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Health Industry Reform

Business Updates on HIX (aka “Marketplaces”) and Other ACA Issues

The Departments of Health and Human Services (HHS) and Labor along with the Internal Revenue Service (IRS) released jointly this week FAQs that address several issues associated with Affordable Care Act (ACA) implementation. Among the topics, the document indicates that employers will not need to notify employees of the availability of health insurance exchanges on March 1, 2013, as previously scheduled. Instead, the guidance indicates “the Department of Labor expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.” More information is available here.

The Office of Management and Budget (OMB) is reviewing regulations from CMS discussing “Minimum Essential Coverage Exemptions (CMS-9958-P)”.

This proposed rule would implement ACA provisions concerning verifications of employer-sponsored coverage eligibility for the purpose of determining an individual’s eligibility for advanced premium tax credits (APTCs). It is expected the final reg will be issued in February.

What About Private HIXs, Insurance Storefronts?

As discussed in a previous article, many payers are developing their own exchanges and marketing these to larger purchasers and employers. Sears Holding Corp. recently announced they’ll shift workers to private exchanges where they can select their own insurance and Sears will help pay for it. This is definitely a good marketing plan as one payer can effectively make a purchasing organization a “happy captive”, and keep the organization from the need to look at the government-run “marketplaces”.

Some large payers have also started opening retail stores in select cities. United HealthCare Group is one of these, opening locations in New York City, Los Angeles, Las Vegas, and other larger cities. Some of these locations specifically target the Medicare Advantage market.

“Customers want to bring the conversation to where they are,” said Christopher Law, a national vice-president at UnitedHealth who oversees the insurer’s retail site. “Why can’t it be more like a bank, where you can go in and have tellers helping you out?” (Source)

How will this new form of insurance selling coordinate with various insurance “marketplaces”? This will indeed be a challenge for business process and IT experts. Stay tuned…

What Does The Public Perceive as Biggest Healthcare Priorities?

A comprehensive new Kaiser Family Foundation/Robert Wood Johnson Foundation/Harvard School of Public Health survey queried the public about their priorities for, and views on, a wide range of health and health policy issues. Respondents listed the creation of HIXs – a key piece of the ACA and one whose implementation has divided states along political lines– the top priority. Specifically, 55% named this as a top priority (including majorities of Democrats and Republicans, 60% and 55% respectively, and 49% of independents). The survey did not specify which government agency should operate the exchanges.

Medicaid Expansion

The survey finds more Americans think their state should undertake the expansion (52%) than oppose it (42%). Unlike exchanges, which enjoy bipartisan support, these views differ sharply by party identification, with most Republicans saying they prefer to keep their Medicaid program as is (66%) and most Democrats (75%) supporting expansion. Independents are evenly divided.

Other topics discussed in the survey include Medicare spending reduction proposals, and public health spending priorities.

HHS Says Insurance Exchanges are Renamed “Marketplaces”

A rose is a rose, is a rose…and in that same vein…a thorn is a thorn, is a thorn…

The Obama administration is re-branding the key element of its signature healthcare law.

HHS has ceased referring to insurance “exchanges”(aka HIX), even as it continues ongoing efforts to push states into setting up their own. Press materials and a public website now discuss insurance “marketplaces” in each state.

Supporters of the healthcare law say the name change wasn’t meant to soften political opposition to the healthcare law. “Exchange” simply isn’t a very good description, they said.

“It’s not that exchanges are unpopular, but there also isn’t broad awareness about what they are and what they will do for the people who will benefit from them across the country, so it makes sense to use a more descriptive name,” a Democratic source said. “The fact is, both Democratic and Republican Governors across the country are building this infrastructure and open enrollment is only eight months away so it’s time to start raising awareness”.

Exchanges are designed to function as one-stop marketplaces for people who don’t receive insurance through an employer. Customers will be able to compare and buy plans online and some will receive a federal subsidy.

States that don’t set up their own exchanges will defer those choices to the federal government, but critics say HHS has too much power over even state-run exchanges.

“The target here is not to make states change,” said Alan Weil, executive director of the National Academy of State Health Policy. “I do think they have come to the realization that the term ‘exchange’ does not actually communicate much to the average citizen.”

(Source) 

HHS promoting exchanges to consumers via texts, emails

Health insurers planning to participate in health insurance exchanges are getting some assistance from the U.S. Department of Health & Human Services, as it takes steps to promote the online marketplaces.

HHS has begun promoting this key element of the reform law through a re-launch of its website healthcare.gov.

