David M. Schreck, MD, FACEP, FACP, FHM , Chairman, Department of Emergency Medicine at Summit Medical Group provided this presentation on health care trends as part of a community lecture series on the Berkeley Heights, NJ campus. The presentation explains the impact on patient care and how to navigate the system.

1. “The Perfect Storm
The Storm”
Health Care Trends
Impact on Patient Care:
How t N i t th S t
H to Navigate the System
David M. Schreck, MD, FACEP, FACP, FHM
Chairman, Department of Emergency Medicine
Summit Medical Group
S it M di l G

2. Introductions
David M. Schreck, MD, MS, FACP, FACEP, FHM
 Chairman – Department of
Emergency Medicine, SMG
 Private practice - IM
 Specialist - Hospital Medicine
 Clinical Asst Prof Med - RWJ
 Adj Professor - Stevens Tech
 MS Biomedical engineering
 Past-Vice Chairman, Medicine
Overlook

3. Agenda
• How did we get here?
– You will get angry!!!
• The “Perferct Storm
Perferct Storm”
– You will get angrier!!!
• N i ti th system
Navigating the t
– You will try to hurt me!!!
• Questions and Answers
So … Don’t Shoot the Messenger!

4. Beware Data Analysis
• 3 f i d d i t Fl id
friends drive to Florida
• They stop at a motel
• Motel l k h
M l clerk charges $30 per night
i h
• Each of the friends pay $10 for the motel fee
• Manager found that they were overcharged $5
per night (should have been $25 per night)
• C
Clerk instructed to refund $
f $5…

5. Data Analysis
• …However, the clerk decided to pocket $ $2
figuring the friends would never find out.
• So the clerk refunded $3 to the friends…
• How much did each of the friends pay ???
• How much did the clerk pocket ???
WHERE S
WHERE’S THE EXTRA DOLLAR ???

6. Viewpoint
• There are no “bad guys”
• Physicians p their p
y put pants on “one leg at a
g
time”
• Patients have a need (and a right) to know
• Is healthcare a right?
• Wh t i quality…who d id ?
What is lit h decides?
• This is a very complex situation….

7. Patients are at the center…
Employers
Hospitals
H i l
Doctors
Media
Patients
Insurers
Pharmacy
Govt: Bio-
President industry
Legislators

8. Bias
• But there are biases out there….
• Physicians have experience based
preferences …
“preferences”…
• Insurance companies have shareholders
• Th
There are “ambulance chasers”…
“ b l h ”
• Patients want they think is best…
– (ie, antibiotics for a “cold”)
• Media sensationalism…

9. Sensationalism
• “Merck's Vioxx scandal widens: Drug
maker knew Vioxx was deadly for years
before risk was made public (opinion)”
• January 26, 2011, 11:13 pm “Breast
Implants Linked to Rare Cancer”
• The Vaccine Victim

10. Real Issues Do Exist
• Who is “passing the buck”
• We cannot legislate morality
– 10% of us give us 90% of the headaches
• …but where does the buck stop?
• Quality…who pays for it?
• Technology advances…who pays for it?
• Access to care who pays for it?
care…who
• Convenience…who pays for it?
• Unscheduled urgencies who pays for it?
urgencies…who

11. ED Marketplace

12. USA ED Visits 1984 2008
1984-2008
“America’s safety net: ~ $100 Billion”

13. National Health Expenditures
p National Health Expenditures
2020 $4,638.40
$4,346.50
2018 $4,080.00
$3,849.50
2016 $3,632.00
$3,417.90
2014 $3,227.40
$2,980.40
Projected
2012 $2,823.90
$2,708.40
$2 708 40
2010 $2,584.20
$2,486.30
Year
2008 $2,391.40
$2,283.50
2006 $2,152.10 $2.7 TRILLION
$2,021.00
2004 $1,877.60
$1,740.60
2002 $1,607.90
$1,358.50
1999 $1,270.30
$1 270 30
$1,129.70 Reported
1993 $916.50
$717.30
1980 $254.90
$0.00
$0 00 $500.00
$500 00 $1,000.00
$1 000 00 $1,500.00
$1 500 00 $2,000.00
$2 000 00 $2,500.00
$2 500 00 $3,000.00
$3 000 00 $3,500.00
$3 500 00 $4,000.00
$4 000 00 $4,500.00
$4 500 00 $5,000.00
$5 000 00
Billions
Source: www.cms.gov

14. National Health Expenditures
and Their Share of (GDP) 1980-2020
( )
$5,000.00 25%
National health spending is projected to continue to increase as a
$4,500.00
share of GDP over the next decade. 20%
$4,000.00 Projected 20%
Actual
$3,500.00
17.7%
$3,000.00 15%
$2,500.00
$2,000.00
$2 000 00 10%
$1,500.00
$1,000.00
, 5%
$500.00
$0.00 0%
80
90
93
97
99
00
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
National Health Expenditures % GDP
Source: CMS, Office of the Actuary, National Health Statistics Group.

15. National Health Expenditures and Their Share of
Gross Domestic Product 1960 2009
Product, 1960-2009
Dollars in Billions:
5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.0% 16.1% 16.2% 16.6% 17.6%
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at
http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip).

16. Health Care Economics

17. CPI 1970-2010
US Census Bureau

19. Total Health Expenditure as a Share of GDP,
U.S. and Selected Countries, 2008
18%
16%
14%
12%
As Percentage of GDP
10%
8% 16.0%
6% 11.2%
11 2%
0 %
10.5% 10.5%
0 % 10.7%
10 7% 11.1%
11 1%
9.9% 10.4%
9.0% 9.1% 9.4%
8.5% 8.5% 8.7%
4% 8.1%
2%
0%
Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-
en (Accessed on 14 February 2011).
Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are
PPP adjusted.

