1 HEALTH CARE REFORM – Implications for Provider Reimbursement Kenneth W. Kizer, MD, MPH Alaska State Hospital and Nursing Home Association Fairbanks, AK September 8, 2010

2 Presentation Objective To review how PPACA is likely to affect reimbursement for providers.

3 Critical Payment Issues   The essentiality of slowing the rate of rise of health care spending   The need to achieve better health care value   The increasing percentage of health care expenditures from federal funds

4 Federal Government Spending   Mandatory Expenditures Social Security Social Security Medicare and Medicaid Medicare and Medicaid The national debt The national debt Veterans disability benefits Veterans disability benefits   Discretionary expenditures Defense Defense Homeland security Homeland security Veterans health care Veterans health care Education Education Highways Highways Parks Parks Arts and humanities Arts and humanities Other Other

Growth of Mandatory Expenditures Increased mandatory expenditures since 2007   Recession Increased Medicaid expenditures Increased national debt and interest   PPACA (esp Medicaid expenditures)

6 General Strategies by Which PPACA Will Drive Changes in Payment General Strategies by Which PPACA Will Drive Changes in Payment 1.Changing the health insurance rules 2.Increasing federal government spending for health care 3.Standardizing benefits and payments 4.Linking payment to performance 5.Paying for aggregated services

7 Specific Ways PPACA Will Promote Changes in Provider Payment   National Medicare pilot programs on bundled payment for acute in-patient hospital, physician, outpatient and post- acute services for an episode of care.   Medicare Shared Savings program using Accountable Care Organizations   Medicare Value Based Payment (VBP) program with incentive payments linked to performance   Medicare VBP programs for SNFs and Home Health Agencies   Medicare Independence at Home demonstration project for high need beneficiaries   Medicaid demonstration projects for bundled payment for episodes of care   Establishing the CMS Innovation Center

8 Specific Ways PPACA Will Promote Provider Payment   Establishing the Independent Medicare Advisory Panel to reduce rate of growth of Medicare spending   Reduced DSH payment   Intensified efforts to combat waste, fraud and abuse   Reductions in annual productivity adjustments

9 Under the new value-based payment paradigm, quality improvement will be an essential business strategy! This will affect payments.

10 Much private sector health care in Alaska has not changed the way it has in the lower 48. What’s different now? Will PPACA drive delivery system change in Alaska the way it will elsewhere in the U.S.?

11 DISCUSSION