Essential Benefits Update

I do not like the HHS decision to "punt" the issue of essential benefits to the states since I think it would have been important to set a national standard. Here is a good summary of the issue:
http://www.commonwealthfund.org/Blog/2011/Dec/Essential-Health-Benefits.aspx

HHS Issues Bulletin on Essential Benefits

On December 16, 2011, HHS released a “bulletin” describing the approach that it intends to take to establishing the “essential health benefits” under the Affordable Care Act. A bulletin is a form of guidance that lacks the legal stature of a rule. HHS believed, however, that the states, insurers, consumer advocates, and the public needed some indication as to the direction HHS was intending to take in defining the EHB, and the Bulletin was intended to serve this purpose until an actual rule is issued.

It is likely that the intent of those who drafted the ACA was to establish a uniform national EHB standard. This is not what the Bulletin proposes, however, at least for 2014 and 2015. Rather the Bulletin proposes that each state define its own EHB within federal guidelines. States will do this by choosing among federally-defined “benchmark” plans. This is the approach that the Children’s Health Insurance Program (CHIP) has used since 1997 and that states may use for some Medicaid populations. The Bulletin signals that HHS intends to extend this approach to those groups guaranteed the EHB under the ACA.

For 2014 and 2015, states may pick a benchmark plan from one of the following four categories:

(1) the largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market (a product being a package of services and riders offered by an insurer and a plan being a specific selection of benefits and cost-sharing) ;

(2) any of the largest three State employee health benefit plans by enrollment;

(3) any of the largest three national Federal Employee Health Benefit Plan plan options by enrollment; or

(4) the largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the State.

If a state fails to pick a benchmark plan, the largest plan in any of the three largest small group products will be the default. Under the Bulletin, exchange plans and plans offered in the individual and small group market must cover the services included in the benchmark plan.

Personally I am disappointed that a national standard benefit plan was not created. Stay tuned for more comments on this in future posts.

Docs Do Not Like the ACA

Threaten someone's income and you won't very likely find that they support you:

http://www.healthcarefinancenews.com/news/deloitte-physicians-skeptical-health-reform-can-deliver-it-promises

Employers Would Save 40% If They Drop Coverage

According to this analysis, employers win big but their employees lose if employers decide to drop HI coverage and send employees to the state exchange:

http://www.washingtonpost.com/blogs/ezra-klein/post/the-cost-of-dropping-health-insurance/2011/12/07/gIQAzTSYcO_blog.html

How Payers Should Prepare for State Exchanges

I think this article offers a nice summary of how payers should prepare for state exchange participation:

http://www.fiercehealthpayer.com/special-reports/health-insurance-exchanges-3-steps-prepare-payers

Most Insureres Would Meet New MLR Requirements

While brokers are not happy about the final regs HHS issued last week that logically excluded commissions from being included in MLR calculations, the insurance industry for the most part already meets the 85% group standard. the 80% individual MLR rewquirement is somewhat more problematic:

http://www.healthleadersmedia.com/page-2/HEP-274068/Good-News-Many-Insurers-Already-Meet-MLR-Requirements

Defined Contribution Health Plans Will Be the Wave of the Future

I totally agree with this. With the rise of private exchanges, it is already happening and will become more and more popular.

http://www.bloomberg.com/news/2011-12-07/defined-contributions-define-health-care-ahead-commentary-by-peter-orszag.html

VT: Single Payor Will Save Money

Most of the savings will be on the clinical side through a reduction in unnecessary care.
But if ACOs take-off, will these savings be realized anyway?

http://www.businessinsurance.com/article/20111102/NEWS03/111109965?tags=58|278|87|74|62#

IOM Releases Recommendations on Essential Health Benefits

One of the key tasks to come out of the ACA was the definition of essential health benefits which was assigned to the Institute of Medicine. Yesterday it released its report and its key recommendations:

Key Recommendations of the IOM Committee on Defining and Revising an Essential Health Benefits Package for Qualified Health Plans.*

1. The secretary of health and human services should establish an essential health benefits (EHB) package including the 10 categories contained in the Affordable Care Act and as guided by a national average premium target. Once developed, the package should be adjusted so that the expected national average premium for a “silver” (second-lowest-price) plan is actuarially equivalent to the average premium small employers would have paid in 2014 for a typical plan. A public deliberative process should be used to make adjustments to the initial EHB package.

2. By January 2013, the secretary should establish a framework for monitoring EHB implementation and updating that accounts for changes in provider payment rates, financial incentives, practice organizations, and other relevant matters. The secretary should implement this framework and coordinate federal efforts to produce and make the data accessible for public use.

3. Beginning in 2015, the secretary should update the EHB package to make it more fully evidence-based, specific, and value-promoting — explicitly incorporating costs. A public deliberative process should be used to inform choices about what to include in or exclude from the updated package.

4. The secretary should permit states administering their own exchanges to adopt variants of the federal EHB package, provided that modifications are consistent with the federal package, not significantly more or less generous, and are subject to public input.

5. The secretary should establish a National Benefits Advisory Council, with members appointed through a nonpartisan process, which should make recommendations annually stemming from its oversight of the EHB package.

6. To ensure that the EHB-defined packages remain affordable and sustainable, the secretary should develop a strategy, in collaboration with others, for aligning the growth rate of health care spending in all sectors with that of the economy.

Below is a link to the entire report:

http://www.iom.edu/

Health Insurers Disliked!

This is just shocking:

Seventy percent of social media comments about major health insurers were negative during the past year, according to a new report released by Amplicate, a social media analytics service. The company analyzed public tweets, Facebook posts and comments on its own website between September 2010 and August 2011. Social media users made 2,311 comments total about 18 insurers, and those opinions were shared more than 632,000 times. Insurers aren’t alone, and they aren’t the most talked about: In the past year, U.S airlines generated over 34,000 comments and U.S. banks had nearly 22,000 comments.

http://capsules.kaiserhealthnews.org/index.php/2011/10/report-americans-give-online-thumbs-down-to-healthinsurers/

VT and Single Payor Moves Forward

Lots of questions the biggest one being how it will be financed but this is just fascinating to follow:

http://www.kaiserhealthnews.org/Stories/2011/October/02/Vermont-single-payer-health-care.aspx

Best Healthcare System in the World?

Another health care-related badge of shame for the United States: A new study finds that we lead among 16 high-income nations in preventable deaths.

New York, NY, September 23, 2011—The United States placed last among 16 high-income, industrialized nations when it comes to deaths that could potentially have been prevented by timely access to effective health care, according to a Commonwealth Fund–supported study that appeared online in the journal Health Policy this week and will be available in print on October 25th as part of the November issue. According to the study, other nations lowered their preventable death rates an average of 31 percent between 1997–98 and 2006–07, while the U.S. rate declined by only 20 percent, from 120 to 96 per 100,000. At the end of the decade, the preventable mortality rate in the U.S. was almost twice that in France, which had the lowest rate—55 per 100,000.[...]

"This study points to substantial opportunity to prevent premature death in the United States. We spend far more than any of the comparison countries—up to twice as much—yet are improving less rapidly," said Commonwealth Fund Senior Vice President Cathy Schoen. "The good news is we know lower death rates are achievable if we enhance access and ensure high-quality care regardless of where you live. Looking forward, reforms under the Affordable Care Act have the potential to reduce the number of preventable deaths in the U.S. We have the potential to join the leaders among high-income countries."

The authors concluded that the poor performance and relatively slow improvement of the United States is because of "the lack of universal coverage and high costs of care." That, of course, goes beyond the specific issue of our health care system and is also a factor of income inequality in this country. While the survey's latest data comes from 2007, the numbers have probably not improved in the last three and a half years, compounded by things like continued high unemployment.

The Affordable Care Act will help to drastically shrink the number of Americans who are uninsured and provide affordable insurance coverage. The next fight will be providing not just near-universal coverage, but universal access to actual health care. There's certainly no reason this country doesn't have the capacity of other highly developed nations. And there is certainly no reason for this country to have a higher infant mortality rate than Malaysia, Cuba and Poland.

Great IOM Chart on the Rising Cost of Healthcare since 1945

Check this out. If milk prices had risen as fast as health care ones since 1945, a gallon of it would cost $44 today. Click the link for other examples.

http://resources.iom.edu/widgets/vsrt/healthcare-waste.html?utm_medium=etmail&utm_source=Institute%20of%20Medicine&utm_campaign=09.11+IOM+News&utm_content=IOM%20Newsletter&utm_term=Commercial

Instead of High Performing Networks...

Here is a company that gives its employees a cap on what to spend for various procedures such as a colonoscopy. But quality is also a concern:

http://www.kaiserhealthnews.org/Stories/2011/September/21/companies-steering-workers-to-lower-priced-medical-care.aspx

10 Challenges for HI Exchanges--AIS Newsletter

I think this is a fairly daunting list. The biggest one however is eligibility which I think really should be handled by the Feds.

(1) Adverse selection: Coverage options available within the exchanges “have to be vibrant and able to attract a sufficient number of covered lives to make it economically worthwhile,” says former Illinois Insurance Commissioner Mike McRaith. Elizabeth Sammis, Ph.D., Maryland’s assistant insurance commissioner, agrees and says it will be important that individuals and small employers are enthusiastic about the exchanges and see them as a place they “can buy coverage they want at a price they can afford.” According to McRaith, regulation of insurers — both on and off the exchanges — ultimately will be the deciding factor for every state in determining whether their exchange becomes a viable marketplace. If an exchange is left with too many potentially expensive enrollees, “then we could see two parallel markets develop without any intersection,” he tells HEX. McRaith left his commissioner post May 31 to lead the Treasury Dept.’s new Federal Insurance Office in Washington, D.C.

(2) Eligibility: Most states will need to develop and implement an eligibility system for their exchanges as well as for their Medicaid program. “If we were only doing this for exchange customers, it would be easier, but since we also have to determine eligibility for Medicaid, and coordinate with older, legacy systems that are not as flexible as what we want for the exchange, it means we have a lot of planning and work to do,” says Joan Henneberry, director of the Colorado Health Insurance Exchange. HHS last month proposed regulations on eligibility (see story, p. 1).

