Emerging Issues
A Two Month “Doc Fix” for Reimbursements
It’s become ‘business as usual’ for doctors who see patients with Medicare.
Every so often, they are threatened with a cut to their Medicare reimbursements mandated by a rate-setting formula that leaders of both parties agree is flawed but would cost nearly $300 billion to permanently repeal.
On December 23rd, Congress passed the latest “doc fix,” delaying a looming 27.4% cut for two months as part of a larger deal to extend the payroll tax cut and unemployment benefits.
In an interview hours before congressional leaders announced the deal, Medicare’s deputy administrator, Jonathan Blum, observed that although the previous doc fix — a 13-month postponement finalized in December 2010 — also was enacted dangerously close to a deadline, “there were strong signals [beforehand] that Congress was coming together, and we were able to plan for that. But this, really to me, is a different scenario, where we don’t have clarity about what the timing of the ultimate policy will be”.
Hmmmnnn…apparently neither does Congress…
“Physicians still think that the people in Congress are too intelligent to let [the pay cut] happen,” said Alan Wasserman, president of George Washington University Medical Faculty Associates, one of the largest practices in Washington. “But we are concerned that as the rhetoric keeps getting turned up… areas of compromise just aren’t there anymore. Sooner or later, there is going to be an impasse”.
This latest fix expires on February 29.
“Congress now has to enact a real and fiscally responsible solution to this sorry cycle of scheduled cuts and short-term patches that compromises access to care for patients and drives up costs for taxpayers,” said Peter Carmel, president of the American Medical Association.
Doctors experienced a harrowing run of short-term fixes in 2010 — when Congress enacted five separate postponements. Both times CMS administrators were able to protect doctors by retroactively processing claims until Congress enacted the next fix. Based on past experience, Blum said, Medicare officials have determined that if Congress were to miss another deadline, the longest the program would hold off on processing physician payments would be 10 business days. After that, Medicare would begin paying claims at the lower rate with the expectation that officials could retroactively compensate doctors for the difference if a fix is passed.
With concern that the teeth-clenching nature of recent negotiations could prompt some doctors to stop seeing Medicare patients, Blum said the program is extending the usual Dec. 31 deadline by which doctors must notify Medicare of their plans to participate in the coming year. Doctors now will have until Feb. 14.
Let’s hope ‘Three Times the Charm’ this Valentine’s Day…
Posted under: Emerging Issues
The Professional Patient Perspective
(This is a new, periodic column that discusses views on the healthcare system from the perspective of an industry professional who happens to be a patient with a chronic condition.)
Perhaps the biggest source of problems in this industry is the sheer number of different interests involved (i.e., patients, clinicians, hospitals, diagnostics, payers), and the differences in their perspectives. In other words, there are so many processes, experiences and stakeholders involved in providing care to one patient that we often can’t see the “big picture” from a different point of view.
One example from my own recent experience involves a chronic, severe sinus infection, my long-time ENT, and my high deductible/HSA health plan (offered by a large, extremely profitable payer). After three months of drugs and outpatient visits, my doc recommended an outpatient surgery procedure at a nearby surgery center to help clean out the problem. I thought this was a great idea, and the only other facility option for this doc besides this surgery center is a nearby hospital. (I have not had good outpatient experiences with that hospital so to me, it is not an attractive option.)
There are plenty of other people with health insurance similar to mine, and expectations are that many more will have this option as employers try to manage health insurance premium costs. Enrollment in high-deductible health plans paired with health savings accounts continued to grow between January 2010 and January 2011, from 10 million to 11.4 million members, according to the most recent census (June 2011) by AHIP.
I soon learned not all providers are willing to contract with this type of benefit plan, and in fact, the surgery center my doc suggested (and other similar facilities near me) will not contract with this benefit product. The reason they told me is that the high deductible amount sets up the provider, especially in the beginning of a benefit year, for a higher incidence of late or non-payment. And even if I wanted to come to their facility with a big bag of cash, their contracts with other plans from this same insurer prohibit them from treating me at all (unless I was to suddenly stop being a covered member in my plan).
I can totally understand where providers are coming from. Most HSA funding is deposited as wages are earned, up to the yearly total amount selected by the member. So in other words, you may have selected an annual HSA amount of $3,000, but on January 31st you will only have a fraction of that amount deposited in your account. And of course if I don’t have enough HSA dollars available to pay a bill, then I am looking for funds elsewhere.
