Deloitte Center for Health Solutions

December 5, 2011

Monday memo

Health reform update

My take

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

I used five different airlines last week to get into and out of six cities, ending the week on a short

hop from Houston to Nashville on Southwest Airlines. Ironically, the news of the day was the

bankruptcy filing by American Airlines as it seeks to restructure its debt and emerge stronger

downstream.

I spend a lot of time on planes. I see differences in the demeanor of flight attendants, the quality of

peanuts, and the predictability of on-time arrivals. I am dependent on the industry to provide safe,

dependable travel, and the government to oversee its business practices to assure safe operations

and fair competition.

Sound familiar? The health care industry is no less vital to the lives of many, and not just those who

“travel” its clinics and hospitals. It is central to the commerce in every community employing more

than 16 million to support the delivery of care or investigate the science of diagnosis and cure. Like

the airline industry, ours is a labor intense, capital intense, and highly regulated collection of

organizations large and small that “fly the planes” or support those that do with parts and services.

In 1978, the U.S. airline industry was deregulated. Competition for routes, gates, and access to the

latest planes was the goal; the federal government stepped back but not out of the picture. The

result: eight of the 12 U.S. airline companies that operated in 1978 no longer operate today as

independent carriers (including: Braniff, TWA, Eastern, Pan Am, Western, Northwest, National, and

Continental). Furthermore, 18.1% of miles flown by U.S. airline companies today are by companies

that did not exist when deregulation began, like Southwest. Per Massachusetts Institute of

Technology’s (MIT) Airline Data Project, consolidation in the industry has steadily increased: the

top five today fly 79% of the total miles flown versus 64% in 1978.

Consolidation seems a natural response in a competitive market wherein innovation in quality,

service, and price-value are critical success factors. Increased consolidation in our industry is

already playing out: it’s understandable. Health care is arguably inefficient due to its

fragmentation—5,800 hospitals, two-thirds operated independently; 700,000 physicians, 90%

operating in single-specialty settings; 4,500 bio-pharma companies competing for the next

breakthrough in therapeutics; 6,000 device companies, 80% with fewer than 200 employees; 400

companies selling electronic health records (EHR) systems; 1,300 health plans; and so on.

Like most Monday’s, I am on a plane this morning. The coffee will not be very good due to the

onboard water filtration system. Virtually every seat will be full as the industry shed capacity to

reduce costs and compete. I don’t fear ending up in the wrong city because the industry’s

technologies would disallow my boarding. And I expect an uneventful outcome—safe landing—

because my expectation is the cabin crew, equipment maintenance, and air traffic control system

are working collaboratively to get me there though sometimes a bit late. And the cost for travelling

will continue to mystify me—seems more about when I fly and where than how far—go figure!

Unlike the airlines, I do not expect to use the health system directly this week. I hope to end the

week in Washington, DC without incident, and the air travel industry will have served me well.

Should I need the health care industry, my expectation is no less optimistic. Its major actors

(doctors, hospitals, allied health professionals), the technologies and facilities they use, and the

administrative processes that frame their work will be there, if I need them. Its costs (no less

confusing than my airfares), service, and quality are highly variable for those that are prone to

explore or feel they have a choice. And it is changing: consolidating, just as the airline industry did,

to compete and survive.

My expectations for both industries are similar—positive outcomes without incident. In each, there

is huge room for improvements to align price and value and, no doubt, continued consolidation as

both industries adjust to their “new normal.” Safe travels! Safe health!

Note: This Thursday (December 8th), industry consolidation will be among the seven themes

discussed in Deloitte’s national Dbrief webcast from New York City, U.S. Health Care: What’s in

Store for 2012, featuring Andrew Vaz (National Managing Director, Life Sciences & Health Care,

Deloitte Consulting LLP), Ken Weixel (National Managing Director, Life Sciences & Health Care,

Deloitte & Touche), and Paul Keckley, Ph.D. (Executive Director, Deloitte Center for Health

Solutions). For more information, please view the Dbrief website.