Through the new website, consumers can sign up for text alerts and emails so they can stay updated about exchange benefits, coverage options and other resources. When consumers sign up for these updates, they’ll also receive a checklist of seven steps they can take to prepare for the exchanges, Politico reported.

(Source)

Shopping Online for Health Insurance?

There are few things we don’t purchase online these days. Yet, turning to the internet to buy health insurance seems a strange concept.

A survey of more than 1,800 adults conducted by Enroll America, a nonprofit created to educate the public about health reform, found that 78% of people who will be newly eligible for insurance coverage because of the law (in 2014) don’t know a thing about the new health insurance exchanges.

What’s more, most people indicated they wouldn’t be comfortable going online to search for a health insurance plan – 75% said they prefer to be helped in person.

Not a good situation for a law that relies on internet-based markets to get people signed onto health plans.

One of the first exchanges to go online is eHealthInsurance, a website where people have been able to shop for and purchase health plans since 1998 in much the same way the Affordable Care Act calls for.

According to Brian Mast, Vice President of Communications with eHealth, Inc., there is hope. “From our own experience, we can say that consumers are increasingly comfortable with enrolling in health insurance online.”

The key, Mast says, is to build a website that is simple and transparent. “Compared to getting health insurance through your employer, the process of buying your own health insurance can be daunting. There’s no benefits manager holding your hand,” he says.

The Human Touch

The health reform law requires that consumers have access to customer support. Navigators – organizations selected to help people enroll in health plans through exchanges – will be available. In some states, you may even be able to meet in person with someone to walk you through your options.

(Source)

To read more about Enroll America...

Falling Through the Cracks – Coordinating Care & Preventing Readmissions

A novel part of the ACA law that went into effect October 2012 is the Medicare program’s “Hospital Readmissions Reduction Program”. This program requires CMS to reduce payments to Inpatient Prospective Payment System (IPPS) hospitals with excess readmissions, effective for discharges.

The program measures readmission rates for the conditions of Acute Myocardial Infarction, (AMI) Heart Failure (HF) and Pneumonia (PN). CMS defined readmission as an admission to a subsection(d) hospital within 30 days of a discharge from the same or another subsection(d) hospital. The calculations for readmission ratios include adjustment for clinically relevant factors including patient demographic characteristics, comorbidities, and patient frailty.

As reported by Health Affairs in October 2012, “The average total annual penalty nationally is reported to be in the low six figures, while large hospitals subject to the maximum 1 percent will see close to a seven-figure revenue impact. The sum of the penalties assessed nationally approximates $280 million”.

“MedPAC estimates the Medicare program spends $12B per year on potentially preventable hospital admissions…beneficiaries who are readmitted to the hospital within 30 days of a discharge, half will not have had any contact with a physician between first hospitalization and readmission…(demonstrating) lack of care transition management”. – Rachel Burton, Urban Institute as reported in Healthcare Finance News.

Recently a colleague of ours experienced the hospitalization of a senior family member for severe pneumonia. After three weeks of hospitalization and subsequent discharge, the patient returned home for a day and a half, only to develop a fever and suffer a relapse. This was discovered by the home nurse on her first visit. His doctor was notified by the home nurse and was subsequently readmitted to the same hospital.

Unfortunately this is a perfect example of all the factors that can result in hospital readmissions, despite the use of inpatient health IT applications, comprehensive lab testing, and home nursing visits.

According to the American Hospital Association (AHA),hospitals, physicians, home health agencies, nursing homes, and pharmacists may prevent more readmissions working together than hospitals can by improving discharge process alone. Easier said than done, unless a patient happens to have the good fortune of being in a medical home or accountable care organization (ACO) environment perhaps.

In fact, in a recent media interview, Dr. P.J. Brennan, the chief medical officer for the University of Pennsylvania Health System, said “hospitals are trying to keep their arms around patients after discharge, but a patient’s personal finances, health literacy and access to primary care are beyond the control of any individual institution. No patient should be readmitted within seven days…(this is) something that every hospital ought to be able to take care of”.

Other factors could include:

1)  Patient demographics, including health literacy levels; patient financial status and ability to be transported to and pay for additional care requirements; ability to perform, or have someone else perform, the role of caretaker; adherence to care instruction post-discharge including medication adherence.

2)  Lack of a regular primary care provider.

Pilot programs such as CMS’ Readmissions Reduction Program and the Community-based Care Transitions Program (CCTP) can make important starts in understanding the many pieces and processes necessary to preventing 30 day readmissions. 

