E-News – February 19, 2013 hhs announces Cap of High Risk Pool Enrollment House Health Panel Is Warned on sgr

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e-News – February 19, 2013

HHS Announces Cap of High Risk Pool Enrollment

House Health Panel Is Warned on SGR

Senate Finance Committee Grills HHS Executive

Long-Term Care Commission Almost Complete

Justice Department, HHS Recover $4.2 Billion

State Exchange Deadline

State Laboratories Testing Medicaid Models

Survey Says Majority of Americans Want Health Exchanges

Re-admissions Caused by Multiple Problems


EHR Incentives Offer Revenue Boost

HHS Announces Cap of High Risk Pool Enrollment

In a surprise announcement on Friday, federal officials announced the government will cap enrollment in the high risk pool for people with pre-existing conditions in 23 states. The Pre-Existing Condition Insurance Plan (PCIP) high risk pool was created by the Affordable Care Act as a bridge to 2014 when insurance companies will be forbidden to refuse coverage or demand excessive premiums for people with pre-existing or high risk conditions.

The announcement is effective immediately and was released by the Center for Consumer Information and Insurance Oversight (CCIIO). The statement said the cost of the enrollment program is a factor.

While the government anticipated enrollments of upwards of 375,000, only 135,000 people enrolled after the program opened in 2010. One reason for the lower than expected enrollment is that the regulations require people to be uninsured for at least six months. But costs grew rapidly, even with a smaller group, because the people who did enroll had higher than anticipated medical bills.

CCIIO attempted to dial back expenditures in January, issuing a memo to states asking that they consider trimming their costs. One cost saving measure was cutting the share of the medical bill that the plan pays after a patient pays a deductible.

Starting in January, the federal program has paid 70 percent of charges and the patient must pick up 30 percent of costs after paying a $2,000 deductible. Previously, federal officials paid 80 percent of allowed charges with a 30 percent coinsurance for patients. Federal officials also increased the maximum out-of-pocket expense for beneficiaries to $6,250 in 2013, up from $4,000 (for in-network services), and to $7,000 to $10,000 for out-of-network services.

“CMS recognizes that several state-based PCIP programs currently offer coverage that may be more generous than the coverage now offered in the federal PCIP,” said the memo. “State-based PCIPs may pay higher percentages of allowed charges, have lower deductibles, and lower maximum out-of-pocket limits than the Federal PCIP. While CMS has allowed those variations in the past, CMS is evaluating the level of cost savings to be realized if state-based PCIPs were to adjust their benefit packages to match the benefits now offered in the federal” program.

House Health Panel Is Warned on SGR

The head of the Medicare Payment Advisory Commission (MedPAC) on Thursday warned the Energy and Commerce Health Subcommittee that failure to repeal the “sustainable growth rate” payment formula for physicians treating Medicare patients could result in catastrophe.

"I'm not predicting a national crisis at this point, but we certainly can't rule it out, either," MedPAC’s Glenn Hackbarth told the panel.

The sustainable growth rate formula, known as SGR, calls for steep cuts to Medicare reimbursements for doctors – this year it would have been a 27 percent cut – though Congress, recognizing the problem with it, annually patches the cuts with a “doc fix”. The temporary doc fix is has been renewed nearly annually for a decade.

Hackbarth said his greatest concern is the potential lack of access to medical care for patients who are sick, as doctors refuse to accept them because of the extremely low reimbursement rates. And while Medicare for beneficiaries is exempt from pending sequester cuts, Medicare physician reimbursements are not and they are scheduled to be cut by 2 percent on March 1, exacerbating the problem.

"We have all heard about the problems for access to care for Medicare beneficiaries in particular markets," he said. "MedPAC's fear is that those problems could spread rapidly if SGR is continued."

House GOP chairmen have agreed to focus a strong effort on replacing the outdated formula, and have said they intend to have a reform bill on the floor by the Congress’ August recess.

The problem with repealing the SGR is the cost. Replacing it with a permanent (and higher) reimbursement rate, even just by freezing the current doc fix rate, will cost a projected $138 billion over the next 10 years, an expense that would contribute to the national deficit and which would require offsets.

