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“The Affordable Care Act” and New Regulations for Health Plan Appeals

On July 22 the Secretary of the Department of Health and Human Services (HHS) released “The Affordable Care Act”, which addresses the appeals process for new health plans as of September 23, 2010. 

These new regulations give consumers in “new” health plans in every state the right to appeal health plan decisions, including claims denials and rescissions.  It is important to note that if you were in a health plan that existed on March 23, 2010, and the plan details were not significantly modified, this plan is considered “grandfathered” and it is not subject to this regulation.  According to the HHS statement, this was done “to help individuals who like the coverage they have keep it”.

HHS estimates that by next year an estimated 31 million people in new employer plans and 10 million people in new individual plans will benefit from this new regulation.  Under the new rules, new health plans beginning on or after Sept. 23, 2010 must have an internal appeals process that:

• Allows consumers to appeal denied claims for a covered service, or those that rescind insurance coverage;
• Offers consumers detailed information about the grounds for coverage or claims denials; and
• Provides consumers with an expedited appeals process in urgent cases.

In addition, consumers with new plans will have the right to appeal all denied claims to an independent reviewer not employed by their health plan. The HHS statement notes that currently, 44 states provide for some form of external appeal; however, there is wide variation in these state laws.  The new regulation ensures that consumers with new health insurance coverage in all states will have access to an external appeals process that was established by the National Association of Insurance Commissioners (NAIC).  HHS is encouraging states to make changes to their external appeals laws that reflect the following standards by July 1, 2001.

• Clear consumer information about internal and external appeal processes.
• External review of plan decisions to deny coverage for care based on medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit.
• Expedited access to external review in emergency cases, or in situations where a health plan doesn’t follow the internal appeal rules.
• Health plans must pay for the cost of the external appeal.
• Review by an independent body appointed by the state.
• Final decisions must be binding.

To read more about this regulation, and the announcement of new Consumer Assistance grants, visit http://www.hhs.gov/news/press/2010pres/07/20100722a.html

 

“Provider Profiling – Physicians Speak Out”

American Health Line reported on Tuesday July 20 about an open letter from the American Medical Association and 46 state medical societies sent to health insurers criticizing the industry’s increasing use of physician grading systems.  The letter contends these grading systems are “unreliable” and “unfair.”

Grading systems typically divide health care providers into tiers based on several factors, including cost, patient outcomes and quality, leading insurers to charge patients lower out-of-pocket costs for choosing a preferred physician. While insurers contend that grading systems help control costs and satisfy consumer demand for physician quality measures, providers say the evaluations are overly subjective, target individual providers and fail to consider other variables, such as patients’ overall health.

(from the AMA’s website)

A series of studies  recently conducted by researchers at RAND Corporation confirm the AMA’s longstanding contention that serious flaws exist in health insurer programs that attempt to rate individual physicians based on economic criteria. One RAND study shows that physician ratings conducted by health insurers can be wrong up to two-thirds of the time for some groups of physicians. Under the best circumstances, insurers misclassified one-fourth of all physicians. This and the other studies call into question the use of cost-profiling tools to control health care spending and provide the public with information.

“Transparent, accurate information is critical when selecting a physician,” said Dr. Wilson. “Patients deserve to know that insurers are offering physician ratings that have a high risk of error and should not be the sole basis for selecting a physician.”

According to the RAND study, “Creating the profiles requires many technical decisions.  Until recently those decisions were largely a black box – different organizations made different choices.  Doctors were largely not informed about how their cost profiles were created.  Some doctors found that two health plans might give them two different cost profiles (e.g., one plan said they were high cost, while another found the opposite)”.

Under the new health reform law, Medicare will be providing physician cost profiles, which will be called “relative resource reports” by 2012.  In order to make this new Medicare initiative effective it will be pertinent that doctors understand the measurement structures used to create the relative resource reports and how to interpret the report results.

The RAND study analyzed claims data for 1.1 million adults ages 18-65 who were continuously enrolled in four Massachusetts health plans between 2004 and 2005.  More than 13,700 physicians were also included in the study.  Methods were developed to construct physician cost profiles and assign physicians to cost categories that largely mirrored the methods commonly used by the health plans.

Creating Physician Cost Profiles
RAND’s study maps out the following steps for creating a physician profile:

1) Definition of which care to include on cost profile (e.g., preventive care)
2) Determine which costs area assigned to each unit of care
3) Identifying the peers to whom a physician will be compared
4) Identifying which physician is ultimately responsible for the care of a specific patient
5) Creating the algebra for constructing cost profiles
6) Deciding how to place a physician in a high-cost or low-cost category.

The initial decision is whether the allocation of dollars spent on care should be on a “per patient” basis – thus assigning all of a patient’s costs to a single physician, or by “episodes of care”.  Episodes of care are defined as the clinically related services delivered to a patient with a specific condition over a period of time.  There are many vendors with specific software tools that automatically group patient claims into episodes of care, and these are commonly referred to as “groupers”.

Another key decision factor is how to assign accountability for costs.  Patients often see many doctors, and deciding the exact physician with the most degree of accountability can be a challenge.  One theory is to assign costs to the physician with the most visits, either from the patient or during the entire episode.  Another theory is to assign costs to the physician who accounted for the largest portion of spending.  Regardless of the approach taken, it can be confusing for physicians who contract with multiple health plans to keep track of each plan’s provider profiling methods.

RAND’s study found that the choice of profiling methods (they define this as “attribution rules”) might affect the cost category (e.g., low, average or high cost) to which a physician is assigned.  In fact, RAND’s assessment illustrated that the choice of attribution rules strongly affects a physician’s cost category.

• 17 to 61 percent of physicians would be assigned to a different cost category if a rule other than RAND’s default attribution rule (used for this survey) was employed.

The researchers raise another question, which is “How accurately does a physician cost profile reflect a physician’s economic performance”?  To test this premise, RAND developed a summary cost profile score indicating what the costs were for episodes of care assigned to a given physician, relative to other physicians of the same specialty who were treating patients with similar conditions and comorbidities.  The RAND analysts then assessed the reliability of the profile, or in other words, the extent to which variation across cost profile scores reflected real variations in physicians’ economic performance.

The researchers found that the median reliability of physician cost profiles varied widely – overall 60 percent of physicians had cost profile reliability scores below 70 percent (a commonly used reliability threshold).  Some other examples of classification errors include:

• Approximately 41 percent of internal medicine physicians were misclassified as lower cost, with an average misclassification rate of 25 percent.
• Approximately 67 percent of cardiovascular surgeons were misclassified as lower cost, with an overall misclassification rate of 36 percent.

Conclusions
The RAND study concludes the current methods of physician cost profiling are not ready for prime time.  “However, the need to curtail rising health care costs is going to become more salient in the policy debate, not less.  So current cost profiling approaches needs to be improved, or new approaches need to be developed”.

 

HHS privacy proposal covers chain of subcontractors

According the July 9 edition of Government Health IT, a Health and Human Services (HHS) Department privacy and security tiger team charged with developing practical guidance on health information exchange must consider a new facet to the HIPAA requirements.  A federal rule proposed the second week of July would extend Health Insurance Portability and Accountability Act (HIPAA) requirements further down the chain of health commerce.

Adam Green, senior health IT and privacy specialist with HHS’s Office for Civil Rights, today briefed the tiger team on the proposed modifications to HIPAA’s privacy and security rules, announced July 8 by HHS Secretary Kathleen Sebelius.

A key provision of the pending rules would make “downstream” healthcare subcontractors subject to HIPAA’s privacy and security requirements. HIPAA, as bolstered under the HITECH Act, already considers a health information exchange as a “business associate” of organizations covered by the law. Business associates are required to sign contacts that bind them to HIPAA.

The proposed rule, however, would confer business associate status to subcontractors working with other business associates. Potentially, the requirement could work its way down a number of tiers as subcontractors to newly coined business associates would also fall under HIPAA’s scope.

Green said each business associate in the chain is to have a “full-fledged business associate agreement” with its subcontractor.

“No business associate down the chain can do anything that would not be permitted by the covered entity and not permitted by the business associate agreement,” he said.

The HHS proposed rule proposes that “downstream entities that work at the direction of or on behalf of a business associate and handle protected health information would also be required to comply with the applicable Privacy and Security Rule provisions in the same manner as the primary business associate, and likewise would incur liability for acts of noncompliance.”

According to Modern Healthcare, Greene said organizations that act as “mere conduits” for the electronic transport of protected health information, or PHI—even if the data is not protected by encryption and even if the conduits have “random and infrequent access” to the contents of the medical records—would not be considered “business associates” of provider organizations, health plans or claims clearinghouses, which are so-called “covered entities.”

Addressing Details for Health Information Exchange

During Friday’s meeting the panel took up some nuances of HIE privacy policy, including whether the exchange of personal health information for treatment should be limited to the treatment of the individual who is the subject of the health information.

Noting that family members’ information could potentially contribute to a patient’s treatment, the group discussed obtaining consent from individuals for broader use of their data.

They brought up cases in which consent may be impossible to obtain, as when maternal information is needed to treat a newborn. Panelists also pointed to the difficulty of developing recommendations for different health information exchange models. The tiger team also discussed how to confirm the relationship between provider and patient to facilitate a personal health information request.

Another topic: should providers not covered by HIPAA – such as those who don’t bill for services electronically – participate in data exchange? On that question, panelists supported a recommendation for heath information organizations where providers don’t have direct control over information disclosure. For those organizations, the panel suggested a contract “to hold all participants to HIPAA, state law and [health information organization] requirements.”

HHS has published a web page discussing “Building Trust in Health Information Exchange,” a joint statement from the Office of Civil Rights (OCR) and the Office of the National Coordinator (ONC) here.

864+  Pages of Meaningful Use

On July 13 the Center for Medicare and Medicaid Services (CMS) announced the final rule on the “meaningful use” of electronic health records (EHRs).  The rule offers some degree of flexibility as compared to the interim rule published in January of this year.  Healthcare providers will now have various ways of reporting objectives to demonstrate meaningful use of EHRs, and some that are deemed too difficult to achieve by the original 2011 deadline will be delayed a year.

The final CMS rule divides the initial 25 meaningful use objectives into two categories: a core group of 15 objectives that physicians and hospitals must meet, and a “menu set” of 10 procedures from which they can choose any five to defer in 2011-12, the first round of the incentive program.

Physicians will have to meet 15 “core” requirements, including electronic prescribing, providing electronic copies of health information to patients who request it, and maintaining a current medication list.  Hospitals will have to meet 14 core requirements.

The final rule relaxes some of the more stringent measures from the proposed rule.  For example, under the proposed rule physicians had to prescribe 75 percent of their prescriptions electronically, while in the final rule that level is 40 percent.

