Impact of Health Care Reform on Major Stakeholders Jeff Korsmo Executive Director, Mayo Clinic Health Policy Center 2010 Health Care Forecast Conference ■ UC Irvine ■ 2/25/2010

Mayo Clinic Health Policy Center Goal Influence stakeholders to implement substantive health care reform before 2011 that will enhance the quality and availability of health care for all patients Convener 1,000 thought leaders 1,400 patients 1,000 surveyed 400 on 9-city tour

2006 Mayo Clinic National Symposium on Health Care Reform Top 6 recommendations – Rated from least important to most important and least urgent to most urgent Importance Urgency Encourage formation of integrated systems Transparency among systems and physician practices Results-based reimbursement, with patient component to incentive plan Reward consumers for choosing high quality health plans and providers Define essential health care services for all Americans Build public and business mandate for national change

The Status Quo is Unsustainable A reminder of the current state of American health care: 46+ million uninsured Americans Skyrocketing costs Uneven quality and safety of medical care Lack of access for Medicare and Medicaid patients Medicare’s imminent collapse Health care reform will not become easier with the passage of time.

Potential Paths House passes Senate bill with “sidecar” legislation via reconciliation Budget reconciliation (requires 51 votes) Many provisions would not be included (i.e. insurance reforms) Pass smaller bills to address most pressing issues Start over with comprehensive reform Do nothing

We All Have to Change Providers Improve outcomes and satisfaction Decrease costs and waste Coordinate care Payers/employers Encourage prevention, compliance and health Value-based benefit design Change payment to reward providers who deliver value Patients Prevention/healthier lifestyles Chronic disease adherence Fair financial stake Government Independent “health board” to ensure transparency, standardize billing and drive pay for value Financial help to those in need Support research and education

Mayo Clinic Health Policy Center Cornerstones Principles to advance patient-centered reform Coordinate care across people, functions, activities, locations and time. Create Value Coordinate Care Reform the Payment System Insure Everyone Improve outcomes and satisfaction. Decrease medical costs and waste. Change the ways providers are paid in order to improve health and minimize waste. Provide guaranteed, portable health insurance for all individuals, giving them choice, control and peace of mind.

MCHPC Cornerstones Reform the Payment System Insure Everyone

It doesn’t work to leap a ten-mile chasm in two five-mile jumps. American Proverb

Issue #1: Reform the Payment System to Reward Value Yes Similar pilot programs Feedback on physician resource use Yes ACO pilot program Shared savings Partial capitation Medical home and bundling pilot programs Efficient areas – 5% bonus for physicians New payment models: Bundled payments Accountable Care Organizations Partial capitation / flexible delivery models Yes Independent Medicare Commission CMS Innovation Center Yes IOM value payment/ index study & recommendations CMS Innovation Center Independent commission to test and recommend new delivery and payment models Yes Value modifier for physician payments Yes High-value care & geo. variation amendment Value-based payment in Medicare Senate BillsHouse BillMCHPC Position

Reform the Payment System to Reward Value Implications for Providers Achieve highest outcomes, safety and service performance using current and future definitions Help define appropriate new value metrics Improve affordability of care Address underlying cost structure Examine utilization patterns Develop coordinated practices Improve current care-delivery models Explore/innovate new ways to deliver care Demonstrate high-value performance across all practice sites Leverage HIT to aid in care coordination

Issue #2: Insure Everyone Yes State or regional exchanges Yes National exchange Choice of private plans through an insurance exchange Yes Subsidies for low income Yes Insurance reforms Public option dropped during negotiations Includes public option Sets Medicare rates as the floor and average private insurance payment as the ceiling; Initial limits on eligibility No government-run public option Yes Individual mandate for insurance coverage Senate BillsHouse BillMCHPC Position

Mayo Clinic Concerns Financing Across-the-board cuts Pay-for-value timeframe and scope Authority and scope of the independent commission Government-run, Medicare-like public plan How to negotiate with the government? Will Medicare rates be the ceiling rather than the floor? Slippery slope on eligibility

Financial Impact of Proposed Legislation ProvisionImpact on Mayo Clinic Medicare cuts agreed to by the AHA - $XX million over 10 years Sustainable Growth Rate formula - $XX million in 2010 if no fix, plus - $XX million/year for 7 years Medicaid expansion - $XX million /year Coverage for the uninsured versus current charity care write- offs + $XX million/year Value Indexing for physician payments ?

Bottom Line: Take Steps Toward the Goal Define what we expect from our health care delivery system Measure our performance Reward providers that deliver what we expect

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