20. Total Health Expenditure per Capita,
Per Capita Health Spending, 2002
U.S. and Selected Countries, 2008
$8,000 Each year, the US spends roughly 2x the amount on $7,538
health care as the next most spending country
$7,000
$6,000
Per Capita Spending - PP Adjusted
$5,003
$5,000 $4,627
PP
$3,970 $4,063 $4,079
$4,000 $3,677 $3,696 $3,737
$3,353 $3,470
$3,129
$2,870 $2,902
$3,000 $2,729
$2,000
$1,000
$0
Anderson GF, Hussey PS, Frogner BK, Waters HR. Health spending in the United States and the rest
of the industrialized world. Health Aff (Millwood ). 2005;24:903-914.

21. Total Expenditure on Health as a Share of GDP,
U.S. and Selected Countries, 1970, 1980, 1990, 2000,
2008
18%
16%
14%
Health Spending as Percent of GDP
12%
10%
8%
1970
6% 1980
1990
4% 2000
2008
2%
0%
Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-
en (Accessed on 14 February 2011).
Notes: Data from Australia and Japan are 2007 data. 2008 figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. 200
figures for Belgium are OECD estimates. Break in Series AUS (1998); AUSTRIA(1990); BEL(2003, 2005); CAN(1995); FRA(1995); GER(1992); JAP(1995);
NET(1998, 2003); NOR(1999); SPA(1999, 2003); SWE(1993, 2001); SWI(1995); UK (1997). Starting in 1993 Belgium used a different methodology.

22. Total Health Expenditure Per Capita,
U.S. and Selected Countries, 1970, 1980, 1990,
2000,
2000 2008
$8,000
$7,000
apita Spending - PPP Adjusted
$6,000
$5,000
1970
1980
$4,000
1990
2000
$3,000
2008
Per Ca
$2,000
$1,000
$-
$
Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-en
(Accessed on 14 February 2011).
Notes: Data from Australia and Japan are 2007 data. 2008 figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. 2000
figured for Belgium are OECD estimates. Numbers are PPP adjusted. Break in Series AUS (1998); AUSTRIA(1990); BEL(2003, 2005); CAN(1995); FRA(1995);
GER(1992); JAP(1995); NET(1998, 2003); NOR(1999); SPA(1999, 2003); SWE(1993, 2001); SWI(1995); UK (1997. Starting in 1993 Belgium used a different
methodology.

23. Growth in Total Health Expenditure Per Capita,
U.S. and Selected Countries, 1970-2008
$8,000
$7,000
ed
Per Capita Spendin - PPP Adjuste
$6,000
United States
$5,000
Switzerland
ng
Canada
$4,000
OECD Average
Sweden
C
$3,000
$3 000
United Kingdom
$2,000
$1,000
$0
1970 1975 1980 1985 1990 1995 2000 2005
Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-
en (Accessed on 14 February 2011).
Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are
PPP adjusted. Break in series: CAN(1995); SWE(1993, 2001); SWI(1995); UK (1997). Numbers are PPP adjusted. Estimates for Canada and Switzerland in
2008.

24. Total Health Expenditure per Capita
and GDP per Capita,
US and Selected Countries, 2008
Countries
$8,000
USA
$7,000
$7 000
Pe Capita Heal Spending
$6,000
Austria
$5,000 Switzerland
lth
Germany
Canada Norway
Belgium
$4,000 France
Netherlands
$3,000 Italy U.K. Australia
er
Japan Sweden
$2,000 Spain
$1,000
$0
$25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000
GDP Per Capita
Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-
en (Accessed on 14 February 2011).
Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates.

25. We are in for a rough ride!!!!
BAD NEWS WORSE NEWS
CURRENT MEDICARE’S
UNFUNDED CURRENT
LIABILITY OF UNFUNDED
SOCIAL SECURITY LIABILITY IS
IS ABOUT ABOUT
$11 TRILLION + $66 TRILLION!
= $250 000 per person
$250,000
(310,000,000 est. pop. 2010)
Who’s paying for this???
Source: Orlikoff & Associates, Inc. 2008

26. Population Data
Are these groups motivated to pay the debt????
And to pay for us as we age???
$39k
$21k $37k $31k
AGE GROUPS

27. Projected National Health Expenditures in the United
States,
States by Source of Payment, 2010
Payment
Where the money comes from……
Private Health
Insurance
32%
Other Private
Spending
7% 21% Medicare
Out-of-Pocket 11%
Payments
12% 16%
Other Public Medicaid and
Spending CHIP1
Total National Health Expenditures, 2010 = $2.6 Trillion
NOTES: 1Includes Children’s Health Insurance Program (CHIP) and Children’s Health Insurance Program expansion (Title XIX). Percentages do not sum to 100% due
to rounding.
SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, Updated National Health Expenditure Projections 2009-2019, January 2011.

28. Distribution of National Health Expenditures, by Type
of Service, 2009
Service
Where it goes……
Hospital
Other Health Care, 30.5%
Spending,
15.9%
Other
Personal
Health Care,
14.9%
Home Health
Care, 2.7%
Prescription
p
Nursing Home Drugs, 10.1%
Care, 5.5% Physician/
Cli i l
Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment,
etc. O h Health Spending includes, for example, administration and net cost of private health insurance, public health activity,
Other H l h S di i l d f l d i i i d f i h lhi bli h l h i i
research, and structures and equipment, etc.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the
Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health
Expenditures by type of service and source of funds, CY 1960-2009; file nhe2009.zip).

