Navigating the Post-Health Care Reform Landscape

1. NAVIGATING THE POST-HEALTH
CARE REFORM LANDSCAPE

2. THE RISE OF THE “ACCOUNTABLE
CARE ORGANIZATION”
–“Accountable Care Organization” is a
network of hospitals and physicians that will
share responsibility for providing care to
patients
– Would be responsible for pre-hospital, inpatient acute
care, and post-acute care of the patient
– Goal is to replace the insurance company as the
“gatekeeper”
–Capitated payment regime

3. THE HOSPITAL AS THE NEW
“DOMINANT” PLAYER
• ACA has upset prior equilibrium that existed
between hospitals and physicians over who
“controls” the patient
• Hospitals have emerged as the dominant player
– More than 50% of physicians are now employed by a
hospital
– 75% increase since 2000

4. HORIZONTAL INTEGRATION
•Acceleration of an existing trend for
hospitals to merge into larger and larger
“health systems”
– Nearly 40% of hospitals
– 50% increase post-ACA

5. VERTICAL INTEGRATION
•Health systems becoming more aggressive in
acquiring ancillary/downstream services
– Rehab and long-term care hospitals
– SNFs
– Ambulance?

6. EMS ACQUISITION ACTIVITY
• AMR (EMSC)
– Purchased by Clayton, Dubilier & Rice
– $3.2 billion
• Rural Metro
– Purchased by Warburg Pincus
– $438 million
• Falck A/S
– 2012 acquisition of American Ambulance (FL)
– 2011 acquisition of Lifestar Ambulance (NY/NJ)
– 2010 acquisition of Care Ambulance (CA)
Private Equity interest in EMS was one
factor cited by MedPAC as evidence of
the industry’s health!!

7. A SUCCESS STORY
•AMR’s parent company was purchased by
Clayton, Dubilier & Rice for $3.2 billion
•New parent company (Envision
Healthcare) conducted a successful IPO
in August 2013
– Raised $966 million

8. ON THE OTHER HAND…
•Rural Metro
– Purchased by Warburg Pincus
– $676.5 million purchase price
– $263.3 million in assumed debt
•On August 4, 2013, Rural/Metro Corp. filed
for bankruptcy protection in Delaware
–July 15, 2013 – missed interest payment on $308 million
in unsecured debt
–S&P downgrade

9. THE RISE OF THE
FREE-STANDING ED
• Since 2000, the overall number of hospitals
has decreased by 5% nationwide
– 25% increase in the number of free-standing
EDs during that same period

10. “SPOKE AND WHEEL” MODEL

11. COST-CONTAINMENT
• Expanded focus on hospital cost-containment
• Hospital readmissions
–Section 3025 of the Affordable Care Act
• Effective October 1, 2012
– Hospitals face a penalty for certain patient readmitted
within 30 days
– Acute MIs, Heart Failure, Pneumonia
• Penalties
– October 2012 – 1%
– October 2013 – 2%
– October 2014 – 3%

12. COMMUNITY PARAMEDICINE
•Hospitals looking to partner with EMS
agencies to go into the community
–Check up on patients
–Confirm compliance with medications
–Schedule and transport to follow-up care

13. THE HEALTH
EXCHANGE
MARKETPLACES

14. BACKGROUND
• The Affordable Care Act requires each state to
offer a “health care exchange marketplace”
(HCE) where individuals and small business
can go to purchase health insurance
– If state elects not to create its own marketplace,
federal government must operate the HCE in that
state

15. TIERS OF INSURANCE
• Exchanges must offer plans falling within one of 5
specified benefit tiers
• Tiers cover the same minimum essential benefits, but
have different cost-sharing structures:
– Bronze (plan will pay 60% of actuarial value)
– Silver (70%)
– Gold (80%)
– Platinum (90%)
– Catastrophic Option – available only to those under age 30 that do not
otherwise have access to affordable care

16. PREMIUM SUBSIDIES
• Premium Assistance Subsidies will be available for individuals
and families with incomes between 100% and 400% of the
FPL
– Individuals = $11,490 – $45,960
– Families = $23,550 – $94,200
• Subsidies will be a sliding scale based on income
– e.g., individual making up to 133% of the FPL will be required to pay no more
than 2% of income
– e.g., individual making 400% of the FPL will be required to pay up to 9.5% of
income
NOTE: premium subsidies can be applied to any level of insurance

17. Operation of Subsidies
• Law sets the maximum amount an individual
or family must pay
– As a percentage of household income
– 4% of household income at 150% of FPL
– 9.5% of household income at 300% of FPL
• Subsidy then makes up difference between
that amount and cost of second lowest priced
silver plan sold in your area

18. Premium Subsidies Examples
Income
(% of
FPL)
Income
($)
Premium
as % of
Income
Insurance
Premium
Family
Contribution
Amount
of Tax
Credit
138% $32,500 3.3% $12,500 $1,070 $11,430
150% $35,325 4.0% $12,500 $1,410 $11,090
200% $47,100 6.3% $12,500 $2,970 $9,530
250% $58,875 8.1% $12,500 $4,740 $7,760
300% $70,650 9.5% $12,500 $6,710 $5,790
400% $94,200 9.5% $12,500 $8,950 $3,550

19. COST-SHARING SUBSIDIES
• Cost-sharing subsidies are available to help with out-of-
pocket expenses for individuals and families
making up to 250% of the federal poverty level
– ~ $58,875 for a family of 4
– Limits out-of-pocket expenses to between 6-27% of
actuarial value of the plan
NOTE: cost-sharing subsidies are only available for people
purchasing “silver” level plans