Each objective has an accompanying measure to determine if a physician met the goal. For instance, one core objective—that a doctor can use an EMR to conduct computerized physician order entry for medication orders—requires that more than 30% of a doctor’s patients taking at least one medication have at least one drug ordered through CPOE.

Providers must also choose 10 measures from a “menu set” of procedures they have to meet, but may defer up to five of them to the next stage, said Dr. David Blumenthal, the national health IT coordinator, who worked closely with CMS to set the new scenario for accomplishing meaningful use.

The measures from this “a la carte” set include incorporating clinical lab results in EHRs, creating a summary of care as patient transitions through providers and maintain an up-to-date problems list of diagnoses.
 
CMS will reward meaningful EMR users with incentive money that was made available through the economic stimulus package enacted in early 2009. Eventually, that money will start phasing out, and physicians who have not adopted paperless systems will start facing Medicare penalties.

As much as $27 billion may be expended in incentive payments, according to CMS. Eligible physicians who meet all required objectives could receive as much as $44,000 over five years from Medicare, or $63,750 over six years from Medicaid. Hospitals may receive millions of dollars for meaningful use under both Medicare and Medicaid, the agency said.

Other key changes in the final rule:

• A new definition of a hospital-based professional as one who performs a substantial amount of services in an inpatient hospital setting or emergency department only.
• A stipulation that critical access hospitals are considered acute care hospitals when it comes to the Medicaid bonus program.
• Hospital and practice CPOE requirement: at least 30% of patients with a med order must have at least one of them entered via CPOE. The denominator is no longer total orders generated, which would have required a manual count of paper orders.
• Requirement to give patients electronic copies of their information when requested dropped from 80% to 50% and time allowed was increased from 48 hours to three business days.
• An EP is considered hospital-based and ineligible to receive an EHR incentive payment if more than 90% of their services are provided under POS codes inpatient hospital or ER. This is consistent with recent legislation (Continuing Extension Act of 2010.)

Re: Timing of payments for Medicare and Medicaid Programs:

• For the Medicare program, attestations may be made starting in April 2011 for both EPs and eligible hospitals.
• Medicare EHR incentive payments will begin in mid May 2011.
• States will be initiating their incentive programs on a rolling basis, subject to CMS approval of the State Medicaid HIT plan, which details how each State will implement and oversee its incentive program.

Resources for this article:
1) “CMS abandons absolutes, adds flexibility to meaningful use”

• Government Health IT,  July 13, 2010

2) AMA News
3) the blog HISTalk
4) CMS: Final rule in the Federal Register (EHRs and Meaningful Use)
5) CMS: Final rule in the Federal Register (Medicare and Medicaid Incentive Payments)

Recap from AHIP’s Institute

I was curious to see what the key discussions points in the new health reform era would be at the annual conference for America’s Health Insurance Plans (AHIP). Here are the highlights I found most important:

1)  McKinsey and Company consultants provided a discussion of the “Underlying Health Care Trends and Implications for Payors in the Post Reform Environment”.  The reform law certainly does challenge private payors’ traditional “value-add” role, and it is expected that the government and consumer markets will most likely comprise the bulk of membership and revenues.  The consultants also see the payors continuing to consolidate with “...winners and losers emerging largely based on strategy and conduct rather than structural advantage”.

The entire model of selling health benefits will also transform from a traditionally B2B model of selling to purchasers and employers, to a B2C model featuring multi-channel retail distribution via the state- and federally managed insurance exchanges.  McKinsey predicts this will enable additional product innovation and differentiation in terms of health insurance packages and structures.

Key figures to illustrate the change:

1)  From 2009 to 2016, it is estimated the Individual market will grow from 19 to 35 million (81% growth) members
2)  the Medicaid market will grow from 38 to 53 million (38% growth) members
3)  the Medicare market will grow from 45 to 56 (24% growth) million members
4)  the small group market will decrease from 50 to 42 (-16%) million members.

After the complete list of health reform changes occur in 2014 (including caps on lifetime limits and premium increases), McKinsey predicts there will be far less opportunity to price risk into insurance premiums - up to a 75% reduction in current levels of pricing flexibility.

McKinsey identifies three major issues that reform will not address for payors, and they suggest it will take concerted action on the part of payors and providers to address these:

1) High costs and persistent inflation: with many more previously uninsured gaining coverage, there is the risk of adding chronically ill members that can bring significant costs of care.  There are “...no real provisions to address this rising chronic disease burden”, and limited paths to increase premiums and/or reimbursements.

2)  Misalignment with contemporary medical risks.  Health reform does include necessary and new programs to encourage wellness, preventive care, and some payment reforms (i.e., medical home models, pay-for-quality, bundled payments). But reform doesn’t go far enough to solve current system financing misalignments.

3)  Cuts to the Medicare provider reimbursements could further create distortions of supply and demand within the system.

Other facts that pose significant risks to care delivery and related costs:

1)  By 2020, more than 80 million people will have two or more chronic conditions.  Chronic care is now, and will probably remain, the major driver of health care costs.
2)  By 2015, 75% of the population is expected to be obese, and this will have severe economic consequences.  By 2020 the total cost of obesity in the U.S. could reach $1 trillion.

As payors move to address costs, quality, reimbursement and patient behavior/education incentives, it is important to note that today’s system does not proactively focus on avoiding failure.  In fact, fee-for-service types of arrangements can often create ‘perverse” incentives, resulting in a wide geographical variation in procedure rates, and/or inappropriate care. 

McKinsey suggests the following actions for payors:

1)  Develop an integrated healthcare value strategy. The strategy has to be collaborative and mutually reinforce initiatives across consumers, providers and insurance product design.  The key components involve three areas.  First, engaging consumers through active outreach, use of influential messages, and member-facing clinical programs with transparent data.  Second, the design of insurance benefits must be very specific about medical policy and employ effective co-pay and deductible amounts.  Third, provider relationships must better address reimbursement amounts and include risk sharing, using transparent processes and information.

2)  Enabling consumers to make better decisions.  (This is something I think a lot of experts are talking about, but few are doing this effectively!)  Changing consumer behavior involves addressing the following realities:

Individuals have emotional, cognitive biases that affect decisions.  This fact can sometimes lead an individual to make default decisions to familiar options, or become “paralyzed” and take no action at all.  There is also a bias to underestimate common risks and overestimate unusual risks.  To change consumer behavior effectively, programs must address all consumer biases.

I am hoping payors actually take the last point and make it happen.  Moving to a true collaborative model of changing the healthcare system has traditionally attracted lots of talk but not nearly enough action. 

Trend in Medical Costs to Decline in 2011

After surveying 700 employers representing 47 million individual insurance plans, PricewaterhouseCoopers’ Health Research Institute (PwC) expects medical costs to decline by half a percentage point in 2011; down from 9.5% in 2010 to 9%.  The key drivers of the decline are listed as:

• lower prescription drug costs
• changes in cost-sharing, and
• COBRA enrollment declines.

For the first time since the survey has been conducted, employers are returning to higher deductibles and replacing co-pays with coinsurance.  The most common plans had deductibles ranging from $400 to $999, and high deductible plans now represent 13% of employer health benefit packages.  The percentage of employers using coinsurance (“co-pays”) ranged from 18% to 32% over various medical cost categories.

Also spurring the decline in medical costs in 2011 was the availability of generic drugs.  Half of all drug patents will expire over the next four years, with 2011 representing the largest piece of the pie at 12%.  Drugs like Lipitor, Plavix, Actos, Seroqual, Zyprexa will lose their patent protections in 2011.

With the economy recovering through 2011, PwC expects COBRA enrollment to decline after large spikes in 2009 and 2010 triggered mainly by changes in eligibility.  As part of the American Recovery and Reinvestment Act (ARRA), the federal government agreed to pay 65% of the cost of COBRA plans, so enrollment doubled over the past two years, pushing up the medical cost trend.  With individuals leaving COBRA for private individual plans or employer-based plans, the upward trend in medical costs in 2009 and 2010 will be reversed through 2012.

However, PwC’s report does not foresee declines in medical costs across the board.  In fact, they estimate that cost-shifting, investments in health IT, and market consolidation will counteract the downward trends in generic drug prices, cost-sharing and COBRA changes.

The biggest problem for hospitals in 2011 is Medicare, which is the single largest payer for hospitals.  According to the report, Medicare payment rates will drop in 2011 after seven straight years of payment increases that either exceeded or nearly equaled inflation increases.  As a result, hospitals will either have to use their reserves or shift more costs to commercial payers.

PwC expects consolidation of medical practices to also shift medical costs upwards, at least in the short term.  “Consolidation carries the benefit of economies of scale as well as increased bargaining power with suppliers, payers, and labor.”  The report expects many physicians’ new bargaining power to increase medical costs, but eventually to give way to efficiencies that may be passed along to payers as lower and moderated rates.

Capital investments in health IT, namely electronic health records (EHR), are also projected to increase medical costs in 2011.  As we reported in January, part of the ARRA legislation provided incentives for hospitals and physicians to purchase health IT assuming they meet new “meaningful use” regulations.  “Two-thirds of healthcare IT leaders said they would increase their IT staff over the next year to account for spending increases related to EHR’s.”  Additionally, the mandates in the health reform act are also causing health providers to invest in health IT to avoid costly penalties.

PwC conducts their annual Behind the Numbers: Trends in Medical Costs report to assist private employers in making decisions about their company’s health benefits.  “Employers use health benefits as a competitive advantage to recruit and retain workers, so as medical costs continue to grow faster than general inflation the value of these benefits has become a larger part of the overall compensation package.”

“Doc Fix” Delayed until November, Again

According to Politico, President Obama signed into law the so called “Doc Fix” last Friday preventing a 21% cut to physicians’ Medicare reimbursements that began June 1.  However, as so many times in the past, the bill only delays these cuts until November, right in time for the mid-term elections.
On June 17, the $6.5 billion, six-month stand-alone doc fix emerged as a compromise between Senate Democrats and Republicans. The measure provides a 2.2% Medicare payment increase to physicians through November and is fully offset with two revenue-raising provisions, according to California Healthline.
Although the Centers for Medicare and Medicare Services (CMS) had begun processing physicians’ Medicare claims with the 21% pay cut, the agency said in a memo to lawmakers that its Medicare contractors have been instructed to stop processing claims with the rate cut.
The bill had been delayed by Speaker Pelosi as a way to put pressure on the Senate to compromise on her a long delayed jobs and economic relief package. “When that measure collapsed Thursday, Pelosi no longer had reason to wait and almost immediately moved to the 415-1 vote on the doc fix,” Politico reports.

What New Health Reform Changes Start on July 1, 2010?