(3) Legacy Medicaid systems: Not only will technology be needed to enroll members in an exchange, it also will have to allow members to easily switch between Medicaid and subsidized coverage as eligibility status changes. Moreover, it will need to transmit and receive data from HHS regarding subsidies and citizenship status, and collect and remit premiums, Sammis explains. While Kentucky’s 17-year-old legacy system integrates eligibility determinations for the state’s income maintenance programs, Special Needs Adoption Program and Medicaid, the IT needed for the exchange requires the ability to determine eligibility and administer health benefits beyond Medicaid, says Jill Midkiff, a spokesperson for Kentucky’s Cabinet for Health and Family Services. Kentucky, she tells HEX, might pursue the enhanced Medicaid match rate that allows states to claim a 90/10 rate for the design, development and installation of a new Medicaid eligibility system. She says the state is considering the State Exchange Establishment Cooperative Agreement as an additional source of funding for developing an IT exchange infrastructure. Kansas Insurance Commissioner Sandy Praeger (R) agrees that there will need to be a “great IT effort” between Medicaid and private insurers that participate in the exchange. “Within that concept we will need to have in place safeguards to keep [enrollees] in a medical home and not have them moving from plan to plan because of income eligibility changes,” she tells HEX.

(4) Federal deadlines: While the exchanges must be operational by Jan. 1, 2014, they must be set up and tested well before that. Carrie Haughawout, assistant director for health policy at the Ohio Dept. of Insurance, calls the federal timeline “extremely aggressive” and says it will be a challenge for every state. “We’re chasing a moving target. I’m sure we can get to where we need to be once we know the parameters, but we’re operating inside of a box without them.” Praeger agrees that moving forward without federal guidance, or governance in place for the exchange, is close to impossible. “Even by compressing these preliminary stages, we will have little time for pilot implementations to test exchange rules and functionality.” Christina Urias, director of Arizona’s Dept. of Insurance, says a team of consultants has been hired to help her state meet the deadlines. The need to meet timelines established by the reform law — and figure out how to coordinate efforts between state agencies — has created a “monumental task” for states, she says. Cindi Jones, director of the Virginia Health Reform Initiative, says the design and implementation of the exchange within the federal deadlines is difficult because of the eligibility and enrollment requirements. And political consensus must be built among all stakeholders, she says. While Maryland’s Sammis agrees that the deadlines can be crushing, she says a tight timeframe can ensure forward momentum. “Sometimes we work better when we have deadlines,” she says.

(5) Momentum: Because Nevada’s legislature meets only every other year, it’s critical that legislation is enacted this session “to demonstrate to the federal government that we are serious and we are moving forward with the exchange,” says Nevada Insurance Commissioner Brett Barratt. He says he has been meeting every other week with a committee of state agency directors to discuss the framework needed to govern the exchanges. Maintaining forward momentum, he explains, is necessary to ensure that the state is eligible for the next round of federal grants that will be used to build out the exchange. Merle Scheiber, director of insurance for South Dakota, echoes that thought and says demonstrating a sufficient amount of progress in time to achieve HHS approval is among his top challenges.

(6) Governance: “The best thing any state can do is to get working as soon as possible,” says Sammis. In April, Maryland Gov. Martin O’Malley (D) signed a bill to establish the state’s exchange as a quasi-public agency. The state recently assembled a nine-member insurance exchange board, which held its first meeting in June. “This is the foundation needed to move ahead,” says Sammis. On Aug. 5, Maryland’s exchange board issued several RFPs to find consultants to conduct studies and make recommendations on a number of issues including the operating model, public relations and advertising strategies, and financing for the exchange.

(7) State mandates: Colorado’s Henneberry says the basic benefit package is an area where there needs to be consistency across states. “Once we know what the mandatory package looks like, then we will have extensive conversations about whether or not we should have additional state-mandated benefits. It will be important for everyone to remember that everything we add will drive up the cost of the premiums, and that anything beyond federal requirements will be paid for by the state or the consumers.”

(8) Business model: Before the framework can be developed, Rhode Island Insurance Commissioner Christopher Koller says the state must first identify the “unmet needs” among individuals and small employers and determine how the exchange can meet those needs. “To overcome this we are using planning funds to develop and test business models, we have tightly integrated planning between our Medicaid agency and my office, and we have a public stakeholder process to vet the ideas.”

(9) Brokers: Participation in an exchange could depend on the role that agents and brokers play. Consumers and small employers will need help navigating the exchanges. “In my mind, the exchanges will not be successful without the brokers,” says Barrett. “They will need to be an integral part and they will need to be paid for their services so it’s worthwhile for them to assist consumers and employers.”

(10) Care delivery: It will be important that the exchanges do more than just enroll members in coverage, says Jeannette DeJesús, special advisor to the governor on health care reform and deputy commissioner of Connecticut’s Dept. of Public Health. “We need to make sure that we’re not just providing insurance but that we have an adequate provider work force available to address people’s health needs…[and] that we’re taking advantage of opportunities to make the delivery of care more efficient,” she says. “In the midst of the huge task of setting up the exchange, it is easy to lose sight of the public health and prevention component of health reform, but we won’t succeed at our core goals without an integrated approach.”

Formation of the Health Care Cost Institute (HCCI)

Trying to gain an understanding of why HC costs have increased so much has been hampered by lack of access to claims data for the general population. But today Aetna, United Health Care, Kaiser and Humana announced that they will share their claims data with the HCCI to help better understand the factors behind HC cost increases. To say this is great news is an understatement! Here is a link to HCCI's website:

http://healthcostinstitute.org/

Cigna Starts to Get Serious in Individual Market

Cigna begins a $25M ad campaign that focuses on the individual market. With the impending changes coming because of the ACA (no more health screening and premium subsidies) major growth (26M!) is expected in the coming years. According to this article Cigna is not alone in this interest:

http://www.washingtonpost.com/blogs/ezra-klein/post/the-insurance-industry-gets-bullish-on-health-care-reform/2011/09/19/gIQA0HNJgK_blog.html

Will Employers Drop Coverage in 2014?

Good review of this issue by CF. Focus though is on large employers not small ones. Major points to ponder include:

• Early adopters' experiences. Whenever a new survey on the subject comes out Fronstin tends to look at the small numbers first. "There's never a zero," he says, meaning that no survey thus far has found that zero percent of employers are considering dropping coverage. That, he says, is significant. "Employers that actually do drop coverage will be watched carefully and they'll talk to other employers. If they save money, don't lose or alienate employees, and otherwise have a seamless transition, others will certainly follow." At least three different surveys conducted since June 2010 have found that if some employers drop coverage, a great many more will at least consider following suit.⁵
• Cost. There is no simple or standard way to calculate the cost to employers of dropping coverage and encouraging employees to seek it on their own through the exchanges, but the bottom line will certainly weigh heavily on many employers. At first glance, dropping coverage might seem like a reasonable cost-cutting strategy. After all, the penalty for not providing coverage is only $2,000 per employee and the average cost of providing coverage is almost $10,000. That $8,000 differential is quickly eaten up, however, by the costs associated with increasing the salaries of employees (especially those not eligible for premium subsidies) so they could afford to purchase coverage on their own. The higher salaries alone would tip the balance in favor of maintaining coverage for some employers; on top of that, employers that drop coverage would also face higher Federal Insurance Contributions Act (FICA) taxes, which fund Social Security and Medicare.
• Recruitment and retention. The state of the economy in 2014 will be a major factor in how health benefits might affect recruitment and retention of key employees, says Fronstin. Even at the present 9 percent unemployment rate, there's still tough competition for talented workers, and workers consistently rank health benefits as the most important employer-based benefit.⁶ "No employer will want to be the outlier that doesn't offer good benefits, unless the economy takes a turn for the worse," he says. If the economy slows down and unemployment ticks up significantly, though, all bets are off.
• Concerns about productivity. Also on employers' list of factors to consider is whether moving employees to the exchanges will have an adverse impact on productivity. Large employers have embraced the idea that healthier workers are more productive workers and many will be loathe to cede responsibility for keeping workers healthy to an untested, government-run exchange. "Quality-conscious employers would need to feel comfortable that exchanges have the same focus on wellness that they do before they could really feel comfortable moving employees to the exchanges," said Fronstin.
• Viability of the exchanges. Many key aspects of the exchanges remain unknown at this point. How much will they cost? Will adverse selection make them unstable? Will enrollees be satisfied with the plans? Employers will look at these and other factors to determine their comfort level with a given exchange. But because states are being given a high degree of flexibility in terms of designing and managing their exchanges, employer reaction can be expected to vary considerably from state to state.

http://www.commonwealthfund.org/Newsletters/Purchasing-High-Performance/2011/September-19-2011/Perspectives-on-Policy/Will-Employers-Drop-Health-Coverage-in-2014.aspx

Health Affairs Article on Reducing Health Care Costs

I thought this was of note (bold is mine):

Drivers of Health Care Costs
One of many factors driving up health care spending is the increase in cost per case:

Charles Roehrig, director of the Center for Sustainable Health Spending at the Altarum Institute and David Rousseau of the Kaiser Family Foundation, conclude that growth in cost per case explains far more of the rise in U.S. health spending than does higher disease prevalence. Roehrig and Rousseau examined the number of people with a given disease--treated or not--and cost per case across medical conditions between 1996 and 2006. They found that during this time, three-fourths of the increase in real per capita health spending was attributable to growth in cost per case, while treated prevalence contributed to one-fourth of spending growth. As a result, they suggest that efforts to reduce future growth in disease prevalence--such as through disease prevention--will not be sufficient to hold down spending growth. This analysis suggests that reducing the growth in how much is spent per case will be essential if we are to tame overall health care spending.

ACOs In MA; Cutting into Hospital Profits?