Senate Finance Committee Grills HHS Executive

Gary Cohen, the director of the HHS office overseeing the bulk of the healthcare law’s implementation, was grilled by Senate Democrats on Thursday at a Senate Finance Committee meeting. Chairman Max Baucus (D-MT) demanded CMS deliver a detailed report to his panel on the agency’s efforts and status for operating as many as 30 federal-run or federal partnership state health insurance exchanges. Baucus said he wants the report by February 26.

“We've got to know what we're doing and what we're not doing; we can't just talk, it's deeds not words,” Baucus said.

Senate panel members pointed out that so far just 20 states have received conditional approval to operate their own state health insurance markets under the Affordable Care Act, but that conditional approval doesn’t necessarily mean they will be fully approved by the October 1 enrollment deadline. Additionally, that leaves 30 other states that will require at least some federal assistance, or will default to a federally operated state-based program.

Cohen walked Senators through some of the details of CMS’s state health exchange program, now called health insurance marketplaces. He said testing has begun on a “federal data services hub” that will be linked to all exchanges. The data services hub will assist the states in determining assistance eligibility. It will connect with the Department of Homeland Security, the Social Security Administration and the IRS to verify citizenship and to determine any tax credits available to help buy coverage.

“The hub will access only the information needed to determine individual eligibility and will not be involved in the selection or certification of health plans,” Cohen added.

Cohen was questioned about a variety of other issues including funding for non-profit insurance co-ops, a delay in offering the promised Basic Health Program, and the agency’s apparent lack of readiness to assist states in IT upgrades.

Senator Bill Nelson (D-FL) wanted to know why HHS cut the funding for a proposed non-profit health insurance co-op as part of the year end “fiscal cliff” tax deal.

“Why was that negotiated away at the 11th hour?” Nelson asked. He noted there were still programs in development for this initiative at the time HHS cut the funding for it. Cohen did not have an answer.

Senator Maria Cantwell (D-WA) also expressed displeasure over a one-year delay in the Basic Health Program that won’t be ready until 2015. The Basic Health Program will be a cost efficient way for states to offer health insurance outside of Medicaid or the state-based health insurance exchanges. Cantwell intimated HHS might be trying to drive up the cost by herding people onto the state exchanges instead.

“We’re very concerned about the approach by the agency in trying to thwart this effort,” she said. “Are you artificially raising the cost to all taxpayers by trying to lure them onto the exchange?”

Cohen denied any such manipulation and said the Basic Health Plan has simply had to take a back seat to more pressing problems and initiatives.

Long-Term Care Commission Almost Complete

Republican House Leader John Boehner (OH) and Senate minority leader Mitch McConnell (KY) last week made their selections to a Long-Term Care Commission. The previous week, House minority leader Nancy Pelosi (D-CA) and Senate Leader Harry Reid (D-NV) named their appointees to the temporary 15-member commission. This leaves only President Obama to name his appointees before the committee can begin its work.

The Long-Term Care Commission was authorized by the Fiscal Cliff legislation that repealed the Community Living Assistance Services and Supports program (CLASS Act). CLASS was developed as part of the Affordable Care Act, but was shelved when it became apparent that it could not pay for itself. But the necessity for a replacement program to address the growing population of elderly in need of long term care is clear.

On Monday, Speaker Boehner named Judy Brachman of Bexly, Ohio, national co-chairwoman of the Jewish Federations of North America’s Aging and Family Caregiving Committee; Stephen Guillard of Chatham, Massachusetts, a health care executive; and Grace-Marie Turner of Alexandria, Virginia, president of the Galen Institute, a right-leaning think tank.

GOP sources reported that McConnell selected Bruce D. Greenstein, secretary of the Louisiana Department of Health and Hospitals; Neil Pruitt Jr. of Atlanta, a skilled nursing facility executive; and Mark Washofski, an official in the Treasury Department during the George W. Bush administration.

The previous week, Pelosi named Bruce Chernof, president and chief executive of the SCAN Foundation; Judith Stein, founder of the Center for Medicare Advocacy; and George Vrandenburg, a philanthropist and former entertainment executive.

