Redrawing health care

What does the Supreme Court ruling upholding the Affordable Care Act mean to Hawaii’s health care system? The Star-Advertiser editorial board recently hosted a roundtable discussion with key players to discuss impacts and what’s ahead for Hawaii.

Star-Advertiser: What is the significance of the U.S. Supreme Court ruling on the Affordable Care Act?

Beth Giesting: With the Affordable Care Act in place, we will have an opportunity to get to virtually universal coverage, because of the Medicaid expansion upward and the availability of affordable insurance through the exchange for everybody else. So I think that we are very well-positioned to look forward to universal coverage here.

George Greene: The important thing is that patients are going to continue to see even higher and higher quality care. Because the paradigm that we have historically used with regard to health care, and that is volume-based health care — the more services you provide, the more referrals you see, the more prescriptions you write — historically that’s what increases your opportunity for reimbursement.

Now one of the major tenets of the health reform law is that things will be based on outcome. So you actually have to prove and show and demonstrate that the treatments you are scheduling, the services you are providing are actually improving the health of the patients that you serve. And to me that is a huge win for the patients of Hawaii.

Everywhere across the country health care providers have quality metrics that they can improve, and we’re the same.

But overall our quality scores are good quality scores. And historically our reimbursement, Medicare and Medicaid, has been low. And as a result of this paradigm shift, I think we have an opportunity, No. 1, to make sure we’re improving the care for those patients we’re serving. But our providers have an opportunity to increase their reimbursement, their payment, which will allow them to invest in new technology, invest in their organizations, which ultimately is an even bigger win for the population.

The last thing I would say is it allows us to continue the work that we’ve already been doing. … The governor had the vision to put a committee together, public and private individuals in the health care community, to say we know that in all likelihood the health care reform act is going to be implemented.

But even if it wasn’t, if the Supreme Court had decided to overturn the law, we had already begun the work to really change the way health care is delivered in this state, because we knew that the old system didn’t work. …

Robert Hirokawa: For the Primary Care Association and the community health centers, it’s actually the two things already mentioned. One is that you will have less uninsured in Hawaii, which is obviously a very positive thing. But also it provides access to care for uninsured. …

The PCA is a membership organization made up of all 14 community health centers operating in Hawaii. Together, the 14 centers serve approximately 135,000 individuals in Hawaii, the majority of which are uninsured or on Medicaid. …

Paul Young: In a nutshell, for us really it’s, “No outcomes, no income.”

It is becoming an outcome-based reimbursement system; you have to deliver that quality care, or you’re not going to get paid for it.

And readmissions is a classic example. CMS (the federal Centers for Medicare & Medicaid Services) is going to say, in fiscal year 2013, “If you have a Medicare patient and they come back within that 30-day period, you’re not going to be paid for it,” because, they’re saying, “They shouldn’t have come back; you should have delivered the care, you should have followed up and provided the post-acute care so that they don’t come back.” Because that in-patient admission is extremely expensive, and CMS doesn’t want to pay for it. And it’s going to reverberate throughout the health care system. CMS is the largest purchaser of health care services, of the federal government.

Ellen Carson: As an attorney, I see that this is the most important law in our country since my birth and, as well, the most important Supreme Court decision in terms of affecting Americans, having a pervasive effect in the sense that we are going to have a health care revolution, finally. We know we’ve been in the midst of that possibility.

But I see it as comparable to the electronic revolution and the industrial revolution. We have a law that reaches sufficient sectors of our health care economy in that it will affect everyone, in different ways. And I see that as a very positive thing for society in general, and really moving forward to a league of nations where we are finally taking our place as a first-level country that can assure health care to our citizens. …

So that’s one thing. A second, unfortunately, is that we have a fractured and highly polarized court. This was an amazing combination of opinions and harsh words toward one another in this decision, and it portends what’s likely to be happening in the future. But it sets a whole new course, and we now have a (Chief Justice John) Roberts court, whereas before we had a (Justice Anthony) Kennedy court. …

Here in Hawaii we are better off than most states because we’ve had a Prepaid Health Care Act. One needs to recognize that there has been an employer mandate, and we now have a federal law that supersedes in many ways, that is supreme under our federalist system, that calls for an individual mandate. When one puts together a more supreme individual mandate with a lower-in-level employer mandate, what we are going to find is many clashes, and a doctrine of preemption that we all need to start to understand …

THE MEDICAID EXPANSION

Carson: Another thing is we need to quickly decide on the Medicaid expansion, which in my mind is not the question of, “Can we afford it?” but “Can we afford not to expand it?” …

Star-Advertiser: Some states have said they will opt out of the expansion. What is Hawaii’s position?