ACOs are supposed to improve patient care while reducing the amount of unnecessary care. There are estimates than one-third of health care in the U.S. is unnecessary ($800B). But one person's unnecessary care is another person's profit. This report from Health Affairs show what is happening in MA, focusing in on the Blues Plan's effort to work w/physician groups to contain cost.

http://docs.google.com/a/rta-inc.com/viewer?a=v&pid=explorer&chrome=true&srcid=1UpQbBuqGtjK7_xszq31cRkTXeQBEe5M_oq54RHKYA4o3tvCrEMQ8A-3yb6tv&hl=en

Towers Perrin Survey: Mid Sized Employers Debate Offering HI Coverage Come 2014

This is a good summary of a recent TP survey:

http://www.healthleadersmedia.com/page-1/HEP-270273/Midsized-Businesses-Grapple-with-Healthcare-Coverage-Options

ACOs Are Alive and Well in the Private Sector

HHS's regs for Medicarew ACOs have been roundly criticized and many major players say they have no intention of participating. But the concept of the ACO is alive and well among health insurers and providers looking to improving quality; reducing care and improving health:

http://www.healthleadersmedia.com/page-1/HEP-270395/Commercial-ACOs-May-Find-Footing-Where-CMS-Slips

Wellmark BC Unsure of Participation in HI Exchange

CEO is concerned about losing money but the details for the exchange have not even been worked out yet according to the Insurance Commissioner so perhaps this speculation is premature:

http://www.desmoinesregister.com/article/20110831/NEWS/308310048/Wellmark-undecided-on-insurance-exchange?odyssey=tab|topnews|text|Frontpage

GAO Report; MLR Regs Cut Broker Commissions

According to the report it will also reduce the number of options available:

http://www.gao.gov/new.items/d11711.pdf

Good Review of Just Post HI Regs by HHS

Jost from Health Affairs does a good job here:

http://healthaffairs.org/blog/2011/08/13/implementing-health-reform-premium-tax-credits/

HHS Releases Additional HI Exchange Regs

These focus on seamless enrollment and application of tax credits:

http://www.commonwealthfund.org/Newsletters/Washington-Health-Policy-in-Review/2011/Aug/August-15-2011/Exchange-Construction.aspx

HHS Awards More Funding for HI Exchanges

HHS gave out $185M in grants to 13 states on Friday. Alas my state of PA was not among them:

http://www.commonwealthfund.org/Newsletters/Washington-Health-Policy-in-Review/2011/Aug/August-15-2011/HHS-Awards-13-States-Grants-to-Build-Exchanges.aspx

Seniors Overuse Healthcare Because of Medigap Coverage

Senators Coburn and Lieberman think seniors need "more skin in the game" even if they are low income:

http://www.ctmirror.org/story/13574/medigap

How to Cut Medicare's Cost

Some great suggestions here from the Incidental Economist:

1. Competitive bidding, also known as competitive pricing. This idea really puts the market to work to buy Medicare benefits for the lowest possible price on a market-by-market basis. Participants can be public and private entities. It piggybacks on the exiting, hybrid structure of Medicare (FFS Medicare + Medicare Advantage) and makes all participating plans compete directly in a way they never have. Scholars have estimated the savings to be 8% of Medicare spending. I’ve written a lot about this elsewhere. Perhaps this post is the best place to start.
2. Competitive bidding can be put to work for durable medical equipment too. See the work of Peter Crampton.
3. Part D formulary design and drug pricing. Did you know the VA buys drugs for 40% less than Medicare? True! That alone suggests Medicare could spend a lot less on drugs. There are many possible Part D reforms that would lower program spending. Kevin Outterson wrote about some. For more about what it would take and mean to make Medicare’s drug benefit more like the VA’s see my post, which links to my paper with Steve Pizer and Roger Feldman.
4. Reference pricing. This idea came to me via David Leonhardt and Peter Orszag (smart guys, by the way; you should talk to them). The basic idea is that Medicare should only spend an amount on therapy for a condition equal to the lowest cost, effective one (that’s the “reference price”). If individuals want more costly therapies that are no more effective, they should pay the difference out of pocket. There’s more to this. See this prior post and related links therein.
5. There are lots of things Medicare shouldn’t even be paying for at all because they don’t work. See Rita Redberg’s NY Times op-ed on this.
6. Support comparative effectiveness research so we can learn more about which therapies are most effective. There is too much we don’t know and it is costing us.
7. Let ACOs be tested. We don’t know if they’ll work, but they’re worth a try.
8. Support the IPAB. Isn’t it obvious by now that Congress itself can’t control Medicare costs?
9. Consider all-payer rate setting. More on that here. Perhaps this post is a good starting point.

Excellent Post on Medicare's Cost Pressures

This is really worth reading. Major point is that the Medicare payroll tax covers only 33% of the program's costs.

http://www.dailykos.com/story/2011/08/14/1005951/-Medicare:-Why-is-it-on-the-table?via=blog_1

Health Insurance Exchanges and Adverse Risk Selection

If employers drop coverage and their high risk employees then seek coverage through their state's HI exchange, adverse selection could be a problem:

http://aishealth.com/archive/nhex0811-02

Kansas Joins Oklahoma and Returns Exchange Money to HHS

First OK returned over $54M and now KS returns $31,5M to HHS. This makes little sense to me:
http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20110810/NEWS03/110819992/1233

Humana ACO Shows Initial Cost Savings

So far so good:

http://www.healthleadersmedia.com/content/LED-269502/Norton-Humana-Commercial-ACO-Notches-Cost-Savings.html

Good Thoughts on How We Reimburse Docs Needs to Change

This is a good review on the disparity in Medicare reimbursement between primary docs and specialists:

http://healthpolicyandmarket.blogspot.com/2011/08/rethinking-value-of-medical-services.html

Sterling Offers New Self-Funding Package

The interesting feature of this package are the rebates the PBM will share w/employers to fund its health incentives program:

http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20110804/NEWS05/110809947/1250

Employees Need Benefit Decision Help

This is just incredible to me. 96% of HR professional recently surveyed said employees need guidance in making benefit decisions. Not surprising. But only 23% of these same professional said that their companies were doing a good job in providing this guidance. Are you kidding me? Isn't this one of their responsibilities?

http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20110804/NEWS05/110809946/1234

Questions and Answers on HI Exchange Regultions

From the 7/18/11 issue of Health Plan Weekly:

HHS on July 11 released its proposed regulations for the development and operation of insurance exchanges (see story, p. 1). HHS has made it clear that it wants stakeholders to weigh in on the proposals by providing a 75-day comment period. Industry observers interviewed by HPW say HHS might be flooded with comments given the number of unresolved issues and questions that haven’t been fully answered.

Here’s a look at questions, answers…and more questions based on the proposed regs, and how they could impact health insurers, brokers and the states:

(1) Which insurers will participate? While some states might opt to allow all qualified health plans (QHPs) to participate, the reg also suggests that exchanges could undertake a competitive bidding or selective contracting process, which would limit participation similar to a state contract with Medicaid managed care companies. “The reference to Medicaid managed care was a bit surprising because that signals that there could be a degree of competitive bidding with a potentially limited number of winners,” says Caroline Pearson, senior manager at the Washington, D.C., advisory services company Avalere Health. “Medicaid managed care frequently results in only one or two plans being available in a market. I think [states] will have to question the feasibility of having just one plan in the market.” She adds that while Massachusetts has been “fairly aggressive” in its criteria for participation in its Connector exchanges, Vermont might be the state most likely to limit participation as it moves toward a single-payer system. Deborah Chollet, a senior fellow at Mathematica Policy Research, says it’s unlikely that an exchange will exclude qualified carriers, at least initially.

(2) How much influence will health insurers have? Advocacy groups lobbied against allowing health insurers to participate on governing boards. While HHS would allow health plan representatives to participate, they would not be allowed to have a voting majority on governance boards. Instead, the majority would need to come from consumer representatives. Health plans, brokers and other related professions will likely be counted together. Most states that have made some governance decisions already have included one or two health plan representatives. But six states already have explicitly prohibited health plan representation. “I think insurers will have a voice on most governance boards, but I don’t think they will be driving the decision making,” says Pearson. Still, consumer groups likely will push HHS to curb health insurer influence even more, says Manny Munson-Regala, vice president of strategy and partnerships at Ceridian Corp., a technology firm that provides back-office services for exchanges. Some exchanges, he adds, might opt to use insurance company representatives only as advisors and restrict them from any policy decisions. Prior to joining Ceridian this year, Munson Regala was deputy commissioner of the Minnesota Department of Commerce’s Market Assurance Division.

(3) Will brokers have a role? The reform law allows agents or brokers to help individuals and employers enroll in coverage offered through an exchange. But brokers aren’t likely to operate as “Navigators,” who would perform a similar function but are not able to accept payment from a health plan. While states have the ability to exclude brokers from an exchange, it’s unlikely that will happen, particularly during the first few years. “Drawing from the experience in Massachusetts, we expect that agents and brokers will have more of an ongoing role in the SHOP [i.e., Small Business Health Options Program] exchanges than in the individual exchanges. SHOP exchanges are more administratively complex [for employers] who are buying for a group,” Pearson explains. The proposed regulation “seems to assume that agents and brokers will be a part of the process,” adds Munson-Regala. “Any smart exchange will have a big red button at the bottom of the website that says ‘still confused? Press here to be connected to a broker.’” The exchange also could provide brokers with an opportunity to talk with consumers about other products such as long-term care or life insurance, he adds.

(4) What will the federal exchange look like? The reform law requires the federal government to operate an exchange for any state that is not able to build its own by the deadline. But it’s unclear exactly what a federal exchange will look like, who will pay for it and whether it will need to be financially self-sufficient, as required of state-operated exchanges. “Until you know how the feds will create and run an exchange, there’s no way for states to know how they can take control back,” says Cindy Gillespie, a managing director at McKenna Long & Aldridge, where she leads the law firm’s health insurance exchange group.