In the more perfect world of the future, patients will be in an ACO and/or medical home type of system with a case manager assigned for all serious condition discharges. The patient will also have remote health monitoring sensors and applications, and possibly telehealth visits through a home computer so that the case manager and/or clinicians can keep close tabs on health status during the 30 day period. And payers will reimburse for the use of these applications and/or telehealth visits.

Until this more perfect time, the most important piece of the solution truly rests with the role of the primary caregiver, whether that is the actual patient, or more likely a family member, home nurse, friend or neighbor. It is the caregiver who is responsible for helping the patient manage his/her own post-discharge health and navigate the fractured healthcare system.

Insurance Premiums And What To Expect Under The Affordable Care Act (ACA)

What will health insurance cost in 2014?

First, get ready for some startling rate increases in the individual and small group health insurance marketplace due to mandated changes.

On average, expect a 30% to 40% increase in the baseline cost of individual health insurance to account for the new premium taxes, reinsurance costs, benefit mandate increases, and underwriting reforms. Those increases can come in the form of direct price increases or bigger deductibles and co-pays.

When you add the impact of the requirement that older consumers can be charged no more than 3x as much as the youngest consumers (the usual standard is now 5x difference), premiums increase dramatically for the youngest.

For example, expect individual health insurance rates to double for people in their 20s and early 30s.

People in their late 50s and 60s might see net decreases because of the compression of insurance rates.

Small group rates won’t increase by quite as much as for those in the individual market; an estimated increase of 10% to 20%.

The new regulations require that insurance companies treat their old and new business lines equally. Most existing business will not come under the “grandfather” rules applying to larger group plans This means most existing individual and small group customers can expect pretty much the same thing - a shock to those who already have insurance and don’t think the new law will impact them.

Consumers will find that they will be faced with very comprehensive health plans but those plans––including the lower cost “Bronze” and “Silver” plans––will have very high deductibles. Middle class families (300% to 400% of Federal Poverty Level (FPL), who aren’t fortunate enough to be in employer-sponsored plans and will be eligible for only partial federal premium subsidies, will still have to pay many thousands of dollars in premiums. They will also be confronted with a choice––pay the big premiums for a plan that will cover only 60% or 70% of their health care costs, with a large deductible, or pay a fine equal to 1% of their income for each adult in the family.

Consumers with incomes greater than 400% FPL ($46,000 single and $92,000 family of four in 2014) will pay the full cost of these health insurance policies. But consumers who earn less than 400% FPL will have their premiums capped at a percentage of their income. So, anyone getting a subsidy will be insulated from the very highest premiums. Who will pick up the rest of the premium? Federal taxpayers.

(Source)

Unhealthy Side Effects to Obamacare

Effective January 1, 2013 the ACA law mandates five new taxes: a 2.3% medical device sales tax (example: heart pacemakers, stents, prosthetic joints and diagnostic scanners). Also in effect for 2013 the tax deductibility of medical bills rises from 7.5% of adjusted gross income to 10%.Pre-tax flexible spending accounts (FSAs are now capped at $2,500). The health care overhaul calls for a $63 per person fee to cover the cost of coverage for individuals with pre-existing medical conditions. Insurance companies forced to foot the bill are expected to pass the cost along to an estimated 190 million Americans in the form of higher insurance premiums.

(Source) 

Also under the ACA law, each state will determine the covered health services as defined in the “essential benefits” rule. Lobbyists for provider groups are pressing state legislatures to make sure their particular service gets on that list.

It means lots of new customers not paying much, if anything, out of pocket for their treatments.

Other coverage mandates that various states have announced they plan to require under Obamacare include weight-loss surgery and infertility treatment. States currently impose 2,262 benefit mandates, up from 2,156 the year before, according to the Council for Affordable Health Insurance. There were just 850 mandates in 1992, when CAHI first started tracking them.

In addition to preventive-care rules, ObamaCare bans lifetime limits on coverage and puts caps on out-of-pocket costs, each of which will drive up premiums. According to Towers Watson, its requirement that insurers cover “children” up to 26 years old has already added as much as 3% to premiums.

Individual plans won’t be allowed to have a deductible higher than $2,000. This rule will mean that 1-in-7 workers will be forced to take a lower deductible plan and could pay higher premium costs as a result.

(Source)

Watch This From FOX NEWS: To provide all Americans with health insurance, premiums will have to rise to pay for it, Aetna CEO Mark Bertolini told CNBC’s “Closing Bell” on Wednesday. “If we’re going to insure all Americans, which is a worthy and appropriate cause, then somebody has to pay for it,” Bertolini said of the expected premium increases under Obamacare. Bertolini said that insurance premiums could double in some places just on the basis of what types of policies people buy today. He also said that when Obamacare is fully implemented, it won’t start the way people had hoped and it won’t be cheaper.