Needless to say, this arrangement is not very beneficial to consumers who live in metropolitan areas where there are plenty of specialists and facilities. In such populated areas providers more often than not have the luxury of refusing to contract with whole carriers, and/or being highly selective of the types of plans they do accept. From my perspective my health plan isn’t very attractive, yet I am sure from the employer’s perspective it saves them a lot of premium dollars each year.
From the insurer’s perspective it is good business for their banking division, which holds and manages the HSA funds. Most of my docs do participate with this plan but are completely confused as to how to collect a co-pay, and I don’t blame them. Most of the time we are negotiating on what we think sounds good, as I regularly check my online account to see when the high deductible is met.
So what about the overall quality of care as perceived from the patient, doctor, and payer perspectives? In my case, I am rather miffed about not being able to receive the most timely care at a facility with a fairly open surgical schedule. But thankfully my issue is not urgent enough to require immediate surgical intervention. But if it was? Hey I have insurance – I should get the care that I need when I want it, right? It is easy for most insured patients to believe this and demand their choice of care. Perhaps if I didn’t work in the industry I would be more upset.
I found the following fact relevant and interesting:
A national mail survey of 627 doctors randomly selected from the American Medical Association Physician Masterfile showed that 42 percent believe patients in their own practice get too much medical care, while 52 percent think the amount of care is just right. (The study is published Sept. 26 in the Archives of Internal Medicine.)
But only 6 percent believe their patients receive too little care, the survey found. Many health care epidemiologists and economists have suggested that much U.S. health care is actually unnecessary, the study authors said.
Almost all said they believed that primary care physicians vary in patient testing and treatment, and three-quarters were interested in learning how their own practice compared to others.
Malpractice concerns drive many decisions to treat aggressively, the doctors said. More than 80 percent felt they could easily be sued for failing to order a test that was indicated, while 21 percent felt they could be sued for ordering a test that wasn’t. Having too little time with patients was cited by 40 percent as another reason for aggressive treatment.
So if there is this much variation in primary care treatment and testing, what will happen under Patient-Care Medical Home (PCMH) and ACO models? How to balance fear of lawsuit (and overtesting) versus being more accountable for treatment costs and outcomes? My sympathies for the primary care physician.
And what about physician views on payers? I read this Medscape article, “How Doctors Get More From Insurers (Despite Anger and Frustration)”. More than 10,000 physicians across the nation participated in Medscape’s Insurer Ratings Report 2011. Feelings of outrage, resignation, and powerlessness dominated the comments that we received. A noted theory by participants: If the companies can wear physicians down with repeated denials and paperwork demands, a high percentage of doctors will give up trying to secure their deserved reimbursement.
The highlights of the survey include:
- 28% of physicians say a Blue plan (Blue Cross, Blue Shield) is their best insurer, followed by Aetna, United Healthcare, and Cigna.
- 14% of physicians say United Healthcare is the worst insurer, followed by Blue plans, Aetna, Cigna, and Humana.
- Three in 10 doctors say they don’t know which insurer is their best payer.
Wow. Can’t we all just get along? The survey also discovered that many docs have no idea what the highest reimbursement is on their highest CPT code. So despite the fact that docs are clinicians and may not want to be involved at all with the business side of a practice, they really need to know a little more than they already do. There is a lot of industry talk about engaging patients on care options and costs. Maybe we can engage some other parties while we are at it.
Posted under: Emerging Issues
THE SEQUESTER FESTER
Federal budget cuts triggered by the failure of the congressional “supercommittee” have state officials concerned.
Across-the-board cuts of about $1 trillion in domestic and social programs and Pentagon spending are supposed to take place in FY13, which begins Oct. 1 2012.
State budgets taking effect next year will overlap with the federal budget.
The Federal Budget Control Act that was activated by the supercommittee’s failure to cut spending or hike taxes will impose $1.2 trillion in cuts over 10 years in non-entitlement domestic programs. Among those cuts will be some payments to hospitals and other health care providers. (Source)
Under orders to cut the Pentagon budget by more than $450 billion over the next decade, Defense Secretary Leon E. Panetta is considering reductions in spending categories once thought sacrosanct, especially in medical and retirement benefits, as well as reductions in troop numbers and new weapons purchases.
In what he described as the most sensitive of the potential cuts facing an all-volunteer force, Mr. Panetta said the Pentagon was considering raising fees for the military’s health insurance program, TRICARE. Today, military retirees and families, who are guaranteed TRICARE for life, pay only $460 a year in fees — far below what they would pay if they worked for a private employer — although a modest increase for new enrollees began last month.