(5) Who will collect premiums? It’s still unclear who will collect premiums from those who purchase coverage through an exchange particularly in the individual market. Requiring the state to do this is a big overhead cost, but insurers might not be set up to do it either, says Gillespie, who notes that some Medicaid managed care plans have no experience collecting premiums from individuals. More importantly, HHS hasn’t laid out how subsidies and tax credits will flow through the exchanges, she adds.

(6) How much of a role will HHS have? Some states have expressed a preference for a “flexible state partnership model” that would combine state and federal business functions. The reg suggests that functions such as eligibility and enrollment could be shared. A federally run exchange also might operate a web portal that could be used by multiple states. Munson-Regala suggests that some states might operate the SHOP exchange on their own, but look for federal assistance on the individual exchange, which will be complicated by the individual mandate and subsidies.

(7) How will adverse selection be addressed? While the proposed regulation didn’t discuss products offered outside of the exchanges, it did suggest fixed annual enrollment periods, which could help prevent people from enrolling in coverage only when they need care. It also outlines several special enrollment periods that could be made available if, for example, a participant wants to move to a different coverage tier after a change in income status. “There is a need to limit adverse selection, but there also needs to be freedom for consumers to change plans based on their circumstances,” says Pearson.

More Thoughts on the Future of Employee Sponsored Insurance

While I do not see a wholesale move away from ESI due to the ACA in the large group market, the economic advantages make it almost impossible for small employers not to drop their coverage, offer a defined contribution through an HRA and have their employees shop its state's health insurance exchange for coverage. This move would save them both money and headaches.

We are going to see the ongoing move to defined contribution and many other changes like HSA etc but the workplace will continue to be a major source of access to coverage even if payment mechanisms and coverage options like Exchanges are now part of the mix. Good overview below:
http://www.huffingtonpost.com/wendell-potter/got-health-insurance-thro_b_878050.html

As for the McKinsey study, as I noted yesterday it has come under major criticism and was called out by the Senate Finance Committee.
http://tpmdc.talkingpointsmemo.com/2011/06/max-baucus-issues-public-call-to-mckinsey-to-come-clean-about-controversial-hcr-survey.php

Also IFEBP's study didn't support their conclusions:
http://www.plansponsor.com/Despite_Anticipated_Costs_Most_Employers_to_Keep_Health_Care_Benefits.aspx

Nor did the Urban Institute study (1/2011) co authored by the head of McKinsey's healthcare practice.
http://www.urban.org/uploadedpdf/412295-Employer-Sponsored-Insurance.pdf

Also the MA experience is indeed relevant as it is the only one to compare to other than UT which also has declined a point or 2 since their limited exchange went into effect. Here is a total review of MA by the BCBS of MA that is quite interesting:
https://c.na7.content.force.com/servlet/servlet.FileDownload?file=015A0000001ZOSL

With nearly 3 years until ACA becomes fully implemented many things will evolve, and I do not believe a SCOTUS strike down will occur of the individual mandate.

The option of doing nothing or simply trying to leave it "to the market" is a non-starter because there is no real market or incentive for the insurers to change and become more consumer friendly and transparent.

It will be interesting to watch this all evolve esp. with the MLR limits and total transparency for health plan exec comp. and for rate increase requests, rebates etc. Aetna and BS of CA are already showing that the MLR's can reduce premiums.

As I have said many times before, health care insurance is a truly dynamic field with more and more changes and shifts to come.

Revisiting trhe McKinnsey Employer Survey

McKinnsey has come under heavy criticism for its survey results that said 30% of employers would drop coverage once the ACA was fully implemented in 2014. But my experience in health care insurance makes me think the number is not that far off. Here is another take on the survey that I agree with:

However, based on what I’ve learned in my not-entirely-random walk through the health insurance market, McKinsey’s findings accurately reflect current employer thinking. The ACA’s incentives to move toward a consumer market and away from employer-provided health insurance could prove to be far stronger than its drafters intended. I was surprised that only 37 percent of employers under fifty employees “probably or definitely” intended to drop coverage, since there are no penalties for doing so and the subsidies for their workers to get Exchange-based coverage are so compelling. If anything, McKinsey’s survey understates the likely employer abandonment of the small group market.

According to Urban Institute’s Eugene Steuerle, a family of four with cash income of $30,000 a year is almost $14,000 to the good by going through the Exchange and picking up the premium subsidies rather than getting coverage from their employer. Even at $42,000 in family income, the Exchange advantage is close to $7000 a year. On this point, my employee benefit friends are virtually unanimous: except for high wage employers like law firms or consultants, it doesn’t make sense, for small employers or their workers, for small employers to continue offering coverage given these incentives.

How large employers will respond is a conundrum. The angry reaction to the McKinsey study was clearly intended to tamp down a stampede for the exits (as well as to deter further studies which reached a similar conclusion). There is no consensus among the employee benefits community about what large employers should do. Some analysts rightly point to corporate inertia, the “malign paternalism” of corporate human resources managers, and collective bargaining agreements as supporting continued provision of employer sponsored health benefits. There is also the “what is my competitor doing?” factor. McKinsey’s study findings probably significantly overstate, (in the mid 20 percent range) the number of large employers that will ultimately drop coverage. Far more likely is a shift to some type of defined contribution model.

From Health Affairs blog

Health Insurers' Concerns About Exchange Participation

From Price Waterhouse Coopers:

Insurers’ Concerns About Participating in a Health Insurance Exchange (HIX)

1. Adverse selection (46%)
2. Ability to integrate technology with the exchange (40%)
3. Ability to charge enough to make a profit (37%)
4. Effectiveness of the risk adjustment process (36%)
5. Administrative costs of our business will rise disproportionately to the profits gained (36%)
6. Managing the movement of consumers between Medicaid and the exchanges (35%)
7. Ability to customize plans (33%)
8. Understanding the behavior and buying preferences of newly eligible consumers (25%)

Notes: Respondents were able to select up to three answers
Source: PwC Health Research Institute Health Insurer Survey, 2011
Source URL: http://www.pwc.com/us/HIX

Regs Posted on CO-OPs

HHS released regs on an alternative to health insurers--CO-OPs. According to the regs these entities must:

1. Be non-profit,
2. Use an integrated care model,
3. Be member-run, and
4. Be approved by the state insurance department

I think some ACOs are natural candies for this alternative since they will already have an integrated care model in place. HHS wants at least on CO-OP in every state and will make over $3,5B in loans available.

States Are Behind in HI Exchange Development

This is not surprising:

http://www.kaiserhealthnews.org/Stories/2011/June/24/Leavitt-Says-States-Not-On-Track-On-Exchanges-Deadline.aspx

At the same time Leavitt is now a consultant helping states form exchanges so his "concern" should be taken with a grain of salt.

MA AG Report: Global Payments NOT Saving Money

1 yr. into the new payment plan finds that doc costs are still up 10% vs. 1.9% for docs not participating in global payments. I really can't believe the 1.9% figure:

http://www.boston.com/lifestyle/health/articles/2011/06/23/mass_finds_new_payment_system_not_cutting_health_care_costs/?p1=Well_MostPop_Emailed2

Health Insurance Exchanges Just Too Complicated

This article reviews all the issues involved in setting up an HI exchange:

http://www.kaiserhealthnews.org/Columns/2011/June/061511howardparente.aspx

BS of CA 2% Profit Cap: " A Good PR Gimmick"

BS of CA has garnered a great deal of good press for its voluntary move to limit profitd to 2% of revenue. But is this positive publicity deserved? Not according to this interview:

http://www.healthleadersmedia.com/page-1/HEP-267432/Behind-BSCAs-2-Solution##

Costs in MA Continue to Outpace the Nation

Providers continue to drive costs in our country's health care laboratory:

http://commonhealth.wbur.org/2011/06/state-health-spending-outpaces-nation/

Messing w/Medicare and Medicaid

As this article points out, more than just the recipients of the two programs are involved:

http://www.kff.org/pullingittogether/medicaid_medicare_multiplier.cfm

Oregon Ready to Establish HI Exchange

I looks like OR is moving forward. The more a state stalls, the more under the gun it will be.

Oregon's legislature this week passed bipartisan exchange legislation and the governor is expected to sign it. "I look forward to signing this key piece of our health care improvement agenda," Gov. John Kitzhaber, a Democrat, said in a statement. The Oregonian newspaper reported that the bill gained a large majority in the state's House despite opposition from the left and the right. Conservatives in the tea party movement viewed any action on the health care law implementation as an endorsement of the overhaul, while unions protested that the setup of the exchange gives too much clout to the insurance industry. The exchange won't have the power to extract lower rates from insurance plans.

Care Management: We Have a Long Way to Go

PCPs just are not yet set up to handle this new role:

http://blog.healthintegrated.com/index.php/2011/06/09/care-management-a-patients-view/?utm_content=0000-00-00%2000%3A00%3A00&utm_source=VerticalResponse&utm_medium=Email&utm_term=&utm_campaign=Care%20Management%20%E2%80%93%20A%20Patient%E2%80%99s%20Viewcontent

ACO Regs Not Attracting Many Takers

Why? The financial incentives are just not there:

http://www.kaiserhealthnews.org/Columns/2011/June/060311cannon.aspx?utm_source=khn&utm_medium=internal&utm_campaign=viewed

BS of CA Agrees to Cap Profits

This is a major advantage of being a non-profit vs. a publicly traded company:
http://www.kaiserhealthnews.org/Stories/2011/June/09/blue-shield-california-profit-cap.aspx

Broler Commissions Issue Find Friends in Congress

Proposed federal legislation removes commissions from admin costs. So where would they go?

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2011/Jun/June-6-2011/Brokers-Push-for-Review-of-Broker-Rule.aspx

Update on State Health Insurance Exchange Activity

Surprisingly Alabama is moving forward while my home state of PA sits on its hands:

http://www.washingtonpost.com/politics/health-care/states-slow-to-adopt-health-care-transition/2011/06/03/AGbZbjJH_story.html

Agents Do Not Want Commissions to be part of MLR Calculations

So they want it to be part of admin expenses?

http://www.kaiserhealthnews.org/Columns/2011/May/052611Besesparis.aspx

Agents Still Not Liking MLR Requirements

From Capitol Hill testimony:

The cost and quality of healthcare will get worse because of healthcare reform rules that let the federal government review rates and set limits on how insurance companies spend their money, small businesses and insurance agents said Thursday.

