By Rebecca Adams, CQ HealthBeat Associate Editor

October 2, 2012 -- Republican presidential candidate Mitt Romney's health care policies might leave 45 million more people without insurance in a decade compared to projections under President Obama's policies, according to a new study by The Commonwealth Fund, a nonpartisan organization whose research often highlights favorable aspects of Obama's health care law.

About 72 million people in 2022 would not have insurance under Romney's plans, according to The Commonwealth study. That compares to 27.1 million if the Democrats' health care law (PL 111-148, PL 111-152) is fully implemented. If the health care law did not exist, the number of uninsured would be 60 million, the study said.

The report comes with lots of caveats, in part because Romney has not released a enough details about his plans to know for sure how coverage would be affected. The Commonwealth Fund assumed that Romney would succeed in overseeing a repeal of the law; provide federal block grants to states for Medicaid; and allow an "above the line" deduction for people who buy insurance on their own so that people could benefit regardless of whether they itemize their taxes.

The organization further assumed that under the block grant plan, federal funding would grow at the rate of growth of the consumer price index plus 1 percent per year; states would match the federal funding with their state shares; states would compensate for lower funding through cuts that would be evenly split between reduced eligibility and lower payments to providers or reduced benefits to patients. The group also presumed that states would not cut eligibility for people who were elderly or had disabilities.

The comparison relies on an analysis by economist Jonathan Gruber, who has served as a consultant for the Obama administration.
"Romney's plan to repeal the Affordable Care Act and replace it with block grants to states for Medicaid and new tax incentives for health plans purchased in the individual market are expected, on balance, to reduce health insurance coverage in every state," said the organization.

Commonwealth Fund president Karen Davis was asked on a conference call with reporters whether she might prefer Democrats to pursue a single-payer approach to health care in the future, considering that the organization has produced reports that shine a positive light on that type of model in other nations.

Davis said that many of the pilot projects allowed under the 2010 health care law could move Medicare toward a system that rewards providers more on value than on volume and experiments with bundled or global payment models. She suggested that these could lead to initiatives that embrace some aspects of a single-payer approach. She said that at some point down the road, more fundamental looks at that will be needed.

By Jane Norman, CQ HealthBeat Associate Editor

October 3, 2012 -- Enrollment in the Pre-Existing Condition Insurance Plan hit 82,000 as of July 31, an all-time high for a program that had a slow start following its creation in the health care law.

But it's still far from the 375,000 Americans who were expected to rush to sign up, based on early estimates by actuaries with the Centers for Medicare and Medicaid Services. One problem for the program has been that the plan premiums, while at market rates, are costly for people with moderate incomes.

Per member per month costs also have been greater than anticipated, according to a recent Commonwealth Fund report.

The temporary program administered by states and the federal government is designed to be a stopgap for people with medical conditions who can't get insurance elsewhere. It will go out of existence once the health care law (PL 111-148, PL 111-152) goes into full effect in 2014 because insurers will be barred from charging more or denying coverage to people on the basis of pre-existing medical conditions.

According to the Department of Health and Human Services, 23 states and the District of Columbia have their pre-existing condition plans administered by the federal government, while 27 states run their own programs. California has the largest enrollment by far, with more than 11,000 people signed up.

The $5 billion PCIP program failed early on to attract as much interest as the Obama administration expected. In response, HHS cut premiums in May 2011, paid insurance agents to recruit uninsured people and eased enrollment requirements. Through the end of March 2011, only about 18,000 people signed up.

But earlier this year, HHS suspended the bonus program for insurance agents, saying there had been increases in awareness and enrollment.

The Commonwealth Fund report published earlier this month said the program has served its purpose.

"Despite the lower-than-anticipated enrollment and higher-than-anticipated costs, PCIPs appear to be performing their intended role as a bridge program, reducing costs of catastrophic medical liabilities for individuals and providers and improving access to care, including preventive and life-sustaining services," said the report by Jean P. Hall and Janice M. Moore of the University of Kansas. "PCIP enrollment continues to grow steadily; however, because premiums are priced at the regular rates for non-group coverage, enrollment is likely limited to people with relatively higher incomes."

