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