The White House and Pentagon have made clear that TRICARE fee increases would be phased in over a few years and would affect current retirees and troops serving today when they retire. (Source)
Read the specifics of the President’s plan to cut military health benefits.
The failure of the congressional “super committee” to reach a deal triggers a two percent across-the-board cut to Medicare, the government program that provides coverage to millions of older and disabled Americans.
That translates into about $123 billion over the next decade—far lighter than the $500 billion to $700 billion in cuts that could have hit hospitals, doctors and beneficiaries, as well as insurers, drugmakers and nursing homes, if the panel had reached a deal.
HOSPITALS, DOCTORS HIT BY CUTS
As stipulated, automatic cuts are likely to hit hardest among hospitals, which are the biggest recipients of Medicare payments and account for nearly 50 percent of program spending.
Doctors suffer a double whammy from the collapse of the super committee. Physicians and clinics receive about 25 percent of Medicare spending.
Further, the breakdown in negotiations quashed hopes among doctors that the panel would eliminate an almost 30 percent cut in Medicare payments scheduled to go into effect in January under a 1997 balanced budget law.
A so-called permanent “doc fix” would have cost nearly $300 billion in lost savings, making it unlikely at a time of deficit reduction.
Analysts said the best healthcare providers can hope for is another short-term fix to stave off the payment reductions.
The automatic cuts would also reduce funding for insurers that participate in Medicare Advantage, a program segment that allows senior citizens to purchase private insurance.
(Source)
The sequester would also hamper the government’s ability to implement the Affordable Care Act by reducing the amount of money that’s needed to enact some programs.
Entitlement programs such as Medicaid and Social Security, however, would remain sheltered, as would funding for veterans programs, income tax credits and food stamps. Funding for these safety net programs is considered mandatory and would not be affected by the sequester. (Source)
Posted under: Emerging Issues
Congressional SuperCommittee – Brink of Failure and Implications for Healthcare
As of the Wednesday afternoon, Nov. 16, political analysts and reporters say the Congressional SuperCommittee is not even close to a Federal budget deal. Politico reports that a “modest deal” is still possible, but all signs to date indicate that nothing tangible has been agreed upon.
Congress has received a truckload of lobbying pressure from health industry groups:
AARP: “To prevent cuts to Medicare and Medicaid benefits, and the increased cost-shifting that would affect beneficiaries’ access to care.”
American Diabetes Association: “To prevent cuts to Medicare, Medicaid, the Centers for Disease Control and Prevention’s diabetic surveillance programs and the National Institute of Diabetes and Digestive and Kidney Diseases”.
American Medical Association: “To prevent an estimated 30 percent cut from taking effect Dec. 31st by repealing Medicare’s physician payment formula.”
According to Politico, “Adding to pressure to the supercommittee are liberals in Congress who fear Democrats may take a huge whack out of cherished entitlement programs — as well as a bipartisan group of lawmakers who will continue to demand Wednesday that the panel “go big” in its deficit goals and take money out of Medicare while raising tax revenues. Any bipartisan deal would split both parties”.
If the automatic cuts take place, many health programs will face sharp cuts, which could negatively impact services available to the public.
1) Reduced CDC funding can mean less dollars for catastrophic event response and inspections for potential food-borne illnesses. The CDC also subsidizes the costs of vaccines for un- and underinsured children.
2) Reductions in the Ryan White HIV/AIDS Program could be devastating to the 500,000 infected people currently receiving assistance with expensive care and medication. The program also helps states provide free or low-cost HIV testing.
3) The disease prevention fund created by the health law provides funding for programs aimed at reducing obesity and tobacco use. The fund is already facing a reduced federal budget.
4) A recent study concluded that deficit-reduction proposals to change the structure of Medicare would increase costs for most current beneficiaries. (Source) Several committees have suggested changing Medicare rules to combine the hospital- and doctor-services deductibles that are currently paid separately. In this system, seniors could have a $550 annual deductible, and be required to pay 20% toward all services up to a $5,550 annual limit. Such a change would mean that approximately 75% of beneficiaries would pay more — on average around $180 a year more — according to models created by the nonpartisan Kaiser Family Foundation. About 5% of current beneficiaries who use hospital services most frequently would see a significant decrease in the amount they have to pay — around $1,570 a year. The rest of the beneficiaries wouldn’t experience any change, the study found.