29. Distribution of National Health Expenditures,
by Type of Service,
Service
1999 and 2009
Hospital Physician/ Prescription Nursing Home Health Other Other Health
Care Clinical Drugs Home Care Care Personal Spending
Services Health Care
Notes: Percentages may not total 100% due to rounding. Other Personal Health Care includes, for example, dental and other professional health
services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private h lth insurance,
i d bl di l i t t Oth H lth S di i l d f l d i i t ti d t t f i t health i
public health activity, research, and structures and equipment, etc.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National
Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service
and source of funds, CY 1960-2009; file nhe2009.zip).

30. Concentration of Health Care Spending
in th U S P
i the U.S. Population, 2008
l ti
Percent of To Health Care Spending
100%
Is heathcare a right? 96.9%
80%
Is rationing on the way? 80.2%
73.4%
63.6%
60%
h
47.5%
40%
otal
20.2%
20 2%
20%
3.1%
0%
Top 1% Top 5% Top 10% Top 15% Top 20% Top 50% Bottom
50%
(≥$44,338) (≥$16,336) (≥$9,148) (≥$6,074) (≥$4,374) (≥$825)
Percent of Population, Ranked by Health Care Spending (<$825)
Note: Dollar amounts in parentheses are the annual expenses per person in each percentile. Population is the civilian noninstitutionalized
population, including those without any health care spending. Health care spending is total payments from all sources (including direct
payments from individuals, private insurance, Medicare, Medicaid, and miscellaneous other sources) to hospitals, physicians, other providers
(including dental care), and pharmacies; health insurance premiums are not included.
Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare
Research and Quality, Medical Expenditure Panel Survey (MEPS), 2008.

31. Hospitals

32. Number of Public Community Hospitals,
1990-2008
1990 2008
Notes: Includes nonfederal (i.e., state and local government), short-term general and specialty hospitals whose facilities are available to the public.
( , g ), g p y p p
Public community hospitals represent 23% of all community hospitals, and community hospitals represent about 85% of all hospitals. Federal
hospitals, long term care hospitals, psychiatric hospitals, institutions for the mentally retarded, and alcoholism and other chemical dependency
hospitals are not included.
Source: American Hospital Association Annual Surveys: 1990-1998 data from Hospital Statistics, 2002, Table 1; 1999-2008 data from AHA Annual
Surveys, Copyright 2010 by Health Forum LLC, an affiliate of the American Hospital Association, at http://www.ahaonlinestore.com.

33. Hospital Patient Volume

34. Hospital LOS

35. Aggregate Total Community Hospital Margins,
1980-2008
1980 2008
Note: Total Community Hospital Margin calculated as the difference between total net revenue and total expenses, divided by total net revenue.
Source: American Hospital Association and Avalere Health, Avalere Health analysis of 2008 American Hospital Association Annual Survey data,
for community hospitals, Trendwatch Chartbook 2010, Trends Affecting Hospitals and Health Systems, Table 4.1, p. A-32, at
http://www.aha.org/aha/trendwatch/chartbook/2010/appendix4.pdf.

36. Community Hospital Payment-to-Cost
Ratios, b Source of Revenue, 1980 2008
R ti by S fR 1980-2008
Note: Payment-to-cost ratios show th degree to which payments f
N t P tt t ti h the d t hi h t from each payer cover th costs of treating its patients. They cannot be
h the t f t ti it ti t Th tb
used to compare payment levels across payers, however, because the service mix and intensity vary. Data are for community hospitals.
Medicaid includes Medicaid Disproportionate Share payments.
Source: American Hospital Association and Avalere Health, Avalere Health analysis of 2008 American Hospital Association Annual Survey
data, for community hospitals, Trendwatch Chartbook 2010, Trends Affecting Hospitals and Health Systems, Table 4.4, p. A-35, at
http://www.aha.org/aha/trendwatch/chartbook/2010/appendix4.pdf.

37. Health Insurance Coverage 2007
Other Private Uninsured
24,500,000 Medicaid
39,600,000
45,700,000
Medicare
41,400,000
Military
4,000,000
Employer
177,400,000
Source: U.S. Census Bureau: Income, Poverty, and Health Insurance Coverage in the United States 2007

38. Payment Sources for Uncompensated
Care, 2004
Private Dollars
$6 Billion
(15%)
Federal Dollars
$24 Billion
(58%)
State Dollars
$11 Billion
(27%)
Total = $40.7 Billion
SOURCE: Kaiser Commission on Medicaid and the Uninsured analysis of data from Hadley, J. and J. Holahan. 2004. The Cost of Care for
the Uninsured: What Do We Spend, Who Pays, and What Would Full Coverage Add to Medical Spending? KCMU, Issue Update, May 2004.

39. Growth in Workers by Type of Industry,
2000 to 2005
+5.6 million
-2.0 million
Growth in Workers in Industries Decline in Workers in Industries
where Employer-Sponsored Health where Employer-Sponsored Health
Coverage is Less Common Coverage is More Common
Notes: Excludes those aged 65+. Uninsured rates are 23% in industries where coverage is less common, such as
construction and agriculture; 10% where coverage is more common, such as education and manufacturing.
Source: Urban Institute analysis of the 2001 and 2006 March CPS for KCMU, 2006.

