By Jane Norman, CQ HealthBeat Associate Editor

March 9, 2012 -- An anxiously awaited final rule on the structure of health benefits exchanges remained stuck in regulatory limbo last week, after an abrupt cancellation of a press call featuring top Health and Human Services (HHS) officials.

Meanwhile, an expert on state health policy says exchange action appears to be slowing in states where largely Republican lawmakers are reluctant to move before the Supreme Court decides later this year whether the health care law is constitutional. In Idaho, for example, legislative leaders say they now doubt an exchange bill will even be introduced this year, the Idaho Statesman reported this week.

HHS officials, however, insist they are happy with the progress that's being made, even in states controlled by the GOP. And they say legislators and governors share the Obama administration's goal to have states run their own exchanges rather than turn them over to the federal government. The exchanges will serve as marketplaces for individual and small group health insurance policies when the health care law (PL 111-148, PL 111-152) goes into effect in 2014.

But before the exchanges can be operational, there are many policy and technology details that must be hammered out. And many cannot be resolved until state officials know more about how the federal government wants them to construct the exchanges.

The mystery surrounding the exchange rule later deepened when HHS officials canned a call with reporters to "discuss an important announcement relating to a provision of the Affordable Care Act."

The call—scheduled after the close of the markets—was to feature key exchange players: Steven Larsen, deputy administrator and director of the Center for Consumer Information and Insurance Oversight (CCIIO) at the Centers for Medicare and Medicaid Services (CMS); and Chiquita Brooks-LaSure, director of coverage policy at HHS' Office of Health Reform at HHS.

Just the day before, Larsen had told those attending an American's Health Insurance Plans (AHIP) conference that the Obama administration was "very, very close" to issuing the exchange rules, which have been under review at the Office of Management and Budget (OMB). OMB review is typically the last step before a regulation is published.

Separately, Marilyn Tavenner, the acting director of CMS, told reporters after speaking at a Federation of American Hospitals meeting that the rules will be out "very shortly."

But less than an hour before the press call was scheduled, as health industry stakeholders nervously monitored their smart phones for rumors and developments, HHS officials said the announcement would be postponed until a date "TBD."

Republican members of Congress have been harshly critical of HHS for not moving faster on the exchange regulation and in a March 1 hearing of the Energy and Commerce Committee several House members battered HHS Secretary Kathleen Sebelius over the issue.
"Some states are concerned that without the final rules on the exchanges, they're bumping up against the deadline that it's going to be pretty tough for them to meet," Michael C. Burgess of Texas told the secretary at the hearing. "I mean they need these rules probably within the next couple of months, if they're able to be finalize their issues to meet the deadline."

Sebelius told Burgess that states would "definitely have them in the next couple of months."

But some states are just going to wait on exchange implementation, said Joy Johnson Wilson, federal affairs counsel and health policy director at the National Conference of State Legislatures.

Wilson said in an interview that "it's fair to say that legislation has kind of slowed." Many lawmakers are adopting a wait-and-see approach in anticipation of oral arguments over the law scheduled before the Supreme Court March 26-28, she said, with a ruling expected by the summer. Others are reluctant to take action until after the November elections.

The problem is that legislators don't want to make decisions that will have to be revisited and reworked, said Johnson. "These are not easy issues and they don't want to have to keep going back and making changes," she said.

However, in states that are going ahead with their exchanges, requests for proposals are going out especially in connection with information technology, she said.

Larsen, though, in his remarks to AHIP said HHS officials are spending a "an incredible amount of time" working through issues with interested states, and learning from them as well. Many Republican-governed states have applied for establishment grants for their exchanges and "we're very encouraged by that," he said.

By John Reichard, CQ HealthBeat Editor

March 6, 2012 -- The acting administrator of the Centers for Medicare and Medicaid Services (CMS) told an audience of hospital executives early last week that in fiscal 2012 her agency will conduct a dry run of payments under the "Value-Based Purchasing" program.

Marilyn Tavenner indicated that will give hospitals a sense of how their payments will change under the program, which her agency is launching in fiscal 2013.

Congress instituted the program under the health law (PL 11-148, PL 111-152) to base Medicare payments on the quality and efficiency of treatment. Initially, payments will be based on quality, not efficiency.