We will continue to follow Congressional developments and post information on the health industry implications in the coming weeks.
Posted under: Emerging Issues
AHIP Study on Early Lessons from Accountable Care Models in the Private Sector
An AHIP-sponsored study on the delivery and payment models in the private health insurance sector appears in the September issue of Health Affairs. The study examines the accountable care models being used in eight health plans, which represent two-thirds of such models being tracked by AHIP.
What makes this study unique is that it focused on a payer perspective from multiple health plans, and focused on a mix of national and large regional organizations across diverse geographic areas including a range of benefit designs. The plans included: Aetna, Anthem/WellPoint, Blue Shield of California, BCBS of Illinois, BCBS of Minnesota, CIGNA, HealthPartners, and Horizon BCBS.
Highlights of the study’s findings include the following points:
1) Program Scope. The scope of accountable care models was very different among the plans. Some plans implemented accountable care arrangements with specific employer accounts (fewer than 100,000 members), and other worked with providers in multiple geographic areas that included most of the commercial population. In one health plan participants in the accountable care model arrangement came together “virtually” and established a governing board.
2) Provider Selection. Providers’ ability to be successful in these new care arrangements will depend on their capacity to organize their delivery of care to achieve performance and accountability requirements. The plan managers agreed that an assessment of this capacity is needed to ensure providers are ready to commit to this type of arrangement. Plan managers are also using a list of provider selection criteria to assess provider eligibility, including organizational leadership, investments in health IT, and the size of patient population.
3) Role of Patients. There is growing recognition on the patient’s role in attaining better health outcomes and reducing cost. The $50,000 question is, “What types of incentives might be used to support patient roles”? The study asked plan managers to list the characteristics of the covered member population, as well as any incentives or changes to benefit design that were instituted as part of these models.
In six of the eight plans, patients had open-access benefit designs such as PPOs. Most plan managers reported that they did not change their benefit designs or offer patient incentives specific to accountable care model arrangements. Because of the open types of benefit designs, managers stated concerns regarding the challenges of coordinating care for patients seeing non-accountable care model providers. However, a few plans incorporated designs or incentives to help address the issue:
- Reduced Premiums (derived from reductions in cost of care).
- Stand-Along Product (offered as an option together with plan’s traditional benefit design offerings).
- Tiered Networks (different co-payments around higher performing providers in the accountable care arrangements).
4) Patient Attribution. A key element is determining the patient group for which a provider is held accountable (attribution). Plans have different rules for this process using a number of criteria including: a) site of most frequent visits, and b) timing (prospective attribution using historical claims data vs. retrospective attribution using claims data from a defined performance period).
5) Performance Measures and Targets. Two key processes: the first is the selection and implementation of measures, and the second involves establishing quality and cost targets for participating providers. Measure selection was typically driven by commonly used criteria, including specific measure evidence base, NQF-endorsed measures, and/or use of a measure in other incentive programs. A list of the types of performance measures implemented by the eight health plans studies can be found here.
6) Payment Methods. All models involved changes to payment methods representing a shift away from fee-for-service (FFS) models, but short of an immediate change to global payment methods. Plans generally built on their existing reimbursement models, which was either FFS or a combination of FFS for hospitals and capitation for physicians.
The authors provide a list of specific payment elements the plan managers incorporated.
7) Technical Assistance. Different types of assistance may be needed by providers at various implementation stages, based on provider needs and capabilities. The authors provide a table listing the key areas of technical assistance provided.
Conclusion
The plans studied reported an approximate 10 percent improvement in quality, a 15 percent reduction in readmissions and total patient days in the hospital, as well as annual savings of $336 per patient.
AHIP is sponsoring an October 18 Summit on Shared Accountability and Payment Reform in Washington, D.C.
Posted under: Emerging Issues
DEBT CEILING…TO CUT OR NOT TO CUT?
As discussed in our previous article on the consequences of federal debt reduction legislation, the bi-partisan “supercommittee” is beginning to develop recommendations for cutting $1.5 trillion over the course of 10 years. The recommendations are due by Thanksgiving. If the committee’s legislation falls short of the $1.2 trillion goal, or fails to pass in both the House and Senate and be signed into law by the President, across-the-board spending reductions will be automatically triggered.
