Study: HDHPs Result in Delayed Care for Low Income Families

A study of lower- and higher-income families on high deductible health plans (HDHPs, with deductibles over $2,000): lower income families were more likely to forego or delay care (57 percent) compared to higher income families (42 percent). The study found no differences in plan understanding between family groups, and did not differentiate between foregone care of little and great benefit. (Source: Kullgren, et al. November 22, 2010. “Health Care Use and Decision Making Among Lower-Income Families in High-Deductible Health Plans.” Archives of Internal Medicine. Vol. 170:21.)

More on MedPAC and ACOs

Accountable care organizations (ACOs) may help correct some of the “undesirable” financial incentives in Medicare's fee-for-service payment system, but the Centers for Medicare & Medicaid Services (CMS) should consider structuring the program so providers share financial risk with Medicare for the cost growth of their patients over an established target, according to the Medicare Payment Advisory Commission (MedPAC).

In a November 22 letter to CMS, MedPAC recommended a two-sided risk model in addition to a bonus-only model in a proposed rule establishing ACOs expected later this year from CMS. MedPAC observed, “the incentives in a bonus-only model for controlling spending are relatively weak and become weaker as the threshold is raised. This will likely be a particular concern to smaller ACOs because they may face higher thresholds. But even larger ACOs may find thresholds discouraging.”

Per MedPAC, ACO metrics could include population-based outcomes measures such as emergency room use, potentially preventable admission rates,

Humana Collaborates for ACO Pilot

Humana and a local health care system in Louisville (Norton Healthcare) have been named one of the 5 pilot ACOs in the country as selected by the Brookings Institute and Dartmouth:

http://www.healthleadersmedia.com/content/LED-259411/Norton-Healthcare-Humana-Launch-ACO-Pilot##

Key paragraph:

Norton-Humana ACO already have identified several initial areas of emphasis, including improvements in preventive screenings and tests, such as mammograms, and vaccinations, better management of chronic illnesses, such as heart failure, more effective treatment of common problems, such as back pain, use of generic drugs, and improved access to the appropriate level of care, rather than emergency department treatment.

The Brookings-Dartmouth team will evaluate the pilots to see how ACOs can impact payment reform, with the hope that a model can be replicated across the nation, building on health reform legislation which will likely make ACOs a voluntary option with Medicare participation in 2012.

MedPAC Thinks ACOs Have Potential

I have blogged quite a bit about ACOs and their potential to lower the cost and raise the quality of health care. Well it looks like MedPAC agrees w/me:

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2010/Nov/November-29-2010/Accountable-Care-Organizations.aspx

Key paragraph:

The commission said in a letter to the Centers for Medicare and Medicaid Services (CMS) that in order to work, ACOs can't simply be given bonus payments if they meet goals for controlling costs and improving quality. They must also pay for some of the overruns if they exceed the spending target they are given.

HHS Provides Clarification on Health Insurance Exchanges

From HHS:

A key point: states can construct an "active purchaser" exchange that bargains with health plans for the best deal and excludes those offering lousy deals, or they can follow an "open marketplace" model that basically posts plan offerings and leaves to marketplace forces rather than regulators the process of producing good deals.

Republicans may tilt strongly toward the latter model in the many states in which they will wield greater influence over state lawmaking after the recent November elections. But Jost notes that they won't be able to pass laws requiring the open marketplace model. Rather, the exchanges themselves will have the power to make that determination, so GOP leaders would have to make sure they have enough control over the exchanges to make sure they adopt the open marketplace approach happen.

The guidance documents the various powers states will have to shape exchanges the way they want. For example, they can decide whether to make the exchange a government agency or a non-profit entity; take part in a regional exchange rather than have just their own state exchange; limit access to employer groups of 50 or less until 2016; require competitive bidding for plans; require additional benefits; extend some or all exchange-related requirements to the outside market.

The guidance document also notes what states must do under the federal law, including certifying and decertifying plans; exempting individuals from the requirement that they carry coverage; rating plans on quality; putting benefits in a standardized format to ease comparison shopping; add determining eligibility for Medicaid and the Children's Health Insurance Programs, among a number of other responsibilities.

Regarding the NAIC model act—forwarded this week by the subcommittee that drafted it to a larger NAIC committee—perhaps the most controversial issue relates to the subject of requiring benefits in addition to those to be spelled out in federal rulemaking to meet the essential benefits standards. "Consumers are concerned that the states not be encouraged to repeal mandates before the essential benefit package is in effect," Jost blogged. Additional drafting may address the concern, he said.

