a high proportion of uninsured residents (24% in Texas).

Differences between HMO and ACO

 Health Maintenance Organization (HMO) – Built on an insurance “chassis”

– State regulated, risk-bearing entity that contracts with various providers or group of providers

– Providers are paid on a fee-for-services – Patients have to be seen by HMO providers  Accountable Care Organization (ACO)

– Collection of providers (physicians and hospitals) that accepts internal payment arrangements that facilitate efficient and high-quality care. – Saving shared among all providers

– Patients do not have to belong to an ACO Healthcare Innovation Zone

Issue: Improving quality and reducing costs will require a fundamental redesign of both systems of care delivery and payment for healthcare.

Solution: AAMC has proposed the creation of a concept called HIZ designed to integrate healthcare providers and align their incentives in order to reduce costs and improve quality of care for a geographically defined population of patients. HIZ will build on ACO and medical home concepts but will be organized around AHC where education and research will allow for innovation.

Implications for health insurance coverage


a. Medicaid

b. Children’s Health Insurance Program (Hawk-I in Iowa)

c. Medicare

3. Creation of Health Insurance Exchanges

4. The Consumer Operated and Oriented (CO-OP) Program 5. Private health insurance programs

IowaCare will end 12-31-2013 and members will transition to the Medicaid expansion Fiscal impact to Iowa has many unknowns with many potential reasons for either increased or decreased cost to the state and much remains to be determined. (See slides for financial details.)

Medicare Benefits

• Provide payments totaling $400 million in fiscal years 2011 and 2012 to qualifying hospitals in counties with the lowest quartile Medicare spending. Of the $30 million obtained by Iowa, UIHC will be getting $2.4 million in FY-11 and $4 million in FY-12 Creation of health insurance exchanges


– Facilitate individuals between 133-400% of FPL to buy insurance using premium and cost-sharing credits.

– To assist small employers and small businesses to obtain coverage for employees through the exchange via what is called the Small Business Health Options Program (SHOP).

Four benefit categories of plans plus a separate catastrophic plan will be offered through the Exchange

– Bronze plan (or Essential Health Benefits package)

• represents minimum creditable coverage and provides the essential health benefits

• covers 60% of the benefit costs of the plan, with an out-of-pocket limit equal to the Health Savings Account (HSA) current law limit.

– Silver plan - covers 70% of the benefit costs of the plan – Gold plan - covers 80% of the benefit costs of the plan – Platinum plan - covers 90% of the benefit costs of the plan

– Catastrophic plan available to those up to age 30 or to those who are exempt from the mandate to purchase coverage and provides catastrophic coverage only. This plan is only available in the individual market.


 The new law contains numerous provisions reauthorizing health professions education and training programs authorized under Title VII of the Public Health Service Act.

 Through these programs, the Health Resources and Services Administration provides grants to medical and other health professions schools to improve the diversity, distribution, and supply of the health professions workforce with an emphasis on primary care and interdisciplinary education and training.  The programs fall under five categories:

– Student loans – Primary care

– Health professions training for diversity – Interdisciplinary, community-based linkages – Health professions and public health workforce Shortfall of physicians are projected

By 2012, U.S. medical schools (new and existing) plan to expand enrollment by 21% percent over 2002 levels, and they are expected to reach AAMC’s

recommended 30% expansion by 2017.

However, even with a 30% growth in GME, this will only provide

enough additional physicians to meet half of the projected shortfall. Moreover, it is important to recognize that any growth in medical school enrollment which is not accompanied by GME growth will not yield a single additional physician available to care for patients.

Implications for biomedical research

The new law includes several provisions that affect medical research broadly and the National Institutes of Health (NIH) specifically.

– Creation of a Patient-Centered Outcomes Research Institute (PCORI) as a nonprofit corporation that is not “an agency or establishment of the U.S. Government.”

– Cure Acceleration Network (CAN)

• To accelerate the development of high need cures, including development of medical products and behavioral therapies. • Managed by the NIH

• $500 M authorized for FY-2010 – Access to Clinical Trials

• Insurance companies cannot deny coverage nor discriminate against individuals participating in clinical trials

Summary of select implications for UIHC  Fewer of our patients will be uninsured  IowaCare likely to be phased out in 2014  Number of Medicaid patients could increase

 Prospects for greater continuity of care for our patients with significant needs will improve


 Medicare Hospital reimbursement subject to market basket reduction (ultimately representing a $157 billion decrease nationwide)

– Impact on UI Health Care: $4.5 million (thru FY12)

 Potential reduction in Medicare Disproportionate Share Hospitals (DSH) payments

 UI Hospitals and Clinics (UIHC) and UI Physicians (UIP) should benefit from funding to address geographic disparities

 UIHC and UIP will face value-based purchasing and bundled payments  Hospital negotiations with insurers will be tougher

 Penalties for excess readmissions within 30 days  Penalties for high levels of hospital-acquired infection  Need to prepare for increased workforce needs

 Large portion of costs of Graduate Medical Education (GME) will continue to be absorbed by UIHC and UIP

 MedPAC is looking at reducing IME payments to hospitals Preparing for change

 Thousands of pages of rules and regulations are yet to be drafted to implement the new reforms.

 It is too soon to know the particular impact of various provisions of the health care overhaul—either on Iowa or on UI Health Care.

– Many changes are months and even years away.

 We will continue to monitor developments closely, model different scenarios, explore participation in pilot programs and otherwise do our best to ensure that UI Health Care is as agile as possible in preparing to respond to the changes that lie ahead.

How does reform affect specialists? Medicaid will increase to the level of Medicare, but only for primary care.

The meeting was then adjourned at 6:40 pm. Respectfully submitted,

David Swanson, M.D.





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