Starting July 1, Americans locked out of the current insurance market because of a pre-existing condition can begin enrolling in the Pre-existing Condition Insurance Plan (PCIP). This program offers insurance without medical underwriting to people who have been unable to get it because of a preexisting condition. It ends in 2014, when the ban on insurers refusing to cover adults with pre-existing conditions goes into effect and individuals will have affordable choices through state-coordinated Insurance Exchanges.

The PCIP plan can be administered in many states through an existing high-risk insurance plan or pool.

According to the Wall Street Journal, (Web link for Wall Street Journal:  http://online.wsj.com/article/SB10001424052748704853404575322860665239340.html?KEYWORDS=obama+tangles+with+insurance)

many states are behind schedule in terms of implementing this plan.  California, Maryland and Michigan say they do not expect to offer coverage through their new state high-risk insurance pools until September, at least three months after the law’s deadline passes this week.  The states said the feds did not give them enough time to introduce the program. 

Other states are strictly limiting early enrollment out of concern that funding for the pools could run dry.  Kansas, which has about 294,000 uninsured residents (according to the group Families USA), will limit its state pool to 25 enrollees per month.

The White House reports the program remains scheduled to take effect July 1 in the 20 states that elected to let the federal government run their high-risk insurance pools.

For more information on health reform and the “Patient’s Bill of Rights”, visit this website: 

Determining State’s Savings or Costs with Health Reform – Not as Easy as You Might Think

A June 25, 2010 article in The Washington Post reported on the difficulty states are encountering in trying to calculate their share of the health reform legislation’s costs.  Several states will incur more costs than others as determined by each state’s Medicaid and other income-related health plans.  Generally, the states that already cover more low-income residents through Medicaid, Children’s Health Insurance (SCHIP) and related, will have to spend less to meet the coverage standards dictated by the federal reform legislation.  Half the expansion in healthcare coverage expected to flow from the new law will come from expanding the Medicaid program, which is jointly funded by the federal government and states.

While this may seem a straightforward equation, it is actually not so simple.  “If government leaders track spending for the remainder of the decade…the law’s costs can look at bit low,” to a state such as Maryland, as an example.  But in the near-term states’ costs are constantly put in doubt because they must rely on the federal government to keep its funding commitment – “a fact highlighted Thursday as the Senate fell short of the necessary   votes to advance promised short-term aid” to states’ Medicaid programs.

Because states must pick up part of the funding for Medicaid, the estimates of their respective costs rely heavily on assumptions about how many new residents will sign up for the program.  This is no simple task.  Officials must predict population growth, estimate how much money residents will earn, and estimate the success of the Medicaid program in terms of identifying and enrolling the newly eligible.

Beginning in 2014, anyone making up to 133 percent of the federal poverty line (FPL) will qualify for Medicaid under the health reform law.  This requirement will affect states differently depending on the generosity of their existing Medicaid program.  In Maryland, the change will actually result in fewer new Medicaid patients, as this state extends some form of coverage to most residents making 116 percent of the poverty level.  The state will need to provide more comprehensive benefits to about 112,000 residents, but state officials estimate that only entirely new benefits will need to be extended to about 21,000.

In contrast across the Potomac, Virginia enrolls only the blind, disabled, some “needy” children and very indigent parents who earn up to 24% FPL.  State officials estimate that increasing Medicaid coverage to the federally required level means as many as 426,000 people might become part of the program.

However, neither state may be entirely correct in their calculations as to who they will be covering in the Medicaid program after 2014.  Maryland’s estimate assumes that far fewer than the number eligible will actually enroll, which the Post notes is based on past experience.  Virginia estimates about 270,000 new Medicaid enrollees, which is the most conservative of the projected models.

Under the new health reform legislation, the federal government will at first pay all the costs for new enrollees.  The states will need to gradually pick up 10 % of the costs by 2020.  This is a better deal than the 50-50 split that states typically paid for.

Calculating the potential savings to states is even more “fuzzier”.  For example, Maryland’s estimate of $1 billion in savings is based largely on the state assuming it could abolish some big-ticket programs, including the $100 million it sets aside each year to extend insurance coverage to those denied coverage due to pre-existing or high-risk conditions.  The state is also counting on decreasing payments to hospitals for treating the uninsured, as theoretically, far more of the currently uninsured should be covered by Medicaid or private insurance.

Virginia estimates its’ cost savings will not be so great.  Without the health reform law, the state expects to pay about $1.3 billion over the next 10 years to help cover the costs of caring for the uninsured at the hospitals and at the University of Virginia and Virginia Commonwealth University.  Under the law, the state figures it will recoup less than 10% of those costs.

The real question according to Darrell Gaskin, an associate professor of health economics at the University of Maryland, is, “Can everything together really bend (the) cost curve of care?”.

Does the Average Citizen Care About Electronic Health Records (EHRs)??

According to a June 17 press release that arrived in my email Inbox….despite years of hype around the issue, less than one in 10 American adults now utilize electronic medical records or turn to e-mail to contact their doctor, a new Harris Interactive/HealthDay poll finds.

Nearly half of respondents weren’t even sure if their physician offered these technologies, according to the survey.

Still, most of those polled said they would like their doctors to access their medical records with the click of a mouse. On the other hand, only about a third (30 percent) believe their insurer should have that same access.

Overall, “the general public only has a vague idea, only a very limited understanding, of what all this is about,” reasoned Humphrey Taylor, chairman of The Harris Poll, a service of Harris Interactive.

The poll was conducted online from June 8-10 among 2,035 U.S. adults.

This year, as in 2009, 78 percent of adults indicated that they “strongly” or “somewhat” agree that doctors should have access to their electronic medical records. In 2007, 80 percent were in agreement on physicians’ access to those records.

But patients’ use of various electronic functions remains very low. Only 9 percent can communicate with their doctors by e-mail, up from 4 percent in 2006. Eight percent can schedule a doctor’s visit online, up from 3 percent, and 8 percent can get diagnostic test results by e-mail, up from 2 percent in 2006.

According to the release text, Americans don’t seem to appreciate the benefits of having their intimate health details stored in a computer vs. stowed away in file folders scattered across multiple doctors’ offices.  This is an interesting point, as I think sometimes those of us in the health IT industry don’t really have a personal perspective on what the average American knows or thinks about health information systems.

The survey also revealed regional differences, with more people in the West (35 percent) saying their primary-care doctor uses an electronic medical record than in other regions.  This is not surprising as the west coast has traditionally been on the front of industry innovation, whether it be models of health insurance, care management programs, or IT adoption.

(OK, disclosure time - I am on a panel of Harris survey respondents, but did not respond to this survey).

Click here to read the survey press release.

Microsoft Announces A New Customer Management Application for Payers

At last week’s America’s Health Insurance Plans’ (AHIP’s) conference, Microsoft announced the release of the Health Plan Sales Solution for Microsoft Dynamics CRM, which is a sales and service-enabled customer relationship management platform that enables health plans to move their marketing and sales processes online. (OK, I have to admit, I was at this conference and didn’t see anything about the release - or maybe that was the window sticker that someone “room dropped” in the conference room block.  Note to fellow marketeers - NO stickers on hotel room mirrors - it is too much like a horror movie scene, especially late at night!).

(NOTE: - I saw the news in this week’s Information Week Online)

MS execs say that the CRM platform will help health plans better manage and monitor sales, member services, and retention, and hopefully this will help payers compete in the individual and small group market; reduce multiple points of failure in their current sales, service, and retention processes; and interoperate with state health insurance exchanges.

Janice Young, program director for IDC Health Insights, notes, “What we are noticing is that health plans have very much prioritized the improvement and Web enablement of online sales and marketing, enrollment, and billing,” Young said. “It is one of those priorities that we are seeing health plans focus on over the last six months, and all of our survey data indicates that there has been tremendous interest there. Microsoft is clearly targeting a solution to a market that is ready and interested in investing”.

Microsoft executives said their CRM strategy for health insurance companies takes into account the recently passed healthcare legislation which will expand insurance coverage to 32 million Americans, 24 million of whom will be enrolled through exchanges by 2019, according to estimates from the Congressional Budget Office. The drive toward universal health insurance coverage means health insurance companies will operate in an even more competitive marketplace where companies will have to offer quality products and services to take market share and increase revenue.

HITECH Compliance and Pre-Existing State Laws

According to SearchHealthIT.com, state laws established before the HITECH Act was signed last year could complicate efforts by providers to achieve EHR adoption in accordance with HITECH’s stipulations and the definition of “meaningful use”.

For example, Massachusetts and Minnesota have detailed health IT initiatives that predate the February 2009 HITECH Act.  The State of Massachusetts requires the implementation of CPOE systems by October 2010, and another requires hospitals to demonstrated interoperable EHR use by October 1, 2015.  If Massachusetts providers do not meet these deadlines, they will be ineligible to renew certification.  Massachusetts’ policy director in the state’s Office of Health and Human Services, David Martin, says that the main point of the regulation is to increase quality of care while reducing costs.  The regulation also speeds up building the state’s health IT infrastructure by putting the hospital certification and physician licensure on the line, which is an extra incentive beyond the federal health reform legislation’s use of incentive dollars.

Minnesota passed “Chapter 102” in 2008 and updated the regulation after HITECH was passed.  Similar to the Massachusetts law, providers have to implement electronic prescribing by 2011, and by 2015 they should be using full EHR systems.  To oversee health IT efforts, the public-private Minnesota eHealth Intitiative was established, although the organization cannot penalize providers with license renewal penalties.  Although there are no real penalties tied to the state law, providers that do not implement the health IT systems by the respective due dates could be considered in “technical noncompliance”, which is a misdemeanor according to Mark Sonneborn, vice president of information services for the Minnesota Hospital Association.  Sonneborn asserts that without the stricter health IT compliance rules and incentive payments, it was unlikely Minnesota providers would have met the state’s deadlines.

Accountable Care Organizations and Models

The Commonwealth Fund’s new report on Accountable Care Organizations (ACOs) discusses how these models could fit into state-level models of health industry reform. Specifically the report looks at Vermont’s Health Care Reform Commission (HCRC) and the group’s study on how ACOs might be incorporated into the state’s comprehensive health reform program.

The report defines an ACO as a health care provider organization that is accountable for meeting the health needs of a defined population, including the total cost of care and the quality and effectiveness of services. Someone asked me how ACOs are different than the capitated provider groups under managed care arrangements. There are many differences:

a) According to the article in The Healthcare Economist, “The goal of ACOs is to pay providers in a way that encourages them to work together, to pay providers in a way that does not encourage supplier induced demand, and to create an organization that is rewarded for providing high quality care.” Capitation compensated physicians a flat rate per patient per month, whether a patient came in for care or had any type of outcome.

b) The author asserts three main differences between ACOs and health plans:

1. The “accountability” rests with the providers. Providers or provider groups, rather than insurance companies, are evaluated on the quality and efficiency of care. 2. Direct contracting with provider organizations without the reliance on a health plan intermediary. 3. The ACOs allow for flexibility in the type of organization. Some regions may prefer independent practice associations (IPAs) while others may prefer a physician-hospital organization (PHO).