Employers and agents are particularly concerned about rules that say insurers can only put 20 percent of their revenues toward profit and administrative expenses. Agents and brokers want their commissions to be carved out of the definition of administrative costs. Without that change, they fear insurers will squeeze broker commissions in order to free up money for other uses.

Agents and brokers are facing a “desperate economic situation” because of the requirements, said Janet Trautwein, chief executive of the National Association of Health Underwriters. She testified Thursday before the House Energy and Commerce Health Subcommittee.

Witnesses said the restrictions on spending — known as the medical loss ratio — will ultimately raise costs and reduce options for consumers. The MLR represents a “significant move toward government micromanagement of health insurance,” University of Pennsylvania professor Scott Harrington said.

ACA's Impact in Oregon

This is a good summary of what two major players in OR's health care market see where things are going in the next few years:

http://www.thelundreport.org/resource/health_reform_should_drive_down_insurance_rate_increases

Commonwealth Fund Report on CA HI Exchange

This is a good review of what CA has been up to:

http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/May/1507_Weinberg_california_hlt_benefit_exchange_ib.pdf

Wake Up Call to Hospitals: Medicaid No Long to Pay for Never Events

Given Medicaid's budget problems this new policy makes total sense:

http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/WHCC2011.aspx

Employee Incentives Gaining Popularity

Employee incentives for healthier behaviors and high performing networks are becoming more popular:

http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/WHCC2011.aspx

State Health Insurance Exchange Updates

Things are moving forward in Washington, Rhode Island and surprisingly Indiana:

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2011/May/May-31-2011/Indiana-Washington-Rhode-Island-Lead-on-Exchanges.aspx

Trade Groups React to Proposed ACO Regs

The accountable care organizations (ACO) rule published March 31 has drawn comments from key industry groups:

• The Academy Advisors: Tuesday, its 17 health system CEOs sent a letter to the Centers for Medicare & Medicaid Services (CMS) Administrator Don Berwick recommending five changes to the rule to simplify and lower the costs of participation in the ACA Section 3022 Shared Savings Program.
• College of Healthcare Information Management Executives (CHIME): in its May 10 letter, CHIME urged CMS to disallow Medicare enrollee opt-out for sharing of their data because it would undermine efforts to coordinate care for seniors. In the current rule, an ACO is required to provide a form to enrollees allowing them to opt out.
• American Medical Association (AMA): in its letter to CMS May 26, the primary concerns are the methodology for determining the Primary Service Area (PSA) and enforcement of the anti-trust oversight provisions. It encouraged increasing the safety zone threshold from 30 to 40 percent. It also seeks clarification of financial integration issues involving physicians and hospitals, and assurance that physicians are not at a disadvantage in forming ACOs in communities where hospitals are consolidating physicians: “Physicians should not have to become employed by a hospital or sell their practice to a hospital in order to participate in ACOs or other innovative delivery models.”
• America’s Health Insurance Plans (AHIP): in its letter, AHIP requested the safety zone be decreased from 30 to 20 percent so as to preclude provider consolidation and anti-competitive behaviors. And in its letter, it requested that regulations be created that preclude an ACO from cost shifting operating costs for the ACO to commercial plans.

But reactions to the Pioneer ACO are more positive to date: announced May 16, Pioneer ACOs allow prospective assignment of Medicare enrollees to the ACO, partial capitation and bigger shared savings bonuses than the two-sided ACO model, and do not carry a downside risk associated with cost benchmarks. Provider organizations with more experience in risk-based contracting might be attracted to the Pioneer ACO model which has a minimum savings rate of one percent (vs. 2 to 3.9 percent for ACOs) and upside of between 50 and 75 percent of savings (vs. 50 to 60 percent for ACOs).

Selling Insurance Across State Lines: Excerpts from a Congressional Hearing

Wednesday, the House Energy and Commerce Subcommittee on Health held a hearing on the Health Care Choice Act of 2011 (H.R. 371), which would allow the purchase of health insurance across state lines. The hearing featured testimony from Steve Larsen, Director of the Center for Consumer Information and Insurance Oversight (CCIIO) at CMS and from health financing experts, the American Cancer Society and the American Legislative Exchange Council (ALEC). A summary of the arguments is below.

Proponents
“States have imposed over 2,100 benefit mandates on health coverage. Estimates show that these requirements increase premiums anywhere from 10 to 50 percent.” – Representative Fred Upton (R-MI)

“The best scenario to reduce the uninsured, numerically, is competition among all 50 states where one or more states emerge as dominant players. This scenario would yield a reduction in the uninsured by 8.1 million people.” – Steve Parente, Ph.D., health financing expert, University of Minnesota, who recently completed a peer-reviewed study on purchasing insurance across state lines that will be published in the Journal of Risk and Insurance

Opponents
“Selling insurance across State lines has long been proposed as an option to increase competition and choices in health insurance, but there are serious pitfalls with this approach when it is not coupled with adequate consumer protections. The Affordable Care Act allows health care to be sold across State lines when both States agree and consumer protections are maintained. Without the consumer protections included in the Affordable Care Act, we run the risk of creating an environment where there is a `race to the bottom’ in which insurers have an incentive to sell plans from the State with fewest consumer protections.” – Steve Larsen, Director of CCIIO

“It allows them [insurers] to choose to operate under the laws of states with weaker consumer protection and risk-pooling standards. By doing so, plans will be allowed to cherry-pick the best risk, leaving older, sicker individuals isolated in pools without healthier individuals to offset their medical costs. The result will be insurance markets in disarray, without any real pooling of risk.” – Representative Frank Pallone, (D-NJ)

High Deductible Plans Gain in Popularity But:

http://www.usatoday.com/news/washington/2011-05-30-health-care-deductibles-hospital-bills-doctors_n.htm

Early Implementor States Running Behind

The Early Innovator grants, awarded in February, total $241 million, and are meant to support states for the next two years as they develop "exchange IT models that can be adopted and tailored by other states." Many of the seven states awarded Early Innovator grants, while still meeting HHS benchmarks, are struggling to move forward on other key aspects of implementation, especially passing legislation to set up the new online marketplaces for insurance .

Pat Boone to the Rescue of the Ryan Medicare Plan

This is unbelievable:
http://www.kaiserhealthnews.org/Stories/2011/May/27/pat-boone-medicare-factcheck.aspx

Will Providers Be Able to Say No to Patients?

Many of the impending reforms in health care will involve docs and hospitals steering members towards more effective and efficient treatment. How will this be received by patients? It depends on ell it is communicated:

http://www.healthleadersmedia.com/page-1/MAG-266122/Telling-the-Patient-No

HHS Grant More States Money to Set Up HI Exchanges

Indiana and Washington were among three states the federal government rewarded with money Monday for being in the forefront of setting up health insurance exchanges. This, even though both are among 26 states trying to kill the law in court. The Department of Health and Human Services on Monday announced a significant step forward in the development of the exchanges -- grant awards totaling nearly $35 million to Indiana, Washington and Rhode Island, which is not challenging the health law. Indiana will receive $6.8 million, Rhode Island $5.2 million and Washington $22.9 million.

States and Medicaid Budgets

Is the request for more flexibility just a cover to reduce Medicaidlls when the program is most needed?

http://www.kaiserhealthnews.org/Stories/2011/May/24/medicaid-maintenance-of-effort-republicans.aspx

Health Insurance Premium Review Rule Published

On May 19th, HHS published a final rule regarding the disclosure and review of “unreasonable premium increases” required by Section 2794 of the Public Health Service Act, added by ACA Section 1003. The rule stipulates:

• Beginning September 1, 2011, insurers seeking rate increases of ten percent or more for non-grandfathered plans in the individual and small group markets will be required to publicly disclose and justify the proposed increases.
• Beginning September 1, 2012, a state-specific threshold will be set for disclosure of rate increases. HHS will work with states to develop the thresholds using state-specific cost data and trends.
• States with effective rate review systems will analyze proposed increases to determine if they are reasonable. HHS will conduct the reviews for states that lack the resources or authority to do thorough actuarial reviews. HHS expects the majority of states to be able to conduct reviews.
• HHS will publish consumer-friendly forms that insurers must use to propose rate increases and to inform consumers about the proposed rate increases.
• Information on the outcome of all reviews, including the justification provided by insurers for rate increases determined to be unreasonable, will be posted on the HHS website. Health plans will also have to justify increases on their own websites.

The Role of Producers vs. Navigators

The NAIC has said that agents/producers will have a strong role in the success of a state's health insurance exchange. But what about the navigators who will act independently and not receive any compensation form health insurers? Should they also be licensed?