Reid named Javaid Anwar, a Nevada physician; Laphonza Butler of California, president of the United Long-Term Care Workers Union; and Judy Feder of Virginia, a professor of public policy at the Georgetown Public Policy Institute.

Once the 15-member Commission is seated, it will deliberate and have six months to report back to Congress on its recommendations about how to best provide long-term care for the nation’s elderly and disabled. The commission has the power to hold hearings, request studies by the Government Accountability Office and ask for cost estimates from the Congressional Budget Office.

Justice Department, HHS Recover $4.2 Billion

Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius on Monday released a new report showing the government’s health care fraud prevention and enforcement efforts recovered a record $4.2 billion in taxpayer dollars in FY 2012, up from nearly $4.1 billion in FY 2011.

“This was a record-breaking year for the Departments of Justice and Health and Human Services in our collaborative effort to crack down on health care fraud and protect valuable taxpayer dollars,” said Attorney General Holder in a joint press release with HHS.

Congressional Republicans have sharply criticized the Obama administration for financing expensive incentive pilot programs called for in the Affordable Care Act, expressing instead a desire to see the administration focus more on cost savings, efficiencies and elimination of criminal fraud.

HHS and the Department of Justice created the Health Care Fraud Prevention and Enforcement Action Team (HEAT) in 2009 to prevent fraud, waste and abuse in the Medicare and Medicaid programs. Since 2009, the Justice Department and HHS have improved their coordination through HEAT and increased the number of Medicare Fraud Strike Force teams to nine.

The government says it recovered almost $8 for each dollar it spent investigating healthcare fraud over the past three years.

According to the press release, “Strike force operations in the nine cities where teams are based resulted in 117 indictments, [complaints] involving charges against 278 defendants who allegedly billed Medicare more than $1.5 billion in fraudulent schemes. In FY 2012, 251 guilty pleas and 13 jury trials were litigated, with guilty verdicts against 29 defendants, in strike force cases. The average prison sentence in these cases was more than 48 months.”

State Exchange Deadline

Friday was the deadline for states to declare their intention to partner with the federal government to create a state-based health insurance marketplace for individuals and small businesses. It appears there were no new applications for participation as partnerships with the federal government; though there were three prominent Republican governors that publicly stated they would not participate at all in the marketplaces.

The governors of Florida, New Jersey and Tennessee announced on Friday they would let the federal government run their state-based marketplaces.

"My Administration is committed to meeting our obligation to comply with the Affordable Care Act, but only in a manner that is the most effective and efficient for the residents of New Jersey, and the businesses that will carry the costs of this new program," said N.J. Governor Chris Christie in a statement as he rejected the partnership exchange.

"In order to move forward in a manner that best meets that standard for our families and businesses, and that ensures that all New Jerseyans have access to the best healthcare options supported by the most effective insurance coverage, I have determined that federal operation of the Exchange is the responsible choice for our state," he said.

So far, seven states have said they are planning for a partnership: Arkansas, Delaware, Illinois, Iowa, Michigan, New Hampshire and West Virginia. That leaves 22 states that have not yet declared their intentions, though several states have said they will likely request a partnership program, and it appears there will be some wrangling over what constitutes a partnership.

Virginia’s Governor, Bob McDonnell (R), last week said he will not submit a blueprint by Friday, but he does intend to request the federal government consider the use of legislation (pending in the state this week) that will keep plan management and rate review functions within the control of the state. There are currently two bills proposing such control in the state legislature. If passed, McDonnell says he will sign them.

“If these bills pass at the will of the legislature, the governor intends to sign the legislation into law so long as they only give appropriate authority for Virginia to perform the plan management function within a federally facilitated exchange,” McDonnell spokesman Jeff Caldwell said in an email to a reporter.

Mississippi became the first state to be denied a state-run exchange program by the Center for Consumer Information and Insurance Oversight (CCIIO).

“With a lack of support from your governor and no formal commitment to coordinate from other state agencies, we do not see a feasible pathway to conditionally approving a state-based exchange in Mississippi in 2014,” wrote CCIIO Director Gary Cohen. “Although we are unable to conditionally approve your application at this time, we are impressed by the work you have completed to date and encourage you to submit an application for the partnership exchange model by Feb. 15,” Cohen said.