I am hoping that since the failure of so many PHOs in the late 1990s, state insurance regulators have increased the required totals and types of financial reserves any type of health care organization must have if it provides and finances the risk of health care services. To this point, Jason Shafrin at The Healthcare Economist states, “Other obstacles to ACOs include possible FTC and DOJ desires to quash ACOs on anti-trust grounds. Further, state governments may need to change laws related to insurance regulation as well as organizational and professional liability.”

Getting back to the Commonwealth report, key findings on ACOs include:

a) The ACO cannot exist in a vacuum. The community health system must support this model. The state-level must also support the ACO through infrastructure to support the entity with health IT, payer payment reforms, and technical support services. And on the national level ACOs must be supported through allowing participation and reimbursement in the Medicare program.

b) The working design for an ACO pilot is primarily built on three major principles:

- Local accountability for a defined population of patients;

- Payment reform based on shared savings; and

- Performance measurement, including patient experience data, clinical process and outcome measures.

One important note mentioned in the report’s findings, is that a successful ACO must be integrated with both commercial and public payers, and all payers need to participate, so that at least 60 to 70 percent of patients in a provider’s practice can be eligible for inclusion in a shared-savings model. I think this finding can be realized in regions where there are no more than 2 or 3 dominant payers, but perhaps this will be harder to accomplish where there are multiple health plans with different provider network contracting processes and reimbursement scenarios.

The report’s conclusion reiterates the fact that while ACO pilot projects will be implemented under federal and state health reform programs, ACOs are a financial incentive model that still needs further testing in these pilots.

The Fifth Annual 2010 PayerView Rankings - Results

According to athenahealth’s fifth annual 2010 PayerView Rankings survey evaluating 137 national, regional and government payers in 43 states, Medicaid payers ranked last in four of the seven performance categories measured. What’s more, state Medicaid programs were eight of the 10 worst payers in the overall-performance category.

Jeremy Delinsky, a senior vice president at athenahealth, called the amount of waste in healthcare today “mind boggling,” according to the Boston Globe. “Healthcare transactions in the United States are not done in real time the way transactions are done in almost every other industry,” he said. “Even in the fastest cases, it can still take three weeks for doctors to get paid.’‘

Overall, health insurers paid physician claims an average of seven days faster in 2009 than in 2008, according to the survey. However, within the industry, payers demonstrated significant variability in days in accounts receivable or DAR (i.e., the days from the date of charge entry to the remittance post). The winner running away in this category was Blue Cross and Blue Shield of Rhode Island (BCBSRI) in Providence, which posted a 12.2 DAR in 2009—more than five days faster than the second-place finisher. At the opposite end of the spectrum, last-place finisher the New York Medicaid program had a dismal 112.3 DAR.

Among eight major payers, Humana Inc., in Louisville, Ky., was No. 1 in overall performance for the second year in a row, reports EMR Daily News. (Humana was second in overall performance among all 137 payers, behind BCBSRI.) Humana also achieved the No. 1 ranking in DAR for major payers at 22.4 days. By comparison, Cigna Corp., in Philadelphia placed last among the major payers with a 28.8 DAR.

Medicare Reimbursement Cuts Likely

Going on seven years and up against a June 1 deadline, Congressional leaders are not likely to pass the so called “Doc Fix,” thus allowing a 21% cut in Medicare reimbursement rates to physicians to proceed.  Congress has successfully passed nine temporary patches over the last seven years, and will likely take up this issue again after the Memorial Day recess.

At issue for many Congressional members, mainly Blue Dog Democrats, is adding more to the deficit during an economic recession and election year.  As we reported in March, this issue was held up in the Senate earlier this year by Senator Jim Bunning of Kentucky (R), but eventually passed both chambers of Congress to avoid cuts.

However, unlike in March neither Health and Human Services (HHS) nor the White House have announced plans to order Medicare billing contractors to hold off processing claims, at least until another temporary fix is passed.  This has many in the industry concerned that medical care for seniors will be affected, even if just for a short period of time.

The Washington Post reports that this year’s Medicare reimbursement patch was attached to a larger catchall spending bill, known as the “extenders bill,” which includes increasing funding for the war in Afghanistan, extending jobless benefits, and increasing health insurance subsidies for many of the nation’s unemployed.  A group of Blue Dog Democrats demanded that the bill be cut by $30 million, so House Democratic leaders were looking to cut the $22 million Medicare reimbursement patch as a way to win votes.

Regardless of whether the current “Doc Fix” passes, what is clear is that many in the industry are frustrated that the issue still exists.  The American Medical Association’s President, Dr. James Rohack is pushing for a permanent fix that he feels “would remove physician uncertainty, restore consumer faith and ultimately save money.”  The AMA’s proposal is to eliminate the current Medicare reimbursement formula with “a new formula that actually reflects the true cost of care.”

Currently, federal law mandates that reimbursement rates be cut annually to keep Medicare in the black, according to CNN.

While this year’s “Doc Fix” sought to delay reimbursement cuts through 2012, it also added a provision that could reduce hospitals’ Medicare payments by as much as $4.5 billion over 10 years.  The Hill reports that at least two hospital groups have expressed opposition to this provision, and are demanding that it be eliminated arguing that hospitals have already accepted payment cuts under the healthcare law signed by President Barack Obama earlier this year.

The House is expected to finalize and vote on the “extenders” bill later this afternoon, but the Senate doesn’t plan to hold any votes until June 7, the first Monday following the Memorial Day recess.  According to Medscape Today, The Centers for Medicare and Medicaid Services (CMS) says doctors should hold on to their claims for the first 10 business days in June—just in case Congress returns from Memorial Day recess ready to pass some sort of legislation to halt the 21.3 percent cut to physician payments still slated for June 1.

UPDATE:
The House, as expected, finalized and passed the “extenders” bill on Friday, May 28.  However, the “Doc Fix” was not included and therefore, according to The Washington Post, will have to be taken up in another piece of legislation after the Memorial Day recess.

NAIC, AHA, and Others React to Medical Loss Ratio (MLR) Requirements

In response to a letter sent by Health and Human Services (HHS) Secretary Kathleen Sebelius requesting comment on medical loss ratios (MLR), the National Association of Insurance Commissioners (NAIC) and the American Hospital Association (AHA) have provided HHS with a list of comments and suggestions that they feel will improve the new regulation’s implementation.

Update on June 1: The new federal law requires the NAIC to establish uniform definitions and standardized methodologies for calculating the medical loss ratio and rebates outlined in the law, subject to your certification. To ensure all views are heard and considered, and everyone has time to review proposals under consideration, the NAIC is using a very transparent, but time consuming, process. Since passage of PPACA, NAIC subgroups have held twelve open conference calls; received over 50 comment letters from various stakeholders; and, posted all drafts, call summaries and comment letters on the NAIC website. The NAIC has also received guidance from congressional offices and the Department of Health and Human Services.

While we are confident that this process will produce an excellent product, we will unfortunately not be able to complete it by June 1st as you have requested. We certainly appreciate the need to complete this project as soon as possible – waiting until the deadline of December 31, 2010 in the law is not an option – but we also appreciate, as you do, how critically important it is to do this right. The medical loss ratio and rebate program in PPACA have the potential to destabilize the marketplace and significantly limit consumer choices if the definitions and calculations are too restrictive.

Equally, the medical loss ratio and rebate program could be rendered useless if the definitions and calculations are too broad. Only through an open, deliberative process can we hope to reach a reasonable consensus that meets the dual objectives of protecting consumers and preserving competitive markets.

NAIC’s initial 71-page letter details the difficulties in calculating MLRs, and can be found on their website.
Below is summary of the major points NAIC discusses:

• MLRs currently in use in 27 states do not adjust premiums for taxes and do not increase claims by quality improvements. Adding both of these adjustments into MLR calculations will result in higher MLRs for the small and large group markets, but the individual market is harder to discern.
  
• MLR fluctuations are mainly due to cyclical changes in the composition of an insurance company’s policy holders. A person who recently purchases a policy will have a very low MLR compared to someone with a policy of several years because they have not made any claims against their policy.
  
• The primary factor in setting minimum MLR standards is the extent to which issuers would be unable or unwilling to meet the standards, and would therefore withdraw from the market and terminate existing policies. In the worst case, this could lead to a lack of available coverage. Even if coverage remains available, those with health conditions who are terminated by withdrawing issuers could be left with no access for up to six months, because in most states, issuers will be permitted to medically underwrite until 2014. After six months, they would qualify for the new federal high risk pools.
  
• Issuers use different methodologies in calculating MLRs and for different purposes. NAIC standards of accounting require MLRs to be calculated on a conservative basis to ensure solvency, so more liberal accounting practices could be used to adjust an insurer’s MLR accordingly.
  
• The definition of what expenses can/cannot be associated with paying claims is insufficient, and would allow certain administrative expenses to be included in “claim payout” thus increasing MLRs.
  

The AHA’s letter to Sebelius supported Congress’ effort in the Patient Protection and Affordable Care Act to impose reporting obligations on insurers and set minimum standards for MLRs. They felt imposing these standards would “ensure that a minimum percentage of health insurance premiums are used to pay for health care services or activities that improve health care quality for enrollees.”

AHA suggests HHS make it a top priority to “clearly define which activities do and do not improve health care quality and restrict the ability of health insurers to subjectively make such determinations.” The organization felt the new regulation should include three principles in classifying which expenses are medical and administrative:

• First, only payments to licensed professionals and entities for health care services should be classified as health care services.
  
• Second, costs and expenses that are classified as activities that improve health care quality need to meet specific criteria.
  
• Finally, loss adjustment activities should be counted as administrative costs, because they do not provide health care services or improve quality.
  

Several other organizations have submitted letters to HHS, which can be found on their respective websites including:

• A joint letter submitted by the Council of Insurance Agents & Brokers, Independent Insurance Agents & Brokers of America, National Association of Health Underwriters, National Association of Insurance and Financial Advisors.
  
• A letter from the National Coalition on Benefits
  
• A discussion on the critical issues with MLRs by American Academy of Actuaries
  
• A letter from the Academy of Managed Care Pharmacy
  

Medicare and Reimbursement Cuts…the Saga Continues

CMS took a first swing at reducing hospital Medicare payments in issuing its fiscal 2011 proposed rule for hospital inpatient rates by suggesting a net 0.1% cut in reimbursement. The proposed $142 million cut is the result of CMS applying an adjustment of a negative 2.9% to recoup excess spending that it says took place in fiscal 2008 and 2009 because of changes in hospital coding practices; an increase of 2.4% tied to inflation; and an additional 0.4% from other factors that would affect spending.