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2011/May/May-23-2011/State-Legislators-Tussle.aspx

States Having Difficulty Creating Exchanges

Given the politics arising in each of the 50 states, I guess this is not surprising:

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2011/May/May-23-2011/State-Legislators-Tussle.aspx

Basic Health Program: Another Option for Low Income State Residents

Much of the focus has been on states establishing health insurance exchanges to comply with the ACA requirements by January of 2014. But an alternative to the HIEs for lower income residents is the basic health program. Here are some details:

http://www.healthleadersmedia.com/page-3/HEP-266339/5-Ways-Basic-Health-Programs-Benefit-States

New ACO Alternatives Announced

Given all the criticisms about the proposed ACO regs (see previous posts) this announcement by CMS head Berwick is not surprising:

http://www.kaiserhealthnews.org/Stories/2011/May/17/ACO-initiatives.aspx

MN Health Exchange Legislation in Limbo

Minnesota leads the country in health and innovative health practices. So it is surprising that legislation to create a health exchange as mandated by the ACA is in limbo. Reps in the state legislature think that the creation of such an exchange is the "first step to gov't healthcare" though there is no requirement to offer a public option. Here is a good review of the issue:

http://www.kaiserhealthnews.org/Stories/2011/May/17/minnesota-health-exchange.aspx

Docs Don't Like ACO Concept

According the the AMGA, their members will not be lining up to participate in an ACO:

The American Medical Group Association (AMGA) notified CMS that 93 percent of its members would not participate in the ACO demonstration project. Separately, on Thursday, ten of the nation's biggest multispecialty groups notified CMS administrator Don Berwick they will not take part in the ACO program. Concerns noted by both groups:

• Financial risk: downside risk for shared savings compounded by high investment costs required for ACO start-up and operation
• Severity adjustment for complex patients: limits on accounting for beneficiary acuity level dilutive to savings and potentially compromising proper patient management
• Excessive quality measurement requirements: too many quality measures in the first year (65 measures in five domains)
• Patient attribution: retrospective attribution will limit efforts to reduce costs
• Patient opt-out: an impractical opt-out system for Medicare beneficiaries

The same groups participated in the Physician Group Demonstration Project (circa 2005), considered the predecessor to the ACO. Only two were able to attain better than a two percent savings in the first year, and two were able to achieve the threshold after three years. Per CMS, the minimum savings threshold ranges from 3.9 percent for an ACO managing 5,000 Medicare fee-for-service (FFS) enrollees to two percent for an ACO with 60,000 enrollees.

How Much will ACO Creation Cost?

It seems that CMS and the AHA have quite disparate numbers:

The American Hospital Association (AHA) released an estimate of costs for establishing an accountable care organization (ACO) per Section of 3022 of the Affordable Care Act (ACA). In its 429-page guidance issued April 30, Centers for Medicare and Medicaid Services (CMS) estimated start-up costs and one-year operating costs at $1.755 million. The AHA analysis said costs would range between $11.6 million and $26.1 million.

Top Challenges of ACO Creation

Number One is finding the cost closely followed by staff buy-in:

http://hin.com/chartoftheweek/ACO_creation_challenges.html

How VT Will Finance its Single Payer System

From the just signed legislation:

The current model is a payroll tax, on both employers and employees, with exemptions for low-income workers. In fundamental design, this is similar to Social Security or Medicare. The tax rate numbers are not set in stone, but one estimate is 11% for employers and 3% for employees. If Vermont can pay for health care with just 14% of wages, that will be a remarkable bargain. The tax applies whether or not the employee accepts GMC. This is a “pay whether or not you play” tax – quite different from the “pay or play” laws in Maryland or SF. As a prominent Vermont employer said, no one wants to pay for health care twice, so this structure encourages the self-insured ERISA plans to voluntarily join GMC.

States Asking for Exemption

Nine states fearing that insurers will leave their markets are asking for relief from the 80% MLR requirement for individual coverage. Consumer groups are not happy:

http://www.kaiserhealthnews.org/Stories/2011/May/10/medical-loss-ratio-rebates.aspx?utm_source=khn&utm_medium=internal&utm_campaign=viewed

CA Exchange Slow Down

As a follow-up to my post the other day, the state's $25B deficit is causing a major slow down in the implementation of the health insurance exchange:

http://www.politico.com/news/stories/0511/54601.html

ACO Risk Might be too Great for Some

With risk comes great reward and also potential losses:

http://www.healthleadersmedia.com/content/PHY-266033/ACO-Hurdles-Risks-Could-Dampen-Provider-Enthusiasm

Aetna to Reduce Individual Premiums in CT

I am fairly surprised to write the above headline. This certainly was a possibility because of the new MLR requirements under the ACA but it is still hard to believe. Rates will drop anywhere from 5 to 19.5 percent with 10 percent being the average come September 1st.

http://www.ctmirror.org/story/12550/aetna-seeks-cut-health-insurance-rates

The Challenges of the CA Health Exchange

There are many given the size of the state and its horrible fiscal condition. But it is pressing on while my home state sits on its hands and waits for the federal ruling on the legality of the individual mandate:

http://www.kaiserhealthnews.org/Stories/2011/May/10/california-health-care-exchange.aspx

VT Gov Ready to Sign Single Payer Bill

Funding/financing still need to be worked out but the VT BCBS Plan is behind this which is a very positive sign. This could be the model for other states. But it is amazing to think that while 26 states have brought suit against the ACA one state is going with the public option.

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2011/May/May-9-2011/Vermont-Governor-Ready-to-Sign-Universal-Health-Care-Bill.aspx

The NAIC and the ACA MLR Calculation

Where should broker commissions reside? On the MLR side or the admin one?

http://www.kaiserhealthnews.org/Columns/2011/May/051011naicconsumerreps.aspx

It's Tough Being a Health Care Plan PR Employee

Is their any industry that catches more flack than health insurance? Perhaps oil companies when the price of gasoline inexplicably rises. Here is more:

http://aishealth.com/archive/nhpw042511-02

How to Control the Cost of Health Care

Without a doubt HC costs are high because providers are paid for what they do, not how effective the treatment is. Actually in some cases providers generate more revenue when they screw up and a patient has to be readmitted to a hospital. So what can be done differently? Paying for Outcomes:

Paying for Outcomes means encouraging hospitals, physicians and other provider groups to reduce potentially preventable events -- PPEs -- that harm patients and add costs. In other words, the approach rewards health care organizations that provide high-quality, effective care, and dings providers that deliver lower quality, less effective care.

There are five major types of PPEs – readmissions, admissions, complications such as infections, ER visits that lead to an inpatient admission, and outpatient procedures such as unnecessary imaging tests. The health law moves in the P-4-O direction by targeting hospitals with high rates of potentially preventable hospital readmissions. Beginning in 2012, these hospitals will need to adjust the quality of medicine.

http://www.kaiserhealthnews.org/Columns/2011/May/050911mcdonough.aspx

Value Based Purchasing and Medicare

Don Berwick I think is doing an excellent job. Here is a good summary of his latest initiative to improve quality for Medicare recipients:

http://www.healthleadersmedia.com/page-1/QUA-265552/Berwick-Announces-CMS-Final-ValueBased-Purchasing-Rules

Update on Quality

Quality is the holy grail of health care. Until it can be well defined and measured, controlling the cost of care will continue to be a challenge. Hospitals are critical in the effort but they are just part of the equation according to an interview w/Kenneth Kizer founder of the National Quality Forum:

The way to manage this increased intensity on quality, Kizer says, requires providers to adopt "a team activity."

• Does the health provider have teams in place to support the patient at home so he doesn't end up back in the hospital?
• Is anyone calling the patient to see if they took their medications? And ask if they are okay?
• Is anyone asking how the patients are doing on their diets?

Read the whole interview here:
http://www.healthleadersmedia.com/content/QUA-265810/NQF-Founder-Quality-Measure-Science-Still-Immature.html

DOL Report on Covered Benefits Not Helpful

One of the ways HHS is going to develop an essential benefits package is to look what is covered now. Its sole of info on this is a DOL survey released 4/15/11. But the report has major limitations according to this article:

http://www.healthleadersmedia.com/page-3/HEP-265768/DOL-Report-Flunks-a-Major-Test

More HIs Operating Clinics to Save Money

http://www.kaiserhealthnews.org/Stories/2011/May/04/Insurers-Turn-To-Clinics-For-Cost-Control.aspx

Forget ACOs says Milliman

Instead an integrated delivery system should partner w/ a health plan to best manage care under the MA program.

http://www.healthleadersmedia.com/content/HEP-265567/Health-Plan-Provider-Partnerships-May-Trump-ACOs.html

Update on Essential Benefits Definition

The HHS Secretary has the final word on what benefits will be deemed essential w/ the help of the IOM. Special interest groups are of course saying their services (chiro, dental, substance abuse, etc.) are. A fine line has to be tread here because if the coverage becomes too expensive individual will forgo the coverage and risk the minimal penalty. More details:

http://finance.fortune.cnn.com/2011/05/04/how-rich-health-care-mandates-could-bust-the-budget/

Medicare to Look at Hospital Patient Satisfaction Scores

Another provision of the ACA to be rolled out:

http://www.kaiserhealthnews.org/Stories/2011/April/28/medicare-hospital-patient-satisfaction.aspx?utm_source=khn&utm_medium=internal&utm_campaign=viewed

Private Insurers Already Forming ACOs

Forget about waiting for Medicare ACOs, private insureres are moving forward:

http://www.healthleadersmedia.com/page-1/LED-265538/ACO-Creation-Driven-by-Commercial-Market

Employers Sending Employees to Private Exchanges

Instead of purchasing insurance for their employees, some employers are providing a defined contribution and sending them to private exchanges to buy individual coverage. This seems fine to me if you are healthy, but what if you are not?

http://www.kaiserhealthnews.org/Stories/2011/April/29/private-health-exchanges.aspx

Employers Continue to Pass Costs Along to Employees

Here are the results from another employer survey on health benefits cost increases:

http://www.healthleadersmedia.com/content/HEP-265299/3-in-4-Employers-to-Increase-Health-Plan-Deductibles-or-Copays.html

More Data on "Skin in the Game " Effects on HC Costs

To continue the discussion on how having "skin in the game" could reduce HC costs, I offer this link which examines out-of-pockets costs of HC in various countries. What it shows is that high out-of-pocket costs are NOT correlated w/low HC costs:

http://motherjones.com/kevin-drum/2011/04/skin-game-continued

VT Moves Closer to Single Payer

Legislation for Green Mountain Care passed the state senate and now moves to conference. A single yet to be identified single funding source will be employed:

http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20110427/BENEFITS03/110429937/1233

Consolidation of the HI Market Implicaions

Here is an interesting interview with the IL DOI Commissioner who will soon be moving to DC to become Director of the Federal Office of Insurance:

http://www.kaiserhealthnews.org/Stories/2011/April/27/Moore-McRaith-Office-of-Insurance-On-Reform.aspx

Why Patients Are Not Consumers

Conservatives consistently say how having "skin in the game" will control the cost of health care. Given what I have seen of how little people understand about their health care insurance, I have always had my doubts about how these same individuals transform into super-educated consumers of health care, particularly when good cost and quality data are still not available. Here is the perspective of an ER doc on the issue that is definitely worth a read:

http://allbleedingstops.blogspot.com/2011/04/why-patients-are-not-consumers.html

ID Governor Prohibits ACA Implementation

Butch is not waiting for the SCOTUS to rule on the ACA's constitutionality:

http://aishealth.com/archive/nref041111-02

Good Review of ACOs

Who will be in charge? It depends:

http://www.healthleadersmedia.com/print/MAG-264787/In-an-ACO-Whos-Accountable

Case Management ROI: 57% Do Not Know

I find this incredible:

http://www.hin.com/chartoftheweek/case_management_program_ROI_printable.html

CO to Pass Legislation to Create HI Exchange

Add Colorado to the list of states moving forward:

http://www.healthpolicysolutions.org/2011/04/19/stephens-predicts-passage-of-health-exchange-bill/

Even Texas is reconsidering its opposition:

http://www.texastribune.org/texas-health-resources/health-reform-and-texas/ogden-revives-key-piece-of-federal-health-reform/

Medicare ACOs: A Risk Not Worth Taking?

