United States Healthcare Systems Presented by John Gallagher, Vice - PowerPoint PPT Presentation

United States Healthcare Systems Presented by John Gallagher, Vice President of VGM Government Relations

Discussion Topics • Medicare – How it works and is funded in the U.S. • Medicaid – How it works and is funded in the U.S. • Third Party Payors – Managed Care – Accountable Care Organizations (ACOs) – Bundled Payments • Other Government Healthcare Programs – TriCare – Veterans Affairs (VA) Coverage • Medicare Competitive Bidding Program • United States Advocacy Efforts Dealer involvement • Lobby Work in USA – Current Grassroots Efforts; Dealer involvement • What are dealers and dealer organizations doing to lobby effectively • The Future of Healthcare in the United States

Medicare Overview – How does it work? • Federally funded health insurance program for Seniors (65+) • What does Medicare cover? – Part A: Hospital visits, home health, skilled nursing facilities – Part B: Doctors visits, durable medical equipment, preventative care – Part C: Medicare Advantage – offered by private insurance – Part D: Medicare approved private plans to assist with A/B costs • Providers that accept Medicare are reimbursed by the government for services (Fee-for-Service) • Covered 54 million people in 2014

Medicare Overview – How is it funded? • U.S. Department of Health and Human Services (HHS) – The Centers for Medicare & Medicaid Services (CMS) • Payroll taxes paid by employees and employers • Funds also allocated by Congress • Medicare Trust Funds – Funds can only be applies to paying for Medicare by the government

Medicare Overview – How is it funded?

Total Medicare Expenditures DME Expenditures

Medicaid Overview – How does it work? • Federally funded insurance program for low-income Americans • Program covers acute and long-term services for those with disabilities – Nursing facilities, home health aides, transportation, ect. • Covers children, adults, and seniors – 65 million people

Medicaid Overview – How is it funded? • Medicaid is funded jointly by states and the federal government. • Paid under FICA payroll taxes (same as Medicare) • Federal government matches qualified states conrtibutions • Affordable Care Act (ACA) incentives for states that expand Medicaid.

Third Party Payers – Managed Care • Health insurance plans where patients agree to visit only certain doctors and hospitals. • Costs of care are managed by a company at a reduced cost – Health Maintenance Organizations (HMOs) – Preferred Provider Organizations (PPOs) – Point of Service (POS)

Third Party Payers - ACOs • Accountable Care Organizations – Groups of doctors, hospitals, and providers that voluntarily give coordinated care to their Medicare patients – Largely used for chronically ill patients. – Goal is to fix inefficient payment system and provide better care. – Hopes are that it relieves some financially stress on Medicare budget. – Health systems are rewarded with “bonuses” of expected savings. • ACOs are paid by Fee-for-Service model with quality benchmarks in prevention and efficiency.

Third Party Payers – Bundled Payment Model • CMS effort called “Bundled Payments for Care Improvement Initiative” (BPCI) • Reimbursements for beneficiaries that reward the quality of services vs. quantity • Sets standards for each episode of care • Participating providers are reimbursed at expected costs for clinically defined episodes

Military Health Programs

TRICARE • Healthcare program providing benefits to U.S. Armed Forces, retirees, and their families. • Managed by U.S. Department of Defense Military Health System • Additional government programs, such as TRICARE, often use rates set by Medicare

