The Impacts of the Affordable Care Act on Preparedness Resources and Programs: Workshop Summary (2014)

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2 How the ACA Will Change the Health Care Delivery System Highlights of Main Points Made by Individual Speakers1 • There will still not be universal coverage under the current reform; recent projections are that 30 million Americans will still lack coverage by 2016. • There will be significant gaps in coverage in states that opt not to expand Medicaid eligibility, potentially leaving 6 million uninsured nonelderly adults without access to care specifically because of lack of expansion. In addition, undocumented residents and those who opt to not purchase coverage will also add to the coverage gaps. • Affordable Care Act payment reforms are changing the emphasis from volume-driven to value-driven reimbursement based on meaningful outcomes measurements, incentivizing high-quality, safe, efficient, and cost-effective care. • A fundamental change in delivery reform is a shift in care management and infrastructure to a system that is more collaborative and integrated. Key features of the Affordable Care Act (ACA) are access to health care through expanded coverage, improved quality and efficiency and lower health care costs, and consumer protections. Incremental reforms have been made to the ACA since it was passed in 2010.2 Although these key features ideally will contribute to communities being not only 1 This list is the rapporteurs’ summary of the main points made by individual speakers and participants, and does not reflect any consensus among workshop participants. 2 For further details and timeline see Appendix F, or http://www.hhs.gov/healthcare/ facts/timeline/timeline-text.html (accessed June 8, 2014). 15 

16 IMPACTS OF THE ACA ON PREPAREDNESS healthier overall, but also more resilient in disasters, some important gaps will remain that could impact this level of community resilience. For example, expanded coverage will not be universal coverage, because some states are electing to not expand their Medicaid programs, and the change in care management will not happen overnight, as all of the speakers point out in this chapter. Comprehensive changes that take effect in 2014 were summarized by Jack Ebeler, principal, Health Policy Alternatives (see Box 2-1). Understanding the reforms and details of the law can help to clarify how preparedness programs should adapt to the changing health care delivery landscape. This chapter will summarize many of the larger changes to the health system, including laws that the ACA is building on, such as the American Reinvestment and Recovery Act (ARRA)3 and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).4 In later chapters, the summary will discuss the potential impact these new provisions may have on preparedness efforts. BOX 2-1 Highlights of the Affordable Care Act Coverage Provisions Effective in 2014 Health insurance exchanges  The mechanism for organizing the individual and small group insurance markets and administering subsidies. The health insurance marketplace includes state-based exchanges and a federally facilitated exchange for residents of states not implementing an exchange. Insurance market reforms  Incentives for private insurers to compete in the exchanges and offer low premiums. Limits on factors that can be used to vary rates. Cannot refuse coverage for preexisting conditions. Shared responsibility  Individual mandate (requiring all citizens to have minimum essential coverage or face a penalty).  Large employers with more than 50 full-time employees pay a “free- rider” penalty if an employee purchases coverage through an exchange and receives a premium tax credit (e.g., because they were not offered coverage or it was not affordable). (Delayed until 2015). Benefits  Essential health benefits (service categories that must be covered by marketplace insurers). These must include items and services within at least the following 10 categories: ambulatory patient services; emergency 3 For more on the ARRA, see http://www.recovery.gov/arra/Pages/default.aspx (ac- cessed June 8, 2014). 4 For more on the MHPAEA, see http://www.dol.gov/ebsa/newsroom/fsmhpaea.html (accessed June 8, 2014). 

HOW THE ACA WILL CHANGE THE HEALTH CARE DELIVERY SYSTEM 17 services; hospitalization; laboratory services; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; pediatric services, including oral and vision care; prescription drugs; preventive and wellness services and chronic disease management; and rehabilitative and habilitative services and devices.  Cost-sharing standards. Insurance affordability programs  Medicaid eligibility expansion to include adults under age 65 up to 133 percent of federal poverty level (per Supreme Court ruling, states can refuse to implement this provision without penalty).  Income-related sliding-scale subsidies for those purchasing insurance in the exchange. o Advance payment premium tax credits (limits premiums as a per- centage of income). o Cost-sharing reductions (lower out-of-pocket spending). SOURCE: Ebeler presentation, November 18, 2013. Additionally, although in effect prior to 2014, one ruling that is notable for preparedness efforts previously mentioned by Lurie is the New Requirements for Charitable 501(c)(3) Hospitals. Section 501(r) was added to the Internal Revenue Code by the ACA. It imposes new requirements on 501(c)(3) organizations that operate one or more hospital facilities (hospital organizations). One of the requirements is to conduct a community health needs assessment (CHNA) and adopt an implementation strategy for addressing the prioritized health needs at least once every 3 years. (These CHNA requirements are effective for tax years beginning after March 23, 2012.) The ACA also added section 4959, which imposes an excise tax for failure to meet the CHNA requirements, and added reporting requirements under section 6033(b) related to sections 501(r) and 4959.5 This requirement is an opportunity for community hospitals to partner with public health departments and further within coalitions to collectively assess their community needs, allowing for a more comprehensive population health picture, which is often needed in a disaster situation. 5 See http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/New- Requirements-for-501(c)(3)-Hospitals-Under-the-Affordable-Care-Act (accessed June 8, 2014). 