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This week’s headlines: My take

Implementation update - HHS releases final MLR rules; 64% of insurers would meet MLR requirements - House Energy and Commerce Committee votes to repeal CLASS - HHS announces contractor to build the federal health insurance exchange - Medicare releases competitive bidding guidance for medical equipment and supplies - CMS announces Medicare coverage for preventive services to reduce obesity

Legislative update - "SGR fix" not fixed

State update - Survey: state revenues below pre-recession levels; Medicaid spending growth above average

- State roundup

Industry news - HHS announces delay to Stage 2 meaningful use - ONC final rule finalizes processes for consequences for EHR accreditors’ misconduct - Medicare open enrollment ends this week - President announces $50 million in new funding to combat AIDs - OECD: U.S. performs well on cancer care and screenings; not on hospital readmissions - Study: Medicare disease management pilot results suboptimal - Study: variation in use of in-office testing and correlation to billing

Quotable

Fact file

National Health Reform: what now?

Subscribe to the Health Care Reform Memo

Deloitte Center for Health Solutions research

Deloitte contacts

Implementation update

HHS releases final MLR rules; 64% of insurers would meet MLR requirements Friday, the U.S. Department of Health and Human Services (HHS) released interim final rules for

medical loss ratio (MLR) rebates and requirements per Affordable Care Act (ACA) Section 1001.

ACA requires large group plans that spend less than 85% of premium revenue on clinical services

and quality and small group and individual market plans that spend less than 80% to provide

rebates to enrollees starting in 2012 on or before August 1 of each year. Note: HHS did not exempt

agents and brokers from the final MLR calculation despite the National Association of Insurance

Commissioner’s (NAIC) recommendation. Key changes:

Tax free MLR rebates: allows employees in group health plans to receive rebates in a way

that is not taxable, instead of insurers sending checks that could be taxed.

Transparency: proposes that consumers receive a notice, showing not only the rebate

amount but also explaining what the insurer’s MLR means regardless of whether there is a

rebate, and how the insurer’s MLR has improved under the ACA. Data on mini-med plans

(i.e. limited benefit plans) and ex-patriate plans will be publicly posted in spring 2012.

Calculation changes: allows ICD-10 conversion costs of up to 0.3% of an issuer’s earned

premium in the relevant state market to be considered quality improvement activities for the

2012 and 2013 MLR reporting years. Also allows an issuer to deduct the higher of either the

amount paid in state premium tax or actual community benefit expenditures up to the highest

premium tax rate in the state from earned premiums.

Adjustments for mini-med plans and ex-patriate plans: phases down special

circumstances adjustment for mini-med plans down from 1.75 in 2012 to 1.5 in 2013 to 1.25

in 2014. Mini-med plans will be banned due to ACA Section 1001 which prohibits annual

limits starting in 2014. The final regulations keep the ex-patriate plan multiplier adjustment at

2.0.

The rules follow a report released Wednesday by the Government Accountability Office (GAO)

finding that in 2010 at least 64% of insurers covering 77% of lives would have met or exceeded the

2011 MLR requirements. The report noted: “A higher percentage of insurers in the large and small

group markets met or exceeded the standards compared to those in the individual market. Insurers

in the individual market averaged higher non claims expenses, including expenses for brokers’

commissions and fees, than those in other markets. The combined effect of the credibility

adjustment and the new components of the PPACA MLR formula resulted in greater increases in

average adjusted PPACA MLRs for individual and small group market insurers compared to those

in the large group market. The average adjusted PPACA MLRs for individual, small group, and

large group market insurers in 2010 were 7.5, 6.5, and 4.8% higher, respectively, than the average

MLRs for these markets calculated without the credibility adjustment and using the traditional MLR

formula. In addition, PPACA required insurers to report MLRs by state, and we found a wide range

of reported MLRs for multistate insurers.”

Source: GAO, “Private Health Insurance: Early Indicators Show That Most Insurers Would Have

Met or Exceeded New Medical Loss Ratio Standards,” October 31, 2011) Comments on the rule

are due February 6, 2012.

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House Energy and Commerce Committee votes to repeal CLASS

The House Energy and Commerce Committee advanced legislation to repeal the Community living

assistance services and support (CLASS) long-term care insurance program per ACA Section

8002. HHS recently halted implementation of the program which was not actuarially sound. Next,

the bill will head to the House floor.

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HHS announces contractor to build the federal health insurance exchange

The Center for Consumer Information and Insurance Oversight (CCIIO) selected CGI Federal Inc.

to build the federal health insurance exchange per ACA Section 1311. The contract’s estimated

total value is $93.7 million over a two-year base with three, one-year option periods.