Giesting: Hawaii’s going to take advantage of this opportunity, there’s no question about that. And I would be very surprised if ultimately very many states decided that they would not do that, because it would truly be so backward-looking. It would be mean, essentially, to the people who certainly have no hope of paying for insurance themselves and need health care and are generally at highest risk for poor health outcomes.

And there is really virtually no risk to the state. The act calls for complete federal payment for the expansion population through 2017. … So to not do that would be reprehensible in many ways. But I think the health care providers in those states would certainly have a lot to say about that.

Star-Advertiser: So why would they decline to participate?

Greene: Only politics.

Star-Advertiser: But what about the cost of it?

Giesting: But the cost of it is borne by the federal government. So for states, if they decided they weren’t going to do that, all the other states would take advantage of it, and federal taxes would help with that. … Initially, all federal funding. After several years, the states would pay a maximum of 10 percent.

Star-Advertiser: It’s planned out for 10 years, right? It would have to be reauthorized after 2022?

Carson: Right.

REPEAL OF FIX?

Star-Advertiser: What about the risk that a new president could be elected to dismantle the legislation? What impact does that have on your planning?

Giesting: Well, from where I sit, the initiatives to improve the health care delivery system, to effectively use health information technology and data, and to change payment strategies, are all things we can move forward with, regardless of the Affordable Care Act.

So that’s why the worst possible effect of this is that we won’t be able to bring everybody into the system, we won’t get close to universal coverage, and then you will still have all of the gap growth and all of the issues and the costs and the ineffective use of services, and the inequities that come with that.

Star-Advertiser: Isn’t the reluctance to accepting the increase in Medicaid related to the concern about becoming addicted to the federal dollars?

Giesting: Well, that is the political line of some people. But … to me the reason we have government is to do things that we can’t do individually. So if providing health care and decent coverage for lower-income people is not taken up by the government, then who’s going to do it?

CHANGING DELIVERY OF HEALTH CARE

Star-Advertiser: Aren’t providers moving away from the fee-for-service model of reimbursement on their own? Or is the ACA really driving that?

Greene: I think it’s a little bit of both. I think that providers recognized that procedures should be based on outcomes. And in discussions with the insurance organizations, seeing that the Affordable Care Act was in all likelihood going to become law, when you listen to the conversations going on in Washington, D.C., they realized that, hey, we needed to get ahead of this curve. So I think that spurred them to make changes in their contract negotiations, to begin to tie things to quality outcomes, so it wouldn’t be completely new, as the new law was implemented. …

Star-Advertiser: But in the act itself there is a requirement?

Greene: It’s called “value-based purchasing.” … In the act, it discusses and describes that when you look at Medicare payments, they’re going to be tied to quality outcomes.

Young: There’s a lot of initiatives within the act that basically have pilots and demonstrations that CMS wants provider groups across the country to take up, and they want to expand those demonstrations nationwide.

But the issue for a lot of providers is maintaining your existing revenue. So CMS creates all these little benchmarks and says, “Here’s what your spending is like now; in order for you to preserve that revenue stream, you’re going to have to hit these quality benchmarks.” And they have all these shared-savings initiatives, where if you come underneath the benchmark, between the federal government and the provider, you can split that.

If you can’t control your prices, and costs keep going up, all the feds are going to do eventually is say, “Well, you’re spending way too much money; we’re just going to cut your fees by 10 percent.” Either you help to transform and lower costs, or Congress will basically do it for you, by price control. So the industry is trying to take a more proactive stand. Because price control, it’s a very blunt instrument. …

Giesting: So, I would say the vision we want to create in the health care system is a seamless system that is surrounding the needs of the patient. So talking about patient-centered care, “patient-centered medical homes,” things like that, with the first tier of service being primary care and really comprehensive good management, so patients don’t get lost in the mix.