18 IMPACTS OF THE ACA ON PREPAREDNESS COVERAGE EXPANSION Lisa Tofil, partner at Holland and Knight, explained that expansion of health care coverage under the ACA is achieved by expansion of Medicaid eligibility up to 133 percent of the federal poverty level6: • Health benefit exchanges, with premium support for those between 100 and 400 percent of the federal poverty level; • an individual mandate that requires people to purchase insurance (or pay a penalty); • an employer mandate that requires businesses with more than 50 employees to provide health insurance to their employees; and • a small-business tax credit. In 2012, in response to a constitutional challenge to the ACA, the Supreme Court upheld the individual mandate, but the Medicaid expansion became optional for states. As a result, there may be significant gaps in coverage in states that decide to not expand their Medicaid programs, Tofil said. People between 100 and 133 percent of the federal poverty level in any state can get the sliding-scale subsidy when selecting coverage in the federal health exchange, Ebeler explained. But those below 100 percent of the poverty level and above current Medicaid coverage limits will have no source of subsidy in the states that are not expanding their programs. As of fall 2013, about half of the states are not moving forward with Medicaid expansion (Kaiser Family Foundation, 2013), which could leave as many as 6 million uninsured, nonelderly adults without access to coverage. Ebeler said it is important to consider implementation of the ACA over the longer term, pointing out that when Medicaid went into effect in 1966, only 26 states participated in the first year, but 4 years later in 1970, nearly all states were participating. He cautioned that even with the ACA, there will still not be universal coverage. Current projections show that overall, including those with lowest income living in non-Medicaid expansion states, undocumented residents, and those unwilling to purchase their own insurance, 30 million Americans will still lack coverage by 2016 (Nardin et al., 2013). 6 For 2013, 100 percent of the federal poverty level was $11,490 for an individual, $23,550 for a family of four. 

HOW THE ACA WILL CHANGE THE HEALTH CARE DELIVERY SYSTEM 19 FINANCING AND DELIVERY REFORM As summarized by Ebeler, there are two key fundamental changes in financing and delivery underlying system reform. First, is the shift in measurement and payment, moving from discrete fee-for-service transactions (payment for each task or service that is done at each moment) to payment for clinically and economically relevant episodes for patients and providers, referred to as bundled payments. Accountability for care may be spread across provider types and over a period of time, which incentivizes those providers to work together and integrate services and provides some degree of risk transfer. Second, there is a change in care-management capacity to favor providers over insurers in driving health care decisions. Groups of providers (e.g., accountable care organizations or ACOs7) with access to data and information systems, and the people who can interpret those data and information, can better provide and coordinate care, and manage costs given the risk and accountability. Ebeler referred to work of the Commonwealth Fund, which suggests that it is easier to implement combinations of payment, accountability, and risk if delivery is more collaborative and integrated (Davis and Schoenbaum, 2010). Tofil highlighted other key changes to payments for providers under the ACA. Partially through Section 3001, they focus on value-based payments to incentivize quality and safety as well as to lower use and increase efficiency. There are Medicare and Medicaid penalties for health care–acquired conditions (not limited to hospital acquired), penalties for excessive preventable Medicare readmissions, as well as a focus on value-based purchasing (i.e., payment is based on performance as determined by quality measurements). ACOs, which will primarily still be fee-for-service, will focus on prevention and wellness to minimize hospitalizations, readmissions, and unnecessary care use. There are also market-driven innovations in payment through various methods. Increased transparency has led to downward price pressure, tougher negotiations by employers with insurers, and a greater need to demonstrate value. One area of payment reform that was of particular concern to some participants who spoke was cuts to the disproportionate share hospital 7 ACOs are groups of doctors, hospitals, and other health care providers that come together voluntarily to give coordinated high-quality care to their patients. More on ACOs can be found at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ ACO (accessed June 8, 2014). 