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Medicare releases competitive bidding guidance for medical equipment and

supplies

Wednesday, the Centers for Medicare & Medicaid Services (CMS) announced operational details

for Round 2 of its Medicare Competitive Bidding Program for durable medical equipment,

prosthetics, orthotics, and supplies (DMEPOS). CMS also launched a program to help guide

suppliers through the competitive bidding process.

Note: ACA Section 3109 expanded DMEPOS with estimated savings of $28 billion years over ten

years. DMEPOS’s first phase was implemented for nine product categories in nine areas of the

country on January 1, 2011, saving Medicare 35% compared to the Medicare payment fee

schedule. Round 2 expands the program to 91 additional metropolitan areas. New prices are

expected to be effective July 1, 2013. Registration for the Round 2 starts today, and the 60-day

supplier bidding period will start late January of 2012.

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CMS announces Medicare coverage for preventive services to reduce obesity

Tuesday, CMS announced that Medicare is adding coverage for preventive services to reduce

obesity without cost sharing per ACA Section 1001. Coverage aligns with the Million Hearts

initiative led by CMS and the Centers for Disease Control and Prevention (CDC) in partnership with

other HHS agencies, communities, health systems, nonprofit organizations, and private sector

partners across the U.S. to prevent one million heart attacks and strokes in the next five years. The

key intervention is free counseling for Medicare enrollees who are obese.

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Legislative update

“SGR fix” not fixed Medicare physician payments are scheduled to be cut 27.4% January 1, 2012 per the sustainable

growth rate (SGR) formula. For the 12th time since 2001, it is likely Congress will circumvent the

SGR in favor of a temporary patch. Several ideas were floated last week including a proposal from

the House Ways and Means Committee that discussed a one-year payment fix with a 1% increase

in pay. The Congressional Budget Office (CBO) estimates SGR pay fix options thru 2021 per

below:

SGR policy options by fiscal year (FY) in billions of dollars

Cliff Options 2012 2013 2014 2015 2016 2012-2016

2012-2021

0% Update for 2012

cliff: ‐32% in 2013 11.0 5.0 0.5 0.3 0.7 16.4 21.0

0% Update for 2012‐2013

cliff: ‐36% in 2014 11.0 18.3 5.3 -1.2 0.2 33.7 38.6

0% Update for

2012‐2014

cliff: ‐37% in 2015

11.0 18.3 21.4 6.2 2.1 54.8 47.8

1% Update for 2012

cliff: ‐33% in 2013 11.3 5.1 0.6 0.2 0.6 16.7 20.6

1% Update for 2012‐2013

cliff: ‐37% in 2014

11.3 19.3 5.7 1.4 0.0 35.0 38.9

1% Update for

2012‐2014

cliff: ‐39% in 2015

11.3 19.3 23.0 6.6 2.4 57.9 49.3

Note: the cliff mechanism would be used to override the projected 27.4% payment reduction in

2012 and would return the payment rate that would have been calculated in the year immediately

following the override, adjusted for changes in the targets and payment rates. Under the cliff

mechanism, the amount of spending in 2012 under a given payment policy would affect the

calculation of the target and update for the following year.

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State update

Survey: state revenues below pre-recession levels; Medicaid spending growth

above average Tuesday, the National Governors Association (NGA) and the National Association of State Budget

Officers (NASBO), released a survey concluding total state revenues are below pre-recession

levels (2007) though states have seen tax collection increases and reduced costs dropping

455,000 employees in the period. Highlights:

States’ 2012 budgets include $667 billion in general fund expenditures—a 2.9% increase

from 2011 but below 2008 levels ($687 billion).

For FY 2011, Medicaid is estimated to account for about 23.6% of total spending, the largest

portion of total state spending. This represents about an estimated $398.6 billion and an

increase of 10.1% over FY 2012.

Medicaid enrollment increased 7.2% in FY 2010, 5.5% in FY 2011 and is estimated to

increase 4% in FY 2012, representing a 17.7% increase in Medicaid enrollment over three

years.

Most states are cutting Medicaid spending via enrollment changes, stepped-up fraud

detection, and managed care.