40. Cumulative Changes in Health Insurance Premiums and
Workers’ Earnings, 2001-2007
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2001-2007; Bureau of Labor Statistics, Seasonally Adjusted Data from the
Current Employment Statistics Survey, 1988-2007 (April to April).

41. Average Annual Worker Premium Contributions Paid by Covered
Workers for Single and Family Coverage 1999 2010
Coverage, 1999-2010
*Estimate is statistically different from estimate for the previous year shown
(p
(p<.05).
)
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2010.

42. Average Annual Health Insurance Premiums and
Worker Contributions for Family Coverage,
y g
2000-2010
$13,770
114%
Premium
Increase
$6,438
147% Worker
Contribution
C t ib ti
Increase
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits,
2000-2010.

43. HMO Median Medical Expense Ratios, 1995-
2002
Note: Medical expense ratio calculated as Total Medical Expenses/(Total Revenue - Investment Revenue).
Source: InterStudy Publications, The InterStudy Competitive Edge 13.2, Part II: HMO Industry Report, (reporting data as of January 1,
2003), October 2003, Figure 9, p. 60.

44. The storm cometh ….

45. Nope… it’s already here!!!

46. The Perfect Storm
• Looming physician shortages
• Elderly population rises
• Health care population rises
p p
• Specialists refuse to take “call” from ED
• Higher unemployment: uninsured
• Employees begin to pay more for care
• Increased regulatory environment
• Malpractice environment
p

47. Total Number of Active Physicians per
1,000 Persons,
1980 – 2004
(1) (2)
Source: CDC, NCHS Health United States, 1982, 1996-97, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006.
(1) 1980 does not include doctors of osteopathy.
(2) 2004 includes both federal and non-federal physicians. Prior to 2003, data included non-federal physicians only.

48. First-Year M.D. Enrollment per 100,000
Population Has Declined Since 1980
i i Si
Source: AAMC 2006; U.S. Census Bureau

49. Average Physician Income
Adjusted f I fl ti 1995 2003
Adj t d for Inflation 1995-2003
Source: Community Tracking Study Physician Survey Center for Studying Health System Change

50. Mean Time Spent with Physician (
p y (in
Minutes), 1989-2006
Minutes
Note: Includes ambulatory care visits made to nonfederally employed physicians’ offices in the United States (excluding physicians in the
specialties of anesthesiology, radiology, and pathology). Visits to private, nonhospital-based clinics and HMOs are included if they are not
federally operated facilities or hospital-based outpatient departments. Only visits where face-to-face contact with the physician occurred are
included. Time spent with th physician excludes ti
i l d d Ti t ith the h i i l d time spent waiting t see th physician, receiving care f
t iti to the h i i i i from someone other th th
th than the
physician without the presence of the physician, or time spent by the physician in reviewing patient records and/or test results.
Source: Center for Disease Control and Prevention, National Center for Health Statistics, Division of Health Care Statistics: 2006 data at
National Health Statistics Reports, No. 3, August. 6, 2008, National Ambulatory Medical Care Survey: 2006 Summary, Table 28, p.36, at
http://www.cdc.gov/nchs/data/nhsr/nhsr003.pdf.

51. LOOMING PHYSICIAN SHORTAGE
• Retiring physicians
– 250,000 physicians will retire in the next 10-20 years
10-
…JUST WHEN THE BOOMERS HIT 70
– 9,000 physicians retired in 2000
• 23,000 WILL RETIRE IN 2025
• Decreasing medical student matriculation
per thousand population
• 2020 E ti t of th shortage of physicians
Estimate f the h t f h i i
– 85,000 TO 200,00
Association of American Medical Colleges

52. Medicare Enrollment, 1966-2010
46.1 47.0
45.4
44.0
43.3
42.5
Number in millions: 39.6
37.6
34.2
31.1
28.5
25.0
20.5
19.1
NOTES: Numbers may not sum to total due to rounding. People with disabilities under age 65 were not eligible for Medicare prior to 1972.
SOURCE: Centers for Medicare & Medicaid Services, Medicare Enrollment: Hospital Insurance and/or Supplemental Medical Insurance Programs for Total,
Fee-for-Service and Managed Care Enrollees as of July 1, 2008: Selected Calendar Years 1966-2008; 2009-2010, HHS Budget in Brief, FY2011.

53. Medicare Beneficiaries as a Percent of State
Populations, 2010
p ,
National Average, 2010 = 15%
18%
14% 20%
17% 17% 16%
15%
16% 16%
15%
16% 17%
14% 17% 16%
14% 16%
18% 15%
17%
15% 16% 16%
13% 14% 15% 14%
10% 21%
12% 15% 14%
17% DC 13%
13% 17%
16%
16%
14% 15% 16% 18% 17%
9%-14% (14 states and DC)
17% 18% 12%
15% (8 states)
12% 15%
16% (12 states)
9% 17%-21% (16 states)
18%
16%
NOTES: Percent enrollment calculated using U.S. Census Bureau July 2009 population estimates.
SOURCE: Centers for Medicare & Medicaid Services (CMS) Management Information Integrated Repository (MIIR), February 16, 2010. Medicare beneficiaries as a
share of state population estimates are based on July 1, 2009 state-level population estimates from the U.S. Census Bureau.

54. Number of Medicare Beneficiaries 1970-2040
Enrollment in the Medicare Program is projected to nearly double in the next 30 years.
Actual Projected
Enrollment (millions)
E (
.
Source: Medicare Trustees Report 2006

55. Doctor Visits Are Sharply Higher
for Those O
f Th Over 65
Source: National Ambulatory Medical Care Survey, 1980, 1990, 2000, and 2003
Prepared by AAMC Center for Workforce Studies

56. Growth in Medicare Expenditures 1970–2015
Dollars in billions
Note: Figures for 2010 and 2015 are projected.
Source: The Commonwealth Fund; Data from 2006 Medicare Trustees’ Report.

