By John Reichard, CQ HealthBeat Editor

September 20, 2010 -- Health and Human Services Secretary Kathleen Sebelius said Monday that new regulations that take effect this week under the health care overhaul law will help stabilize a market that has been "in a bit of a death spiral."

Sebelius said the loss of eight million jobs during the economic downturn has "translated into a lot of health coverage losses" but that the other key factor behind the rise in the uninsured population to 50 million is that "the system was broken—fundamentally broken."

The secretary was asked at a forum, sponsored by the National Journal, whether the administration was making plans for next year in case Republicans gain a majority in Congress and they cut off funding for implementing the law.

Sebelius sidestepped the question, but she offered a response to statement made by House Minority Leader John A. Boehner, R-Ohio. Boehner said that he wouldn't spend "one dime" on the law; Sebelius said Boehner should have a conversation with his constituents. "Millions" of Americans in January will benefit from the new protections, Sebelius said, and Boehner needs to explain what the health care system will look like if Congress blocks implementation of the law.

Sebelius said this week's new regulations will protect consumers against insurer tactics to limit coverage, such as the cancellation of polities once they actually begin to file for health care benefits.

The regs also would end lifetime limits on insurance benefits, a protection that applies to a relatively small number of people but is crucial nonetheless, she said. Insurance enrollees who exceed the limits typically face serious illnesses requiring enormously costly treatment. "The people who are affected are really in life or death situations," she said.

The regs also will help another population facing lack of coverage: Young adults who are coming off their parents' coverage but who now under the law can stay insured up until age 26 if their insurer offers dependent coverage.

Children with preexisting medical conditions also will no longer be denied coverage, Sebelius said. She noted that some 2,000 employers and unions are now benefitting from a program created under the health law that helps pay medical expenses for enrollees in corporate or union retiree health plans. She also pointed to the availability of tax credits for small business to help pay for insurance coverage.

The major provisions of the law to help pay for coverage do not kick in until 2014 through subsidies and the availability of state-based exchanges that are supposed to foster competition to keep premiums affordable.

Sebelius acknowledged that rate increases "are likely to continue to be somewhat substantial," not because of the cost of complying with new regulations under the law but because marketplace cost trends "are fairly substantial."

The secretary suggested that insurer complaints that the regs will drive double-digit premium hikes are not credible, saying she typically encountered such claims as the Kansas state insurance commissioner when the legislature considered new mandates and that the assertions proved to be unfounded.

By John Reichard, CQ HealthBeat Editor

September 24, 2010 -- State governors and the District of Columbia had until the end of Friday to request their share of $16.1 billion in added Medicaid money made available under a law passed by Congress this summer—and the Department of Health and Human Services (HHS) announced late in the afternoon that all had done so.

"I am glad that every state and the District of Columbia has decided to accept this funding to assist in extending coverage for men, women, children, seniors, and people with disabilities," HHS Secretary Kathleen Sebelius said in a statement.

A spokesman for House Minority Leader John A. Boehner, R-Ohio, has blasted the education-Medicaid funding measure signed into law Aug. 6 by President Obama, saying at the time that "the American people don't want more stimulus spending."

But Republican and Democratic governors alike decided they wanted the Medicaid money.

"These critical resources will not only help stave off cuts to Medicaid but will also help sustain jobs in hospitals and health centers in communities across the country," Sebelius said in her statement Friday.

The education-Medicaid funding measure extended the period of added federal Medicaid funding that started as part of stimulus funding from Dec. 31, 2010, to June 30, 2011. But states had to specifically request the funds within 45 days, or by Sept. 24.

After Congress passed the economic stimulus law in 2009, South Carolina Gov. Mark Sanford grabbed headlines by appearing to take a principled stand against the law in suggesting he wouldn't take any money. But Sanford then later quietly took the funding. The 45-day provision appeared to be designed to keep governors from appearing to act on principle against the funding while quietly accepting it.

It's no surprise that states strapped for cash are taking the money, but that isn't stopping lawmakers from raising concerns about how much money Washington is spending overall on Medicaid.

Elsewhere on Friday, the top Republican on the Senate Finance Committee, Sen. Charles E. Grassley of Iowa, sent a letter to Sebelius asking why a report due last January on Medicaid's finances still hasn't been submitted to Congress by HHS.

"I said before that the report might contain bad news, but we all need to see it," Grassley said in a news release.