Fiscal Cliff Deal and The Effects on Healthcare

The fiscal cliff deal is mostly about preventing the fiscal cliff and stopping a tsunami of huge spending cuts. At the same time legislators did find ways to make some relatively important health policy changes too. They include everything from raising Medicare doctor’s pay, repealing a part of the ACA law, and cutting over $1B from the law’s funding.

Medicare and Medicaid

Medicare doctors will get paid more. Medicare hospitals will get paid less. 

The fiscal cliff bill, aka the “American Taxpayer Relief Act (ATRA) of 2012”, ratified by Congress, postpones a 26.5% Medicare pay cut for physicians for one year and preserves a hefty Medicaid raise for those in primary care.

The massive Medicare cut, triggered by the program’s sustainable growth rate formula and set for January 1, was a small component. What made the abyss so dangerous was the combination of Bush-era tax cuts set to expire this month and $109 billion worth of automatic, across-the-board cuts — called sequestration — in domestic and military spending that also were to take effect this year.

At stake for physicians in this debate is a 2% cut in Medicare reimbursement written into sequestration. ATRA puts this off until March 1, 2013.

ATRA does not offset the $25 billion cost of this “doc fix” by canceling a Medicaid pay hike for primary care physicians authorized by the ACA. The act raises Medicaid rates to Medicare levels for evaluation and management services and vaccine administration. Family physicians, general internists, pediatricians, and sub-specialists related to these fields are eligible for the increase.

Instead, ATRA pays for the “doc fix” largely by reducing Medicare hospital payments. The American Hospital Association (AHA) and other hospital-related groups denounce this approach as harmful to their institutions and the patients they serve.

Hospital interests were not pleased. “While fixing the physician payment formula is essential, it should not be done by jeopardizing hospitals’ ability to care for seniors and their communities”, stated AHA president Richard Umbenstock. “That’s why we are very disappointed at the approach taken in this measure.”  So doctors end up with stable salaries for the next year, but that does not mean that the Medicare program came out of this deal unscathed.

(Source)

Co-Ops

The Affordable Care Act did not include a public option, but it did include funding for Consumer Oriented and Operated Plans (CO-OPs). These are meant to be non-profit, customer-owned and operated plans that could test out new ways to deliver health care. These health plans would compete against traditional insurance plans on the exchanges, when they launch in 2014, giving consumers an alternative to for-profit insurance plans.

The fiscal cliff deal, eliminates most of the more than $1.4 billion in remaining funding from the federal health law for new nonprofit, customer-owned health plans designed to compete against the major for-profit insurers.

That means the Obama administration won’t be able to approve loans to any additional co-ops. In the past two years, HHS has awarded nearly $2 billion in loans to 24 proposed state co-ops.Those loans won’t be affected by the cut.

Critics have been skeptical the co-ops could compete with more established insurers, such as Aetna and UnitedHealthcare.

“Starting a new health plan is a risky proposition,” said Peter Kongstvedt, a McLean, Va.- based health care consultant. He said consumers already have sufficient choice of plans in most markets and won’t miss having the additional co-ops.

The deal leaves 10 percent of the remaining co-op funds to cover the administrative costs connected with the 24 plans already launched.

(Source)

Health Care Changes In The ‘Fiscal Cliff’ Deal

KHN’s Mary Agnes Carey and Politico Pro’s Jennifer Haberkorn detail the deal struck between President Obama and Congress to avert the so-called “fiscal cliff” and what the compromise means for hospitals and doctors who serve Medicare patients.

(Source)

In addition to the effects on healthcare, the fiscal cliff deal preserves the tax cuts for individuals earning no more than $400,000 and couples earning no more than $450,000. Americans earning above these amounts will see their tax rate rise from the current top rate of 35% to 39.6%. ATRA delays sequestration until March 1, giving lawmakers 2 months to replace it with a more discerning deficit reduction plan. The measure also extends unemployment insurance benefits and various tax credits and reduces tax breaks for high-income households.

For others details of the Fiscal Cliff Deal

Open Enrollment and What’s On Schedule for Health Reform in 2013?

What are most people faced with during the current open enrollment period?

1. Higher Premiums

First, the bad news: You will likely be paying higher premiums next year, with 13% of companies planning to raise their employees’ contributions to health-care costs by five percentage points or more. The silver lining? Premium increases have been held down thanks to the requirement that insurers give rebates to consumers if insurers spent less than 80% of premiums on medical care, says Cheryl Fish-Parcham, deputy director of health policy at Families USA, a health-care consumer group in Washington.