Coupled with a 0.25% mandated marketbasket cut that was included in the recently passed health reform law, average payments in fiscal 2011 will actually decrease by 0.35% compared with FY 2010 payments, according to the American Hospital Association. Hospitals already were readying for a 0.25% cut mandated under the health reform law for 2010. That provision technically took effect in April, with the AHA estimating the cut to reduce hospital payments by $201 million this year.

Modern Healthcare reports that CMS argues its Medicare severity-diagnosis related groups, or MS-DRG, coding system that went into effect in 2008 has resulted in hospitals coding for more severe care than patients are getting. Hospitals may have been getting paid more, but changes in their coding practices “did not reflect increases in patients’ severity of illness,” the agency stated in explaining the reasons why it was recouping payments from the industry.

The American Hospital Association insists CMS failed to consider real patient severity when developing the payment adjustment. According to an AHA spokesperson, healthier patients are now going to outpatient settings, including ambulatory surgery centers and doctor’s offices, leaving hospitals with the most severely ill patients.

In the past, similar proposed adjustments related to what CMS believes is MS-DRG “upcoding” have either been reduced by Congress or postponed by regulators. The CMS proposed inpatient rule almost always offers a “worst case scenario,” with the final rulemaking delivering a less severe impact than the proposal, according to an analysis of the 2011 proposed rule by Wells Fargo Securities. Case in point was the fiscal 2010 rulemaking, which proposed a 0.5% reimbursement cut, then implemented a 1.6% increase in the final regulation.

The legislative branch of the government does have the power to postpone or change the final reimbursement rule. Given the fact this is a mid-term election year, it will be interesting to see what ultimately happens.

April Health Observance - Alcohol Awareness Month

April 2010 is Alcohol Awareness Month.  Thursday April 8 is Alcohol Screening Day.

Some facts about alcohol use and abuse and how it affects the U.S. population:

Types of Alcohol Problems

  * Relatively low levels of alcohol consumption may increase risk for motor vehicle crashes, medication interactions, fetal effects, strokes caused by bleeding, and certain cancers.
  * Alcohol use disorders include alcohol dependence (known as alcoholism) and alcohol abuse.
  * Alcohol abuse is characterized by clinically significant impairment or distress but does not entail physical dependence.
  * Alcohol dependence (alcoholism) is characterized by 10 diagnostic criteria according to the DSM-IV. These criteria include: impaired control over drinking, tolerance, withdrawal syndrome when alcohol is removed, neglect of normal activities for drinking, and continued drinking despite recurrent related physical or psychological problems.

Who Has An Alcohol Problem?

  * 25 percent of U.S. children are exposed to alcohol abuse or dependence in the family.
  * Between 2001 and 2002, the prevalence of alcohol abuse was highest among Native Americans (5.75%) followed by Whites (5.10%), Blacks (3.29%), Hispanics (3.9%), and Asians (2.13%).
  * Alcohol abuse and dependence is more common among males than females and decrease with aging.
  * Between 2001 and 2002, 8.5 percent of adult Americans –17.6 million—met DSM-IV diagnostic criteria for either alcohol dependence or alcohol abuse.

Pulse of the Physician Community’  - A Summary of the 2010 Physician Sentiment Index

Most of the focus this past year on health care reform has been on the politics of the issue, with little attention paid to the outlook of the nation’s physicians.  However, in an effort to measure what physicians feel about the health care system, athenahealth in a partnership with Sermo, the world’s largest online community for physicians, created their first annual Physician Sentiment Index.

PSI was created by using 1,000 surveys of physicians representing a full range of specialties, regions, and practice sizes.  They responded to questions revealing pain points and frustrations with the business of medicine, reimbursement protocols, government’s hand in health care, EHR’s, and other variables that could either make or break the delivery of quality care in the U.S.

Most of the physicians surveyed work in small offices with less than 25 physicians (41%), are independently or jointed owned (45%), use an outside billing service (30%), and spend most of their time in the office (60%).

The 2010 PMI Index found that physicians’ perspectives on the future of medicine and a doctor’s ability to practice independently are largely negative.  64% cited the current system as detrimental to their delivery of care, while 59% believe the quality of medicine in the U.S. will decline in the next five years.  Only 22% are optimist about the ability of physicians to practice independently or in small groups.

Overwhelming majorities of doctors felt insurance companies were compromising their livelihoods and patient care.  92% felt getting paid by insurers has become burdensome, 77% believed payers inhibit the care doctors provide to patients, and only 16% said they were primarily concerned with patient care versus what insurers were willing to cover.

When it came to questions about EHR’s, respondents’ feelings were positive, signaling a readiness for adoption, but costs and practical considerations were big concerns.  Not less than 81% of doctors felt EHR’s were too expensive to purchase, install, and maintain.  Practically, 54% of doctors felt use of EHR’s slowed down patient exams.

Physicians view the shift to Pay for Performance as a positive for quality of care (49%), but as somewhat of a negative in terms of the financial side of practicing medicine (53%).  81% agree that getting paid by Medicare has become more burdensome, with a similar percentage feeling the same about Medicaid (83%).

The 2010 Physician Sentiment Index is available at http://www.athenahealth.com.

Setting Up State-Based Insurance Exchanges

As part of Rx for Health Reform: Affordable, Accessible, Accountable, the National Governors Association hosted the State Summit on Health Reform on March 15, 2010.  The summit brought together state teams from 49 states to examine steps in implementing health reforms.  The summit covered the fundamentals of federal and state-based reform, and helped states begin to plan for implementation of federal reform.  One of the specific topics they covered was establishing state-based health insurance exchanges.

According to Ezra Klein of The Washington Post, “states will be hugely responsible for setting up the new [federally mandated] insurance exchanges—which have to be running by 2014.”  The intent behind these exchanges was to provide an option for those without health care insurance, but recent discussions at the NGA suggest that exchanges may take a broader approach.

To assist states in implementing these new federal reforms, the NGA drafted a list of guidelines that states should consider when forming exchanges.  They based their guidelines on the experiences of states that currently have exchanges - Massachusetts, Utah, and Washington in particular.

First, the NGA suggests that states conduct a thorough analysis of “whether a state-level exchange will be able to attract enough [people] to be sustainable.”  In those states that can’t attract a critical mass, the NGA outlines several options worth considering.

“States could decide, through regulation, to require all individuals (and/or small groups) purchasing health insurance to purchase it via the exchange thus ensuring a certain number of covered lives in the exchange.”  The NGA mentions the advantages of this approach would be assuring a large number of people join the exchange, the initial medical risk of those currently purchasing in the non-group market would be known, and the opportunity for the exchange to “capture” carriers that have served those members.

In addition, the NGA feels mandating that everyone should use the exchange “may [make] it easier for individuals to access insurance though a single mechanism, as they could more easily compare benefit plans and prices across options.”  However, they also mention that in some states this arrangement could exert pressure on the state to include all carriers and products in the exchange that are currently available in the marketplace.

That would not be desirable if a state wanted to be more selective about the number and types of products that the exchange sells and endorses as “good value.”  Additionally, the draft paper suggest that “if robust distribution channels already exist, requiring insured individuals and/or small businesses to move to the exchange may be disruptive and have unintended consequences.”

Second, the NGA wants states to consider current insurance market rating rules.  “A lesson learned from the failures of earlier state purchasing pools and exchanges is that the rating rules must be the same, or virtually the same, inside and outside the exchange. States with very different rating rules across their markets will encounter more complexity offering products both to individuals and groups within an exchange.”

When it comes to the structure of these exchanges, the NGA felt that states should focus on “leveraging existing state and private infrastructures that may be able to accomplish quite a bit on a tight budget.”  They outlined three types of exchange structures that they felt current exchanges have had success implementing: private (Utah), governmental (Washington), or quasi-governmental (Massachusetts).

“States that have experience working with vendors to facilitate premium assistance or subsidy/voucher programs for individuals/employers may have existing infrastructure that can be adapted to achieve new goals. This may be particularly important for states with small implementation budgets as establishing brand new systems can be expensive.  If a state already has a significant infrastructure to build upon, a fully governmental structure may be more appealing.”

States should also assess existing private infrastructure.  “Some states may already have one or more commercial “exchange-like” entities operating in their insurance markets. Although these entities sometimes go unnoticed by policymakers, these private-sector intermediaries may provide small groups, and in some instances individual consumers, with a central point of access to compare health benefits and select a health plan from among a number of carriers”

In states with very large or very spread out populations, NGA suggests that states seek to setup regional exchanges, which “may be the most cost effective” option for all parties involved.  “It seems likely that certain economies of scale can be achieved through the development of regional exchanges particularly in states with smaller populations. A regional model could also offer advantages concerning portability of insurance.”

What is clear is that while states have until 2014 to setup their health insurance exchange, they will have to meet a July 1st deadline that requires them to setup pools for high-risk individuals.  This won’t be an issue for those states that already have these pools, but could be an early measure of how compliant certain states will be in implementing new federal reforms.

Health Care Reform Passed: What Now? - A Look at the 2010 Implementation Schedule

On Wednesday, March 24, 2010, President Obama signed H.R.3590, the Patient Protection and Affordability Health Care Act, capping an end to an intense year-long debate on the nation’s health care system. But, what now?

Here is a look at what’s in store for 2010:

Insurance Reforms
• Require qualified health plans to provide at a minimum coverage without cost-sharing for preventive services rated A or B by the U.S. Preventive Services Task Force, recommended immunizations, preventive care for infants, children, and adolescents, and additional
preventive care and screenings for women.
• Require health plans to report the proportion of premium dollars spent on clinical services, quality, and other costs and provide rebates to consumers for the amount of the premium spent on clinical services and quality that is less than 85% for plans in the large group market and 80% for plans in the individual and small group markets. (Requirement to report medical loss ratio effective plan year 2010; requirement to provide rebates effective January 1, 2011)
• Establish a process for reviewing increases in health plan premiums and require plans to justify increases. Require states to report on trends in premium increases and recommend whether certain plan should be excluded from the Exchange based on unjustified premium increases.

Medicare
• Improve care coordination for dual eligibles by creating a new office within the Centers for Medicare and Medicaid services, the Federal Coordinated Health Care Office.
• Ban new physician-owned hospitals in Medicare, requiring hospitals to have a provider agreement in effect by December 31; limit the growth of certain grandfathered physician-owned hospitals.

Medicaid
• Provide funding for and expand the role of the Medicaid and CHIP Payment and Access Commission to include assessments of adult services (including those dually eligible for Medicare and Medicaid).

Prescription Drugs
• Authorize the Food and Drug Administration to approve generic versions of biologic drugs and grant biologics manufacturers 12 years of exclusive use before generics can be developed.