"The new health care reform law expands Medicaid by the greatest amount in the program's history, yet states are already struggling to afford their existing Medicaid responsibilities," Grassley said. "It would really bother me if HHS were withholding the report because they don't want people to know what the true picture of Medicaid is."

HHS officials had no immediate comment.

By John Reichard, CQ HealthBeat Editor

September 24, 2010 -- Federal officials are pushing now to increase Medicaid enrollment, rather than waiting for when eligibility sharply expands four years from now, the top Medicaid official told a new congressional advisory panel Friday.

Cindy Mann, director of the Center for Medicaid at the Centers for Medicare and Medicaid Services, said there has long been a mindset that there will always be a big "eligible but unenrolled" population for Medicaid and the Children's Health Insurance Program (CHIP). But the "new paradigm" at CMS is that "eligibility equals enrollment," she said.

Mann spoke at the second day of the inaugural public meeting of the new Medicaid and CHIP Payment and Access Commission, known as MACPAC.

The mantra among federal CMS officials is that "2014 is Now!" Mann said, referring to the date Medicaid eligibility expands under the health care overhaul law (PL 111-148, PL 111-152) to include uninsured people with yearly incomes up to 133 percent of the federal poverty level.

Even as federal workers prepare for that date, they are mounting an aggressive "Connecting Kids to Coverage" campaign targeting uninsured youngsters now eligible for Medicaid or CHIP but not actually enrolled, Mann said.

"Sometimes people think, 'They keep working on eligible but unenrolled, it must be that it can't be accomplished,' and in fact, it can be accomplished," she said. New census data shows a drop in the uninsured rate for low-income children because of Medicaid and CHIP, even though the rate rose in society as a whole, Mann said. "It is no accident that that's happened. . . . it shows we can and have made concerted progress."

Historically, one of the obstacles to enrolling low-income Americans in federal programs is that those who are eligible don't know it. For their part, government workers aren't sure how best to find them in order to let them know.

But Mann said "we know there are roughly 4.7 million of those eligible but unenrolled children, and we know more precisely than we have before where they are residing. . . . It's rare that everybody stands up and says, 'You know, if you're eligible, you have to be enrolled, you ought to be enrolled. It is our job to get you enrolled. That's really a new paradigm shift."

Mann said cost control and quality improvement goals for Medicaid and CHIP can't be met "unless we not only get everybody enrolled, but they are enrolled all year continuously in the right program without gaps in coverage, without churning. Only then can we really focus on making sure that access is there, that the quality of care is strong, and that our cost containment goals are able to be met."

Efficient enrollment in the programs also will require marrying the enrollment and renewal process with that of the state health insurance exchanges. Those exchanges will begin operating in 2014 as Americans seek coverage and subsidies to fulfill the legal mandate that everyone have insurance, Mann said.

Some people who come to the exchanges to find coverage options and see if they are eligible for subsidies may learn that they are qualified for Medicaid or their children for CHIP. That could become another way to enroll people in those programs.

Or, maybe in trying to sign up for Medicaid they will find they make too much money to qualify, but that they can get subsidies through the exchange. All of that suggests the need for close coordination between Medicaid, CHIP and the exchanges.

Mann also sees enrollment coming through the Web portal that opened up earlier this year, Healthcare.gov, which points Americans to coverage options. People can now get a general idea of whether they or their kids are eligible for Medicaid or CHIP in a state. Further refinements will be made to let them know for sure and ultimately to give them the ability to enroll in the programs, she said.

Mann touched on a variety of other issues in her presentation, including the need for research on problems with access to care in the programs, and the use of various measures to assure quality of care.

Commissioners listened with interest, but the enrollment issue can be a touchy one. Republicans under the George W. Bush administration tightened eligibility criteria for uninsured children in Medicaid and CHIP. And MACPAC itself may draw fire from the right depending on how it handles the issue.

Earlier this year, Senate GOP staffer Rodney Whitlock said MACPAC will be valuable if it pinpoints how payments can improve access — but not if it focuses primarily on better outreach to increase enrollment in a broken system that states can ill afford.

MACPAC's Vice Chairman David Sundwall told Mann at Friday's meeting that "it's all very interesting to me to see the energy and creativity that you have related to Medicaid." But, he said, "your enthusiasm is not shared by a lot of states. It is really difficult for us who are on the ground trying to balance budgets.

"I just hope you will factor in if you will the ambivalence that we might seem to be demonstrating or the challenges that we face whether they be budget or philosophical differences with the legislatures we work with," Sundwall said. "I see this mammoth energy and interest and intellect kind of churning to get this done, but I hope you also appreciate that there's some people and opposite forces at work making our lives difficult" at the state level.

