The Politics of Health Care: State and Federal Policy Priorities for Advocate Health Care Meghan Clune Woltman, Vice President, Government and Community Relations

Discussion Topics State Initiatives Federal Outlook Supreme Court Global Health Care Issues Q & A 2

State Initiatives 2012 Spring Session – what happened? Budget Challenges Nonprofit Hospital Property Tax Exemption Medicaid Changes –SMART Act Implementation Rate adjustments Utilization controls Eligibility, coverage and care coordination HACs, therapy, readmissions

Medicaid 2012: Overview Governor’s ProposalFinal Legislation $2.7 billion total: $1.35 billion targeted savings/reductions$1.36 billion targeted savings/reductions $675 million cigarette tax$700 million cigarette tax $675 million provider rate cuts$240 million provider rate cuts - $350M or 8% hospitals - $108 million or 3.5% hospitals $100 million new assessment - $190 million gain for hospitals $300 million - GRF

Hospital Payment System Reform HFS may implement new inpatient and outpatient payment system by rule as set forth in statute Inpatient payment system –10/1/12 – test & shadow –7/1/13 – Implement new system Base payment only Supplemental payments and assessments separate –7/1/14 – Begin 2-4 year transition of static payments

Looking Forward Continued SMART Act implementation CMS approval of Enhanced Assessment Medicaid Payment System Reform Care Coordination Expansion

Federal Outlook What can we expect from the Congress? November Elections Bush Tax Cuts Expire 10 month Physician Fix expires –27% cut, costs $376B to fix Debt Ceiling Debate…again Sequestration Starts –2% across the board reductions

Supreme Court Upheld Individual Mandate through Taxing Power of the Congress Found Medicaid Coercion Unlawful States can opt out of Medicaid Expansion Congressional Budget Office Assumes $84B savings through SCOTUS decision No change for Advocate – already the largest Accountable Care Organization in the nation.

2014 Coverage Continuum Medicaid Expansion Subsidies on Exchange State Exchanges Employer Sponsored Coverage Medicare

It’s a New Day Most Insurers Acknowledge Inability to Manage Rising Costs Medicare Finances are Not Sustainable Payers Can No Longer Sustain Double-Digit Increases Population is Aging - 10,000 New Medicare Beneficiaries Per Day Uninsured Will Enter Care Delivery System 10

Global Issues Health Care’s Impact on Economy Providers Need to Reduce Costs Alignment of Incentives –Patients/Providers/Health Plans Medicare/Medicaid –Medicaid is largest expense in state budgets –Alignment of the patient End of Life Cost of Care 11

Questions?