Exempted from the sequestration process will be several large budget items, such as, but not limited to, Social Security, Medicaid, military pay and veterans’ benefits. The exemption of these items from automatic cuts will result in even deeper cuts to the rest of the budget. In fact, under automatic cuts, provider and health plan payments from Medicare would face across-the-board reductions of up to two percent starting in 2013.
Among various industry stakeholders, there is a divide between those who think the automatic cuts are preferable to presumably deeper cuts the supercommittee would develop, and those who believe the opposite case is preferable.
SUPPORTING AUTOMATIC CUTS:
Many industry interest groups prefer the supercommittee to allow the automatic cuts to occur. Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, said, “sequestration (automatic cut process) is the devil you know and the supercommittee is the devil you don’t.” Mark Hayes, a health care lobbyist, said health care companies actively will support the automatic cuts. He said, “The message will be communicated to … members of Congress, through all the usual channels including letters, town hall meetings, phone calls and personal messages.”
According to Richtman, lobbyists “are talking about ways to induce stalemate” on the panel so that no agreement can be reached and the automatic cuts take effect. Lobbyists could encourage a stalemate through various means, such as pushing Republicans on the committee to stand firm against efforts to raise taxes, a deficit-reduction strategy supported by many Democrats.
AGAINST AUTOMATIC CUTS:
Some industry groups are too wary of the potential 2% cuts to Medicare reimbursements to support their implementation. Certain provider groups are warning that the cuts could trigger job losses in the industry. One group protesting the cuts is the American Hospital Association, stating that such a reduction in Medicare reimbursements for hospitals could cause up to 194,000 job losses through 2021. AHA claims automatic cuts would cause a $41 billion loss in the industry. (Source)
THIS JUST IN…
The President recently proposed a plan to cut more than $3 trillion from the nation’s deficit over a decade by ending tax breaks for the wealthy and making modest changes to Medicare and Medicaid. The president said when his plan is combined with the roughly $1 trillion in spending cuts that he signed into law this summer, the nation’s deficit could be slashed by more than $4 trillion over the next decade. (Source)
Included in the President’s plan are a proposed $320 billion in cuts to Medicare and Medicaid, largely by changing how the federal government pays health providers, slashing payments to drug companies, and dramatically changing the way it splits the costs of Medicaid with the states, according to a fact sheet the White House released.
The biggest cut to Medicare requires pharmaceutical companies to lower their rates. The proposal would save Medicare an estimated $135 billion over 10 years starting in 2013. The change would allow the federal government to receive the same brand name and generic rebates for low-income Medicare patients as are provided to Medicaid beneficiaries.
Highlights of Proposed Changes to Medicare:
- The administration also is proposing cutting $3.5 billion from a fund created by the health law to improve disease prevention and to promote public health while keeping $13.8 billion.
- Some Medicare beneficiaries would see costs go up under the president’s plan. For the first time, beneficiaries receiving home health services would pay a $100 co-payment per treatment episode starting in 2017, which would raise $400 million over 10 years.
- The deductible Medicare Part B (physician costs) would increase by $25 in 2017, 2019 and 2021 for new beneficiaries, raising $1 billion over the next decade.
- Starting in 2017, new beneficiaries who buy a Medigap policy that leaves them with little out-of-pocket costs would pay a 15 percent surcharge on that policy. Critics have argued such Medigap plans lead to excess use of health services and raise health spending. The change would net the feds $2.5 billion over 10 years.
- Higher income Medicare beneficiaries would pay higher premiums for Medicare Part B and Medicare prescription drug plans, raising $20 billion over 10 years.
- One of the biggest changes proposed by Obama is how the federal government splits Medicaid spending with states, at a proposed savings of $14.9 billion over 10 years.
Dr. Georges C. Benjamin, executive director of the American Public Health Association, criticized the administration’s decision to cut funding to prevention and public health, saying “it could effectively put the nation’s health at risk, severely threatening ongoing efforts to reduce the burden of our nation’s most feared and deadly diseases…Long-term and potentially life-threatening consequences of a compromised public health system will far outweigh the short-term savings.”
The only major health provider group not to criticize the plan was the American Medical Association. The doctors’ group was pleased the administration’s proposal included the $300 billion needed to fix the flawed Medicare payment formula that threatens to slash fees to doctors each year. Since 2003, Congress has repeatedly stepped in at the last minute to avert the cuts from taking effect. (Source)
TO READ THE WHITE HOUSE FACT SHEET
Posted under: Emerging Issues
Thoughts On The 10th Anniversary of Sept. 11 Events
A day after the “east coast earthquake”, an article on the front page of the Washington Post summarizes my thoughts:
“In Washington, 10 years later, every day is Sept. 12. When the office ceiling shifts to and fro, and the pens and cups fall off the desk, it’s scary enough. But in a terror-scarred city, thoughts go immediately to evil attack rather than natural disaster”.