By Rebecca Adams, CQ HealthBeat Associate Editor

October 2, 2012 -- Insurers that want to participate in the California health care exchange have until Oct. 12 to submit letters of intent, according to state officials who were poised to release a notice about the process last week.

California was the first state to establish a health benefits exchange after the 2010 health care law (PL 111-148, PL 111-152) passed. A spokesman said that California officials expect between 1.8 million and 2.1 million people to obtain subsidized coverage through the exchange with another 2.1 million Californians purchasing unsubsidized coverage in the exchange, which the law says should be up and running in 2014.

The state is moving ahead on its exchange even as officials in many states across the country continue to press federal officials for more details on how they will operate and how the rules for essential health benefits could affect coverage choices.

On Sept. 25, the California state exchange released a draft solicitation for insurers and collected comments from the public on it until last Thursday. The draft is the first glimpse insurers got of what information exchange officials want from those plans that would like to offer coverage in the exchange for part or all of the state. After reading comments and considering whether to make changes in the solicitation, the exchange is expected to release a final document on Oct. 18.

State officials expect to choose the plans that will participate in the California exchange by March 30, according to the 175-page solicitation, and execute contracts by June 1, in anticipation of an open enrollment period beginning in the fall.

The solicitation shows that the state is interested in signing contracts with insurers of up to three years. The state will ask each insurer to certify that for each rating region in which the plan wants to offer coverage, the plan will offer benefits for the four coverage levels required in the law (bronze, silver, gold and platinum tiers) and a catastrophic plan, and would ask plans to provide details about additional any benefits that would be offered.

Separately, the California insurance commissioner is praising other efforts to implement the exchange. Insurance Commissioner Dave Jones applauded Gov. Jerry Brown's signing of legislation that creates a licensing framework for Consumer Operated and Oriented Plans (COOPs), a nonprofit health insurance option in exchanges that was provided for in the health care law.

"This legislation will enable California to offer more affordable, quality insurance products in the Health Benefits Exchange, thus providing consumers with competitive, lower premiums, allowing them to keep more of their hard earned dollars," Jones said in an Oct. 1 statement. "I believe one of the most pressing issues facing Californians is the lack of available options for obtaining affordable health coverage. With the goal of providing insurance options to nearly one million low-income Californians in need of affordable health care, co-ops can serve as one affordable option available to these individuals and families."

The co-op bill takes effect on Jan. 1. It includes a provision banning a co-op plan from converting or selling a for-profit or non-consumer-operated entity after receiving a solvency loan. The state law also requires co-ops to comply with insurance governance standards.

Jones noted that the federal government has given out more than $1.6 billion in low-interest loans to co-ops located in more than 20 states.

By Jane Norman, CQ HealthBeat Associate Editor

October 4, 2012 -- Again tackling an issue that outrages hospital officials, members of the Medicare Payment Advisory Commission last week dived deeper into the question of how to equalize reimbursements paid to outpatient hospital departments and stand-alone doctor's offices.

In March, MedPAC recommended that payments for evaluation and management services paid to outpatient departments be lowered so they are equal to payments to doctor's offices. While Congress hasn't yet acted on that idea, it did catch the attention of lawmakers on the prowl for Medicare savings.

Now MedPAC is looking at other ambulatory care services to determine whether there might be ways to set equal payments across more settings beyond just evaluation and management, which refers to a doctor visit where the location of the visit doesn't affect the care. MedPAC staff estimated that equalizing those rates would save Medicare between $1 billion and $5 billion over five years.

Expanding the equalization effort as described in the new staff analysis that the commission discussed last week could save Medicare as much as $900 million a year. And the savings to beneficiaries through reduced cost sharing would be $250 million, the analysis found.

A spokeswoman for the American Hospital Association, however, said during the public comment period at the meeting that her organization is "extremely concerned" about any further proposed reductions in reimbursements on top of the March recommendation.
Roslyne Schulman said the March cut already constituted a $1 billion payment reduction for hospitals.