20. The Bumpy Road to
Implementation

21. ENROLLMENT DATA
State/Federal
Marketplace
Plans
Medicaid 9,000,000 4,377,932 51.4%
Sources:
CBO Projections Actual Data % of Projections
7,000,000 ~8,000,000 114%
Marketplace: President Obama Press Conference, April 14, 2014
Medicaid: HHS Press Release, March 11, 2014

22. SELECTED STATE
ENROLLMENT DATA
State Enrolled in Marketplace
Plan
Source: HHS Press Release, March 11, 2014
Medicaid
Eligible
California 868,936 1,136,000
New York 244,618 310,645
Florida 442,087 124,363
Wisconsin 71,443 68,655
Ohio 78,925 97,477

23. ENROLLMENT DATA
Source: HHS Press Release, March 11, 2014

24. ENROLLMENT DATA
LEVEL OF INSURANCE
Bronze Silver Gold Platinum Catastrophic
Florida 14% 65% 9% 12% 1%
Texas 21% 62% 11% 4% 1%
Nation 19% 62% 12% 7% 1%
Source: HHS Press Release, February 12, 2014

25. INDIVIDUAL MANDATE
HARDSHIP EXEMPTIONS
•Administration will permit individuals that
lose their existing coverage and who are
unable to find affordable insurance through
the exchanges to qualify for a “hardship
exemption”
•Permit them to either:
–Purchase catastrophic coverage
–Avoid penalty under individual mandate

26. IMPLEMENTATION DELAY
EMPLOYER MANDATE
• On July 2, 2013, the Obama Administration announced
that it was delaying enforcement of the employer
mandate for 1 year
– Qualifying employers would have been exempted from
penalties for failing to provide insurance starting in 2015
• On February 10, 2014, the Administration announced a
second delay
– Firms with between 50 – 100 workers are now
exempt until 2016
–Firms with over 100 workers now required to offer
insurance only 70% of their workforce
• Down from 95%

27. IMPLEMENTATION DELAY
OUT-OF-POCKET CAPS
•ACA imposed caps on out-of-pocket insurance costs
– $2,000 deductible limit for individuals
– $4,000 deductible limit for family plans
• In February, 2013, DOL published a rule delaying
the implementation of these caps until 2015
– Notional “concern” was that many companies use
different companies to administer major medical vs. drug
coverage, and no way existing to coordinate amongst plans

28. Premiums v. Deductibles
Deductibles
Premiums

29. Comparison of Anthem Plans
Milwaukee, WI
Plan Monthly
Premium
Annual
Deductible
Max Out-of-
Pocket
DirectAccess
Bronze
(POS)
$730 Individual: $6,300
Family: $12,600
Individual: $6,350
Family: $12,700
DirectAccess Silver
(POS)
$904 Individual: $3,000
Family: $6,000
Individual: $3,600
Family: $7,200
DirectAccess Gold
(POS)
$1,221 Individual: $750
Family: $1,500
Individual: $6,000
Family: $12,000

30. Comparison of Dean Plans
Madison, WI
Plan Monthly
Premium
Annual
Deductible
Max Out-of-
Pocket
Value Focus
Bronze
(EPO)
$667 Individual: $6,000
Family: $12,000
Individual: $6,000
Family: $12,000
Classic
Silver
(HMO)
$721 Individual: $4,500
Family: $9,000
Individual: $4,500
Family: $9,000
Copay Plus
Gold
(EPO)
$966 Individual: $1,000
Family: $2,000
Individual: $3,000
Family: $6,000

31. Strategies for
Handling
Patient
Deductibles

32. Option A
• Access to real-time deductible status
• Review patient’s deductible status at time you verify
insurance eligibility
• If deductible has been met, submit claim
immediately
– If not, schedule a follow-up review and retest deductible
status periodically thereafter until either:
1. Deductible is met, or
2. Timely filing limit is hit

33. Option B
• No access to real-time deductible status
• Time/expense in getting real-time deductible status
is prohibitive
• Create guidelines on whether to hold a claim, and if
so, how long
– Based on level of patient’s coverage
• i.e., “Bronze” v. “Silver” v. “Gold”

34. Gold/Platinum Coverage
• Lower deductibles
• Patient has voluntarily opted to pay higher monthly
premiums for “better” coverage
Lower probability of unmet deductible,
combined with greater probability that
patient has financial means to pay whatever
deductible remains, suggests that
immediately submitting claims for these
patients carries less risk than other levels
of coverage

35. Silver Coverage
• Higher deductibles
• Patient has opted to pay “baseline” premium
Deductibles can be significantly higher than
gold/platinum coverage. Patient has also elected
not to pay more than legally required for their
coverage. This may be because they wanted to
take advantage of subsidies for out-of-pocket
costs. Collectively, this suggests that holding
claims for some period of time may make sense,
particularly if the patient was transported for a
medical condition that is likely to result in
significant hospital expenses (e.g., an AMI or
stroke)

36. Bronze Coverage
• Highest deductibles
• Patient has opted to pay less than the federally required
maximum percentage of their income on monthly
premiums
The fact that the patient has elected to pocket
a portion of the federal premium subsidy
suggests that they lack the financial means to
pay a significant out-of-pocket expense.
Combined with the highest deductibles, it
may make sense to hold claims for these
patients for some period of time

38. Brian Werfel, Esq.
A.A.A. Medicare Consultant
631-265-5650
bwerfel@aol.com

39. The Lighter Side
of EMS