November 1, 2011

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November 1, 2011

The potential concern that may come from the exchange is that it shouldn’t be a dumping ground for companies that decide not to provide insurance. The exchange is a separate marketplace—it’s a defined contribution marketplace where an employer now can budget for their healthcare a lot more easily than compared to the traditional market. So an employer can send their employees out to the exchange and they, as consumers, can purchase the kind of health coverage they feel best fits their needs. Rather than be held to one carrier as in our traditional market, you can have a 10-person employer group select three different carriers.

CAMPBELL: One thing that we have worried about with the exchange is the pollution of risk from people who have difficulty getting insurance from other areas or who have an RFP process where they end up with a lot of high rates and say, “Forget this. We’re going to the exchange.” There will be some risk issues that have to be dealt with regarding the exchange.

Rep. Sanpei, please give us an update on where you think we’re heading with state and federal reform efforts.

SANPEI: If you asked 10 constitutional lawyers, “Is the healthcare reform constitutional or not?” five of them will say it is and five of them will say it isn’t. Most assuredly, this is going to end up at the Supreme Court because it was split in the district courts, then it went to the appellate courts and it’s split there, which is exactly the scenario that sets up a Supreme Court hearing.

You can flip a coin as to whether or not it’s going to be overturned, but I think the sentiment in the healthcare industry is that it doesn’t matter. Whether federal reform takes place or not, changes need to happen. And organizations need to be preparing for those changes. On the patient-engagement com-ponent, we are a giant ecosystem with healthcare, and we need all of the players involved to get real reform. We need providers involved, we need physicians involved, we need the hospitals, the payers, government. Everybody’s got to be involved, because any one of those entities can shift the problem to one of the other entities, which they then shift to another—and it just exacerbates our downward spiral.

Patients are a big piece of that. You have to have patients engaged through education, through some cost sharing.

As to state Medicaid reform, we recognize as a state that we’ve had an unsustainable growth trajectory. And estimates related to the federal reforms indicate we’re going to see an increase in Medicaid by as much as 56 percent. Some of that Medicaid increase is going to be covered by federal dollars, but those dollars don’t cover the administrative expenses. They also don’t cover individuals who are currently eligible for Medicaid but who are not yet signed up; they will sign up when the federal reforms take place because there will be greater incentives for them to do so. The estimates are for hundreds of millions of dollars that the state has to absorb when those changes occur.

One option for the state is just to cut reimbursement rates; but when the state cuts rates, providers then have to absorb that. Providers then naturally cost-shift that on to payers, who cost-shift that increase onto employers, who can’t hire as much or who have more uninsured or underinsured, which ends up being a problem for the state—so then we have more on Medicaid and we cut rates and start that cycle all over again.

We’ve decided the only way to get out of that cycle is to reform the incentives. Starting with Medicaid, the state put forth a proposal to refocus the incentives away from utilization onto value, onto taking care of the population. We’ve requested a waiver from the federal government related to some of the requirements associated with Medicaid in order to give us some flexibility.

We’ve asked for the flexibility to pay providers in a population-based way, rather than on a fee-for-service basis. We’ve also asked for the ability to create an accreditation process for provider institutions, along with some other waivers. In general, we’ve gotten positive responses from CMS on everything with the exception of a patient-engagement component. CMS is seemingly hesitant to give approval on that because the advocate community is concerned that the way the cost share would be structured, it would put too much of a burden on Medicaid recipients.

The health reform law that passed federally was more than 2,700 pages. And the estimate is we’re going to have another 100,000 pages of rule-making on providers and others on top of the 125,000 pages we have now. What is the physician perspective on all of this?

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