Quality Improvement
• Establish a commissioned Regular Corps and a Ready Reserve Corps for service in time of a national emergency.
• Reauthorize and amend the Indian Health Care Improvement Act.

Workforce
• Establish Teaching Health Centers to provide Medicare payments for primary care residency programs in federally qualified health centers.

Tax Changes
• Impose additional requirements on non-profit hospitals. Impose a tax of $50,000 per year for failure to meet these requirements.
• Limit the deductibility of executive and employee compensation to $500,000 per applicable individual for health insurance providers.

A complete implementation history spanning from 2010 through 2015 and later can be found on The Henry Kaiser Family Foundation’s website.

What Sectors of the Healthcare Industry Stand to Benefit from Health Reform?

As reported in the online news and discussion pages of “Seeking Alpha”, there are many sectors of the healthcare industry that stand to gain from provision of the recent health reform legislation.

First, consumers will benefit as many previously uninsured will indeed be able to gain affordable insurance.

Health insurers will benefit due to the following reasons:

1. Additional 32 million Americans will be required to purchase insurance.

2. New restrictions such as the placing of lifetime limits on coverage or denying adults based on pre-existing conditions will not become effective until 2014.

3. Many insurers are expected to raise premiums in order to maintain profits. Recently Anthem Blue Cross raised premiums by as much 39% in California for some customers.

4. Some insurance companies will go out of business since they would not be able to compete under the new regulatory environment and others may merge with the big players leading to a bigger consolidation in the industry.

The five largest health insurers in the country are Aetna (AET), Cigna (CI), Humana (HUM), UnitedHealth Group (UNH) and Wellpoint (WLP).

Medical device makers and healthcare facilities also stand to profit from this new legislation since in general more medical procedures are performed in the U.S. than other OECD countries.
Many of diagnostic tests such as MRIs are very expensive and are done even when not required as part of the “defensive medicine” strategy followed by healthcare professionals. Threat of lawsuits forces doctors to perform unnecessary tests generating billions of dollars in revenue for hospitals, medical diagnostic companies and others. Hence it is not surprising to see that the US also has the highest number of MRI units and CT scanners in the world after Japan.

So What Does Health Reform Really Mean for Businesses?

According to the Wall Street Journal Health Blog today, a Mercer webcast included over 5,000 business attendees who are unclear about what the final health reform legislation means for their companies.

The top concern is how the legislation will affect overall health benefit costs. Other themes seemed to be how much flexibility benefit managers would have in the future to design plans and what would administrative staffs need to do to make sure plans followed the new rules.

As per Mercer’s advice, businesses should continue to patiently wait for regulations to become final, and to communicate to employees the facts in the interim. In the longer term, administrative challenges will start to take shape. For instance, in 2011 employers will have to start including the aggregate cost of health benefits on an employee’s W2 form, and health savings accounts won’t be able to reimburse for over-the-counter medications. In 2014, of course, new standards for plans will go into effect and there will be a ban on annual limits for coverage — keeping corporate benefit managers plenty busy.

Biometric Technology To Help Fight Fraud in California Home Care Programs

As part of an initiative to prevent fraud and potentially help save tens of millions of dollars in California, Gov. Arnold Schwarzenegger’s administration announced plans to test devices that would scan fingerprints and snap photographs of disabled and elderly residents who receive in-home care.

Starting April 1, the state will roll out the high-tech devices (on loan from the manufacturer, MorphoTrak) in Sacramento, San Diego and a few rural communities in a two-month pilot program, according to Lizelda Lopez, spokeswoman for the state Department of Social Services. These devices will download fingerprint and photo data to the department’s administrative systems to help keep better track of the 460,000 people in the In-Home Supportive Services program.
The photograph, with a fingerprint to match, would allow the state to have accurate identification information for each recipient of in-home care, Lopez said. However, disability rights groups have questioned the total cost of implementing this technology.

If the test run goes well, Lopez said, preliminary estimates showed that the state would need between 600 to 1,000 devices, which range in cost from $4,500 to $5,000. That means these devices could cost the state up to $5 million. But, Lopez stressed, it’s too early to know exactly how many devices the state would use, and the price estimates don’t factor in bulk purchasing rates.

This article originally appeared in Government Technology.

Please Support our Team in Susan G. Komen’s Global Race for the Cure

On June 5, 2010, our team will be participating again in the Global Race for the Cure in Washington, D.C. This annual fundraiser for the Susan G. Komen Foundation raises money for the global efforts to find a cure for breast cancer, and research into the prevention of the disease.  Monies raised also go into education programs that aim to teach patients about the prevention and detection of the disease.

If you are local to the Washington, D.C. area, please think about joining our team.  No matter the weather on June 5, we promise to have a great time in the city.  If you can’t join our team in person, please consider supporting our team and the Komen Foundation with a donation.

Our team page can be accessed at this link.

The President Announces a Crackdown on Health Insurance Fraud

President Obama announced today that the Administration will be providing additional resources to crack down on Medicare and Medicaid fraud.
Obama said he was assigning auditors nationwide as part of a special program to ferret out government overpayments to hospitals and doctors, as well as to other contractors.

Mr. Obama said the auditors would have an incentive to find improper payments because they would receive a small percentage of the savings. “It’s estimated that improper payments cost taxpayers almost $100 billion last year alone,” he said. “If we created a Department of Improper Payments, it would actually be one of the biggest departments in our government.”

The auditors — whom some White House officials are already referring to as “bounty hunters” — would have high-tech computer programs that would troll through billing records for fraudulent claims. White House officials said that a pilot program run by Medicare in California, New York and Texas recaptured $900 million in taxpayer money between 2005 and 2008.

Mr. Obama sent his secretary of health and human services, Kathleen Sebelius, to take on insurance companies Wednesday. Speaking in Washington at the annual policy conference of America’s Health Insurance Plans, a trade group, she said, “It’s not too late to work on this issue together, for insurance companies to come to the table and work with us.”

In addition, Ms. Sebelius asked insurance companies to disclose all their requests for increases in premiums, along with data showing costs and other factors that would justify the higher rates.

Karen M. Ignagni, president of America’s Health Insurance Plans, immediately accepted the suggestion. She said her group would work with the National Association of Insurance Commissioners to develop a standard template for disclosure of data on premiums and costs.

Ms. Ignagni said her group would also suggest ways to improve the health care bill by strengthening its control of health costs.

This announcement and related content is based on an article in today’s New York Times.

Update from the 2010 HIMSS Conference

What a difference a year made for the mood and agenda of the 2010 HIMSS conference.  Compared to last year’s event, the attendance and overall sentiment was improved; attendees and session content themes seemed more energized and hopeful about the current and future state of the health IT industry.  I attribute much of this to the following: a) the Obama administration and the National Coordinator for Health IT, Dr. Blumenthal, have had a year to communicate and act on their respective health industry-related agendas, and b) the health IT-related provisions of the ARRA legislation are starting to enable many communities and stakeholder groups to begin implementing a variety of information technology systems and applications.

There was so much information to share that it is challenging to select a topic to share.  One session I attended provided a discussion on Personal Health Records (PHRs) from the physicians’ and consumers’ perspectives, featuring results from the American Medical Association’s (AMA’s) and Markle Foundation’s recent joint surveys.
The survey’s key findings include the following categories:

Concerns about use of PHRs from the physician perspective:

1.  If a patient walks into a doctor’s office with a USB flash drive and wants this PHR data uploaded into a physician’s electronic health or medical record (EHR or EMR) system, what will the physician do with this information?  Is a physician now liable, or expected, to know all the data contained in a patient’s PHR?

2.  Many concerns related to privacy and security of any integrated PHR data with a physician’s EHR/EMR system.

3.  Patients will see ancillary service results, lab values, etc., and may want to talk about everything with the physician.

Of the physicians surveyed:

- 4 in 10 are willing to use PHRs today
- Very few have used PHRs yet
-  34% are withholding judgement on PHRs; 24% state they would not use PHRs
- Half agree that PHRs can empower patients.

Concerns about the use of PHRs from the consumer perspective:

1.  1,580 respondents over age 18 were surveyed during May 2008.

2.  There is a high perception of value in PHRs; valued functions include the ability to check a PHR for errors in information, and tracking overall health expenses.

3.  13.5% stated they were “very interested” in joining a PHR service; 33% said they were “somewhat interested”; 27.4% said they were “not at all” interested.

4.  Of those who stated they were “very interested”, the demographics included those with a disability, Latino background, 7+ doctor visits/year.

5.  Of those who stated they were “not interested”, the demographics included those with a high school or lower education level, a caregiver for a spouse, or those who report excellent health status.

6.  Only 2.7% surveyed report having a PHR today, with about 40% reporting the maintenance of a personal, paper-based health record.

A comparison of physician vs. patient views on PHRs yielded the following results:

a)  80% of patients see a PHR as empowering patients to participate in their own care; only 48% of physicians agree.
b)  87% if patients believe that patient access to health records will improve record content accuracy; only 38% of physicians agree.
c)  When asked, “How long until patients and physicians regularly use electronic methods to communicate”, physicians reported “Within 5 years”, while most surveyed patients reported “Never”.

Health Reform Summit and The Aftermath

If you were looking for a final bill to come out of President Obama’s health care summit, you were left wanting.  However, while many political pundits and notable industry experts thought the President and Congressional Republicans fared best, one thing was made certain and recently advanced: the process is quickly coming to a close.

“On the policy front what we saw [come out of the summit] was the same exchange of the old talking points we have watched for a longtime. No progress was made toward any kind of health care bill. That is no surprise—this was never going to be the place to fashion any kind of compromise,” says Robert Laszewski of Health Care Policy and Marketplace Review.

Ben Pershing of The Washington Post’s blog 44: Politics and Policy echoed Laszewski’s sentiment: “Nothing fundamental changed about the trajectory of health-care reform. Democrats have the same opinions and plans as they did before the summit, and so do Republicans.”

Chris Cillizza of The Fix, in his weekly “Winners and Losers” column, scored the summit in favor of President Obama, Senator Tom Coburn, The Senate and Wisconsin Republican Paul Ryan, while describing Senator Harry Reid, “Genuine Discussion,” Senator John McCain, and the Public Option as the clear losers.  “With a few exceptions, the bulk of the summit—not surprisingly—was focused on the rehashing of talking points rather than a serious engagement on the issues. Obama repeatedly attempted to keep speakers (of both parties) on topic but the conversation felt like politicians talking at—rather than to—one another.”

For all the rehashing and recycling of talking points that occurred, Timothy Jost of Health Affairs Blog noted that President Obama “felt that there was room for agreement about the need for insurance market reforms, sale of health insurance over state lines, the use of exchanges, and perhaps even medical malpractice.”  However, the devil is in the details and it doesn’t appear that either party is willing to negotiate.