Reviews on the proposed regs have not been good:

http://well.blogs.nytimes.com/2011/04/18/new-lessons-to-pave-a-road-to-safety/?ref=health

Oklahoma Returns $35M to Feds

HHS has distributed hundreds of millions of dollars to various states to develop their health insurance exchanges. One of these, Oklahoma, just returned the $35M it received. It also returned $1M it received to review insurance rate increases.

In all seven states have passed legislation to create an exchange. For more details:

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2011/Apr/April-18-2011/In-the-States-Heat.aspx

Urban Institute Looks at Multi-State Exchanges

This could make sense for the Dakotas and Wyoming and Montana:

http://www.urban.org/uploadedpdf/412325-Multi-state-Health-Insurance-Exchanges.pdf

VA Reduces Its Hospital Infection Rate

Who says the gov't can't do anything right? The VA puts many private health systems to shame w/these results:

http://www.nytimes.com/2011/04/14/health/14infections.html?emc=tnt&tntemail0=y

Will the ACA Cause Smaller Groups to Self-Insure?

Stop loss coverage is not cheap. But self insuring still has its advantages such as flexibility in benefit design:

http://aishealth.com/archive/nhpw032811-03

HHS to Provide $1B to Improve Hospital Quality

$1B to save $35B seems like a good deal to me. Reducing hospital errors is a critical component to improving quality and reducing costs:

http://www.latimes.com/news/nationworld/nation/la-na-medical-errors-20110413,0,3360859.story

Arizona's Plan for a $50 "Stick"

As a follow-up to my last post here is a LA Times' editorial regarding the plan in AZ to assess a $50 surcharge to Medicaid recipients who do not take any steps to change their unhealthy behaviors such as smoking or obesity:

http://www.latimes.com/news/opinion/opinionla/la-ed-obesity-20110411,0,3157293.story

Medicaid Incentives: $100M Federal Grant Available

Large employer groups have offered incentives to employees to stop smoking, lose weight etc. The results have been mixed but now the feds wants states to try it for the Medicaid population. According to this article Idaho and Florida have already done this and have not seen much success. Perhaps it will work in other states:

http://www.kaiserhealthnews.org/Stories/2011/April/08/Medicaid-incentives.aspx

8 Key Factors for an ACO

Intermountain Health Care is often cited as a health care system that "gets it." So what do they say you need to create a successful ACO?

1. Create a meaningful, living mission, vision, and values for the organization. Make sure they all live by it.
2. Balance commitment to all dimensions of care, including clinical goals, operational goals, and financial goals.
3. Develop collaborative working partnerships among physicians, nurses, and hospital operations. Use annual goal-setting.
4. Plan for the future and stay the course. Do not give up your plans based on short-term setbacks. Do not give up your plans based on short-term setbacks.
5. Create an infrastructure and tools to support capability and future enhancements—not necessarily capacity.. Focus on getting better, not necessarily bigger.
6. Train all leaders in common principles of management and continuous improvement so that common processes of problem-solving are practiced system-wide.
7. Create a culture that rewards innovation, continual improvement, accountability, commitment, and honesty , while building on the strengths of the local environment.
8. Become a learning organization, and plan clinical improvements based on evidence gathered from your own system as from the literature.

Good Article on UT and MA Health Insurance Exchanges

So the UT HI is all free market while the one in MA is heavily regulated, right? Not so fast according to this study:

http://www.kaiserhealthnews.org/Columns/2011/April/040611corlette.aspx

Are ACOs Affordable?

Along with taking on the risk of a global payment, entering into a ACO arrangement will also require extensive costs in IT infrastructure for providers. From a NEJM article:

Drs. Trent Haywood and Keith Kosel write that HHS is underestimating the anticipated three-year period that it will take providers to recoup the average $1.7 million investment (startup costs and first-year operating expenses as estimated by the Government Accountability Office) in an ACO. For many, even the best-equipped provider groups, it could take seven years or more before they achieve any financial benefit.

http://www.healthleadersmedia.com/page-1/FIN-264180/Are-ACOs-Unaffordable

ACO Issue: Different Incentives for Docs and Hospitals

So if you are a hospital, admissions mean revenue. But if you are part of an ACO, your global payment discourages unnecessary hospital admissions. From a WSJ article on ACOs:

Another concern: "Hospitals and doctors don't work together well," says Mr. Goldsmith. Hospitals' incentive is to maximize revenue through admissions, Mr. Goldsmith says, while doctors aim to keep their patients at home or in outpatient facilities.

This is really going to be interesting.

CMS Releases Draft ACO Regs

The regs are only 429 pages long. Here are my initial observations:

• The ACO is one of several programs in PPACA that advance clinically integration and physician-hospital alignment. The common thread running through episode-based payments, value-based purchasing, the medical home, avoidable readmissions, and ACOs is clinical integration in an organized delivery system that is capable of taking risk for results—cost savings, outcomes, and service delivery.
• The ACO is not for everyone. Guardedly, CMS suggested it envisioned only five million Medicare enrollees would participate in the ACOs—that’s 11 percent of total enrollment. (On page 352, however, the guidance suggested a lower range of 1.5-4.0 million). Some provider communities will no doubt pass, preferring to create clinically integrated delivery systems through other means. And for those pursuing the one-sided lower risk pathway, in year three, financial risk for savings and quality is required, so the reality of risk in the ACO model, and in many of the PPACA-related delivery system alignment efforts, is explicit. In most communities, the question for leaders are these: (1) should we create a clinically integrated delivery model wherein physicians, hospitals, long term care, and allied health professionals become formally structured to assume risk for costs and outcomes? (2) in assuming risk, are we prepared to make investments for infrastructure and changes to how we operate to achieve optimal results? and (3) do we have the core competencies necessary to manage population-based outcomes and costs, and the risk associated, or should we outsource these capabilities to a strategic partner?
• If an ACO is the pathway chosen work must begin now. “Clinical integration” requires deployment of health information technologies, clinical operating models, data capture and performance reporting and alignment of financial incentives for physicians, hospitals and allied professionals who share risk for results. It requires strong local leadership and substantial investment in hard and soft costs. It may require expertise in risk management accessible through a partnership with a health plan, or third party. It starts January 1, 2012, so decisions must be made now to participate or pass.

More to come.

RAND Study: HDHPs Save Money But.....

In what has to be the most extensive study done on HDHPs, RAND looked at over 800,000 people enrolled in this type of coverage spread among 53 employer groups. The findings are as follows:

• Health costs increased for enrollees in both high-deductible and traditional plans but grew more slowly in the high-deductible group.
• HDHP enrollees spent less on both inpatient and outpatient medical services, as well as prescription drugs. Spending for emergency care did not differ from traditional plans.
• Individual deductibles must be rather high ?more than $1,000 per person? to achieve meaningful cost savings.
  

http://www.healthleadersmedia.com/content/HEP-264431/HDHPs-Associated-With-14-Decline-in-Health-Spending.html

Cigna Intoduces the Value Based Concept to Dental Benefits

I like these dental benefit tweaks offered by Cigna:

http://newsroom.cigna.com/NewsReleases/CIGNA-Offering-New-Dental-Product-Features-that-Reward-Preventive-Care-and-Provide-Cost-Savings.htm?view_id=3897

DOJ Increasingly Looking at Monopoly Power of Health Systems and Insurers

Consolidation of health care providers leads to higher health care costs or so the theory goes. Here is the latest of the fed's effort to prevent it:

http://www.kaiserhealthnews.org/Stories/2011/April/05/Hospitals-And-Insurers-Face-Growing-Antitrust-Scrutiny.aspx

Gesinger ACO Experience Could Be Hard to Replicate

Geisinger Health System as often been cited as a model for the country to follow because of its high quality and cost effective care delivery. It participated in Medicare's bundled payment demonstration and certainly is interested in Medicare's ACO demonstration project. What is next for this high performing health care system?

http://aishealth.com/archive/nabn0411-06

Ario Says Movement To Exchanges Would Be a Good Thing

One of the concerns about the ACA is that it would decimate empoyer sponsored health insurance. HHS Director Joel Ario says this would be OK by him:

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2011/Apr/April-4-2011/Potential-Growth-of-Exchanges-a-Positive-Effect.aspx

HHS Makes $200M Available to States for Premium Review

HHS as part of the ACA will provide additional resources to states that wish to more closely examine rate increases from insurers that exceed 10%:

http://newsmanager.commpartners.com/ahstsd/issues/2011-03-31/5.html

Update on MLR Regulations

Under the ACA, states can petition for an exemption from the MLR requirements of 80% for the individual market. Maine received the exemption and eight other states have also requested one including Florida. Here are more details:

http://newsmanager.commpartners.com/ahstsd/issues/2011-03-31/3.html

Consensus Reached on ACO Key Principals

The four principals are:

• access
• care coordination
• health information technology
• payment reform

To find out more:

http://healthaffairs.org/blog/2011/03/31/acos-medical-homes-and-reform-a-crucial-consensus/