And that kind of system also is quality-based. So we measure quality, we report on quality, we can ensure as patients that the care we are getting is quality. The Affordable Care Act has a lot of things that address all of the underpinnings for that, including the payment initiatives that will pay based on quality.

But in addition to that, one of the things I find so interesting is that there has not been a lot of focus on evidence-based care. So there is an initiative within the Affordable Care Act to compile data and identify best practices for a variety of conditions, so that there will be guidance for providers to use best practices.

And I think one of the most important parts of this whole thing is that health care, for as huge and sprawling a sector as it is in our economy, is the last one that has truly embraced the use of health information technology. And so we have got to have all of our providers using electronic health records; we need them to be able to exchange information across the system. They need to report certain metrics so that we can establish the quality outcomes.

So we really are dealing with a system that’s going to take decades to pull together and mature. …

EFFECTS ON SMALL BUSINESS

Star-Advertiser: Employers of 25 or less get subsidies for health benefits paid to employees under ACA, right?

Carson: Those are already in place.

Star-Advertiser: Does that mean employer costs for insurance are reimbursed?

Carson: It can be reimbursed, if they will apply and go through the hoops to get that. And very few evidently have.

Young: It’s pretty onerous, (speaking as someone) owning a small business. … but it definitely was worth it. … It’s up to 35 percent now. Once the exchanges open up, it will be 50 percent for the first two years, 2014-2015; after that, I think it goes away. … It’s a direct tax credit that the businesses can write off.

Carson: There’s a lot of things coming down the pike you may want to think about in terms of obstacles or bumps in the road. …

What we’re coming up to in 2013 is the largest budget battle in the last 100 years in the U.S. Congress. And that’s because we’ve got a confluence of Medicare, the tax cuts under (President George W.) Bush coming due, this affordable care plan and a lot of different things that need to be reconciled in terms of how to provide for the federal deficit that’s there. …

There’s the regulations: We’ve seen a stack about this high come out so far, and we still have a lot more to come out before 2014 in terms of how this whole law is going to operate, and all of that will be influenced by what happens this fall as well.

And then once the costs start coming in 2014, we’ll have to see how the whole thing shakes out in terms of how many states have done the Medicaid expansion, whether the costs are being reined in, whether the revenues being generated are sufficient to make the whole thing work, how the exchanges pay for themselves, a lot of those things that will likely create new pressures, even if there is not a change in the House, the Senate and the president in terms of parties. …

HEALTH INSURANCE EXCHANGE

Star-Advertiser: The health care exchange, the Hawaii Health Connector, is a nonprofit? Who’s doing the work?

Giesting: Right now, our exchange here in Hawaii is a nonprofit. And the work of building an exchange, particularly the work of putting together a competent Web-based application and enrollment system is being paid for by the federal government.

Once the exchange is up and running, it has to be paid for by other resources, which we assume would be the insurers …

Star-Advertiser: Would it be 100 percent by the insurance companies?

Giesting: It doesn’t say it has to come from the insurance companies …

Carson: Cost-neutral on the federal budget, because it’s already taken a big enough hit.

Giesting: One of the things about our insurance exchange, it’s being set up as the one place where everybody who’s uninsured gets their intake. So they go and they enter some information, and if they meet the income criteria for Medicaid they would be automatically sent to the Medicaid program (website); if they don’t meet that criteria they would be moved over to the insurance exchange to either get subsidies or to shop for the plan that they want.

So this is an electronic system that is being shared with the Medicaid program, so the Medicaid program would also be paying some of the ongoing upkeep because it would be essential to what they’re doing. …

Star-Advertiser: Any comments on the protests earlier this year that the exchange agency would not be covered by the Sunshine Law, and that industry representation would overwhelm consumer interests?

Giesting: There certainly will be a lot of regulations from the federal government, and the Legislature can get in on the act and regulate even further. …

With the insurance exchange, I guess it’s just such a new endeavor, a different kind of animal that’s been put together, that there will be a lot of tweaking, a lot of seeing how it behaves.

I truly believe that the biggest problem at the beginning was that there was so much work to be done to establish the insurance exchange, the electronic system, … that there was not adequate attention given to the needs of consumers. That really was an oversight that we had to pay for.

I believe that the Connector is spending a lot more time and attention, and money, dealing with consumer needs, to make sure that they are getting input from consumers and providing adequate communications.

