1. Health Care Reform & Hospitals (aka the Big Squeeze) August 4, 2010

2. HCR’s Overarching Goals –Improve access: expand coverage, prohibit pre-existing condition denials, etc. –Reduce the federal deficit –Improve access: expand coverage, prohibit pre-existing condition denials, etc. –Reduce the federal deficit

3. Approach –Phased: now through 2017+ –Medicaid expansion (Medi-Cal in CA, CalOptima in OC) serves as basis –Individual/employer mandates with subsidies –State-established exchanges –Consumer protections –Phased: now through 2017+ –Medicaid expansion (Medi-Cal in CA, CalOptima in OC) serves as basis –Individual/employer mandates with subsidies –State-established exchanges –Consumer protections

4. Approach - 2 Address “social determinants of health” - Address “social determinants of health” - Cost containment (read: provider cuts) - Quality improvements/value-based purchasing (more provider cuts) - Workforce component Address “social determinants of health” - Address “social determinants of health” - Cost containment (read: provider cuts) - Quality improvements/value-based purchasing (more provider cuts) - Workforce component

5. Approach - 3 –Standardized benefits, claims, eligibility verification –Multi-state plans –Public option back on the table overtly and covertly –Standardized benefits, claims, eligibility verification –Multi-state plans –Public option back on the table overtly and covertly

6. Business Issues –Employers w/50+ FTEs: play (provide insurance) or pay –Employers w/200+ FTEs: auto-enroll employees in a plan –Starting in 2014, small companies can procure coverage through Exchange; larger companies starting in 2017 –Employers w/50+ FTEs: play (provide insurance) or pay –Employers w/200+ FTEs: auto-enroll employees in a plan –Starting in 2014, small companies can procure coverage through Exchange; larger companies starting in 2017

7. Implementation - Waiver –Coverage Initiative - State/federal regulations –Reinsurance –Exchange - Progress Reports - Waiver –Coverage Initiative - State/federal regulations –Reinsurance –Exchange - Progress Reports

8. Implementation - OC - 80% of County MSI clients will move into Medi-Cal Managed Care (via CalOptima) in 2014 or sooner - The state-established Exchange will initially serve those without employer coverage; MCMC entities (CalOptima) seeking to serve general public (public option) - 80% of County MSI clients will move into Medi-Cal Managed Care (via CalOptima) in 2014 or sooner - The state-established Exchange will initially serve those without employer coverage; MCMC entities (CalOptima) seeking to serve general public (public option)

9. Implementation - OC - Hospitals –Payment cuts –“Quality”, “value-based purchasing”, hospital readmissions (devil in details) –Fewer uninsured but hospitals will also lose payment supplements - Hospitals –Payment cuts –“Quality”, “value-based purchasing”, hospital readmissions (devil in details) –Fewer uninsured but hospitals will also lose payment supplements

10. Trends and Predictions - By 2016, a larger portion of the population will move into public plans: public option and single payer - Traditional physician private practice will change: more, larger groups, hospital systems, mega health plans - Cost controls: rate regulation, price controls, certificates of need, rationing of services - By 2016, a larger portion of the population will move into public plans: public option and single payer - Traditional physician private practice will change: more, larger groups, hospital systems, mega health plans - Cost controls: rate regulation, price controls, certificates of need, rationing of services

11. Trends and Predictions - 2 - Alliances: ACOs, hospital-physician alignment, integrated delivery systems - Tiered future for hospitals –“Must haves” in health plans/ACOs –Physician alignment, high quality, low cost –Unable to achieve above; able to survive low-cost - Alliances: ACOs, hospital-physician alignment, integrated delivery systems - Tiered future for hospitals –“Must haves” in health plans/ACOs –Physician alignment, high quality, low cost –Unable to achieve above; able to survive low-cost

12. Conclusion This is sea change! - For the delivery of health care - For the health care marketplace This is sea change! - For the delivery of health care - For the health care marketplace

13. Questions? Julie Puentes Regional VP Hospital Association of Southern California (HASC) jpuentes@hasc.org jpuentes@hasc.org Julie Puentes Regional VP Hospital Association of Southern California (HASC) jpuentes@hasc.org jpuentes@hasc.org