The quake yesterday rattled buildings, furniture, fixtures, and nerves mostly because we aren’t used to earthquakes here. And after September 11, 2001, every day has the possibility of some sort of man-made attack.
“People looked up at the sky for smoke. They listened for sirens. They checked their colleagues for signs of that gut-level fear they had felt a decade ago. Same clear blue sky, same blessed break from the humidity”. I thought exactly the same.
A decade after the worst terrorist-sponsored attacks on American soil and our lives forever changed in every aspect. It seemed a whole new industry was born in everything related to ‘homeland security”, preparedness, and disaster.
I will let the pundits, experts, and media explore the question of, “How prepared is the U.S. now to cope with man-made catastrophes and disasters”. This topic will undoubtedly be discussed (ad nauseam) in the coming weeks.
The following is a list of upcoming events and information resources for reflecting on and honoring the anniversary of 9/11/2001.
- Voices of September 11th
- New York State Bar Association - Initiatives on Disaster Preparedness and Response
- 9-11 Healing and Remembrance
- September 11th Day of Service and Remembrance
- CNN’s List of Anniversary TV Programming
Posted under: Emerging Issues
ICD-10 Update: Who Will Be Prepared On 9/30/2013?
HHS will require all patient encounters and discharges on or after October 1, 2013 to be billed using ICD-10, but healthcare organizations cannot begin using the new codes sooner than that. We conducted a scan to gauge just who is working on compliance, and who might be in big trouble.
ICD-10 compliance will require upgrades to electronic health record, care/disease management, coding, billing, claims processing, and other systems. While all this may seem like just another “IT fix”, physicians and hospitals will not receive full reimbursement from payers if the diagnoses codes are not accurate and related documentation more precise.
According to a HealthLeaders Media Intelligence Report, “84% have started their ICD-10 projects. Meanwhile, less than a third (29%) has moved beyond the assessment phase into implementation. Of the organizations that have begun their assessments, 73% have completed a system/vendor readiness analysis; 64% have assessed training needs; 57% have done a documentation gap analysis; and 48% have completed a financial impact assessment”.
There is a significant potential of revenue loss if an organization is not ready. AMN Healthcare recently reported on the issue: “Ed Hock, director of revenue cycle solutions at The Advisory Board Company, a consulting and technology services firm based in Washington, D.C., estimates a 250-bed hospital could lose between $1 million and $2.5 million. He said the landscape is fraught with problems and the possibility of losing substantial money. Hospitals operate on a 1 percent to 2 percent positive margin, and the thought of losing millions of dollars related to this change is a scary one for organizations.”
Of the respondents to the HealthLeaders Media survey: 46% expect revenue losses associated with ICD-10 implementation, 28% anticipate revenue loss between 6% and 10%, with another 12% expecting revenue losses at between 11%–20%.
- Nearly a quarter (23%) of respondents expects those losses to last one to two years, another 6% think it will be more than two years, and 7% expect the losses to become permanent.
CMS recently held a national web conference, “ICD-10 Implementation Strategies for Physicians”, and ICD-10 Monitor provides a good summary of the event. The ICD-10 Watch group on LinkedIn also provides good discussions of the many issues re: ICD-10.
Payers have been taking this topic very seriously and it has been a “hot” issue for at least the last two years. As evidence of the willingness to bring in outside resources (and spend money), the Blue Cross Blue Shield Association (BCBSA) recently announced that is has hired HCL Technologies (http://www.hcltech.com/) Ltd. (HCL), an Indian-based global IT services provider, to be part of a national purchasing arrangement for the ICD-10 transition. Through this arrangement, HCL’s products and service capabilities will be available to the 39 independent Blue Cross and Blue Shield companies across the country.
Posted under: Emerging Issues
BUDGET DEAL BEGETS LOBBYING BONANZA
President Obama last week signed the fiscal year 2012 budget and deficit reduction agreement (S 365), ensuring the U.S. will not default on its debts. Under the agreement, federal discretionary spending will be cut by a total of about $2.4 trillion over the next decade, while the debt ceiling will be raised in two stages.