A spokeswoman for the American Association of Medical Colleges also urged a "thorough analysis" to determine whether low-income patients' access to hospital services could be harmed.

The issue is cropping up as more and more hospitals buy up physician practices and consolidate systems. When the hospital owns and operates a physician practice, even if it's not physically located in the hospital, the Medicare system allows an extra reimbursement. In some cases, such as laser eye procedures, the total payments can be 90 percent higher in a hospital outpatient department as in a physician's office, even though the procedure is the same, a MedPAC staff analysis found.

Commissioners raised questions after a staff presentation but seemed willing to pursue the idea of even more equalization. They are not yet at the point of crafting a draft recommendation to Congress. But the idea clearly was popular. MedPAC is an advisory board made up of health experts who make recommendations that Congress can accept, reject or ignore, though their discussions often form the basis for deeper analysis of Medicare spending.

"The principle of equal pay for equal services is, I think, really important, and I think taxpayers should know more about what they're paying for," said Mary Naylor of the University of Pennsylvania School of Nursing.

Scott Armstrong of the Group Health Cooperative in Seattle urged that "the sooner we move on this, the sooner we'll have an impact on cost trends beyond Medicare."

Why Pay More for Same Service?

The staff analysis set out payment principles that patients should have access to the right care but a "prudent purchaser" would not pay more for a service in one setting than another. Medicare should base its payment rates on the resources needed to treat patients in the lowest-cost, clinically appropriate setting, the analysis stated.

Payment rates could differ because hospitals incur costs related to other services that they provide and have to have on standby, and hospitals in some cases might have sicker patients. Hospitals also receive payments for tests or drugs apart from the payment for a doctor consultation.

But in some cases, payments could be the same whether they are provided in the outpatient department or the doctor's office, the analysis said. In certain other cases, payments could remain higher in outpatient departments but the size of the difference could be narrowed, according to the analysis.

The criteria for 25 services that could have equal rates across settings include those performed in physician's offices most of the time, those that don't involve a lot of other tests or procedures, those that usually don't involve an emergency department visit and those with few differences in the sickness of the patient.

Specifically, those could include diagnostic tests like certain bone-density testing or neuropsychological testing or laser eye surgery, the analysis said.

For example, an office visit for a laser eye procedure now carries a $389 reimbursement from Medicare, the analysis said. But in a hospital outpatient department, the reimbursement would be $738.

The analysis pinpointed 61 other services for which a hospital outpatient department could continue to receive an additional reimbursement because it provides other services but the reimbursement needn't be as large.

If Medicare were to adopt the system in the analysis, hospitals overall would see a reduction in revenue of seven-tenths of 1 percent and a decline in outpatient department revenue of 3.4 percent. Of the 100 hospitals whose payment reductions would be reduced the most, a majority are specialty hospitals and many are orthopedic/surgical hospitals.

By Jane Norman, CQ HealthBeat Associate Editor

October 5, 2012 – A Centers for Medicare and Medicaid Services (CMS) bureaucrat painted a bright picture of brisk action and state–federal cooperation on state exchange implementation at an insurers' meeting late last week.

But an exchange official from Arkansas, who was on the same panel at the state issues conference organized by America's Health Insurance Plans (AHIP) outlined the reality and complications on the ground. In Arkansas, even with a Democratic governor and Democratic legislature, a state–federal partnership will be the most that state officials will be able to muster prior to federal deadlines, given the vocal Republican minority opposed to any exchanges.

States face a Nov. 16 deadline for submitting a blueprint application to the Department of Health and Human Services (HHS) if they plan to operate their own state exchanges or state–federal partnerships. HHS is then supposed to issue conditional approval by Jan. 1, 2013, and the exchange is to be up and running by Jan. 1, 2014 under the health care law (PL 111-148, PL 111-152).

So much still hangs in the balance. Political struggles, information technology issues and the tight deadlines have proved problematic. A recent Urban Institute report said that while progress is being made, many crucial decisions about exchange design must be made prior to November.

