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