Highlights:
DEBT LIMIT—The plan would immediately increase the debt limit by $400 billion, with Obama permitted to order another $500 billion increase this fall unless both House and Senate override him by veto-proof margins; a third installment of between $1.2 and $1.5 trillion would be made available after enactment of matching levels of additional spending cuts recommended by a special joint committee of lawmakers. The full $1.5 trillion could also be available if Congress adopts and sends to the states for ratification a balanced budget amendment to the Constitution.
SPENDING CAPS—The measure would cut more than $900 billion over 10 years from the day-to-day operations of Cabinet agencies whose budgets are passed each year by Congress. While sounding harsh, the measure represents a significant $24 billion increase over even deeper cuts sought by tea party-backed Republicans controlling the House.
After a near-freeze in 2013, discretionary spending would increase by about 2 percent a year. Both security and non-security programs would absorb outright cuts in 2012. Defense hawks are protesting likely cuts to the Pentagon, which would have received a $17 billion, 3 percent increase under a recent House spending bill. The Pentagon is among a group of programs that together would absorb a $4 billion cut from current levels next year. (Source: Money.MSN)
The second phase of the deal is less clear cut…
Party leaders in the House and Senate will each appoint three members to a special committee that will recommend another round of deficit reductions of between $1.2 and $1.5 trillion over 10 years. Their mandate is broad very little is off the table, but at least seven of the 12 members would have to agree on a package to force an up-or-down vote in Congress.
If the committee can’t agree on enough deficit reduction, then automatic spending cuts would ensue to reach the $1.2 trillion minimum deficit-reduction target. One key point is that the committee’s failure to agree would not automatically “trigger” revenue increases, as the White House was insisting. Instead the automatic cuts would be divided equally between defense and nondefense. For example, if the committee agrees to deficit reduction of only $600 billion, then another $300 billion would be cut automatically from defense and domestic accounts (excluding Medicare beneficiaries) to reach at least $1.2 trillion. (Source: WSJ)
So what do the health industry experts think this really means for Medicare?
Medicare beneficiaries escaped direct cuts in Washington’s debt deal, but the agreement could eventually hit seniors and disabled Americans who rely on the program for medical coverage.
Health industry lobbyists and policy experts say the deal between the White House and Congress effectively opens the door to another round of talks in which lawmakers are likely to weigh increasing the Medicare eligibility age and setting up a means test that might require wealthier people to pay more for the program.
To hit the $1.5 trillion in spending cuts, the congressional committee is likely to reconsider major changes to Medicare that the White House and congressional leaders put on the table during this summer’s debt-ceiling negotiations. President Obama in earlier negotiations floated the idea of raising the Medicare eligibility age to 67 from 65 in an effort to win Republican concessions. He also said he was open to a means test.
“All those types of issues will certainly be looked at by the committee,” said Tom Nickels, a senior vice president at the American Hospital Association.
Should the committee’s recommendations not make it into law, the backup spending-cut mechanism would include cuts to Medicare. The agreement says the cuts would only affect health-care providers and would be capped at 2%.
Some health care provider groups contend they couldn’t absorb such payment cuts without affecting patients. The hospital industry says the cuts could overload emergency rooms, shut down trauma units and reduce patient access to the latest treatments.
The industry is already on the hook for $155 billion in Medicare and Medicaid savings over 10 years under the health overhaul passed last year.
“Some of it may be subtle, but at the end of the day, there is a consequence to such a significant reduction in payments,” said Chip Kahn, president of the Federation of American Hospitals, which represents for-profit facilities. (Source: WSJ)
Meanwhile, advocacy groups have begun mobilizing grassroots campaigns to lobby lawmakers on the issue. Groups including Health Care for America Now, the Medicare Rights Center and Families USA are expected to work to shield Medicare and Medicaid from cuts. Conservative groups looking to cut entitlement spending are using similar tactics to mobilize their supporters. Both sides are expected to rely on partnerships, letter-writing, coordinated phone calls to congressional offices, emails and opinion pieces to rally support. (Source: AHLAlerts)
As the plan plays out, here is something to keep in mind…
Sequesters and triggers don’t work. Historically, they have a lousy record. Under the 1985 Gramm-Rudman-Hollings law, for example, many programs—defense, Social Security, Medicare, Medicaid, others—were originally exempted, and Congress eventually found ways around the rules to avoid across-the-board spending cuts. (Source: Money.MSN)
Posted under: Emerging Issues
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