57. Medicare % of U.S. Population 1970-2030
p
The U.S. population will age rapidly through 2030, when 22 percent of the
populationwill be eligible for Medicare.
22.0%
18.5% 2.4
15.0% 2.7
13.9%
13.1%
12.1%
1.9 2.4
1.2
9.5% 1.3
9.5 10.8 11.9 12.0 12.6 15.8 19.5
Total Number of
Medicare Beneficiaries: 20.4 28.4 34.3 39.6 46.5 61.6 78.6
(millions)
Source: Social Security Administration, Office of the Actuary.

58. Median out-of-pocket health care spending
as a percent of income continues to rise for
people on Medicare
l M di
AARP IS A VERY BIG LOBBY
Median Out of Pocket Health
Out-of-Pocket
Spending as % of Income
SOURCE: Kaiser Family Foundation analysis of CMS Medicare Current Beneficiary Survey Cost and Use Files, 1997-2006.

59. Health Care Spending as a Share of Social Security
Income for a Typical 65-Year-Old Medicare
Beneficiary, 2022
B fi i
Average Social Security
$25,560 Income, 2022 $25,560
Beneficiary Spending
as a share of
Social Security Payment
Traditional Medicare “Path to Prosperity” Proposal
SOURCE: Kaiser Family Foundation analysis. Beneficiary health care spending under Medicare (extended baseline scenario) and Mr. Ryan’s proposal is
calculated based on data in the CBO letter to Chairman Paul Ryan dated April 5, 2011. Social Security income for an average wage 65-year old retiring
at age 65 is based on Social Security Administration data (Table VI.F10 of the 2010 Trustees Report) adjusted to current dollars (based on annual CPI
projections in Table VI.F6. See http://www.ssa.gov/OACT/TR/2010/lr6f6.html factors).

60. Prescription Drug Coverage
Among Medicare Beneficiaries, 2010
No Drug
Coverage
Stand-
Alone
4.7
Prescription
million
Drug Plan
Other Drug 10%
(PDP)
Coverage1 5.9
million
Total in
17.7
17 7 Part D
13%
million
38% Plans:
27.7
Million
8.3 (60%)
Retiree Drug million
Coverage2 18%
9.9
99
million
21%
Medicare Advantage
Drug Plan
Total Number of Medicare Beneficiaries = 46.5 Million
NOTES: Numbers do not sum to 100 percent due to rounding. 1Includes Veterans Affairs, retiree coverage without RDS, Indian Health Service, state pharmacy
assistance programs, employer plans for active workers, Medigap, multiple sources, and other sources. 2Includes Retiree Drug Subsidy (RDS) and FEHBP and
TRICARE retiree coverage.
SOURCE: Centers for Medicare & Medicaid Services, 2010 Enrollment Information (as of February 16, 2010).

61. Standard Medicare Prescription Drug Benefit, 2011
CATASTROPHIC Enrollee Plan pays 15%;
pays 5% Catastrophic
COVERAGE Medicare pays 80% Coverage Limit =
$6,448 in
Total D
T t l Drug Costs
C t
Brand-name drugs
Enrollee pays 50%;
COVERAGE 50% manufacturer discount
GAP Generic drugs
Enrollee pays 93%;
Plan pays 7%
Initial
Coverage Limit =
$2,840 in
Total Drug Costs
INITIAL Enrollee
COVERAGE pays Plan pays 75%
PERIOD 25%
$310 Deductible
SOURCE: Kaiser Family Foundation illustration of standard Medicare drug benefit for 2011 (standard benefit parameter update from Centers for Medicare & Medicaid
Services, April 2010). Amounts rounded to nearest dollar.

62. Percent of Medicare Part D Enrollees Who Reached the
Coverage Gap and Catastrophic Coverage in 2007
g p p g
Excludes Part D Enrollees Who Receive Low-Income Subsidies and Non-Users
Remained
in the
coverage
gap
Did not reach the Reached the
coverage gap coverage gap
Reached
catastrophic
hi
coverage
level
NOTES: Estimates based on analysis of retail pharmacy claims for 1.9 million Part D enrollees in 2007.
SOURCE: Georgetown University/NORC/Kaiser Family Foundation analysis of IMS Health LRx database, 2007.

63. Components of Average Health Care Spending
by Medicare Households, 2009
Share of Total Spending
9.8% Health Insurance
($3,038)
($3 038) (65.7%
(65 7% of Health Care
Spending)
Other Health
Household Care
Spending 14.9%
85.1%
2.6%
Medical Services (17.4%)
($804)
2.1%
2 1% Prescription Drugs
($654) (14.2%)
0.4% ($125) Medical Supplies (2.7%)
Average Total Spending = $30,966
A T lS di $30 966 Average Health Care S
A H l hC Spending = $4 620
di $4,620
NOTES: Numbers may not sum to total due to rounding.
SOURCE: Kaiser Family Foundation analysis of the Bureau of Labor Statistics Consumer Expenditure Survey Interview and Expense Files, 2009.

64. Medicare’s Share of National Personal Health
Expenditures,
Expenditures by Type of Service 2010
Service,
Expenditures in Billions
Medicare $489 $31 $235 $62 $105 $29
Total $2,142 $77 $789 $260 $536 $149
NOTES: Total also includes dental care, durable medical equipment, other professional services, and other personal health care/products.
SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Expenditure Projections 2009-2019, February 2010.