The program to reward providers based on the quality of their care is the culmination of efforts that date back to early in the George W. Bush administration. Critics say the current payment system doesn't deliver good value because it fails to penalize providers if they deliver poor quality treatment. In fact, botched treatment leads to follow-up care and more revenue for providers, critics note.

Tavenner noted that in October, the start of fiscal 2013, the hospital Value-Based Purchasing (VBP) program "will distribute an estimated $850 million to hospitals based on their overall performance on a set of clinical quality measures that have been linked to improved clinical processes and patient satisfaction."

In order to "familiarize hospitals with how the program might affect them, we're going to do a dry run of the program" in 2012, she said at a public policy conference in Washington, D.C., sponsored by the Federation of American Hospitals. "The dry run will provide each eligible hospital with an example performance report based on historic CMS data for each hospital.

"This report will contain historic data of the hospital's performance against hospital value-based purchasing measures and a series of scores based on that performance and the estimated impact on the hospital's payment to give you a chance to look at it in advance, learn what we're thinking about doing, and give us feedback,'' she said.

Comments on 'Doc Fix,' State Exchanges

Tavenner told the group that she thinks they all agree that the current Medicare sustainable growth rate patch that will last until the end of the year "isn't sustainable and that we need a permanent fix." She added that "we also need to look at new and creative ways to run the physician payment programs." Tavenner didn't elaborate.

She also said that CMS would have some news in the next couple of weeks about insurance exchanges. The agency is expected to issue final regulations shortly on the creation of exchanges to provide the uninsured with health plan options starting in 2014 under the health law.

Tavenner was asked after her speech about whether exchange regulations might be issued as soon as this week. "Very soon," she replied.

As Tavenner was talking to hospital officials, Steve Larsen, director of the Office of Oversight at the Office of Consumer Information and Insurance Oversight, was telling members of America's Health Insurance Plans that administration officials have been working on the last details of the final exchange rules. "We're very, very close to putting those out in final form," Larsen said.

Tavenner was also pressed for details on a potential Senate confirmation hearing to consider her nomination by the Obama administration to become permanent administrator. "You're asking the wrong person!" she told a reporter. Senate Finance Committee Chairman Max Baucus, D-Mont., has yet to reveal what plans, if any, he has for a confirmation hearing.

By John Reichard, CQ HealthBeat Editor

March 8, 2012 -- The Medicare benefits package would be redesigned to cap enrollee out-of-pocket costs, under a draft recommendation unveiled recently at a Medicare Payment Advisory Commission (MedPAC) meeting.

The benefits redesign also would combine the deductibles for Part A and Part B services and vary copayments by the type of service and provider.

In addition, the Health and Human Services secretary would be given authority to alter beneficiary cost-sharing "based on evidence of the value of services," the draft language states.

And the draft recommendation also would require insurers to pay a surcharge on the supplemental policies they offer to beneficiaries to pick up certain expenses Medicare doesn't cover.

The proposal is designed to discourage beneficiaries from getting unnecessary or inefficient treatment. It would do so by increasing, decreasing or eliminating out-of-pocket payments, depending on the efficiency and quality of the service. But at the same time, it would protect beneficiaries by capping their out-of-pocket costs.

Such a cap would presumably make it more palatable for patients to pick up more of the initial cost of their medical care.

As an example, to encourage beneficiaries to get primary care, copayments could be set at $20 for primary care visits and $40 for visits to specialists. Or, to make beneficiaries think carefully about getting advanced imaging, which is more costly, Medicare could charge higher co-payments for that particular type of service.

The commission isn't endorsing specific copayment levels, however. There would be no change in the aggregate cost-sharing liability of the beneficiary.

The commission unveiled the draft but isn't expected to vote whether to recommend it to Congress until later this spring and may make changes to the proposal based on the discussion at this month's meeting. The panel is gearing up to make recommendations in a June report to Congress, and the benefit redesign recommendation could be part of that.

By CQ Staff

March 7, 2012 -- Federal officials have redesigned the notice that Medicare beneficiaries get every quarter that explains their benefits and claims and enables them to appeal any decisions the agency has made.

The new notice is available online now, and starting next year the paper version will be mailed to beneficiaries each quarter.