"What we need to make sure we have the opportunity to do is have some thoughtful dialogue with people of different views or concerns, Mann responded. "For example, on the cost side there is no one more committed to reducing costs in our health care system and in Medicaid than Don Berwick," she said, referring to the new CMS administrator.

By Jane Norman, CQ HealthBeat Associate Editor

September 22, 2010 -- Two states—Maine and Iowa—have asked the Obama administration for more time in implementing a key provision in the health care law that spells out how much health insurers must spend on medical care and quality improvements, state insurance commissioners said after a White House meeting with the president on Wednesday.

A third state, Florida, is gathering additional concrete information and evidence to submit to the administration to bolster its case.

Leaders of the National Association of Insurance Commissioners (NAIC) said at a news briefing that President Obama told them during the meeting that he wants the federal government to be "thoughtful" and "realistic" as the difficult work of the health law's implementation goes on.

The commissioners said their concern is that small companies in the individual market, especially in smaller and more rural states, may founder if they must too quickly meet regulations dealing with what are known as medical loss ratios, or MLRs.

The NAIC is playing a major role in implementation of the law because its members make recommendations to the administration on the MLR and other provisions in the law. The group hit a milestone in August when it approved the detailed "blanks" form on the MLR that insurers will have to complete (See related story, CQ HealthBeat, Aug. 17, 2010). The commissioners had to agree on the criteria they would list on the form to show the government that insurers are spending enough of the premiums they collect on medical care for policyholders. The agreement followed months of debate over developing the regulation, and the MLR regulations could have a direct impact on insurer profits.

The law requires 85 percent of insurer premiums to be spent on medical care and quality improvements for large insurers, and 80 percent for small group and individual plans. Consumer advocates and Democrats in Congress are keeping a close eye to make sure insurers don't game the process of how those outlays are calculated or the time frame in which they must be completed.

Iowa Insurance Commissioner Susan E. Voss said she sent a waiver letter to the Department of Health and Human Services (HHS) on Tuesday asking that the MLR be phased in through 2014 in her state, where there is a dominant health insurer and a small cluster of other providers in the individual market. Without more time for small companies to meet the standard, "it's going to be like 1-800-Blue Cross Blue Shield in Iowa," Voss said.

Florida Insurance Commissioner Kevin McCarty said he appreciated the president's words because "we can't put this all into place immediately" without potentially disrupting the market. "If our goal is to minimize disruption before guaranteed issue in 2014, then a way to do that is to do some kind of phase-in," he said, referring to the point in 2014 when health insurers cannot deny applicants if they have pre-existing conditions.

Administration officials "don't like the word phase-in" and want concrete evidence of what disruption in the marketplace would be, McCarty said. He said he had a conversation with Jay Angoff, head of the Office of Consumer Information and Insurance Oversight, about Florida's concerns.

The hourlong White House meeting included commissioners from 32 states, two territories and the District of Columbia. HHS Secretary Kathleen Sebelius and Labor Secretary Hilda L. Solis were in attendance, and the president arrived about halfway through, commissioners said.

Voss said she felt administration officials heard the commissioners' message about the phase-in. "I got a sense they were taking notes," she said. "I think there's going to be continued open discussion." She said there's been no determination yet on possible waivers to allow phase-ins and that it's not clear how many other states might attempt the same. Sebelius would make the ultimate decision on whether or how a phase-in would work.

Kansas Insurance Commissioner Sandy Praeger said commissioners encouraged the administration to "look at any flexibility they have" in phasing in the medical loss ratios, since the law doesn't allow the states to implement phase-in periods on their own. Jane L. Cline, president of the NAIC and West Virginia insurance commissioner, said that "at the end of the day, we want to make sure consumers have an opportunity to purchase affordable health insurance."

Insurers who don't meet the ratios will have to issue rebates, but the rebates were not an item of discussion, the commissioners said.

By John Reichard, CQ HealthBeat Associate Editor

September 23, 2010 -- On a day when Republicans across town were proudly proclaiming plans to repeal the health care overhaul, a new Medicaid commission created by the measure rumbled into motion, with its chairwoman, Diane Rowland, cheerfully anticipating the work ahead despite the uncertain fate of the law and the new organization it funds.

Both Medicaid and the Children's Health Insurance Program (CHIP) are poised for sharp expansion under legislative wins for the Obama administration and congressional Democrats.