“Sen. John McCain (R-AZ) talked at length about what malpractice reform had done for Texas, reducing malpractice insurance premiums and attracting doctors to the states, including obstetricians for rural areas.  [However], Sen. Dick Durbin (D-IL) in response noted that medical negligence is in fact a serious problem and simply denying justice to the victims does not solve it.  The figures offered by the parties as to the cost of malpractice litigation strikingly illustrated the depth of disagreement on this issue, with Senator Durbin claiming that malpractice litigation accounted for one-fifth of one percent of health care costs, while Rep. Joe Barton (R-TX) claimed it cost $150 billion a year,” notes Jost.

Ultimately, much of the disagreement at the summit centered on whether health insurance is a right or privilege: Democrats arguing for a right and Republicans, a privilege.  Nevertheless, President Obama made clear that while he is willing to work with Republicans and give some time for a compromise to be hashed out, he is not willing to start from scratch and feels strongly that the time has come to get the job done.  If the last week is any indication of Obama’s seriousness to bring the process to an end, a blend of the three options we discussed in February will soon be realized and it looks like reconciliation will be apart of the process.

The Washington Post is reporting that “[Press Secretary Robert Gibbs] said on MSNBC the president expects to “get something done” by March 18, when Obama leaves for travel to Indonesia, Guam and Australia. Later, Gibbs said he thinks the House is on track to approve the Senate-passed health bill by that date, though action on a ‘reconciliation’ bill to make adjustments could take somewhat longer.”

Medicare and Reimbursement Cuts

With Obama Administration officials and Congressional leaders at an impasse on how to move forward with health care reform, many doctors were almost left holding the bag when an automatic legal requirement to cut Medicare reimbursement rates by 21 percent went in effect.

The Washington Post reported that this requirement was nearly triggered after the Senate failed to follow the House in “temporarily staving off cuts” to Medicare reimbursements.  In response, “the Obama Administration directed Medicare billing contractors to hold off processing claims for 10 business days” to allow the Senate more time to get their act together.

The hold-up in the Senate was mainly caused by Senator Jim Bunning (R-KY) who single-handedly held up the bill on the grounds of not “adding to the debt” and enforcing Senate pay-go rules, according to the Senator’s spokesman, Mike Reynard.

“The bill Bunning voted against would have extended provisions that were included in last year’s stimulus package, including one in which the federal government assumed 65 percent of the cost of COBRA health benefits. It would have perpetuated other key programs, including one that would keep Medicare reimbursement rates at current levels.”

While the crisis was eventually averted – at least for the next 30 days – it setoff a panic across the county.  The Sacramento Business Journal reports that the California Medical Association suggested that the federal government’s slow reaction to the reimbursement cuts could have “hampered senior citizen’s access to care and force physicians to contemplate turning away patients or dropping out of the program altogether.”  The CMA’s frustration was joined by the American Medical Association, AARP, and other groups.

Current health care reform legislation doesn’t address the issue of Medicare reimbursement rates.  According to Ricardo Alonso-Zaldivar of the Associated Press, “There’s no consensus on a long-term solution.  The Medicare cuts are the consequence of a 1990s deficit reduction measure that Congress has routinely waived for years. But every time the cuts are postponed, they only get bigger in percentage terms, making a permanent fix more costly and difficult. The Obama administration and most Democrats favor repealing the 1990’s law that called for the cuts to doctors, arguing that it never worked in the first place.”

Late on March 2, the U.S. Senate voted 78-19 to pass H.R. 4691, the “Temporary Extension Act of 2010,” which included provisions to extend 2009 Medicare physician payment rates through the end of the month. As a result, the 21 percent payment cut that took effect on March 1, 2010, has been postponed until April 1, 2010. Discussions are still underway in the House and Senate on the next steps that will be taken to address the Medicare payment crisis.

UPDATE

On March 29, J. James Rohack, MD, president of the AMA, said in a statement released on Friday, “It is unconscionable for elected officials to play politics with seniors and military families who rely on them to preserve their ability to see the physician of their choice.”

“Members of Congress eager to spend a two-week holiday with their families have left America’s military families and seniors to fend for themselves through their inaction on a known threat to the Medicare and TRICARE programs,” Rohack stated. “On April 1, a 21% Medicare cut to physicians begins. Congress’ failure to act on permanent repeal of the broken Medicare physician payment formula has put access to healthcare for seniors and military families in jeopardy.”

While the Senate passed legislation delaying the scheduled 21% payment cut until October, the House left town for the two-week spring break without addressing the topic.  While they still could return and pass legislation that would retroactively delay the cut, the House is not currently scheduled to vote on anything until April 13.  The provision for payment cuts will take place on Thursday, April 1, unless the White House takes corrective action.

Health Reform: What About the States?

While the Obama Administration and Congressional leaders race to the health reform finish line, several states – 36 in total – have passed or proposed legislation that would reject all or some of the reform initiatives currently under discussion in Washington.  While several of these measures are being pushed by conservatives and libertarians – namely, the Tea Party – their influence will be felt across federal and state elections in 2010 and 2012.

“As part of state-based responses to federal health reform legislation, individual [legislators] of at least 36 state legislatures are using the legislative process to seek to limit, alter or oppose [federal health reform initiatives], including single-payer provisions and mandates that would require purchase of insurance,” says the National Conference of State Legislators.  NCSL also reports that most states – mainly red states – are seeking measures to “keep health insurance optional, and allow people to purchase any type of coverage they may choose.”

In Arizona, voters will vote by referendum this November to decide whether a constitutional amendment should be adopted that would “preserve the freedom of all residents of the state to provide for their own health care.”  This amendment would block any future state or federal legislation that requires, or “mandates,” individuals or businesses to purchase health insurance.  Similar referendums could be on the agenda in Idaho, Utah, Florida, and Georgia as soon as this November and as late as 2012.

Referenda typically increase voter turnout among supporters of the ballot-initiative, and thus could have far reaching effects on this years’ mid-term elections and the presidential election in 2012.  However, many constitutional law experts disagree on the constitutionality of these measures.

Mark A. Hall, a law professor at Wake Forest University thinks states don’t have the power to override or “opt out” of federal legislation: “The debate is ‘a flash in a pan’ set off by libertarians who say ‘Washington shouldn’t be telling us what to do.  [These] state measures “seem more like an act of defiance, a form of civil disobedience if you will.”
Politico interviewed Randy E. Barnett, a Georgetown law school professor who has written about what he views as legitimate but weak constitutional questions about health insurance mandates.  “While using federal power to force individuals to buy private insurance raises serious constitutional questions,” Professor Barnett said, “I just don’t see what these state resolutions add to the constitutional objections to this expansion of federal power.”

Regardless of the constitutional questions raised, many other states are moving forward with health reform with or without the federal government.  “The demands on our healthcare system and the costs of providing care continue to increase for Colorado families, businesses, and providers,” said Gov. Bill Ritter Jr. in a speech before the Colorado Health Foundation on Feb. 11.  “We can’t wait for Washington to act and we aren’t.”

HealthLeaders reports that Colorado is joining several other states to “strengthen the state’s healthcare system” by “focusing on cost-savings, improvements to public and private insurance programs, and better care for women.”  However, most states are not taking the compressive approach to health reform excluding Massachusetts – which has already provided universal coverage – and Maine and Vermont.
Connecticut, Florida, Illinois, Iowa, Minnesota, New Jersey, Utah, and Washington have adopted expanding government health programs to address their uninsured population, but there are no states that are making significant financial contributions, especially during the recession.

“There is not yet disposition in the states to do anything that would entail a financial commitment to make significant healthcare changes”, says Henry J. Aaron of the Brookings Institution.  “They are still fiscally flattened by the recession. Even if Congress acted, the states could do nothing that would entail any financial commitment.”

Feedback on “Meaningful Use”

Obama’s 2011 Budget Proposals for Health IT

This week the White House released the proposed federal budget for fiscal year 2011, including $78 million for programs to help propel health IT adoption and use.

In the proposed fiscal 2011 budget released by the White House, the U.S. Department of Health and Human Services is requesting funding of $78 million for its Office of National Coordinator for Health IT, an increase of $17 million over the $61 million allocated to the office for fiscal 2010.

In a 114-page “budget brief” released by HHS, the $78 million funding requested for ONC includes “resources [for ONC] to serve as the federal health IT leader and coordinator and to continue implementing recovery act programs”.

The brief also stated that the increase to the Office of the National Coordinator’s (ONC’s) budget will enable the office to continue implementing programs that accelerate the adoption of health IT nationwide, and “helping physicians achieve meaningful use of e-health records.”

According to the briefing document, HHS’s fiscal 2011 budget proposes $32 million for the Agency for Healthcare Research and Quality to advance the use of health IT to enhance patient safety; $1.6 million in the Office of Civil Rights for “regional privacy advisors”; and $1 million for the Office of Assistant Secretary for Planning and Evaluation “for independent evaluation of [electronic health record] adoption and economic factors influencing health IT.”

(Source: www.InformationWeek.com)

Electronic Medical Records - Mixed Bag of Results

According to an Physician Practices and EMRs in the Journal of General Internal Medicine published by The Commonwealth Fund, “There is a gap between policymakers’ expectations of the capability of electronic medical records to improve coordination of care and clinicians’ real-world experiences.” With so much emphasis by the Obama Administration on the potential for technology to decrease costs in the healthcare industry, experts’ findings suggest more needs to be done to reach its full potential.

ModernHealthCare.com Physician practices and EMRsthe study was conducted using interviews with physicians and staff at small and medium-size practices. The study found that electronic medical records (EMR) improved care coordination within a practice but was “less helpful for exchanging information across” practices. “Information overload” and lack of financial incentives perpetuated this issue.

“EMRs may have unintended consequences for care coordination, such as creating information overload that complicates providers' efforts to discern key clinical information. And managing information overflow from EMRs is a challenge for clinicians,” the article stated.
The authors of the study noted that current EMR systems overemphasize billing over care coordination. This causes many healthcare providers to utilize billing-specific technologies over EMR systems. Respondents of the study also felt the lack of “financial incentives for coordination among providers” was also a drawback.
Industry experts are interested in seeing if the new HHS regulations regarding “meaningful use” and the Electronic Health Record Incentive Program (EHRIP) will target these issues.

HHS Releases “Meaningful Use” Regulations; Transparency Steps

With less than 24 hours until a December 31st deadline, the U.S. Department of Health & Human Services (HHS) has released interim federal regulations defining “meaningful use” and setting standards for the Electronic Heath Record Incentive Program (EHRIP). The “interim final regulations” will go into effect 30 days following publication (January 5, 2010), and enter into a 60 day public comment and refinement period before final authorization sometime later this year.