65. Historical and Projected Number of Medicare
Beneficiaries and Number of Workers Per Beneficiary
Number of Beneficiaries (in millions) Number of Workers Per Beneficiary
SOURCE: 2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

66. Solvency Projections of the Medicare Hospital
Insurance Trust Fund, 1970-2011
Projected Number of Years to Insolvency and Projected Year of Insolvency:
(1972)
(1994)
(2003)
(2005)
(1999)
(2001)
(2001)
Report
Year (
(2015)
)
(2029)
(2026)
(2020)
(2019)
(2017)
(2029)
(2024)
Source: Intermediate projections from 1970-2011 Annual Reports of the Boards of Trustees of the Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds.

67. Medicare is less generous than FEHB and other
large employer plans
Share of Total Spending Paid by Plan in 2007
Total Average Medical Spending = $
l di l S di $14,270
2 0
85% 83%
74%
Medicare Typical Large Employer PPO Plan FEHBP Standard Option
NOTE: The FEHBP (Federal Employees Health Benefits Program) standard option is offered through Blue Cross Blue Shield. Employer plans include
dental benefits.
SOURCE: Hewitt Associates analysis for the Kaiser Family Foundation, 2008.

68. The Perfect Storm
• Our patients are sicker
p
• Our patients are older
• There are more of them
• They must all be seen and treated faster
• ….in less number of hospital beds
• ….in less days
• ….for less money
• ….with much improved quality
– ….TRANSLATION: without any errors!!!!

69. THE COMMODITIZATION and
GLOBALIZATION OF HEALTH CARE
WHOLESALE TO RETAIL
RETAIL CLINICS
QUALITY & PRICE
INFORMATION
MEDICAL TOURISM
MARKET
SEGMENTATION

70. HEART SURGERY WITH A WARRANTY!
SU G
Geisinger Health System ProvenCare:
•Flat rate for Bypass surgery $25,000 – $30,000
•Includes any complications 90 days post-op
Includes post op
•Relies on following 40 Best Practice Guidelines
•In 117 cases,
•mortality rate 0 from 1.5%
•30 day readmission 5.1% from 6.6%
•Hospital charges d
H it l h dropped 5 2%
d 5.2%

71. NOV. 2007 HEADLINE: “DENNIS QUAID’S
NEWBORN TWINS GIVEN 1,000 TIMES
INTENDED DOSE OF BLOOD THINNER”
• The CMO At CEDARS-SINAI MEDICAL
CENTER in LA Stated:
“As a result of a preventable error, the
patients
patients’ IV Catheters were flushed with
heparin from vials containing a
concentration of 10 000 units per milliliter
10,000
instead of from vials containing a
concentration of 10 units per milliliter ”
milliliter.

72. • Multispecialty group Northern Central NJ
– 120 physicians
– 1700 patients per day
• 40+ Acres
• 250,000 sq ft facility
• Urgent Care facility
– 10 exam rooms
– 3000 sq ft

75. Accountable Care Organizations
75

76. PATIENT CENTERED MEDICAL HOME
The following principles were written and agreed upon by the four
Primary Care Physician Organizations – the American Academy of
Family Physicians, the A
F il Ph i i th American A d
i Academy of P di t i th
f Pediatrics, the
American College of Physicians, and the American Osteopathic
Association.
Principles:
Ongoing relationship with personal physician
Physician di t d
Ph i i directed medical practice
di l ti
Whole person orientation
Coordinated care across the health system
Quality d f t
Q lit and safety
Enhanced access to care
Payment recognizes the value added
76
Source: PCPCC (www.pcpcc.net)

77. Defining the Medical Home
•Specialist care is coordinated, and
systems are in place to prevent
•Patients can easily make appointments and select errors that occur when multiple
p
the d
th day and ti
d time. physicians are involved.
•Waiting times are short. Care •Follow-up and support is provided.
Superb •eMail and telephone consultations are offered. Coordination
Access to •Off-hour service is available.
Care • Integrated and coordinated team care
depends on a free flow of communication
among physicians, nurses case
physicians nurses,
managers and other health professionals
(including BH specialists).
•Patients have the option of being informed and • Duplication of tests and procedures is
engaged partners in their care. Team Care avoided.
•Practices provide information on treatment plans,
preventative and follow-up care reminders,
Patient
at e t access to medical records, assistance with self-
Engagement care, and counseling.
• Patients routinely provide feedback to
doctors; practices take advantage of low-
in Care cost, internet-based patient surveys to
learn from patients and inform treatment
•These systems support high-quality care, plans.
practice-based learning, and quality improvement. Patient
•Practices maintain patient registries; monitor
Practices Feedback
adherence to treatment; have easy access to lab
and test results; and receive reminders, decision
Clinical support, and information on recommended
Information treatments. •Patients have accurate, standardized
Systems information on physicians to help
them choose a practice that will meet
their needs.
needs
Publically
P bli ll
available
information
77
Source: Health2 Resources 9.30.08
8

78. WHY IS IT IMPORTANT?
• In the U.S., PCP supply is consistently associated with
, pp y y
improved health outcomes for conditions like cancer,
heart disease, stroke, infant mortality, low birth
weight,
weight life expectancy, and self rated care
expectancy self-rated care.
• In England, each additional PCP per 10,000 persons is
associated with an approximate decrease in mortality
of 6%.
%
• In the U.K., an increase in PCP’s resulted in a
significant decrease in both acute and chronic hospital
admissions.
Starfield B. Shi L, and Macinko J. Contributions of Primary Care to Health Systems and Health, Millbank Quarterly, Vol. 83, No. 3,
2005 (457-502)