2. Straightforward Summaries

The most visible change in your packet of insurance options for 2013 is a new form called a “Summary of Benefits and Coverage.” The health-care law requires plans to provide these as of last month. Finally, an end of the document seemingly written in “legalese”.

3. FSA Limits

For 2013, the amount you can put into a workplace flexible spending account will be capped at $2,500. Previously, the limits, if any, were set by the employer.

4. Dependent Coverage

Thanks to the ACA provision, which took effect in 2010, many adult children up to age 26 can remain on their parents’ policies.

5. Higher Spending Cap on Annual Limits

This really applies to the total amount an insurance plan has to pay towards high cost chronic or catastrophic conditions. For 2013, the cap rises to $2 million, from $1.25 million this year. The cap goes away entirely in 2014.

(Source)

What’s Next for 2013:

• Medicaid payments to primary care physicians for primary care services will increase to 100% of Medicare rates for two years.
• States that offer Medicaid coverage with no patient cost-sharing for recommended preventive services will receive a one percentage point increase in federal matching payments.
• Medicare will test bundled payments for physician services, acute inpatient hospital services, outpatient hospital services, and postacute care services for a patient’s episode of care.
• The federal government will impose an excise tax of 2.3% on the sale of taxable medical devices.
• Reductions will begin on disproportionate share hospital payments under Medicare and Medicaid.
• Nonprofit, member-run health insurance companies known as Consumer Operated and Oriented Plans (CO-OPs) will launch.

(Source: Kaiser Family Foundation Health Reform Implementation Timeline)

 

HIX Developments - Private Exchanges and Employers

A number of Blue Cross Blue Shield health plans are establishing private insurance exchanges for their small to larger group customers. Typically in a private insurance exchange, employers give employees specific funds to purchase health coverage from a variety of options offered by a given insurer in the exchange.

How does this differ from the government operated exchanges that must be ready by October 2013? In private exchanges the employer groups choose a specific payer(s) and then their employees can choose specific plan packages from the selected payer(s), most often using a defined contribution funding arrangement. In the government sponsored exchanges, the individual will bear all of the responsibility for choosing and enrolling with a payer using all of his/her own funds, unless the individual qualifies for Federal subsidies.

(Source)

Why would employers choose this model?

Large employers may view private exchanges as a viable alternative to the penalty under PPACA for not offering coverage.

Employers can continue to provide pre-tax subsidies to employees to help them buy insurance through a private exchange (however, doing so may preclude the ability of lower-income workers to take full advantage of government-paid premium subsidies for those who enroll through public exchanges).

Exchanges may offer reduced administrative costs by offloading such tasks as enrollment, plan selection, employee education, and employee complaints. (Source)

By utilizing a “direct contribution” type of benefit funding approach, employers can increase the emphasis on a more mass, consumer-driven insurance market and gain more control over their health care contribution costs.

Blue Cross and Blue Shield of Kansas City has operated a private exchange for its small group clients since late 2011 and is now adding an exchange for large group clients. Health Care Service Corp. (HCSC) is preparing to offer a private exchange for their mid-market and national account clients in 2013, and Highmark Inc. will offer a private exchange platform to small businesses and retirees. (Source)

What Do Providers Need to Think About?

As states ready themselves to develop health insurance exchanges, plans moving into these marketplaces will look to offer lower-cost options to consumers, according to Laura Jacobs, Executive Vice President of Camden Group. Insurers that want to keep spending down might gravitate toward more restrictive networks of health professionals who will accept lower negotiated pay rates.

An important activity for physicians in 2013 will be to observe what local health insurers are doing to organize networks for their exchanges, Jacobs said. Doctors must develop strategies on what health plans they want to participate in, whether they could take lower rates and how they’re going to manage collecting deductibles, she said.

(Source)

In addition, physicians are facing a nearly 27% sustained growth rate (SGR) pay cut on Jan. 1, 2013, unless a deal is cut in sequestration negotiations, which could be complicated by the fact that separate sequestration deficit reductions could mean other cuts to the Medicare program. (And of course the sequestration discussions are anything but simple and congenial).

Status of State Health Insurance Exchanges (HIX) Post-Election

The extension of deadlines for setting up Health Insurance Exchanges (“HIXs”) under the Affordable Care Act, has put both the Exchanges and upcoming deadlines in the forefront.

HHS Secretary Kathleen Sebelius has extended the deadline by one month until Dec. 14 for states to submit their blueprints for a state-based health insurance exchange and/or decide if they plan to establish their own exchange.