Source: NGA and NASBO, “Fall 2011 Fiscal Survey of States,” November, 2011.

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State roundup In Arizona, CMS approved an additional 5% Medicaid payment cut for health care providers

and hospitals in Arizona as part of Governor Jan Brewer’s (R) plan to balance the state’s FY

2012 budget.

Monday, Indiana and Louisiana were denied requests for waivers to ACA’s MLR

requirement by HHS’s CCIIO. Indiana requested an MLR of 65% for 2011, 68.75% for 2012,

and 72.5% for 2013. Louisiana requested an MLR of 70% in 2011 and 75% in 2012. To date

CCIIO has approved six MLR requests (Georgia, Iowa, Kentucky, Maine, Nevada, and New

Hampshire), denied five (Delaware, Guam, Indiana, Louisiana, and North Dakota), and has

yet to act on requests from Florida, Kansas, North Carolina, Oklahoma, Texas, and

Wisconsin.

Tuesday, HHS awarded $220 million in ACA funding through exchange establishment grants

to 13 states: Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Maine, Michigan,

Nebraska, New Mexico, Rhode Island, Tennessee, and Vermont. All states received Level

One funding except Rhode Island, the first state to receive Level 2 funding. HHS also

extended the application deadline for Level One establishment grants from December 30,

2011 to June 29, 2012. Note: Forty-nine states and D.C. have received planning grants, and

45 states have consulted with consumer advocates and insurance companies. Thirteen

states have passed legislation to create an Exchange.

November 25, Governor Bob McDonnell (R) sent a report to the state legislature on the

impact of the ACA on Virginia recommending the state create a “quasi-governmental” health

insurance exchange to cover the 520,000 projected eligible people under the oversight of a

11-15 member appointed board.

Arkansas’s state insurance commissioner announced that its health insurance exchange will

be run by the federal government.

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Industry news

HHS announces delay to Stage 2 meaningful use

Thursday, HHS announced that it intends to delay Stage 2 meaningful use attestation for

physicians and hospitals that adopt EHRs under the Medicare and Medicaid EHR Incentive

Programs per the Health Information Technology for Economic and Clinical Health (HITECH) Act.

“…HHS intends to allow doctors and hospitals to adopt health IT this year, without meeting the new

standards until 2014. Specifically, HHS intends to propose such an extension in the Stage 2

meaningful use Notice of Proposed Rulemaking (NPRM), which is scheduled to be published in

February 2012”. The final rule is expected June 2012.

Background: three stages for meaningful use standards were included in HITECH (2009). Each

eligible professional or hospital enters the program at the lowest stage and rises through an

“escalator” of stages:

Stage 1 (2011 and 2012) sets the baseline for electronic data capture and information

sharing.

Stage 2 (originally 2013, delayed to 2014) expands upon the Stage 1 criteria to encourage

the use of health for structured exchanges of quality improvement data including electronic

transmission of orders entered using computerized provider order entry (CPOE) and the

electronic transmission of diagnostic test results.

Stage 3 (expected to be implemented in 2015) will focus on promoting improvements in

quality, safety, and efficiency leading to improved health outcomes via structured clinical

decision support tools for providers and consumers.

Key facts per HHS:

Over 135,000 providers have registered for a Medicare or Medicaid EHR Incentive Payment

as of October 31, 2011, indicating their intent to adopt and meaningfully use EHRs, and over

$1.2 billion in EHR incentive payments have been made through the end of October.

Medicare has paid over $119 million in EHR incentives to eligible doctors and hospitals for

meaningful use of EHRs.

Medicaid has paid over $230 million in EHR incentives to eligible doctors, nurse practitioners,

certified nurse-midwives, dentists, physician assistants, and hospitals for having adopted or

meaningfully used EHRs.

Medicare and Medicaid combined have paid over $880 million in EHR incentives to hospitals

eligible for both incentive payments for having adopted or meaningfully used EHRs.

52% of office-based physicians report that they intend to take advantage of incentives

provided through the Medicare and Medicaid EHR Incentive Programs. (Source: National

Center for Health Statistics, National Ambulatory Medicare Care Survey, November 30,

2011)

The percentage of physicians who have adopted EHRs in their practice has doubled from 17

to 34% between 2008 and 2011, with the percent of primary care doctors using this

technology nearly doubling from 20 to 39%. (Source: National Center for Health Statistics,

National Ambulatory Medicare Care Survey, November 30, 2011)

Note: HITECH authorized $27 billion over ten years (i.e. between about $44,000 and $63,750 per

physician and up to $2 million per hospital) to support EHR adoption.