79. WHY IS IT IMPORTANT?
U.S. adults who reported having a PCP
rather than a specialist as their regular
source of care had lower 5 year mortality
rates after controlling for initial differences in
health status, demographics, health
insurance status, health perceptions,
reported diagnosis, and smoking status.
Starfield B. Shi L, and Macinko J. Contributions of Primary Care to Health Systems and Health, Millbank Quarterly, Vol. 83, No. 3, 2005 (457-502)

80. WHY IS IT IMPORTANT?
Patients who use a particular doctor for their
care have more preventive care, more
p ,
accurate diagnosis, fewer diagnostic tests,
fewer prescriptions, fewer ER visits, and
fewer h it li ti
f hospitalizations, resulting i l
lti in lower cost t
of care.
Starfield B. Shi L, and Macinko J. Contributions of Primary Care to Health Systems and Health, Millbank Quarterly, Vol. 83, No. 3, 2005 (457-502)

81. WHY IS IT IMPORTANT?
In the U.S., when adults have a medical
home, access to needed care, receipt of
routine preventive screenings, and
screenings
management of chronic conditions improve
substantially.
y
A. C. Beal, M. M. Doty, S. E. Hernandez, K. K. Shea, and K. Davis, Closing the Divide: How Medical Homes Promote Equity in Health Care: Results From The
Commonwealth Fund 2006 Health Care Quality Survey, The Commonwealth Fund, June 2007

82. PCMH as Foundation for Accountable
Care Organizations
ACOs are defined as a
group of providers that has
the legal structure to receive
and distribute incentive
payments to participating
providers.
Source: Premier Healthcare Alliance 82

83. What is an Accountable Care Organization?
• The PPACA Section 3022 definition
– Organization of health care providers that agrees to be
accountable f quality, cost and overall care of Medicare
for f
beneficiaries who are enrolled in traditional fee-for-service
program and who are assigned to it
– For each 12-month period, participating ACOs that meet
specified quality performance standards eligible to receive
share of any savings if actual per capita expenditures for
y g p p p
assigned Medicare beneficiaries are sufficient percentage
below specified benchmark amount
• A partnership among health care providers to coordinate
and deliver efficient care
– Assumes joint accountability for improving quality and slowing
cost growth
83

84. ACO Envisions Integrated Care
Hospital
Other
Payers Healthcare
Providers
Patients
Primary
Specialists Care
Providers
Purpose of ACOs is to create incentives for providers to collaborate
to treat patients across health care settings
84

85. Basic Requirements for ACOs
• ACOs are required to:
– Operate as a single integrated organization that
accepts shared responsibility for the cost and quality
of care provided to a specific population of patients
cared for by the groups’ clinicians
– Operate consistently with principles of a patient-
centered medical home and other requirements of
State legislation on ACOs
– Have a formal legal structure to receive and distribute
savings
– Comply with federal requirements related to ACOs
85

86. Functional R
F ti l Requirements f ACO
i t for ACOs
• At a minimum, ACOs are required to have or provide
through contractual arrangements:
– Clinical service coordination, management, and delivery functions
– Population management functions, including Health Information
functions
Technology (HIT)
– Financial management capabilities
– Contract management capabilities
– Quality measures to report on performance
• There is a performance penalty if ACO fails to achieve certain quality
measures
– Patient and provider communication functions
– Ability to provide behavioral health services within ACO or by
contractual arrangements
86

87. Eligibility Criteria for Forming ACOs
• Under PPACA, ACOs may be formed by:
, y y
– ACO professionals (physicians and practitioners) in
group practice arrangements
– Networks of individual practices of ACO professionals
– Partnerships or joint venture arrangements between
acute care hospitals and ACO professionals
– Acute care hospitals employing ACO
professionals
• CMS roughly estimates th t th t t l average start-up
hl ti t that the total t t
investment and the first year of operating expenses for
an entity forming an ACO to participate in the Medicare
Shared Savings P
Sh d S i Program would b approximately $1 7
ld be i t l $1.7
million 87

88. Participation in ACOs
• SNFs, long-term care hospitals, and
federally qualified health centers may not
form ACOs, but may participate in
established ACOs
• Participation in ACOs is voluntary
88

89. Beneficiary Assignment to ACOs
• Beneficiaries are assigned to an ACO based on p
g primary care
y
services rendered by physicians in general practice, internal
medicine, and geriatric medicine
• Under PPACA, an ACO is required to have at least 5,000
beneficiaries assigned to it to qualify to participate in shared savings
• Assignment is made on a retrospective basis
• Beneficiaries do not enroll in a specific ACO and ACOs do not know
which beneficiaries are assigned to it until the end of the year
• Two reasons CMS proposed retrospective assignment of
beneficiaries:
– “… the ACO should be evaluated on the quality and cost of care
furnished to those beneficiaries who actually chose to receive care from
ACO participants during the course of the performance year.”
– “… to encourage the ACO to redesign its care processes for all
Medicare FFS [Fee for Service] beneficiaries, not just for the subset of
beneficiaries for whom the ACO is being evaluated.”
89

90. Medicare B
M di Beneficiaries’ F d
fi i i ’ Freedom of Ch i
f Choice
• The assignment of a patient to an ACO in
no way restricts a Medicare FFS patient’s
freedom of choice in selecting physicians
and other health care providers and
suppliers from whom he/she wishes to
receive services
90