Several states are divided along partisan lines and have yet to choose. New Hampshire has designated a committee of three Democrats and three Republicans who will meet this week to discuss whether the state will partner with the federal government. Utah is waiting to hear whether HHS will approve their partnership model, which differs from the federal blue-print.

State Laboratories Testing Medicaid Models

Two stories stood out in last week’s healthcare coverage as insightful about how states might share and adapt to achieve Medicaid changes.

As reported in Kaiser Health News, Oregon’s historically progressive public health model allows for generous Medicaid benefits, while Alabama’s spending on public health like Medicaid has been “bare bones” with few benefit options. Yet both states are implementing ‘accountable care’ payment models for Medicaid in an effort to slow or reduce costs.

Under that system, community providers – whether hospitals, physician practices, or managed care providers –agree to work within a tightly networked continuum of care to treat patients. They accept a single negotiated or flat fee for the collective services. While this payment model can vary, typically the providers are responsible for costs that exceed the patient’s target expense, and sometimes also share in any savings that may have been achieved.

Ironically both states’ governors are physicians. Democrat John Kitzhaber of Oregon is an emergency room doctor. Republican Robert Bentley of Alabama is a dermatologist.

According to the Kaiser report, neither Oregon or Alabama have had strong leanings toward utilizing a private managed care contractor to manage their Medicaid dollars and beneficiaries.

“In general, Alabama health care providers are concerned that managed care organizations would cut payments to doctors, hospitals and other providers in order to hit cost targets under a state contract,” said the Kaiser report. “They also worry that the companies could break their contracts or fail to renew if they’re unhappy with their profits.”

Florida, however, is looking at a managed care or health maintenance (HMO) model for Medicaid. CMS recently signed off on a waiver request that will allow Florida to begin transitioning long-term care Medicaid patients to a managed care plan.

And while some policy analysts share reservations about profit-motive in a private contractor managed care organization, others see the potential for great savings through efficiencies the current system doesn’t provide.

For example, in Florida’s current system, nursing homes bill the state directly for Medicaid care. It is difficult for beneficiaries to follow the billing process, and the system doesn’t necessarily deliver better care. In a managed care system, savings can be achieved through drug management, patient centered and tailored care, and other quantifiable efficiencies.

In Florida’s model, the state plans to monitor the new managed care organizations by setting boundaries and limits. Among the oversight proscriptions, managed care contractors will be required to keep a minimum number of providers within each managed care network, and reimbursement rate increases will be funded only through achieved savings.

Survey Says Majority of Americans Want Health Exchanges

A survey by the Robert Wood Johnson Foundation reveals the majority of Americans (and pluralities in both parties) believe the state-based health insurance exchanges should be a top priority for the 113th Congress.

According to the report, 55 percent of the public, including majorities of Republicans and Democrats, say that establishing the exchanges—a key element of the Affordable Care Act (ACA) and one whose implementation has divided states along partisan political lines—is a “top priority” for their governor and legislature.

So far 18 states and the District of Columbia have declared that they will create their own state-based exchanges, seven other states have opted to establish exchanges in partnership with the federal government and 25 others—some driven by resistance to the ACA—appear set to default to a federally-run exchange.

“Governors are largely splitting along partisan lines on the exchanges, but the public is not. People like the idea,” said Drew Altman, President and CEO of the Kaiser Family Foundation in a press release.

In other findings, 78 percent of Republicans believe their lawmakers should continue to find ways to change or alter the ACA to lessen its impact on taxpayers, providers and employers. Forty percent said the country should accept the ACA as a law of the land and should stop trying to block its implementation.

The survey makes clear the dilemma facing lawmakers. While 65 percent of those polled said Congress should act quickly to bring down the deficit, 58 percent oppose any cuts to Medicare and 46 percent oppose any cuts to Medicaid.

But there is evidence of some common ground about how to reconcile those problems. Eighty five percent of the people said they would support demands for drug companies to lower prices for low-income people on Medicare, and 59 percent said they agree higher income-earners on Medicare should pay higher premiums.