"Consumer protection starts with making sure consumers not only get timely and accurate information, but that they understand what services they're receiving from Medicare," Marilyn Tavenner, acting administrator of the Centers for Medicare and Medicaid Services (CMS), said in a written statement announcing the change. "The new Medicare Summary Notice (MSN) empowers Medicare's seniors and people with disabilities. The statement is easier to understand and navigate, and makes clear what information to check and how to report potential fraud. The new MSN also makes it easier for people with Medicare to understand their benefits and file appeals if a claim is denied."

The new notice organizes the information in a form that's clearer and easier to read. Much like the statements consumers get from their private insurance companies, the new format more prominently displays the "This is not a bill" explanation and on the first of five pages clearly lists whether all Medicare claims were paid, which providers made claims for that beneficiary during the quarter and what the beneficiaries' deductible status is. The type is larger, and a more thorough explanation and definition of services is included.

CMS officials said the redesign took 18 months to complete and included feedback from beneficiaries.

By Nellie Bristol, CQ HealthBeat Associate Editor

March 5, 2012 -- Physicians are attempting to take charge of how they are paid through a new commission that will make recommendations next year for how compensations should be restructured to slow costs but optimize outcomes, the Society of General Internal Medicine recently announced.

The 13-member panel is chaired by Steven Schroeder of the University of California-San Francisco, who previously served as chairman of the Robert Wood Johnson Foundation. Honorary chairman is former Senate Majority Leader William Frist. Commissioners include physicians, health system executives, business leaders and policy experts.

The National Commission on Physician Reform plans to announce its recommendations in early 2013. The project is funded in part by the Robert Wood Johnson Foundation, the California Healthcare Foundation and the Sergei Zlinkoff Fund for Medical Education and Research.

"Congress continues to grapple with adjusting the sustainable growth rate (SGR) that determines Medicare payment rate cuts, uncertainty continues to surround implementation of the Affordable Care Act, and physicians and policy makers agree the continued increases in cost to provide health care services cannot continue," the group says in a news release.

The panel will assess physician compensation including the effects of new models such as accountable care organizations, patient centered medical homes and value based purchasing.

"How physicians are paid is a major driver of health care costs, along with other factors such as the number of patients accessing services, increased treatment for chronic conditions, the continued reliance on high technology interventions, and a system that continues to reward payment for procedures rendered and tests ordered instead of quality of overall patient care," the release notes.

According to the Kaiser Family Foundation, spending for physicians and other professional services comprised 24.4 percent of total health care spending in 2009.

By CQ Staff

March 9, 2012 -- President Obama appointed Todd Park assistant to the president and U.S. chief technology officer (CTO). Park has been head of technology for the Department of Health and Human Services (HHS) since 2009.

In announcing the appointment, administration officials said Park has been an "agent for change" at HHS where they said he was hired as the department's "entrepreneur-in-residence."

"Park has been helping HHS harness the power of data, technology and innovation to improve the health of all Americans,'' the announcement said. "The president has asked him to bring that same approach to a broader mission—helping to replicate those and other best practices across government and bring them to scale."

Park takes over for Aneesh Chopra, the first U.S. CTO, who last month left to return to The Advisory Board Company as senior advisor, health care technology strategy.

"As our 'entrepreneur-in-residence,' Todd has lit a fire of innovation across HHS,'' HHS Secretary Kathleen Sebelius said in a statement. "Notably, Todd led the team that, in ninety days, developed and launched HealthCare.gov, the first website to provide consumers with a comprehensive inventory of available public and private health insurance plans in a single, easy-to-use tool. I know he'll bring the same energy and boundless creativity to his efforts across the entire Federal Government as the next CTO of the United States."

Asked who will replace Park at the agency, an HHS officials said that "Todd's HHS portfolio will continue to be a major focus of his work given the significance of the Department's efforts and the wonderful work already underway. He has built a strong team at HHS that will continue to support our efforts."

The U.S. CTO is responsible for ensuring the adoption of innovative technologies to support administration priorities, including job creation, broader access to affordable health care, enhanced energy efficiency, a more open government, and national and homeland security.

"Todd Park has demonstrated a remarkable talent for enlisting innovative technologies to modernize government, reduce waste and make government information more accessible to the public," Obama. said in a statement. "In his new position he will bring those skills to the entire federal enterprise, ensuring that government will serve all Americans fairly, effectively, and efficiently."