Carson: The Division of Insurance also has regulations over the Connector, and actually it’s going to be the division that makes the decisions on which plans are permitted on or not. That’s by legislation … so actually the Connector becomes more of an administrative, innovative arm that helps implement all this. …

THE PENALTY / TAX

Star-Advertiser: What kind of person would be subject to the tax for not having insurance?

Carson: Self-employed, or part-time workers who employers are deliberately keeping below the 20-hour (minimum for workplace coverage).

Star-Advertiser: So when they go to the doctor and they don’t have insurance …

Carson: They’ll pay through the pocket (for the care).

Star-Advertiser: … and then they’ll be fined?

Carson: No, not until tax time, and then they get the penalty and it’s quite mild in the beginning years, but after a while it rises to be a fairly significant portion, but still not quite what it would cost to have a real policy. But it’s significant, and that goes into the government coffers to come back to help support the bill.

Star-Advertiser: If the fine isn’t that high, is there any incentive for them to buy it?

Young: Not in the first year; it’s $95. …

Star-Advertiser: But he’ll still get medical care?

Greene: Yes, because they’d probably come in through the hospital (through the ER), or to the community health centers.

Hirokawa: It would be exactly how it is now. …

Giesting: If you’re asking if the providers are going to rat them out, that’s not the case. (Laughs.)

EFFECTS ON HEALTH CARE PROVIDERS

Star-Advertiser: Will the federal government compensate hospitals for treating people with no insurance?

Greene: No, it’s written off as charity care, for not-for-profit hospitals.

Young: There is a small amount of DSH (federal Medicaid Disproportionate Share Dollars) funding that the feds kick in. In Hawaii it’s not as significant as in other states. … In Hawaii, we’re different again, in the sense that we’ve got this tiny little allocation of $10 million, and that’s shared between public and private hospitals. Other states get hundreds (of millions) to billions of dollars …

Greene: To give you a clearer picture, that $10 million a year is benchmarked against … $117-119 million in uncompensated care provided by the public and private hospitals of our state. …

Hirokawa: This is a very important point because the assumption is that the Affordable Care Act provides increased access to care, but that’s not true. What it’s providing is increased access to coverage.

The other end of the equation is that the provider system has to be strong … the whole health care system has to be supported in a way to be able to receive these  patients with insurance. … The other discussion that has to occur, what we’re talking about here, is how do we improve the system of care, how do we strengthen it, how do we find collaborative efforts, how do we leverage what we have,. … how do we keep the community health centers solvent and strong because they’re going to have to provide all these primary care services to these folks. …

Star-Advertiser: Aren’t there demonstration projects within the act that try to address things like doctor shortages?

Hirokawa: There’s money in there to provide more reimbursement. … If they practice in shortage areas they get their loans forgiven. … They’re trying to beef up the provider system as well. So that’s all part of the ACA.

Star-Advertiser: Targeting primary care, for the most part?

Hirokawa: Primary care is a big focus of it, yes, and there’s also money in the ACA to provide more funding to community centers as well. So ACA does try to affect that side of the equation. But I don’t think it’s enough; we need to do more. And the state has to ante up as well.

EFFECTS ON INSURANCE COVERAGE

Carson: (Insurers would) like to tweak it more. There’s parts of (the act) that no longer allow the actuarial rating an insurance company would normally do. Right now there’s only going to be four factors that are going to be permitted to influence premiums at all, and that’s just unheard of. And so that’s a huge change of a way of doing business for them.

Star-Advertiser: That’s because of the ban on pre-existing conditions?

Carson: There’s the ban on pre-existing conditions; there’s guaranteed issue, so they’d have to issue to everyone. But also they can only change the rate for age, for family group versus single, for your geographic setting and for whether or not you smoke. … Gender used to be there; if you had a heart condition, if you didn’t exercise enough, if you had a family history of this or that. None of that’s permitted anymore. …

Star-Advertiser: What’s the incentive for compliance, if the fine is less than the cost of insurance?

Carson: … I think you’ve identified an enforcement issue there. … We don’t have criminal penalties attached to this. It’s nothing but a tax liability if one chooses not to comply. …

Greene: I think everyone understood that the goal is universal coverage, but you’re always going to have some individuals who are going to fall through the cracks. And so, will we ever get to 100 percent? No, for the reasons we just discussed.

