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Health Reform, Year 1

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One year after the sweeping Affordable Care Act was signed into law, there is still uncertainty about its effects on personal health care.

 “It is a very partisan issue. There has been such a large (public relations) campaign against it that it has created a mindset that this is too confusing and is bad,” said Thomas McAuliffe, policy analyst for St. Louis-based Missouri Foundation for Health.

The nonprofit foundation focuses on empowering uninsured, underinsured and underserved Missourians through presenting information about health care policy and providing financial support through grants to nonprofit advocacy agencies, according to

McAuliffe said the foundation recently polled 800 Missourians who said they were likely to vote in general elections to gauge their feelings about reform and found that 50 percent of respondents said they oppose the law, 30 percent supported it and 20 percent were undecided.

According to a Missouri Foundation for Health overview of health reform, the Affordable Care Act is expected to expand health coverage to an estimated 32 million Americans, including 400,000 Missourians.

Among the changes implemented in 2010:
  • Young adults can remain on their parents’ insurance coverage until age 26.
  • People can no longer be dropped from coverage if they become ill.
  • Caps on the maximum amount that can be spent on an individual – the lifetime limits – were dropped.
  • New health plans must provide for preventative services with no co-pays.
  • Children cannot be denied coverage due to a pre-existing condition.
McAuliffe said that other key elements, such as beginning to close the “doughnut hole” for seniors on Medicare and offering tax subsidies for small businesses that provide health insurance for their workers were also implemented.

The doughnut hole refers to the amount of money seniors must spend on prescriptions after they reach a certain limit and until they hit catastrophic levels. Last year, McAuliffe said seniors who fell into the doughnut hole category received $250 rebates to offset drug cost. Starting this year, prescription costs will drop by 20 percent to 25 percent until the gap is closed in 2020.

Another key change brought by reform is the subsidies available to about 85,000 Missouri small businesses, enabling them to receive rebates of up to 30 percent if they pay for at least half of employees’ benefits. Companies, however, seem hesitant to tap into that help.

“We know that almost 50 percent of the small businesses eligible have not applied for that tax credit,” McAuliffe says.

One of the key aspects that will be implemented this year is the requirement of insurance companies to be more transparent about how they are spending their money, McAuliffe said.  The law requires insurance companies to provide a rebate to enrollees if they aren’t spending 80 percent to 85 percent of the premiums paid to them on health services for enrollees.

A change McAuliffe characterized as one of the most influential aspects of the bill – the creation of insurance exchanges – won’t go into effect until 2014, effectively granting small-business owners the bargaining power to purchase health coverage for their employees at the same rates as large businesses.

Officials with CoxHealth and St. John’s health systems said they are preparing now for health reform changes that will be implemented 2012–2014.

CoxHealth, for example, is actively referring people into the high-risk insurance pools created by reform in 2010 for people who aren’t covered and have pre-existing or chronic conditions, according to Jake McWay, CoxHealth senior vice president and chief financial officer.

“We haven’t added staff, but have built it into the workflows of people in admissions and financial aid,” McWay said.

Both health systems have been preparing for the Accountable Care Rule, for which participation is voluntary and which some providers will implement in 2012. The rule will provide performance payments to integrated physician groups that provide quality care that results in Medicare savings.

St. John’s already is participating in the Physician Group Practice Project, a pilot program with nine other physicians’ groups nationwide to measure the quality of preventive care and care for patients with chronic illnesses.

The pilot program models the Accountable Care Rule, focusing on integrated care among primary care physicians, specialists and hospitals, and reducing redundant testing and other waste through provider communication, said Mike Peters, vice president for advocacy at Mercy, St. John’s parent entity.

Peters said more than 600 physicians participated in the program, tracking the care of 30,000 Medicare patients.  St. John’s and four other groups received performance payments totaling $31.7 million as their share of the $38.7 million in savings generated for the fourth year of the project, which is now in its fifth and final year.

“We proved that if we have an integrated system and take a proactive approach, we can achieve higher quality of care while saving money,” Peters said.

McWay said that ACR is an affirmation of practices already in place at CoxHealth.

Paul Taylor, CEO of Ozarks Community Hospital, which focuses on primary care, said his system also is getting ready for the new rule, but he said that planning is largely left to individual systems.

“Right now, there’s really no incentive for larger systems to create an ACO with providers outside of their own systems,” he said, noting that the fact that Ozarks Community Hospital was named in 2009 among the least-expensive U.S. health systems might be seen as attractive to other organizations.“We’re trying to tout that advantage, that what we do efficiently would be a benefit to a larger ACO,” Taylor said.

Among other changes on the horizon, beginning in 2012, businesses will be required to report the value of health coverage on employees’ W-2 forms, a step that is optional in 2011. The value of those benefits, however, is not considered taxable income, according to the Missouri Foundation for Health’s reform overview. In 2013, a tax deduction for employers who receive subsidy payments for retiree drug coverage will end. By 2014, when the insurance exchanges are open in each state, coverage subsidies will be available to individuals and families based on income, and employers will be able to offer rewards of up to 30 percent of the employees’ shares of insurance premiums, if employees are participating in wellness programs, the foundation report said.
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