Defining Essential Benefits: Cost is Critical

As IOM prepares its definition of essential benefits (due September) industry experts debate what should be covered. One thing is that everyone agrees that cost be kept in mind:

http://aishealth.com/archive/nhpw031411-04

What Decisions Are Ahead for Employers

An excellent summary from the Commonwealth Fund on the decisions employers will have to make because of the ACA. Among them are should I "grandfather" my plan or should I drop coverage all together and pay a $2,000 penalty?

http://www.commonwealthfund.org/Content/Newsletters/Purchasing-High-Performance/2011/March-29-2011/Perspectives-on-Policy/As-Health-Reform-Moves-Ahead.aspx

Health Risk Assessments: Just a First Step

Sixty percent of large employers offer HRAs to their employees. But to be truly effective, identified health issues must be treated:

http://www.commonwealthfund.org/Content/Newsletters/Purchasing-High-Performance/2011/March-29-2011/Featured-Articles/Health-Risk-Assessments.aspx

How One Republican Solves Health Care

For all their criticism of "Obama" care, Reps really do not offer a viable alternative. However, Mitch Daniels, former Republican governor of Indiana, reformed his state's Medicaid program to try to make recipients more financially responsible. Here is a link to explain aspects of "healthy Indiana".

http://www.tnr.com/blog/jonathan-cohn/85908/mitch-daniels-healthy-indiana-medicaid

LA Joins FL in Health Exchange Opt-Out

How many more will there be? The Feds will then have to step in.

http://aishealth.com/archive/nref032811-21

So Are Providers Consolidating and Raising Their Fees to HIs?

The HIs say providers are doing so while providers say HIs still have all the power. A study in MA blamed the providers for the increasing cost of care.

http://aishealth.com/archive/nhpw030711-02

WSJ Weighs in on ACOs

The WSJ does not like the fact that ACOs are "ill defined"

http://online.wsj.com/article/SB10001424052748703300904576178213570447994.html?KEYWORDS=medicare

VT Moves Closer to Single Payer

This should be interesting. Funding source TBD:

http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20110325/BENEFITS03/110329934/1233

OPM to HIs: Provide Health Incentives

OPM wants federal employees to improve their health through incentives. Who will pay for the "carrots"? Will OPM allow for "sticks"?

http://www.washingtonpost.com/local/politics/opm-asks-health-insurers-to-provide-incentives-for-wellness-programs/2011/03/24/ABV58QRB_story.html

Most Surprising Reselt of the ACA after 1 Yr.

I really thought more people would have signed up for the high-risk pools:

The vast army of uninsurable people is AWOL. I thought one of the strongest arguments for the mandate--and the broad outlines of PPACA--was people with pre-existing conditions. The new high-risk pools were supposed to be a stop-gap for those people until PPACA kicked in. But so far, just 12,000 have signed up, or about 3% of the expected total. Either pre-existing conditions just aren't the large problem that advocates claimed, or something has gone disastrously wrong with the implementation of these pools. (from the Atlantic.com)

Towers Employer Benefit Survey Results

http://ifawebnews.com/2011/03/23/cost-challenges-health-reform-lead-to-%E2%80%98bold%E2%80%99-health-plan-redesign/?bold?-health-plan-redesign/

Most interesting survey fact to me:

A third of employers plan to reward or penalize their employees based on biometric outcomes (for weight and cholesterol), compared to 6% in 2010, the survey reported.

Cigna Study Shows ACOs Reduce Cost

This is the first proof by a health insurer that I have seen.

Preliminary results from two of CIGNA's collaborative accountable care pilot initiatives – CIGNA's approach to accountable care organizations, or ACOs – show that quality is improving and costs are being reduced. In New Hampshire, Dartmouth-Hitchcock is closing gaps in care 10 percent better than the market, while in Phoenix, Cigna Medical Group has lowered average annual costs per patient by $336. CIGNA plans to build on these successes with a national expansion of its accountable care initiatives in 2011.

http://newsroom.cigna.com/NewsReleases/CIGNA-s-Collaborative-Accountable-Care-Programs-Improving-Quality-and-Reducing-Costs.htm?view_id=3897

Deloitte Study on Out-of-Pocket HC Costs

The Deloitte Center for Financial Services and the Deloitte Center for Health Solutions recently embarked on a major study examining some of the hidden costs of U.S. health care spending patterns. The Center hypothesized that consumers spend more out-of-pocket than is typically reported in the insurance industry or government reports. This hypothesis was confirmed and the Center found that the cost to consumers was $363 billion heretofore not recognized and, in many cases, these are supplemental to traditional costs for doctors, drugs, hospitals, and insurance coverage — no small matter. Some of the study's key findings include:

• 2009 U.S. total health care expenditures are $2.83 trillion, 14.7 percent ($363 billion) more than calculated by the NHEA
• 55 percent of the $363 billion in additional health care costs are the imputed costs of supervisory care
• Total discretionary costs for health care (direct and indirect) totaled $1,892 per capita in 2009

For the complete study please click on the link below:

http://www.deloitte.com/view/en_US/us/Industries/Banking-Securities-Financial-Services/center-for-financial-services/87e022a77acde210VgnVCM3000001c56f00aRCRD.htm?id=us_email_fsi_032311

Update on Health CO-OPS

On March 21 the 15-member Consumer Operated and Oriented Plan (CO-OP) program Advisory Board submitted recommendations to HHS about the circumstances that would warrant the development of a nonprofit, member-run co-operative health plan (PPACA Section 1322). Among its suggestions:

• HHS should develop flexible criteria that recognize the diversity of market conditions around the country and enable differing models of CO-OPs created and supported by different types of sponsors to develop.
• In awarding loans and grants, preference should be given to applicants with a strong local network and model of integrated care over an application that includes a state-wide network with little emphasis on care coordination.
• HHS should make every effort to help a CO-OP succeed by providing or arranging for needed technical and management support as well as additional funding.

Note: Per Section 1322, $6 billion in loans are available to capitalize eligible prospective CO-OPs: start-up loans to be repaid in five years and grants to meet state insurance solvency/reserve requirements to be repaid in 15 years. Draft regulations for this program are expected later this spring.

Health Insurers Branch Into Other Ventures

Fearing profits will be cut by the new medical loss ratio requirements, HIs are purchasing a variety of businesses including wellness, health management and data companies:

http://www.kaiserhealthnews.org/Stories/2011/March/20/health-insurers-reform-business.aspx

Providers Don't Like CMS Value Based Regs

No one said this was going to be easy.

http://www.healthleadersmedia.com/page-5/QUA-263564/10-Ways-CMSs-ValueBased-Purchasing-Proposal-is-Flawed

ACO Regs: Give Providers the Flexibility to Promote Healthy Behavior through Incentives

This idea really makes sense:

http://www.kaiserhealthnews.org/Columns/2011/March/031511lutesbrill.aspx

Employers Do Not See the Real Costs of Underinsuring Their Workforces

It is more than just the cost of premiums:

http://healthaffairs.org/blog/2011/03/15/what-employers-don%E2%80%99t-spend-for-health-will-cost-them/

Cost of Chronic Conditions

Good chart from McKinsey:

http://www.mckinseyquarterly.com/newsletters/chartfocus/2011_03.htm

Pharmacists Step in to Fill the Gap

With the shortage of primary care physicians and the regular contact many people have w/their pharmacy this idea makes sense:

http://www.kaiserhealthnews.org/Features/Insuring-Your-Health/Michelle-Andrews-on-Pharmacy-Outreach-and-Chronic-Health-Problems.aspx

5 Components of High Quality Health Plans

http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2011/Mar/Success-Factors-in-Five-Health-Plans.aspx

Year Two of ACA

There will be more nitty gritty matters to resolve. The big one will be deciding what services must be covered by health plans:

Department of Health and Human Services (HHS) officials will create a Medicare initiative to encourage hospitals and physicians to coordinate more closely on patient care in the coming year. Regulators will start deciding which medical services health plans must cover as of 2014. Negotiations between federal and state officials will escalate as states prepare to launch the health insurance markets that will expand coverage. And researchers will get federal money to find the most effective way to treat diseases.

HHS Assisting States in Health Exchange IT Issues

Joel Ario spoke at an AHIP conference on states' efforts to establish health insurance exchanges by 2014.

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2011/Mar/March-14-2011/Insurer-Friendly-Exchange.aspx

Connector Popular in MA: Shades of Things to Come in 2014?

The health insurance exchange in MA gets high marks from its customers. 86% are satisfied w/its services:

http://www.boston.com/news/local/massachusetts/articles/2011/03/11/health_connector_patients_mostly_satisfied_with_service/

ACOs vs. Bundled Payment Pilots

If you are a hospital, a Medicare bundled payment pilot is the way to go:

http://www.beckershospitalreview.com/hospital-physician-relationships/evaluating-the-medicare-pilot-programs-comparing-acos-and-bundled-payments.html

Aetna and Carillion Clinic Form ACO in VA

Aetna will perform the back office support for the venture. No word on how risk will be shared for global payments.
http://www.healthleadersmedia.com/content/COM-263594/Aetna-Carilion-Clinic-Building-ACO-in-VA

BCBSMA Suspends Pay to Board Members

This is not surprising:

http://www.healthleadersmedia.com/content/COM-263482/BCBSMA-halts-payments-to-directors.html

Good Post on Medical Homes

Medical homes are gaining in popularity and showing good results. I truly believe that medical homes are an essential element to any ACO. Here is the link:

http://blog.healthintegrated.com/index.php/2011/03/08/pcmhs-acos-and-reality/?utm_content=0000-00-00%2000%3A00%3A00&utm_source=VerticalResponse&utm_medium=Email&utm_term=&utm_campaign=PCMHs%2C%20ACOs%20and%20Realitycontent

So What Will HIEs Look Like?

It really will depend on the political philosophy of the state:

http://www.healthleadersmedia.com/content/HEP-263497/HIEs-Still-More-Questions-than-Answers.html