For more information, please contact: Mitch Morris, M.D., National Leader, Health Information

Technology, Deloitte Consulting LLP (mitchmorris@deloitte.com).

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ONC final rule finalizes processes for consequences for EHR accreditors’

misconduct November 25, Office of the National Coordinator for Health Information Technology (ONC)

released its rule for the removal the of accredited EHR vendors committing false, fraudulent, or

abusive activities that affect the permanent certification program and for “failing to timely or

adequately correct a performance violation.” A vendor will have up to 30 days to respond to ONC

about a noncompliance notification. The regulations are effective December 27, 2011.

Note: In June, ONC selected the American National Standards Institute (ANSI) as the only ONC-

AA.

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Medicare open enrollment ends this week Medicare open enrollment ends this Wednesday, December 7, 2011. In an announcement

released November 28, CMS states, “…as beneficiaries look over their available plan options, they

will see better value in the Medicare Advantage (Part C) and Prescription Drug (Part D) plan

benefits…On average, Medicare Advantage premiums will be 4% lower in 2012 than in 2011.”

Beneficiaries in the Medicare prescription drug coverage gap (i.e. “donut hole”) will continue to

receive 50% discounts on covered brand name drugs per ACA Section 3301.

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President announces $50 million in new funding to combat AIDs Thursday, on World AIDS Day, the President announced that HHS will provide $35 million to the

Health Resources and Services Administration (HRSA) to support state AIDS Drug Assistance

Programs. The CDC estimates that 34% of HIV/AIDS patients do not receive consistent care and

only 28% of HIV/AIDS patients have their HIV under control.

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OECD: U.S. performs well on cancer care and screenings; not on hospital

readmissions The Organization for Economic Cooperation Development (OECD) released its sixth edition of

“Health at a Glance” comparing health care quality and treatment measures for 34 developed

countries plus Brazil, China, India, Indonesia, the Russian Federation, and South Africa. Notable

comparative findings for 2009:

Measures U.S. rank of countries

U.S. OECD Average

% of population who perceived health 1 out of 34 90% 69.1%

status as good, adults ages 15 and older

% of U.S. obese adults (measured data)

40 out of 40 33.8% 16.9%

Infant mortality rate 31 out of 40 6.5/1,000 4.4/1,000

Life expectancy at birth 27 out of 34 78.2 79.5

Practicing medical doctors 28 out of 40 2.4/1,000 3.1/1,000

Average length of stay in hospitals for all causes

32 out of 38 4.9 7.2

Asthma hospital admission rates (aged 15 and over)

27 out 28 120.6/100,000 51.8/100,000

In-hospital mortality following stroke within 30 days after admission for ischemic stroke (age-sex standardized rate)

20 out of 27 3.0/100 5.2/100

Per-capita pharmaceutical spending 1 out of 32 $947 $487

% GDP spent on health care as share of GDP

1 out of 40 17.2% 9.6%

Source: OECD, “Health at a Glance”, November 23, 2011

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Study: Medicare disease management pilot results suboptimal Based on analysis of results from eight companies that participated in the Medicare Health Support

Pilot Program launched in 2005 involving 242,417 Medicare enrollees in eight communities. Study

design:

Each company was paid a monthly per member fee to provide nurse call centers, and health

coaches for higher risk enrollees. Companies failing to achieve established targets were

required to return a portion of the fees.

The analyses were based on comparisons of the intervention group with a control group

using a trailing 12 month baseline for 40 “process of care” measures. Beneficiary

participation ranged from 75-96% (average 85%). Average contact: every 80 days (every 2.7

months).

Conclusion: “in this large study, commercial disease management programs using nurse

based call centers achieved only modest improvements in quality of care measures and no

demonstrable reduction in the utilization of acute care or costs of care.”