The tide could be turning against Democrats and their expansion efforts, with Republicans threatening to try and gut the law if they make significant gains in the midterm elections.

But the need met by the new Medicaid and CHIP Payment and Access Commission (MACPAC) for much greater official scrutiny of the two programs suggests MACPAC will be around for a long time, whatever the fate of the law.

In an interview Thursday morning before the panel's inaugural public meeting, Rowland said, "We want to look at the access issue. What do we really know about it? What are states trying to do to address it?"

It's one thing to have an insurance card and another to actually see a doctor or a specialist. So the panel's early work will center on pinpointing gaps in access to care around the country, and the specific nature of those gaps. Analysts often cite Medicaid's low payment levels as the reason enrollees can't find doctors. But Rowland says the commission will also explore what role administrative hassles play in the reluctance of doctors to treat Medicaid patients. And the congressional advisory panel will examine to what extent the lack of geographic proximity of patients to doctors is the real problem.

Rowland says she's aiming to make commission meetings a window not only on research relating to the programs, but also on Medicaid as it is actually operating "on the ground."

For example, Thursday's session included a presentation by Julie Hudman, director of the District of Columbia's Department of Health Care Finance, on a program to expand Medicaid eligibility to 133 percent of the federal poverty level for childless adults.hat's the threshold for Medicaid eligibility in 2014 under the overhaul law, but federal funds are available before then for childless adults. Both the District of Columbia and Connecticut are taking advantage of that.

Research Findings Presented

The first day of the Sept. 23-24 meeting, Genevieve Kenney of the Urban Institute and Peter Cunningham of the Center for Studying Health System Change will present policy research findings.

Cunningham's data concludes that the "low overall supply of physicians may be more of a problem than low fees in some areas." There is also variation among the types of providers who will accept Medicaid patients. Younger doctors, larger practices and practices in rural areas are more likely to take Medicaid patients, he notes.

Sixty-five percent of practices specializing in pediatrics take Medicaid patients, compared with 42 percent of psychiatric practices and 40 percent of those in internal medicine.

The fact that many doctors don't take Medicaid doesn't mean there isn't considerable access to care in the program, Cunningham's data also suggests. Fifty-three percent of all doctors accept most all or most new Medicaid patients, it says.

According to Kenney, "Nationally, access to routine primary care is fairly strong in Medicaid and CHIP, especially for children, when compared to care received by other groups." But compared with people with private coverage, enrollees in the programs have high rates of emergency-room use, a higher rate of dental problems, a greater reliance on safety net providers and more problems getting access to specialty care.

Kenney's data also suggest that enrollment in Medicaid or CHIP is far better in terms of access to care than having no insurance at all. The data show for example that 32 percent of non-elderly adults with no insurance in 2007 made one or more visits to the doctor, compared with 71 percent in Medicaid.

And 63 percent of children in Medicaid or CHIP had one or more visits to the doctor, compared with only 33 percent of uninsured children.

Overall data on Medicaid released at the meeting showed the program's big share of national health spending in various categories. The program funds 41 percent of nursing home care in the U.S., 17 percent of hospital care, 13 percent of other professional services and 8 percent of prescription drug purchases. Medicaid covers about 60 million people, more than Medicare, and one-third of all children.

Study Gaps

While MACPAC will bring much more data to bear on policy decisions, big gaps remain in research on Medicaid, which consists of 51 different programs because of variations in how states and the District of Columbia run the program.

Officials with the Government Accountability Office and the office of the Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services are scheduled to make presentations Friday on their research priorities to help commissioners evaluate remaining research needs—which are expected to be huge.

According to Kenney, "most studies examine access to care at the national level or focus on just one state. So we have limited information on how access to care varies across the 51 different Medicaid and CHIP programs."

Rowland emphasized Thursday that children's health coverage will be an important focus despite the major advisory challenges awaiting the panel with respect to Medicaid. And a huge part of the Medicaid program, she also noted, consists of long-term care.

Rowland said the panel will meet more or less monthly, with the next meetings planned for October and December to help make recommendations for a report to Congress due March 15. Another report to Congress is due June 15 of each year. Transcripts of meetings will be posted at the commission's new web site, www.macpac.gov.

By John Reichard, CQ HealthBeat Editor

September 21, 2010 -- If the health care overhaul is going to decimate the Medicare Advantage program as Republicans insist, don't look for it to happen next year—premiums are falling, benefits are holding steady and enrollment in the program will rise five percent next year.