91. Payment Model – Shared Savings
• CMS will develop a performance benchmark for ACOs to
assess whether they qualify for shared savings
• ACOs will receive a share of any savings if the actual per
capita expenditures of their assigned Medicare
beneficiaries are below the benchmark
• ACOs will select either:
– A one-sided risk payment model (sharing of savings only for the
first two years, and sharing of savings and losses in the third
year); or
– A two-sided risk payment model ( h i of savings and l
t id d i k t d l (sharing f i d losses
for all three years)
• CMS has no authority to specify how shared savings will be
distributed by ACOs
y
91

92. Quality Measures and
y
Performance Thresholds
• 65 quality measures are proposed for the first
year (January 1, 2012 through December 31,
2012) in the following 5 areas:
– (1) Patient/Caregiver Experience of Care
– (2) Care Coordination
– (3) Patient Safety
– (4) Preventative Health
– (5) At Risk Population/Frail Elderly Health
At-Risk
• ACOs which do not meet quality performance
thresholds for all proposed measures would
be ineligible for shared savings
92

93. Patient Protections
• ACOs are required to ensure access by disabled
individuals and other individuals with chronic or complex
medical conditions to appropriate specialty care
• ACOs are required to accept all patients regardless of
payor or clinical profile
• The Office of Patient Protection is directed to establish
regulations relating to consumer appeals of ACO
determinations
• The DHCFP is required to:
– Safeguard against underutilization of services and inappropriate
denials of services or treatment
– Safeguard against, and impose penalties for, inappropriate
selection of low cost patients and avoidance of high cost patients
by ACOs and ACO network providers
93

94. How should patients navigate the
system in such a “ f t storm”?
t i h “perfect t ”?
Do Your Homework!
• Is the physician taking new patients?
• Does the physician accept your insurance?
• Is the physician part of a group?
• What are the office hours?
• Where did th physician attend medical
Wh the h i i tt d di l
school?
• Is the physician board-certified?

95. Let s
Let’s start with a “Day in the Office”
Day Office
• How many of you have been kept waiting
for a scheduled appointment?
– Did it make you angry?
• How many of you have been late for an
appointment?

96. Start of the Day’s Schedule
Day s
• 730am: Staff shows up to begin the day
• 8:00am: First patient shows up for
scheduled 8am 20min appointment
• What needs to happen during this visit?
– Staff brings you to the room
– BP, P, Temp, Wt, medication list, allergies
– Verify complaint
– Update data on EMR

97. Enter the Physician…
Physician
• It’s now 8:07am…
It s
• The physician
– Patient history: Wassuppp!
– Physical exam: any findings?
– Order any testing
– Counsel the patient on assessment
• Dx, medication, expected course, instructions, what to watch
for, f/u Q/A etc
for f/u, Q/A, etc….
– Write/dictate the medical record of encounter
• All of this needs to get done in 13 min!

98. Suggestions
• Request copies that require your signature
ahead of time to allow reading them
• Come in 15 min earlier…
– To register
• Have insurance card
– To have EMR updated so that visit can begin
on time
• Have meds/OTC/herbs list for updating
• Is your scheduled visit enough time?

99. ASK QUESTIONS!!!
-Newsweek: September 1, 2003, page 17
Newsweek:

100. Schreck’s Top 10
Value Considerations f P i
V l C id i for Patients
• Get a PCP to help you • Keep list of your current meds
NAVIGATE • Physician EMR utilization
• Physician
Ph i i credentials:
d ti l • Discuss end-of-life decisions with
Board-Certified your PCP (have family member with
Fellow of the College you to hear your wishes)
• Physician accessibility • “One stop shopping”
One shopping
• Physician’s personality • ACTIVELY PARTICIPATE IN YOUR
• Understand insurance policy CARE !!!

101. Closing Comments
• Do your homework
• Ask
A k questions
ti
• Not all conditions are “cut and dry”
• Be active and participate in your own care
– Your medical care is a TEAM EFFORT!

102. • Government has been trying to herd the
medical system
• B t getting physicians t d anything i
But tti h i i to do thi is
like herding CATS!!!!

103. Answer
• There is no “extra” dollar -> depends on
extra >
accounting basis (“balance”):
Friends: Motel: Clerk:
-$30 (motel fee) +$30 (motel fee) +$5 (refund)
+ 3 (refund) - 5 (refund) -$3 (“commission”)
-$27 net loss
$27 +$25 net gain
t i +$2 net gain
t i
-$27 balances + $27
$27
NO EXTRA DOLLAR!

104. Prescription Drug Coverage Among
Medicare Beneficiaries, by Income, 2008
23% 26%
30%
Part D ­ Stand­alone
PDP
49%
Part D ­ Medicare
66% 19% 16% Advantage Drug Plan
g g
24% 1% 1% Self­Purchased Only
1% Employer­Sponsored
25%
44% 48% Other Public/Private
31%
1%
20%
13% No Drug Coverage
<1% 1% <1%
5% 1%
<1% <1%
12% 14% 13%
8% 9%
$10,000 $10,001- $20,001- $30,001- $40,001
or less 20,000 30,000 40,000 or more
(5.9 million) (8.9 million) (6.8 million) (6.4 million) (7.7 million)
NOTES: Percents rounded to the nearest whole number. Numbers may not sum due to rounding.
SOURCE: Kaiser Family Foundation analysis of the CMS Medicare Current Beneficiary Survey Access to Care File, 2008.