Young: If you look at Massachusetts, they’ve had an individual mandate since 2006: They only have 95 percent coverage. …

Greene: The national average is 15 percent uninsured. And it goes as high as 25 percent.

Star-Advertiser: What about undocumented immigrants?

Carson: They don’t have access to this.

WHAT HAPPENS NOW?

Star-Advertiser: What do you expect to be happening in the next six months to a year?

Giesting: For the administration, the Department of Human Services is working very hard on setting up the new intake system for the Medicaid program, in connection with the insurance exchange, and also otherwise improve their systems in place to be sure they can handle the increased number of people coming on Medicaid.

Star-Advertiser: How many people?

Giesting: For Hawaii, because we had a higher eligibility level, and then we had to drop the eligibility level because of the cost, I’m not so sure there will be a really major influx. But there will be more people who will be eligible because right now, besides income they also have an asset test; under the ACA there is no asset test. So there will be additional people who will qualify.

Star-Advertiser: Hundreds, thousands, tens of thousands?

Giesting: Thousands, maybe tens of thousands. …

The other thing is, once you promote the insurance exchange — the idea that everybody needs to have insurance, there are options — you want to drive everybody to get into that system and apply for something. You might find there are more people who are eligible for Medicaid than we’re aware of.

So the state is working on Medicaid expansion; the insurance Connector is working on all of the issues to get everybody signed up. The insurance commissioner has been doing a lot of work, there’s a lot of commercial insurance regulation there also. …

Star-Advertiser: Will DHS or other state agencies be looking for more funding?

Giesting: The ask for the state will be quite modest, because the federal government is paying for most of it.

Hirokawa: As for the community centers, we are continuing to work on improvement in terms of quality of care. … For example, I believe all the centers are striving toward the patient-centered medical home model of primary care, which is basically the crux of the Affordable Care Act. So they’re moving toward getting actual certification for that. …

They’re also trying to understand payment reform and how they play a role in that. … Reimbursement should be commensurate with the severity of a person’s condition. Community health centers see a pretty sick population, so they’re working on trying to come up with strategies, trying to quantify what this payment mechanism should be. …

Star-Advertiser: How many patients do the centers see annually?

Hirokawa: 135,000 … and about 30 to 40 percent are uninsured. … It’s a very challenging patient population, as you can imagine.

Greene: Collaboration is an area where providers need to focus in the coming years. … It’s going to be key to have the right partnerships, the right relationships in place across the continuum of care. …

Also I would say quality … actually having industry take a look and benchmark where we are with regard to quality metrics within our system now. Because we need to see where we need to improve.

Young: Just wanted to make a quick comment on Medicaid. The reason the community health centers see a lot of uninsured is because of the fact that new immigrants to the United States are not eligible for Medicaid for five years. … Even when we have exchanges, you’re still going to have a whole bunch of uninsured. New immigrants are going to have to purchase through the exchange for the first five years, even if they’re under that poverty threshold. … They can get federal subsidies … or they can get it through Prepaid Health Care Act, if they’re working at a job. …

In terms of what’s going to happen, it’s great that the Supreme Court ruled in favor of Obamacare. But no matter what happens in those November elections, Jan. 1, 2013, is huge. To me it’s bigger than the election, because we’ll be right beside the fiscal cliff. …Basically it doesn’t matter what party’s in control of the White House or Congress; everyone has to deal with the fact that you’ve got this massive debt issue. Our country has problems, and how do you fund it? … You’ve still got to pay for Obamacare, and it’s a trillion-dollar price tag.

Carson: Now it’s full steam ahead in regards to all of the ACA’s mandates for 2012 … Regulations are coming out about every month that just add to the stack of trying to help understand how the act is supposed to work. 2013 has a lot of changes, and then 2014, of course, is the major one, with the exchanges, but even after that year there are major differences that will be occurring: the payment incentives, the flexibility for things, the compliance needs, it’s major for everybody in this industry.

A second thing is working with the inconsistencies between the Prepaid Health Care Act and the Affordable Care Act. …

A third is just advising on the whole range of innovative opportunities now existing. The health care system has kind of been turned upside down. From fee for service, now it’s fee for quality, and needing to show that there are outcomes. And it’s an exciting time that way, but it is stressful for businesses to understand, “How can we be competitive, how do we work within this?”