20 IMPACTS OF THE ACA ON PREPAREDNESS (DSH) payments for both Medicare and Medicaid.8 They pointed out that the cuts to Medicaid DSH payments apply whether or not the state has chosen to expand Medicaid. This means that states that do not expand Medicaid will provide about the same level of uncompensated care to uninsured individuals but will now receive less federal funding for that care (discussed further in Chapter 3). Many participants noted this has dire implications for safety net hospitals, especially in a disaster. Bruce Rueben, president of the Florida Hospital Association, discussed what states are doing to prepare for payment reform and the change in emphasis from volume-drive to value-driven payments. As background, Rueben explained that the Agency for Healthcare Research and Quality (AHRQ) releases reports on quality comparing states.9 Minnesota, for example, scores in the “strong” performance category for overall health care quality compared with other states (AHRQ, 2008). In Florida, more than 20 percent of people are uninsured, and the state scored at the low end of “average” (on the borderline of “weak”) on acute care quality performance in 2008 (AHRQ, 2008). Comparing geographic variation in cost and quality, Florida fell in the high- cost/poor-outcome quadrant, or rated low in nearly every benchmark across multiple assessments by AHRQ and the Dartmouth Atlas of Health Care.10 The board of the Florida Hospital Association set out to change this, Rueben said, and created a framework for performance improvement collaborations in areas that were particularly important to the Centers for Medicare & Medicaid Services (CMS), including reducing avoidable readmissions, hospital-acquired infections, and complications after surgery (Florida Hospital Association, 2013). These collaborations have made meaningful improvements statewide, reducing the cost of care while improving the outcome. For example, avoiding unnecessary readmissions, Rueben said, is really about improving care of the patient through the continuum. Keeping these readmitted patients out of the hospital also allows for greater bed availability in the case of an emergency or disaster when hospitals may need to surge. Through the 8 DSH payments are federal funds awarded to qualified hospitals that serve a large number (i.e., disproportionate share) of uninsured and underinsured patients and provide high levels of uncompensated care. 9 Reports are available at http://www.ahrq.gov/research/findings/nhqrdr/index.html (accessed June 8, 2014). 10 The Dartmouth Atlas of Health Care is a project managed by the Dartmouth Institute for Health Policy and Clinical Practice. The project uses Medicare data to document national, regional, and local variations in medical resources and health care spending. More information is available at http://www.dartmouthatlas.org (accessed June 8, 2014). 

HOW THE ACA WILL CHANGE THE HEALTH CARE DELIVERY SYSTEM 21 collaborative, hospitals worked to improve hand-offs and information sharing, and established programs to help patients schedule follow-up visits and better understand their discharge instructions and medications. As a result of these initiatives, the 2011 AHRQ assessment showed that Florida’s hospital care quality performance relative to other states had increased significantly, falling on the borderline between average and strong (AHRQ, 2011). Programs and collaborations such as these can be the future of health care in many geographic areas if the ACA guidelines and provisions work out the way they were designed. More integrated and collaborative everyday care can then be more easily translated to coordinated response and better continuity of care for patients in disasters. With regard to preparedness, the financial pressures on health systems are immense, and incentives and demands are changing, Tofil said. For example, health systems wanting to control financial risk are looking to repatriate their patients from out-of-network facilities as quickly as possible so they can control their care, costs, or both. This could have varying effects in a disaster scenario, depending on how hospitals follow up with staffing changes in response to more open beds. There will also be much more data (e.g., data in electronic health records, population-based information on use and costs within the delivery system) that can potentially be converted into usable information. Health care delivery is changing rapidly, and adaptation is a necessity, not an option, Tofil concluded. Many changes will occur with the new health care law, and this report will highlight some of them. The ACA is not just about access, Tofil said, but about efficient, cost-effective care. Together with the ARRA and the MHPAEA, there are opportunities for all three laws to improve care delivery, build mental health resilience, and augment and improve information-sharing capacity to allow for better awareness of patient needs and patient tracking. All health care providers will be held financially accountable for patient safety and quality with meaningful outcomes measurements. Educated and em- powered providers will do the best they can for patients. The better the system can operate on a daily basis, the better it will be able to respond when tested in a disaster.