1. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association National Healthcare Reform Now What? NJ HIMSS May 26, 2010 Sean J. Hopkins Senior Vice President, Health Economics

4. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association The Bill(s) Patient Protection and Affordable Care Act (H.R. 3590) Passed 219 to 212 (218 votes needed) Reconciliation Act of 2010 (H.R. 4872) – “Sidecar” Passed 220 to 211 Cost – Congressional Budget Office Score = $940 billion/ 10 years* *Includes estimated savings associated with 21.5 percent reduction in physician payments = $250 billion/10 years.

5. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association What the Bills Do ■ Coverage expansion for 32 million by 2019 - Individual mandate - Large employer mandate - Medicaid expansion - Health insurance exchanges Estimated New Jersey coverage – 923,000 What the Bills Don’t Do - Fix the SCR (Sustainable Growth Rate) physician cut of 21.5 percent - No public option - No linkage to Medicare Payments

6. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association Strategic Directions Delivery System/Payment Reforms: Greater transparency Movement away from fee-for-service… toward “integration” Emphasis on value versus volume Emphasis on quality versus quantity

7. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association Delivery System Reforms HHS Secretary can waive regulatory barriers to clinical integration Accountable care organizations Bundling Medical homes Gainsharing

8. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association Hospitals Are Part of the Funding Market Basket Updates (2011 = -.25) (2012 & forward = -0.1 to -0.3 + productivity) $112.6 billion/10 years Medicare DSH (Starting in 2014) $22.1 billion/10 years Medicaid DSH (Starting in 2014) $14 billion/10 years Inappropriate Hospital Readmissions (Starting in 2013 – “Excess” vs. “Expected” for heart attack, heart failure and pneumonia) $7.1 billion/10 years Total$155.8 billion/10 years Estimated New Jersey Share$4.5 billion/10 years

9. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association State Based Health Insurance Exchanges Effective 2011, requires states to establish HIEs (Health Insurance Exchanges) where individuals and small businesses can purchase private insurance. - Federal employee health benefit plan “like” offering - Consumer operated and oriented plans (Co-Ops) - No government public option - Payment rates are not tied into Medicare - Subsidies for 133 percent to 400 percent of FPL (Up to $88,200 for a family of four) - States may work together to set up regional exchanges - Must be operational by 2014

10. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association Insurance Reforms - No lifetime limits on coverage - No exclusions based on pre-existing conditions - No discrimination based on health status - No annual limits on coverage for preventative services - Allows parents to cover children up to age 26 - Tax on Cadillac plans beginning 2018 - Excise tax of 2.3 percent on medical devices beginning 2013 (excludes eye glasses and hearing aids)

11. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association Non-Profit Hospital Requirements To retain tax exempt status hospitals must: - Periodically prepare community health needs assessment - Maintain a qualified financial assistance policy - Limit charges on patients eligible for assistance - Avoid excessive billing and collection practices

12. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association Other Items Accountable Care Organizations Starting in 2012 allows hospitals and physicians to jointly create an ACO - Requires management of beneficiary care - Allows Secretary to share savings with provides Liability – sets aside $50 million for medical liability demonstrations Geographic Variation Sets aside $400 million for hospital payments in 2011 and 2012 in low cost states Calls for two Institute of Medicine studies and a national summit to discuss geographic variation

13. Comparing Cost and Quality of Health Care Across the Country Researchers at Dartmouth Medical School have found huge geographic variations in Medicare spending per beneficiary, but areas that spend the most do not always produce better quality of care. Some point to the disparity as evidence of inefficiency; others say higher spending often reflects higher cost of living and sicker population. Source: The New York Times, September 8, 2009

14. “The Democrats are stuck with this bill…they’re going to have to live with it for the rest of their lives. Every problem that comes up is going to be blamed on them.” Senator Orrin Hatch (R-UT) March 24, 2010

17. Source: New Jersey Hospital Association Copyright 2010, New Jersey Hospital Association Final Word Implementation will be key Congress already aware “Meat must be put on the bones” The phrase “The Secretary shall….” appeared over 1,300 times in the final bill State government and departments must be monitored and directed as well.

18. New Jersey Care Integration Consortium Medicare Physician – Hospital Collaboration Demonstration Performance Based Incentives Overview & Implementation

19. New Jersey Care Integration Consortium (CIC)  12 Hospitals and NJHA Medicare Modernization Act Section 646  Allows CMS to conduct several Gainsharing Demonstrations  Only 72 hospitals nationally (No more than 12 in any one state)  All necessary waivers have been approved CIC Application  Approved by CMS  Targeted July 1, 2009 start-up (currently operational for 6 months)  Demonstration authorization is for three years Background

20. NJ Care Consortium Members AtlantiCare Regional Medical CenterCentraState Healthcare System Holy Name Medical CenterHunterdon Medical Center Jersey Shore University Medical CenterJFK Medical Center Our Lady of Lourdes Medical CenterMonmouth Medical Center Overlook HospitalSomerset Medical Center St. Francis Medical CenterThe Valley Hospital

21. Operational Structure Global  Steering Committee  Quality Oversight Committee  Post-Acute Tracking Work Group At Individual Hospital Sites  Steering Committee –At least 50 percent physicians –One consumer representative –Can be any size  Quality Monitoring Sub-Committee  Designate a Program Coordinator

22. Project Framework 1.Allows hospitals to incent physicians financially for improved quality of care and improved efficiency. 2.Creates a collaborative environment where both hospital and physician incentives are aligned. 3.Rewards achieved level of physician performance. 4.Provides incentives for improved performance. 5.Provides loss of income protection.

23. 23 Key Points For Physicians  Participation is strictly voluntary.  Bonus only; no risk or penalties.  Incentives based individual performance; payment not dependent on the performance of other physicians, or the hospital.  Payments for improvement to compensate for loss of income.  No change in current process or form of payment (no bundling). Physicians will continue to receive fee-for-service payments, as they do currently.  Pilot includes a program of quality monitoring and maintenance.

24. Best Practice Norm  All claims are adjusted to recognize severity of illness (using APR DRGs).  The best practice norm is set at the 25 th percentile of cases – statewide.  “Responsible Physician” – is the physician of record upon discharge or the surgeon.

25. Incentive Payments On average physician incentives are:  $100/case per medical admission  $200+/case per surgical admission *No additional incentive payment for surpassing the Best Practice Norm.

26. Quality of Care  All Consortium hospitals must participate in any current or future Quality Institute Collaboratives offered by NJHA –ICU –Pressure Ulcer –Anti-Microbial Resistance –Rapid Response –Reduce Readmissions  Implement WHO Surgical Safety Checklist in conjunction with The Joint Commission Universal Protocol  Submit HCAHPS Patient Satisfaction Data  Explore implementation of specific clinical & non-clinical tasks

27. Quality of Care  Physician Specific Measures ­Mortality ­Readmissions within 7 days ­Length of Stay  Post-Acute Tracking -CHF 3/14 days post discharge -Stroke 10/21 days post discharge

28. Questions?