Federal Legislative Update on Health Care

1. Federal Legislative Update on Health Care UPHCN Trustee Forum Kim Byas, Sr. Regional Executive April 27, 2012

2. Overview • The Year Ahead • The Big Challenge • Meeting the Big Challenge • Backdrop for rest of the agenda

3. The recent deal • Unemployment compensation extension (+30.1 billion) • Medicare physician fee fixand no update (+$18 billion) • Medicare extenders(+1.5 billion) Wednesday, February 15Naval Heritage Center9:30 AM

4. Medicare Extenders Key Hospital Provisions

5. Rest of the deal through 12/31/12 Offsets • Spectrum sales (-$15.2 billion) • Reduced ACA funding • Prevention and public health fund (-$5 billion) • Increased amount that new civilian federal employees must contribute toward retirement (-$15.2 billion) • Provider payment (*$18.1 billion) • Direct hospital impact much smaller ($6.5 billion) Wednesday, February 15Naval Heritage Center9:30 AM

6. Key provider payment offsets • Medicare bad-debt reduced from 70 percent to 65 percent in FY 2013 for ten years (-$6.9 billion)…hospitals account for one third • Critical access hospitals • 88 percent in FY 2013 • 76 percent in FY 2014 • 65 percent in FY 2015 and thereafter • Phase-in for dual eligible beneficiaries • Medicaid DSH “rebasing” in 2021 (-$4.1 billion) • Extension of cap (and exceptions process) on Medicare therapy services to HOPDs through December 31, 2012 (-$25 million) • MEDPAC study by June 15, 2013 • Clinical laboratory (2 percent) reduction(-$2.7 billion) • Louisiana provision (-$2.5 billion) Wednesday, February 15Naval Heritage Center9:30 AM

7. What is NOT in the law • Reductions in Medicare payments for hospital outpatient services (E&M) codes • Retrospective coding offsetsfor Medicare inpatient PPS • Cuts in graduate medical education • Limitations in Medicaid providertax programs • Relaxation of restrictions on physician-owned hospitals Wednesday, February 15Naval Heritage Center9:30 AM

8. Other 2012 priorities On Capitol Hill • Extenders (expiring provisions) • Rural • LTCH • Drug shortages • HIT/multi-campus • Annual appropriations

10. AHA’s position • Individual (responsibility) mandate is constitutional • Medicaid expansions are constitutional • Severability should be decided by the Supreme Court • IF coverage expansions arethrown out…then budget reductions (update factor, DSHand readmissions) also mustgo

11. Supreme Court Orals Concluded… • Good source is the Kaiser Family Foundation: Policy and Political Implications of the Supreme Court Case on the Affordable Care Act • http://www.kff.org/healthreform/scotus_aca_video.cfm • Decision expected by no later than 7/1/12 • KKF’s latest opinion poll on ACA: 41% favorable; 40 % unfavorable along partisan lines

12. Campaign 2012 Congress • House outlook…Democrats need 25 seats • Senate outlook…Republicans need 4 seats

13. March 21, 2012 Congressional Job Approval at 12% Source: Gallup

14. President Obama Job Approval CNN/Opinion Research Corporation 03/27/2012

15. President Obama General Election Favorability CNN/Opinion Research Corporation 03/25/2012

16. Beyond the Courts Beyond the Courts… • No change…implementation moves forward • Opportunities for fixing thelaw IFRepublicanelectedPresident AND GOPcontrols both chambers of Congress lllll IFRepublicanelectedPresident ANDsplit controlof Congress IFPresident Obama Re-elected • Leverage in implementation • Likely repeal of the law • Leverage in implementation

17. Post Election Deficit Reduction

18. Post election • Fundamental questions: • What will Medicare and Social Security look like? • How big will the military be? • How much will the wealthy pay in taxes? • How will the country care for the sick and vulnerable (Medicaid)? • Payment reform…hospital role • Specific policy options

19. Basic issues

20. What have we learned? “Ground given up that may be hard to take back” • Democrats on entitlements • Harder to be guardians of Medicare in 2012 • Republicans on revenue • Did they violate the “pledge” • Super Committee left no plan

21. Medicare provider payment reductions

22. Other key savings proposals in health care

23. Structural changes to Medicareand Medicaid

24. Beneficiary Proposals

25. Eight months from now End of this year • Moratorium on Medicare physician cuts expire • Payroll tax cut expires • Bush tax cuts expire • Sequester scheduled to kick-in • Debt ceiling will need to be extended

26. Eight months from now The Cost of Doing Nothing • Letting sequester kick-in(-$ 1.2 trillion) • Letting Bush tax cuts expire(-$ 4 trillion)

27. Opportunity • Limited legislative engagements requiring broad-based grassroots action • Targeted approaches when necessary • Preparation for post-election challenges • Laying the political foundation • Developing policy ideas • Positioning hospitals asoffering solutions

28. “We Care…We Vote” Strategy Goals and Objectives • Impact congressional elections • Political Action Committee • Voter registration and encouragement • Good citizenship • Highlighting hospitals as voters and big employers • Educate public and candidates on key issues: • In preparation for deficit reduction • Reinforce hospitals as providing solutions

29. “We Care…We Vote” Strategy Public and Candidate Education • What needs to be done to sustain Medicare and Medicaid…explaining the cost of caring • Hospitals as employers • Real cost drivers • Cost of “redundant” regulation

30. Facts Hospital Jobs Source: Department of Labor, Bureau of Labor Statistics Current Employment Statistics (CES) Data released 2011.

31. Hospitals as Employers Facts Source: Department of Labor, Bureau of Labor Statistics Current Employment Statistics (CES) Data released 2011.

32. Cost of Caring

33. Cost of Caring

34. Cost of Caring

35. Two-Thirds of Medicare Spending Is for People With Five or More Chronic Conditions Percentage of Medicare Expenditures • Ninety-nine percent of Medicare expenditures are for beneficiaries with at least one chronic condition. • Ninety-eight percent of Medicare expenditures involve individuals with multiple chronic conditions. Source: Medicare Standard Analytic File

36. “We Care…We Vote” Strategy Public and Candidate Education • What MORE Needs to Be Done…“Reform NOT ratcheting” • $2 trillion list • Eliminating barriers to clinical integration • Regulatory relief • HFL unfinished business • Incentives for care coordination • Medicare premium support • Medicaid redesign • Future of rural health care • Care at the end-of-life

37. Thoughts/Comments/Feedback Conclusion: It’s going to be a bumpy ride. So, buckle up!

38. Federal Legislative Update on Health Care UPHCN Trustee Forum April 27, 2012 Kim Byas, Sr. Regional Executive Chicago, IL kbyas@aha.org