Re-admissions Caused by Multiple Problems

A new report published by the Robert Wood Johnson Foundation looked at the reasons for one of the most expensive healthcare problems – hospital re-admissions – and concluded there are multiple causes and multiple solutions needed to fix the problem.

More than 1 million Americans wind up back in the hospital within weeks of discharge. Nearly 1 in 5 Medicare patients is hospitalized again within a month of going home, and many of those return trips could have been avoided. Un-necessary re-admissions cost Medicare alone more than $17 billion yearly.

The Revolving Door: A Report on U.S. Hospital Readmissions”, An Analysis of Medicare Data by the Dartmouth Atlas Project revealed re-admission rates held steady – and high – between 2008 and 2010, showing few signs of abating. By focusing on how the re-admissions rates were experienced by patients, it yielded some insightful conclusions about how to improve the situation.

The reasons for re-admission are widely varied and differ greatly depending on where you live, say researchers.

Some patients don’t feel well enough to travel to a pharmacy for prescription drugs, or don’t have transportation available. Others don’t understand their after-care instructions, many cannot get a follow-up appointment with their primary care doctor early enough for physicians to identify potential complications, others have no primary care.

"This is a team sport," said readmissions expert Dr. Eric Coleman of the University of Colorado in Denver in an AP story about the RWJ report. Among the lessons learned is the fact that patients must be better advocates for themselves – and providers must educate them in a way that makes them better advocates.

And while medical problems like poor drug compliance, or drug interactions, and post-operative infections are well-known, for patients the problems are often just practicalities like lack of transportation, or poor scheduling of follow-up care.

Hospitals will have to focus on issues specific to them to identify causes of re-admissions, since those factors appear to vary widely by geography and patient population. In some cases, a hospital may have a larger population of aging or ill patients, in other instances the lack of availability of follow-up care may be the culprit. Rural hospitals have different problems than urban hospitals, and geography sometimes offers clues about patient populations, and therefore clues about how to better reach, treat and monitor patient care.

The Affordable Care Act now allows Medicare to penalize hospitals through lower reimbursements for re-admission rates it deems unacceptably high. Those federal penalties may be applying some leverage for hospitals to put a new focus on how to solve the problem.

Medicare’s Deputy Administrator, Jonathan Blum told the AP that new focus is improving the situation.

“We're at a very promising moment,” he said. “Two years ago, the response was, ‘This is impossible.’ Now it’s, ‘OK, let's figure out what works.’”


EHR Incentives Offer Revenue Boost

Large for-profit hospital systems have enjoyed a revenue boost from electronic health records incentives paid by CMS as part of the Affordable Care Act’s endeavor to modernize and streamline administrative work, but the income appears to be leveling off according to industry analysts.

During the release of fourth quarter earnings reports, HCA Nashville (the country’s largest for-profit system) reported $80 million in the final quarter of 2012 on net income of $314 million. By comparison, it recorded $120 million in EHR incentive payments during the same period the previous year.

Vanguard Health Systems, also in Nashville, received $14.5 million in fourth quarter EHR incentive payments, down from $21.3 million in fourth quarter of 2011. Vanguard’s net income for the quarter in 2012 was $12.2 million.

Analysts reported in last week’s trade press that other large for-profit health systems also were anticipating fourth quarter reports reflecting fewer dollars from the CMS incentive program.

But the incentives have made an economic impact in other business sectors that have benefited from the EHR upgrades. Software businesses that design the IT platforms for storing, sharing and integrating medical records also enjoyed a revenue boost.

Two years ago, the response was, ‘This is impossible.’ Now it’s, ‘OK, let's figure out what works.’”

Jonathan Blum, Medicare deputy administrator commenting on the new focus hospitals are putting on trimming readmissions, in part because of a new ACA feature that allows the government to cut Medicare reimbursements to hospitals with readmission rates deemed too high.

"It's ridiculous for Medicare to be paying drug companies two and three times as much money for drugs as other countries at a time when we are cutting essential programs,"

Dean Baker, Center for Economic Policy Research who found that for every dollar paid in the U.S. per person on medications, Canada, the U.K. and Denmark spend about 70, 40 and 35 cents respectively. He calculated the U.S. could save $230 billion over 10 years following Canada’s model, and $540 billion following Denmark’s.

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