The American Recovery and Reinvestment Act of 2009 created the EHRIP to provide subsidies to eligible healthcare providers to offset to the cost of moving from paper health records (PHR) to electronic health records (EHR). In order to receive federal funds, the legislation required each provider to demonstrate that EHR’s provide “meaningful use” to their practice/business, but did not provide any details on just what constituted “meaningful use.”

Capping off a process that started in June 2009, a HHS press release disclosed on December 30, 2009, that “meaningful use” will generally be defined as “an eligible professional or eligible hospital that, during the specified reporting period, demonstrates meaningful use of certified EHR technology in a form and manner consistent with certain objectives and measures presented in the regulation.” ModernHealthCare.com reports that “under [these] new regulations EHRs must be able to securely exchange information among providers and between providers and patients using standardized data elements and technologies.” HHS has provided the full 556-page regulation on the Office of the National Coordinator for Health Information Technology (ONC) website.

With billions of subsidies at stake and public outcry to make the process more transparent, it appears that the head of ONC, Dr. David Blumenthal, is taking steps to make all future meetings public. “I am committed to open and transparent discussion of issues critical to achieving ONC’s goals of promoting adoption and meaningful use of health information technology,” Blumenthal wrote in his blog Health IT Buzz. “Beginning January 1, we’ll implement a new policy that will open up workgroup meetings to the public unless a closed meeting is clearly in the public interest.”

Blumenthal’s announcement comes after several closed-door workgroup and committee meetings beginning in June 2009. According to ModernHealthCare.com what is “at issue is an interpretation of the Federal Advisory Committee Act, or FACA, and the applicability of federal open-door rules to the work groups and subcommittees of FACA advisory panels.” Members of the Obama Administration have argued that any closed-door meetings have complied with FACA, but have not been forthcoming with reasons for all past closed-door meeting as required by law.

A View on American Health Reform from The Economist’s Reporters

The March 25th online issue of The Economist magazine provided an editorial overview of the health reform legislation’s implications for the U.S. health industry. The articles addresses the question of, “What does all this mean for America?”.

According to the article, the short answer is that the reforms will expand coverage dramatically, but at a heavy cost to the taxpayer. They will also do far too little to rein in the underlying drivers of America’s roaring health inflation.
Analysis by RAND,an independent think-tank, suggests that the reforms will actually increase America’s overall health spending—public plus private—by about 2% by 2020, in comparison with a scenario of no reform (see chart). And that rate of spending was already unsustainable at a time when the baby-boomers are starting to retire in large numbers.

The authors contend the legislation bends the cost curve “the wrong way”.

The Congressional Budget Office (CBO), a non-partisan agency, estimates the new health reforms will cost the federal government some $940 billion over the next decade. Of this total amount, roughly $400 billion will be spent by 2020 on subsidies to lower income residents so they can purchase health insurance in the individual market. In addition, the CBO estimates that about $500 billion will go to increased spending on Medicaid.

The article’s authors assert that the above-stated figures underestimate the full cost of this new reform. Elizabeth McGlynn of RAND points out that the huge numbers of newly insured—who now typically skip medical care or simply turn up, in a crisis, in emergency rooms—will soon consume a lot of routine medical services. She thinks this spending will expand the country’s health outlays even more than the direct cost to the Federal government.

However, not all health economists agree that increased health spending in the short term will lead to significant cost growth in the longer term. Spending more on routine and preventive care today is sure to save some money in the long run: paying for someone to pop statin pills daily, for example, is much cheaper than treating his eventual heart attack. The snag is that some economists disagree on whether and how much this will really save the government or the health system. What is clear, argues Ms McGlynn, is that this new spending will improve the health and probably extend the lives of those many unfortunates currently without insurance.

Payments and Deficit Reduction

The CBO’s analysis suggests that the federal deficit will be slashed by well over a trillion dollars over the next two decades by this reform. Critics charge that a big chunk of the estimated savings is made up of politically implausible cuts in doctors’ reimbursements (known as the “doc fix”) and in the Medicare program. In addition, the main spending surge on providing health insurance subsidy payments to lower income families who do not have health insurance provided to them by employers will occur in 2014. Critics say that this in effect skews the 10 year analysis. The real cost to the government of expanding coverage over the ten years from 2014 to 2023 will be $1.6 trillion, not $940 billion.

Such talk infuriates Peter Orszag, the head of the White House’s Office of Management and Budget and the administration’s most important health expert. He insists all the fuss about ten-year windows obscures three big ways in which this reform will curb costs, by shifting the incentives in the delivery system to reward value and results rather than mere piecework (or “fee for service”).

The authors conclude, “All this points to the only certain thing about Obamacare: that this is just another episode in the long saga of health reform.”

National Patient Safety Awareness Week

Patient Safety Awareness Week (PSAW) is a national education and awareness-building campaign for improving patient safety at the local level. Hospitals and healthcare organizations across the country are encouraged to plan events to promote patient safety within their own organizations.

Ask Me 3 is a patient education program designed to promote communication between health care providers and patients in order to improve health outcomes.
The program encourages patients to understand the answers to three questions:

1. What is my main problem?
2. What do I need to do?
3. Why is it important for me to do this?

Patients should be encouraged to ask their providers (doctors, nurses, pharmacists, therapists) these three simple but essential questions in every health care interaction. Likewise, providers should always encourage their patients to understand the answers to these three questions.

Studies show that people who understand health instructions make fewer mistakes when they take their medicine or prepare for a medical procedure. They may also get well sooner or be able to better manage a chronic health condition.

Patient Safety Awareness Week Website

When Will The Senate Discuss the Final Health Reform Legislation?

And doesn’t it just seem that all this reform talk will NEVER END?!

The USA Today reported yesterday (Nov. 16) that according to Sen. Tom Harkin, chairman of the Senate health committee, the health care debate “will start in earnest” in the Senate, Nov. 30, the Monday after Thanksgiving.

A vote to allow the debate to start likely will take place this Friday, but it won’t be until after Thanksgiving that the Senate will entertain amendments, he said.

“That’s when it will all begin,” he said of Nov. 30.

Harkin also said the Senate Democrats expect the Congressional Budget Office to provide a cost estimate for the revised Senate bill that combines elements of both the Senate health bill and the Senate Finance Committee bill. The Senate Finance bill was $829 billion over 10 years, considerably less than the $1.2 trillion estimate for the House bill. President Obama has asked for a bill within the $900 billion range.

Minnesota Proposes State Health Reforms

(from the Minneapolis/St. Paul Business Journal, Oct. 13, 2009)

Minnesota would be the first state in the nation to allow its residents to buy health insurance across state lines, under a health care reform package unveiled by Gov. Tim Pawlenty today.

Currently state residents may not purchase health insurance from other states. Minnesota’s three largest insurers — Blue Cross and Blue Shield of Minnesota, HealthPartners and Medica — provide coverage for 80 percent of fully insured Minnesotans, said Pawlenty, who argues that Minnesota residents and businesses would benefit from increased competition.

Under the proposal, which the Governor would like considered during the 2010 session, health plans would have to meet the following requirements to be sold in Minnesota:

• the state insurance regulator where the company is based must be accredited by the National Association of Insurance Commissioners;

• the insurance company must have a certificate of authority in Minnesota;

• the insurance regulator in the state where the company is based must review and approve policy forms;

• the insurance company must agree to abide by Minnesota’s claims practices and other consumer protection laws; and

• the insurance company would be subject to Minnesota fees and taxes.

Minnesota’s commerce commissioner will determine the 20 most-effective states in terms of regulating health insurance policies. Only policies that are approved in those states and meet Minnesota’s new standards could be sold to Minnesotans.

Pawlenty’s health care reform packages also would require MinnesotaCare and Medical Assistance to price health care services based on quality and cost. Under that plan, those state programs would use a tiered provider system similar to the one used by Minnesota Advantage, the state’s employee health care program. Individuals can choose any clinic available to them in a private market system, but pay more out of pocket for using clinics that are deemed to be more costly and less efficient.

 

Kaiser Survey Shows Uptick in Consumer Sentiment on Health Reform

Survey Finds Support for New Proposals for Fees and Taxes on Insurance Companies to Help Pay for Overhaul

(From PRNewswire-USNewswire/Sept. 29) Public support for health reform ended its summer slide, reversed course and moved modestly upwards in September, according to the latest Kaiser Health Tracking Poll.

Fifty-seven percent of Americans now believe that tackling health care reform is more important than ever – up from 53 percent in August. The proportion of Americans who think their families would be better off if health reform passes is up six percentage points (42% versus 36% in August), and the percentage who think that the country would be better off is up eight points (to 53% from 45% in August).

Despite the uptick, a substantial share of the public (47%) favors taking longer to work out a bipartisan approach to health reform, compared to 42 percent who would prefer to see Democrats move faster on their own. Meanwhile, the public continues to view the action in Washington with mixed feelings: The largest share (68%) said they were “hopeful” about reform, but 50% are “anxious” and 31% “angry.”

Substantial majorities of Americans continue to say they back individual reform components designed to expand coverage, including an individual mandate (68%), an employer mandate (67%) and an expansion of state programs such as Medicaid and the Children’s Health Insurance Program (82%).
The component that draws among the strongest support across the political spectrum is requiring that health insurance companies cover anyone who applies, even if they are sick or have a pre-existing condition. Overall, 8 in 10 people support that idea, including 67 percent of Republicans, 80 percent of independents and 88 percent of Democrats.

When it comes to paying for reform, two ideas now under discussion among policymakers garner initial majority support. Fifty-seven percent of the public say they would support “having health insurance companies pay a fee based on how much business they have” and 59 percent would support “having health insurance companies pay a tax for offering very expensive policies.” The poll did not test arguments for and against the policies.

North Carolina and Plans for Health IT Stimulus Dollars

This news comes from INPUT’s Blog pages:

In June 2009 North Carolina’s HIT Strategic Planning Task Force released a report outlining the state’s overall health IT strategy. A key recommendation is immediate establishment of a HIT Coordinating Committee which would assume the role of the state-designated entity for federal stimulus funding. In keeping with this recommendation, Governor Beverly Purdue has since issued Executive Order 19 naming the Health and Wellness Trust Fund Commission (HWTF). HWTF has established the North Carolina Health Information Technology Collaborative which will included stakeholders appointed by the Governor. In addition, the Task Force has recommended that the state establish a State Coordinator of HIT position to be the point-person and lead for state-administered activities.

A primary responsibility of this collaborative is to develop the architecture of the North Carolina Health Information Exchange (HIE), which is expected to leverage and support current HIE activities. Other key responsibilities of this collaborative include: implementation and operations of the NC HIE, as well as, planning and operating public Community Health Information Exchanges (CHIE). The role of the NC HIE would be to connect the community HIEs, serve as a connection point for state-level entities, a connection point for individual providers and a connection point for the National Health Information Network (NHIN).

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