This continuing saga around the deadline delay doesn’t change the fact that all states are required to have an online insurance marketplace, one way or another. 

The most crucial deadline is Oct 1, 2013, when state exchanges need to be ready to start enrolling individuals. The exchanges become operational Jan. 1, 2014.

The Affordable Care Act (ACA) provides for the 50 States and the District of Columbia to select one of three types of HIX.  They are:  (1) a State-based Exchange, which offers the highest level of State control over the Exchange, (2) a State Partnership Exchange, which allows the State to control some aspects of the Exchange while HHS administers other parts of the Exchange, and (3) a Federally-facilitated Exchange, which is not really a State Exchange at all. 

Note that these choices are not necessarily permanent, as states can elect different models in and for following years.

Many states had been waiting for the outcome of the election to make their final decision, and some are revisiting their decision in light of the President’s reelection, said Patrick Howard, who leads Deloitte Consulting’s state healthcare practice.

Some states had held hard and fast to not making any plans, “but a number were doing, as well they should, contingency planning on both alternatives,” Howard said Nov. 16 in comments to Government Health IT.

“If they haven’t been doing things in the background and are starting from square one, the odds of them actually making an October implementation are relatively slim,” he said.

What may become a more attractive option is the federal partnership model.

“I think more states will embrace that federal partnership model perhaps for a year and then transition to a state-based exchange, giving them a little more time to think through their business processes and technology,” Howard said.

(Source)

Currently, 18 or slightly over one-third of the States plus the District of Columbia have established or elected to establish a State-based Exchange, and six States were planning for a State Partnership Exchange, so that by Thanksgiving, 2012, 47% of the 50 States plus the District of Columbia have chosen one of the two types of Health Insurance Exchanges available for State participation under the ACA.  ( Kaiser State Health Facts on Health Insurance Exchanges at, “State Decisions For Creating Health Insurance Exchanges in 2014, As Of November 19, 2012.” )

(Source) 

For More Individual State Information:

http://healthreform.kff.org/en/the-states.aspx

http://www.cbpp.org/files/CBPP-Analysis-on-the-Status-of-State-Exchange-Implementation.pdf

http://www.jdsupra.com/legalnews/state-of-the-states-health-insurance-ex-32086/

A Thought to Ponder…

If a state chooses to use the Federal exchange, will there be a fee for accessing the Federal database? Maybe - refer to the following:

State of the States: Health Insurance Exchanges—November 2, 2012

by McKenna Long & Aldridge LLP on 11/5/2012, discussing the Idaho HIX Working Group:

“The most recent information KPMG received on the Federal Data Hub is that the Federal government would NOT be charging the states for its use. Please note that this position has not been formally adopted or communicated in writing, but it was conveyed to KPMG at least twice in the past months in direct conversation with CCIIO. KPMG has not obtained any information on the other services, but we expect that the Federal government will want to charge some type of fee to the Issuer as part of the PMPM costs just like a state would need to do if they were running their own Exchange (in order to be self-sufficient). KPMG has no visibility into what the cost will be, but we think that with the volume that the Feds will have coming through the FFE, the PMPM costs can potentially be lower than if a state does is on their own (e.g., chooses a SBE).”

(Source)

For updates on the latest ACA-related rules regarding HIXs, Essential Health Benefit (EHB) packages and more, visit NCSL’s page.

Implementing the ACA: Status of Health Benefit Packages in the States

Benefit Plans: Where Do The States Stand In Their Decisions

The ACA requires that health insurance plans sold to individuals and small businesses provide a minimum package of services in 10 categories called “essential health benefits.” HHS has decided to allow each state to choose from a set of plans to serve as the benchmark plan for their state. States are required to establish benchmark plans based on one of four options outlined in a bulletin on essential health benefits.

States will need to select a benchmark plan by the fourth quarter of 2012, but many began analyzing options earlier this year.

This chart highlights activity around selecting benchmark plans that states have shared publicly or on State Refor(u)m.  (Source)

The states making the most progress are:

Massachusetts - 54%
Nebraska - 39%
Vermont - 30%
Maryland - 24%
Connecticut - 22%

The states making the least progress are:

Alaska, Alabama, Arkansas, Florida, and Idaho - 2%
South Dakota - 1%
Wyoming - 0%

Want to see where your state measures up?

Key Healthcare Election Points

No matter what your political persuasion, it’s clear that both sides do agree on one thing: Healthcare is one of America’s great strengths, yet one of its biggest challenges.