Source: McCall et al, “Results of the Medicare Health Support Disease Management Pilot

Program,” New England Journal of Medicine, November 3, 2011, Vol. 365, No.18

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Study: variation in use of in-office testing and correlation to billing Increased health services research attention is being given to practice variation. A recent study

used logistical regressions to assess the association of physician billing and the use of stress

testing (after adjusting for patient severity and other risk factors) for 17, 847 patients from

November 2004 to June 2007. Conclusion: nuclear stress testing and stress echocardiography

testing following revascularization was more frequent (four times higher) among patients treated by

physicians who billed for technical and professional fees than those who billed the professional fee

only.

Source: Shah et al, “Association between Physician Billing and Cardiac Stress Testing Patterns

following Coronary Revascularization,” Journal of the American Medical Association, November 9,

2011, Vol. 306, No.18)

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Quotable “The biggest problem in health care isn’t with insurance or politics. It’s that we’re measuring the

wrong things the wrong way…There is almost a complete lack of understanding of how much it

costs to deliver patient care, much less how these costs compare with outcomes

achieved…making matters worse, participants in the health system do not even agree on what they

mean by costs.”— Kaplan and Porter, “How to Solve the Cost Crisis in Health Care,” Harvard

Business Review, September 2011

“The genomic revolution is under way, and some therapies, particularly in oncology, can be

individualized with genetic characterization to maximize outcomes. House staff are better rested,

but their attending physicians are more anxious, as the fundamentals have taken a back seat and

the histories of complicated patients seem to be left in the dust. The components of what we used

to call comprehensive, multi-disciplinary team care seem to be replaced by only those services that

are allowed or reimbursed…It is clear something has to change to facilitate patient care and

address physicians’ helplessness to perform our jobs to the best of our ability. Complaining has not

helped, and individual coping mechanisms are not always productive. We can change our attitude,

change the system, or change the assumptions and conceptual framework behind the system. ..as

with other problems, if we as physicians band together to address it, the solution may be far easier

than expected.”— Roxanne Young, Associate Editor, Journal of the American Medical Association,

“A Piece of My Mind,” November 2, 2011, (Vol. 306, No. 17)

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Fact file U.S. unemployment decreased to 8.6% in November from 9% in October. Employment

continued to increase in the retail trade, leisure and hospitality, professional and business

services, and health care industry. Government employment continued to decrease. (Source:

U.S. Department of Labor (DOL), Bureau of Labor Statistics (BLS), December 1, 2011)

In 2010, 50% of U.S. adults sought information about a personal health issue from sources

other than their doctors, down from 56% in 2007. Sources include: internet; books,

magazines, newspapers; friends or relatives; and TV or radio among other sources. (Source:

Ha T. Tu, Center for Studying Health System Change, “Surprising Decline in Consumers

Seeking Health Information,” November 2011)

The Medicare donut hole decreased 40% from $1,504 to $901 for those who hit the coverage

Medicare prescription drug coverage gap. (Source: Medicare's Office of the Actuary analysis,

reported by Ricardo Alonso-Zaldivar, Associated Press, “AP Newsbreak: Medicare’s drug

coverage gap shrinks,” November 27, 2011)

44% of Americans have an unfavorable view of ACA vs. 37% with a favorable view. ACA’s

most favorable element: the requirement that health plans provide summary of benefits (per

Section 2715) viewed favorably by 84%. (Source: Kaiser Family Foundation, Kaiser Health

Tracking Poll, November 2011)

Uninsured children decreased nationally from 6.9 million in 2008 to 5.9 million in 2010.

(Source: Georgetown University Center for Children and Families, “Despite Economic

Challenges, Progress Continues: Children’s Health Insurance Coverage in the United States

from 2008-2010”, November 29, 2011)

Enrollment in the Medicare Advantage (MA) plans increased by about 6%—from 7.9 million

to 8.4 million beneficiaries—from April 2010 through April 2011. The number of MA plans

decreased from 2,307 to 1,964, due primarily to a decrease in private fee-for service (PFFS)

plan offerings. The average monthly premium for beneficiaries in MA plans decreased by

about 14% from $28 in 2010 to $24 in 2011. (Source: GAO, “Medicare Advantage,

Enrollment Increased from 2010 to 2011 while Premiums Decreased and Benefit Packages

Were Stable,” October 2011)

57% of physicians say their practice uses EHRs in some capacity other than for billing, up

from 51% in 2010. 52% say their practice plans to apply for federal EHR incentive payments,

up from 41% in 2010. (Source: National Center for Health Statistics)

443,000 annual deaths were due to smoking at a cost of $96 billion in direct medical

expenses and $97 billion in lost productivity. 19.3% (45.3M) of U.S. adults smoke: 78.2%

daily—21.5% men, 17.3% women. Prevalence decreases with education and income.