Jost also noted that NAIC has left open the question of whether insurers in exchanges for small employers can offer traditional group coverage. If insurers were allowed to do so, and the employer shopping at the exchange picked traditional group coverage, the employer's workers would not individually have the freedom to pick their own plan from the exchange's menu of offerings—a freedom often touted by exchange advocates as a major advantage of these marketplaces.

McKinsey Study: Insureds Owe More Than Uninsureds

Who would have thought this? (https://www.mckinseyquarterly.com/Health_Care/Strategy_Analysis/The_next_wave_of_change_for_US_health_care_payments_2585):

According to our modeling of the 2010 flow of health care funds, consumers now pay more in health care costs than do employers. This cost is split among direct payment of noncovered services, out-of-pocket expenses after insurance, and the consumers’ share of premium expenses. Uncompensated care from 46 million uninsured Americans continues to be an issue, but one that will be mitigated by reform. In fact, the fastest-growing portion of bad debt stems from what insured patients fail to pay after insurers have paid their portion of medical bills. This category will likely grow as more insured patients enter the market following passage of the new health care law. For example, at one multifacility hospital system, we found that, for insured patients, “balance after insurance” is growing at 30 percent a year; for patients without insurance (those who pay for services from their own pockets), that figure is only 19 percent.

Will Health Exchanges Add High Admin Fees to Premiums?

As states develop their health insurance exchanges one of the unresolved issues is how they will become self-sufficient by 2015. Here is an article from AIS that looks at the question:

Analysts are at odds about whether health insurance exchanges being set up for individuals and small groups will result in significant premium hikes to consumers — because the entities will be required under the reform statute to handle numerous administrative functions.

John Sheils, the vice president of consulting firm The Lewin Group who conducts reform analyses, says it only stands to reason that exchanges, which are required under the reform statute to perform about a dozen functions now handled by insurers and brokers, “can’t run for free. If you’re going to have exchanges perform functions not performed today, it will increase costs.”

“It’s possible to have huge economies of scale to get 10,000 people [enrolled in a plan] at once, but the exchange would have to absorb costs and pass them on to consumer cost,” Sheils asserts to HRW. “The only argument that exchanges can save money is [when] insurers get a list of 10,000 people, and don’t have to put 10,000 together [themselves]…but the costs haven’t disappeared.”

Among its administrative duties, an exchange must enroll people for coverage — “and there’s no reason to think an exchange will sign people up for less,” he says. “It may be more expensive if the insurer still has to maintain some part of the process to sign up people. The insurance company may get a list, but still has to set people up in their system, so there’s a possibility of duplication of services.”

Exchanges Will Have Unprecedented Functions

Exchanges also must make arrangements for collecting premiums, handle premium subsidies, certify that participating health plans meet federal and state requirements, inform employers of termination of coverage, run a toll-free information line and offer a rating system that allows a comparison of plan quality and cost. “We’re talking about functions that have never been performed before,” Sheils says of some of them.

In making his argument, Sheils points to the history of a now-defunct private exchange called the Health Insurance Plan of California (later called PacAdvantage), which ended up adding 4.5% to premium costs to cover its administrative expenses. “I’m concerned it could be much higher, though,” he says. “Like processing eligibility for premium subsidies: That’s a cost that’s going to be heaped on the exchange.”

Rick Curtis, president of the Institute for Health Policy Solutions, a nonpartisan organization giving technical assistance to California and other states on exchange design, disagrees about the potential impact. “I think [administrative] functions of the exchange, other than the eligibility function, should be a wash,” he tells HRW.

Curtis contends that states’ newly created exchanges should be “considerably bigger” than was PacAdvantage because small employers will want to participate in them in order to get tax credits. The now-defunct California exchange, he notes, was for small groups, so its 4.5% premium cost add-on may not translate to individuals. He says pricing for that exchange was difficult because it couldn’t rate for health status although the outside market could do so, and there were inefficiencies and duplicative administrative efforts because only a small portion of participating small groups’ employees chose it as an option. He asserts that the Connecticut Business and Industry Association’s Health Connections exchange is a more instructive model.

Brokers represent another question mark, Sheils says. “The state can decide not to use brokers [for the exchange], and that can save them 8% [on typical small-employer group commissions] on some of these numbers,” he says. “But taking brokers out also will reduce the numbers enrolled.” Moreover, employers, who rely on brokers for various kinds of insurance beyond health, may balk at the idea of not using them, according to Sheils. He asserts that by using brokers, “You insert a layer of bureaucracy, and you’ll pay more for that bureaucracy.”

Some people may think that the exchanges will save money if they somehow regulate the industry a little more, eliminating high-cost health plans, Sheils tells HRW. “But there’s nothing more efficient about running the exchange, particularly if you’re going to keep brokers….It’s hard to see how exchanges will save costs.”