In light of the upcoming election, we provide this overview of key healthcare points in each candidate’s platform. 

Obama’s Health Care Record

Medicare, Medicaid and the ACA health law will continue to be hot topics this presidential campaign season. Kaiser Health News (KHN) has assembled a comprehensive resource page to help track President Barack Obama’s health policy record from his 2008 campaign positions to the enactment of the health law and his proposals to control federal health care spending.

Obama on Medicare and Medicaid:

• Obama repeatedly mentions provisions in the 2010 health law that aim to expand coverage and bring down costs in so-called entitlement programs. The law’s approach includes the expansion of Medicaid; the creation of the Independent Payment Advisory Board (IPAB), accountable care organizations (ACOs), and other payment pilots and demonstration projects to reward providers for delivering quality—rather than quantity—of care; and various cuts to Medicare providers and insurers. The administration has made clear that it is willing to go beyond the changes included in the law, particularly in the Medicare program, to ensure its solvency.
• The administration proposed additional cuts in its fiscal year 2013 budget proposal, including reducing Medicare spending by $302 billion over 10 years and Medicaid spending by $56 billion over the same period.
• The administration has opposed Republican proposals to turn Medicaid into a block grant for states.
• Obama has strongly opposed Republican proposals to change Medicare for future beneficiaries (people currently 55 or younger) into a defined-contribution program, in which they would receive a set amount of money each year to buy health coverage, rather than the program’s current defined-benefit design.

Obama on health reform philosophy:

• Among the key provisions of 2010 health law is a requirement that nearly all Americans obtain health coverage, a marked expansion of the Medicaid program, the creation of health insurance exchanges and a collection of consumer protections including bans on pre-existing condition exclusions.
• His reform proposal included a requirement that all children have health insurance, and that most large employers either offer employee health benefits or contribute to a new public program. He also advocated expansions for Medicaid and CHIP. He initially opposed the individual mandate.
• During the 2008 campaign, Obama advanced a proposal for a refundable tax credit to help small businesses buy health insurance for their employees. The 2010 health law creates a tax credit for small businesses (fewer than 25 employees) that provide health coverage to their workers.
• He has consistently supported proposals to increase transparency related to health care costs and quality, such as the health law’s medical-loss ratio requirement and requirements to collect and report on health care quality measures such as preventable medical errors, hospital-acquired infections, and others.
• During his 2008 campaign and later as part of the health law, Obama advocated for comparative effectiveness research to help physicians and patients make health care decisions.

Obama on the health care marketplaces:

• Obama has opposed medical liability tort reforms that impose federal caps on jury awards in malpractice cases. However, his administration has launched a Patient Safety and Medical Liability Reform Demonstration program to help states test new ways to improve patient safety, reduce the incidence of frivolous lawsuits, and bring down the cost of liability insurance premiums.
• He has supported the re-importation of prescription drugs from other developed countries. 

(Source)

Mitt Romney On Health Care

The state health reforms overseen by Mitt Romney while he was governor of Massachusetts have received significant attention throughout this campaign. His health policy record goes beyond this state law to include a range of hot-button issues—from the future of the federal health law to plans to revamp Medicare and Medicaid costs as well as a range of market-based initiatives .

On Massachusetts Health Reforms, Romney:

• Was a key player in the effort to reform Massachusetts’ health care system. Before his election as governor, he campaigned on a health overhaul plan.
• After his term as governor ended, he cited the 2006 state health reform law as a point of pride, but has since distanced himself from it because it is often considered a prototype for the ACA law, an assertion he rejects. The Massachusetts law includes the creation of an online insurance exchange known as the Health Connector, as well as fines against businesses with more than 10 employees that don’t offer health insurance plans and an individual mandate regarding purchasing health insurance.
• Defends Massachusetts’ individual mandate because it was a state-level decision rather than a federal decision.
• Advanced a managed care plan for seniors who are eligible for both Medicare and Medicaid.
• Was silent on a 2005 proposal to extend health care benefits provided by the state government to same-sex couples.

On Medicare & Aging, Romney:

• Favors Medicare reforms that would give future beneficiaries a “defined contribution” or “premium support” and allow them to choose between private and traditional plans.
• Maintains that seniors already enrolled in Medicare, or those nearing retirement, would not be affected by his plan, which also would retain a fee-for-service option.
• All plans would have to offer coverage at least comparable to what Medicare provides today, though premiums for “traditional” coverage would rise if private companies can provide the same services for less. Critics say that capping the government’s contribution would likely mean that beneficiaries’ costs would increase.
• Backed the December 2011 Medicare proposal by Rep. Paul Ryan, R-Wis., and Sen. Ron Wyden, D-Ore.
• Supports the notion that wealthier seniors should pay more toward their health coverage and lower income seniors should receive a higher subsidy.
• Wants to publish a yearly federal balance sheet to help people understand the impact of entitlement spending on the budget and economy.