(Source: National Health Interview Surveys 2005-2010)

Average length of stay in U.S. hospital: 3.29 days in 2011 vs. 3.25 in 2010 and 3.70 in 2006.

(Source: Thomson Reuters)

Employer sponsored insurance for 2010: family premiums increased 9% vs. 2009 to $15,073;

single coverage increased 8% to $5,429. (Source: Survey of 2,000 employers by Kaiser

Family Foundation and Health Research and Education Trust)

$70.4 billion in improper payments from government health care programs in 2010: Medicare

fee for service ($34.3 billion), Medicaid ($22.5 billion), and Medicare Advantage ($13.6

billion). (Source: Government Accounting Office GAO-11-318SP page 205)

Medical school applications: increased 2.6% in 2011 to 32,654. (Source: AAMC)

Emergency Room visits up 10% over 2009 vs. 2008 to 136 million. (Source: American

College of Emergency Physicians)

65% of U.S. Food and Drug Administration (FDA) clinical trials occurred outside U.S. in 2008;

regulated products are 10% of U.S. imports in 2010: $184 billion of FDA regulated foreign

imports into U.S. (Source: FDA)

13% of health costs due to medication non adherence at a cost of $290 billion per year.

(Source: New England Healthcare Institute, “Thinking Outside the Pillbox: A System Wide

Approach to Improving Medication Adherence for Chronic Disease,” August 2009)

Medicare operating margins for hospitals: -7% in 2011 vs. -5% in 2009; 61% of hospitals

operate at a loss on Medicare. Hospital merger activity January – September 2011: 132

hospitals involved in 71 deals valued at at $6.9 billion. (Sources: Medicare Payment Advisory

Commission (MedPAC), Healthcare M & A Monthly)

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National health reform: what now? National health reform is here. The health reform bills (HR3590 and HR4872) are

law and triggering sweeping changes and disruptions – some rather quickly and

some over many years. The industry is asking, “What now?” At Deloitte, we

continue to explore and debate the key questions facing the industry, and we look

forward to helping our clients find and implement the right answers for their

organizations. To learn more, visit www.deloitte.com/us/healthreform/whatnow

today. return to top

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Deloitte Center for Health Solutions research

Coming soon: Physician attitudes about health reform and the future of medicine

Issue Brief: Supervisory care

Physician attitudes about health information technology

Currently available: “2011 Global Survey of Health Care Consumers” – U.S. and country specific reports and

fact sheet library —2011. Available online at www.deloitte.com/us/2011consumerism.

“Issue Brief: The fiscal impact to states of the Affordable Care Act (ACA): Comprehensive

analysis” — October 2011. Available online at www.deloitte.com/us/acafiscalimpactstates.

“Issue Brief: The impact of health reform on the individual insurance market: A strategic

assessment” — October 2011. Available online at

www.deloitte.com/us/acaindividualinsurancemarket.

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Deloitte contacts Paul H. Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

(pkeckley@deloitte.com)

Harry Greenspun, M.D., Senior Advisor, Health Care Transformation and Technology, Deloitte

Center for Health Solutions (hgreenspun@deloitte.com)

John Bigalke, U.S. Industry Leader, Health Sciences & Government and National Co-Leader,

Health Reform, Deloitte LLP (jbigalke@deloitte.com)

Bill Copeland, National Co-Leader, Health Reform, Deloitte Consulting LLP

(bcopeland@deloitte.com)

Andrew Vaz, National Managing Director, Life Sciences & Health Care, Deloitte Consulting LLP

(anvaz@deloitte.com)

Steve Kraus, Principal, Human Capital, Deloitte Consulting LLP (stkraus@deloitte.com)

Mitch Morris, M.D., National Leader, Health Information Technology, Deloitte Consulting LLP

(mitchmorris@deloitte.com)

Clint Stretch, Managing Principal, Tax Policy, Deloitte Tax LLP (cstretch@deloitte.com)

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