So said Obama administration officials in a telephone conference call with reporters on Tuesday, noting that premiums on average will drop 1 percent in 2011 for the private health plans that make up the Medicare Advantage (MA) program.

"Despite a lot of predictions of doom and gloom, the Medicare Advantage program is stronger than ever before," said Kathleen Sebelius, secretary of the Department of Health and Human Services.
Medicare Advantage "remains strong and a robust option for millions of seniors who choose to enroll or stay in a participating plan today and in the future," added Donald Berwick, administrator of the Centers for Medicare and Medicaid Services (CMS).

Officials in the briefing attributed the attractiveness of these plans to consumers to the explicit authority the overhaul law gives CMS to reject plans' bids.

CMS initially denied about 300 plans that had wanted to increase out-of-pocket costs for beneficiaries, Berwick said. After being told they had to do better, the plans boosted benefits by some $150 million, he added. Some 2,100 plans filed bids.

Industry sources confirmed the far tougher negotiating tactics by CMS during bid reviews. John Gorman, CEO of the Gorman Health Group, a consulting firm, said he wasn't surprised premiums dropped, "especially after the beat-down they gave plans this season. This was night-and-day different from the Bush years."

Another industry source, a former MA plan executive who requested anonymity, said "plans either reduced their margins or reduced supplemental benefits, or costs shifted to the beneficiaries where they were able. The CMS reviewers demanded cuts in bids, sometimes giving plans a few hours to respond, but would not tell the plans where the cuts had to be made," the former executive said. "This became a game of CMS saying 'you shoot the arrow' and we will throw up the target afterwards."

The tough tactics didn't cause many plans to quit the Medicare Advantage program, however. "That didn't happen yet," Gorman said. "What we did see is most plans sacrificing margin to hold onto market share."

In the end, only three sponsors offering seven plans dropped bids after they were rebuffed by CMS, CMS Deputy Administrator Jon Blum said.

But officials at the America's Health Insurance Plans (AHIP) still predict major cutbacks in benefits and increases in costs in the coming years.

"Medicare health plans are doing everything they can to keep coverage as affordable as possible for the more than eleven million seniors in Medicare Advantage,'' said Karen Ignani, president and CEO of AHIP. "Nevertheless, as deep cuts go into effect in the coming years, government experts have forecasted that millions of seniors will experience higher costs, reduced benefits and fewer choices."

Congressional Republicans have predicted that reimbursement cuts in the overhaul law would result in many plans dropping out, belying President Obama's claim that people will be able to keep their current coverage under the health overhaul law.

CMS officials said that of the 11 million or so beneficiaries in the Medicare Advantage program, roughly the same percentage will have to find a new plan next year as has been the case in the past several years, officials said.

CMS said in a news release that "about five percent of non-employer beneficiaries enrolled in Medicare Advantage and stand-alone Prescription Drug Plans will need to choose a new health plan or original Medicare." And only 2,300 Medicare Advantage enrollees will have no Medicare Advantage options whatsoever because of plan withdrawals, officials added. Those beneficiaries, in Utah and Colorado, are primarily in private fee-for-service plans, a type of Medicare Advantage plan that fewer and fewer companies have sponsored because of a 2008 law that required them to create actual networks of providers.

But Medicare officials did not specify in the press call or in their news release the exact number of beneficiaries who will have to find a new plan next year, or have to return to traditional Medicare because their current Medicare Advantage plan is leaving the program. A CMS spokesman said later Tuesday that about 900,000 will fall in those two categories, compared to 637,000 last year.

The spokesman said that "in large measure" the 900,000 consists of enrollees in private fee for service plans, the type of plan hit hard by the 2008 law.

The relatively good news for the Obama administration on the Medicare Advantage front may not last long, however. Medicare payment levels to plans held steady in 2011 compared to 2010—but in 2012 and beyond reimbursements will be cut.

"I think you'll see a lot of withdrawals next year," Gorman said, referring to announcements by plans about their intentions for 2012. Gorman predicted a drop of about 30 percent by 2013 in the number of plans participating in Medicare Advantage.

But Sen. Charles E. Grassley, R-Iowa, said in a statement that the Obama administration is sugar coating what is happening in the Medicare Advantage program. "One million seniors will be forced out of their current Medicare Advantage plan next year" he said, noting that "more cuts are on the way." Grassley said that "the Administration may be trying to persuade seniors that everything is fine, but the millions of Medicare beneficiaries who will lose their current coverage or see fewer benefits in the coming years will disagree."