On The Health Care Marketplace, Romney:

• Wants to strengthen high-deductible health savings accounts by allowing consumers to use them to pay insurance premiums.
• Supports caps on non-economic damage awards in medical malpractice lawsuits and funds for states to develop other ways to deal with the liability issue, such as health care courts.
• Urges restricting federal regulation of health care insurance, although he supports limited rules to bar insurers from denying coverage to those with preexisting conditions when they have had coverage for a specified period of time.
• Supports “co-insurance” plans, in which consumers pay a fixed percentage of the cost of their care.
• Says insurers should be allowed to sell their products across state lines.
• Endorses ending “tax discrimination against the individual purchase of insurance” and has suggested allowing tax deductions for people who obtain health insurance on their own; also favors allowing individuals and small businesses to join together to buy insurance.
• Wants to issue “Consumer Reports”-type ratings of insurance plans.

On Health Reform Philosophy, Romney:

• Says he would allow states to opt out of the federal health law and encourage Congress to repeal it.
• Believes that “each state should be able to fashion their own program for the specific needs of their distinct citizens,” and that states are the “laboratories of democracy.”
• Maintains that “market dynamics” such as increased competition, provider performance ratings, cost comparisons for procedures, co-insurance and lowering the number of uninsured will improve the health care delivery system.
• Endorses efforts to find an alternative to the fee-for-service payment model.

On Medicaid, Romney:

• Opposes the health law’s expansion of Medicaid coverage to as many as 17 million people.
• Supports Medicaid block grants to allow states to use capped federal contributions to run the program with more flexibility.
• Would limit federal standards and requirements on private insurance and Medicaid coverage.
• Favors reducing the amount of money the federal government spends on Medicaid.

(Source)

View here to read AARP’s October Bulletin interview of President Obama and Mitt Romney

ACOs – “Just Say No”?

The Centers for Medicaid and Medicaid Services’ (CMS’) deadline for comments on the Accountable Care Organization (ACO) rules closed on June 6, and since then, there have been many dynamic discussions on the topic. From the many opinions, publications, and presentations we have read and heard, the majority opinion seems to be that ACOs are definitely not for everyone; in fact, they may be only for a very small percentage of providers.

Our summary of notable comments:

1. According to Pillsbury health law practice attorneys David Main and Linda Kotis, 17 major health systems have significant concerns with the draft rules. In fact two health systems that were “inspirations” for the ACO model, Geisinger and Intermountain Health Care have said they do not plan on developing ACOs. What are main concerns of these health systems? First, they believe beneficiaries should be assigned to ACOs prospectively so that providers can know up front the patient population they will be caring for. Second, they are concerned the start-up costs are too expensive, and the shared savings rates should be adjusted so as to account for the exact number of enrollees.

   Third, the total number of proposed quality measures (currently 65) is too many. A broad industry consensus with respect to the number of quality measures (as voiced by provider, hospital, payer and think tank groups) is that 65 measures are just too many, and starting with 32 would be a better option.

 

2. A recent MedeAnalytics analysis focuses on “…leading healthcare constituencies’ recommendations on the key drivers of the ACO business model”. Key comments included: 

 

• a. AHA, AMA, and MGMA: Eliminate the CMS withhold rate (25%) applied to any earned performance payment for years 1 and 2.
• b. With respect to the shared savings rate for ACOs tracks 1 and 2 (proposed at a maximum of 50% and 60% respectively), the overwhelming industry consensus was that this should be raised to 60 - 80% (track 1) and 70 – 90% (track 2). I tend to agree – ACOs are taking on a significant risk given the estimated start-up costs. Their compensation in shared savings needs to better reflect this.  As for what the “tracks” are (from CMS’ website): “CMS is proposing to implement both a one-sided risk model (sharing of savings only for the first two years and sharing of savings and losses in the third year) and a two-sided risk model (sharing of savings and losses for all three years), allowing the ACO to opt for one or the other models”.
• c. Comments regarding the minimum savings rate (MSR). Per CMS: The MSR “…is a percentage of the benchmark that ACO expenditure savings must exceed in order for an ACO to qualify for shared savings in any given year”. There is consensus here that a standard, flat MSR of 1-2% should be established for all ACOs, rather than the sliding scale as proposed by the current CMS rules.

 

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