Medicare rates impacting TRICARE TRICARE REDUCTIONS FROM DEC 15 TO JULY 16 HCPCS Code Description 15-Dec 16-Jan % reduction 16-Jul Total reduct E0601 Continuous positive $48.09 $34.72 27.80% $18.41 61.70% E0562 Humidifier, heated, u $172.80 $129.93 24.80% $80.89 53.20% A7037 Tubing used with po $23.54 $16.04 31.90% $7.17 69.50% A7034 Nasal interface (mas $67.52 $52.55 22.20% $33.29 50.70% A7035 Headgear used with $22.81 $17.24 24.40% $10.75 52.90% A7030 Full face mask used $108.28 $84.55 21.90% $52.52 51.50% E0470 Respiratory assist dev$93.90 $73.37 21.90% $47.79 49.10% E0471 Respiratory assist dev $276.46 $205.41 25.70% $115.42 58.30% E1390 Oxygen concentrato$108.55 $82.40 24.10% $47.25 56.50% E0431 Portable gaseous ox $18.25 $14.99 17.90% $10.48 42.60% E1392 Portable oxygen con $30.98 $28.04 9.50% $22.18 28.40% Avg reduction 52.20% MEDICARE REDUCTIONS FROM DEC 15 TO JULY 16 HCPCS Code Description 15-Dec 16-Jan % reduction 16-Jul Total reduct E0601 Continuous positive $106.87 $77.14 27.80% $40.92 61.70% E0562 Humidifier, heated, u $288.17 $216.55 24.90% $134.82 53.20% A7037 Tubing used with po $39.23 $26.74 31.80% $11.95 69.50% A7034 Nasal interface (mas$112.53 $87.59 22.20% $55.48 50.70% A7035 Headgear used with $38.01 $28.73 24.40% $17.92 52.90% A7030 Full face mask used $180.47 $140.92 21.90% $87.54 51.50% E0470 Respiratory assist dev $208.66 $163.05 21.90% $106.20 49.10% E0471 Respiratory assist dev $614.34 $456.46 25.70% $256.48 58.30% E1390 Oxygen concentrato$180.92 $137.33 24.10% $78.75 56.50% E0431 Portable gaseous ox $30.42 $24.98 17.90% $17.46 42.60% E1392 Portable oxygen con $51.63 $46.73 9.50% $36.96 28.40% Avg reduction 52.20%

Veterans Affairs Healthcare • Comprehensive medical benefits for United States Military Veterans • Network of sites under the Department of Veterans Affairs, more than 1,700 nationwide • Types of care: illnesses, injuries, preventative care, improving function, enhancing quality of life • Covers over 8 million veterans • Congress allocates dollars annually which changes eligibility.

VA Network of Medical Facilities

Medicare DMEPOS Competitive Bidding Program • Introduction – In October 2014, CMS released a rule which affects all durable medical equipment (DME) suppliers in the U.S. – Established new methods for a national price adjustment for DME Medicare reimbursements. – Reimbursements for competitively bid items were reduced based on various “regions” within the United States

Competitive Bidding Program Urban Areas • Currently in 109 Competitive Bid Areas (CBAs) in 43 states • Additionally, a national mail order program • “Rounds” are contract periods which providers in a CBA have rights to provide care at the price that was bid.

Nationwide Rollout of Competitive Bidding • DME items within the competitive bidding program phased in cuts over 6 month period. • Beginning January 1, 2016, reimbursement rates were cut by 50%, with the phase-in concluding on July 1, 2016.

Nationwide Rollout of Competitive Bidding • Industry stakeholders, including VGM Group, have adamantly opposed the nationwide rollout of competitive bidding into rural areas of the country. • We continue to argue that applying urban, competitively bid rates into rural America is an extremely flawed model. • Medicare beneficiaries’ access to DME items will be disrupted as suppliers are unable to sustain the 50% cut in reimbursement • In CBAs, suppliers accept contracts for DME items at a lower rate because there is a reduced number of suppliers that can provide the competitively bid items.

Short Term: Competitive Bidding/Expansion to Non-Bid Areas S.2736 Patient Access to Durable Medical Equipment introduced by Sen. Thune (R-SD) and Sen. Heitkamp (D-ND) This bipartisan, non-controversial, and budget-neutral bill will: Delay the second cut for HME items in non-bid areas by 12 months . This would push back the second cut from July 1, • 2016 until at least Oct. 1, 2017. Replace the bid ceiling for future rounds of bidding with the unadjusted fee service rates from January 1, 2015 instead • of CMS’ current plans to limit future bid ceilings to the previous bid rates. Require CMS to solicit stakeholder input and take into account travel costs, volume, clearing price and information on • the numbers of providers serving bid areas as part of rate-setting activities for Jan. 2019 and beyond. Require CMS to monitor and report on access issues and health outcomes for Medicare beneficiaries utilizing HME, with • updates provided on the CMS website on a monthly basis. Advance the start date of the federal portion of Medicaid reimbursement mirroring Medicare rates by three months • from calendar year 2019 (Jan. 1) to fiscal year 2019 (Oct 1, 2018). 35 Co-sponsors