Some Republican governors refuse to take any action until after the November election, though other GOP governors are allowing some steps forward. And CMS has not yet produced a final rule on the essential health benefits to be offered in qualified health plans in the exchanges, upsetting some states whose governors say they can't move forward with a lack of information.

At the AHIP meeting, Amanda Cowley, who deals with exchange implementation at the Center for Consumer Information and Insurance Oversight (CCIIO), praised the "tremendous progress" states have made in recent months in setting up the health benefits exchanges designed under the law to provide a market for individual and small group health insurance coverage.

Cowley said the governors of 14 states already have sent in letters to HHS Secretary Kathleen Sebelius saying they will establish exchanges and "we are actively working with those states as well as many others to complete the requirements."

The other options for states are to set up a state–federal partnership like Arkansas, or to allow the federal government to operate the exchange. "There may be a small number of states who choose not to operate a state-based exchange or a state partnership," Cowley said.

According to the Kaiser Family Foundation, as of Sept. 27, three states are actively planning state–federal partnerships while 16 are studying their options, eight have seen no significant action and eight have decided they won't create exchanges.

Cowley said her colleagues at CMS are working on the structure of the federal exchanges—building the plan management, consumer assistance functions, premium tax calculations and more. "We are consciously working very closely with stakeholders," she said, including recent open-door conversations across the country. The involvement of state insurance departments is a high priority, she said.
"The overall frequency and intensity of our interactions with states is increasing on a bit of a geometric basis," she said, including phone calls and webinars. More than 30 calls with groups of states have recently been conducted, she said.

Meanwhile, though, it's been tough going in Arkansas, a Southern state with a Democratic governor facing conservative opposition to the health care law.

Cynthia Crone, exchange partnership director, told the AHIP meeting that 78 percent of her state's residents earn less than 400 percent of the federal poverty level, which when the law goes into effect means they will qualify for subsidies to buy health insurance. It's also the third worst state in the nation in terms of health indicators and half of adults have a chronic disease, she said. Of those aged 18 to 64, a quarter lack insurance.

State officials, though, have been striving to improve residents' health care and plan for the exchange, Crone said. But even with a "popular" governor, and a Democratic legislature, politics have come into play, she said. "We have had a very vocal and active group of tea party Republicans who remain opposed to the Affordable Care Act and therefore exchanges," she said.

Lawmakers didn't enact legislation in January 2011 on exchanges because of opposition among Republicans and the insurance department appropriation was even held hostage over objections to a federal exchange planning grant, she said.

Turmoil continued over federal funding so that when the partnership model was announced by HHS, "that seemed to us like a really nice compromise," she said. "We wanted to keep insurance as local as we could." Groups working on plan management and consumer assistance were set up and have been intensely working on implementation issues during the past six months in conjunction with a steering committee set up by the governor, Crone said. An essential health benefit model was picked.

"We are on track, we believe, to get our partnership online as it should be," she said, and HHS conditional approval is expected in January.
But will the state ever move toward its own exchange, without the federal helping hand? "I don't know but I think we are in a good position to make that move should we have the political wish to do so in our state," Crone said. "We see this as really a way to help Arkansans, how we can truly improve our access, our quality and our coverage so that we improve our health."

By John Reichard, CQ HealthBeat Editor

October 2, 2012 -- Talk of deficit reduction running into the trillions of dollars is heating up—and with it discussion of a proposal floated by leaders of the unsuccessful Simpson-Bowles commission as the eventual basis of compromise.

Judged against the standards of longstanding health policy, Simpson-Bowles would bring dramatic change—taxation of health benefits, a cap on overall health care spending by the federal government, an end to Medigap coverage in its current form, and possibly a premium-support based overhaul of Medicare.

But what seems radical and unconventional now may seem less so if, as some predict, the federal government faces a debt crisis in a few years on a scale now overwhelming a growing number of countries in the European Union.

So what would that mean for health care?

First, a bit of background. A majority of the White House's Simpson-Bowles commission voted to approve its November 2010 proposal. But not enough members supported it to allow it to be issued as a formal recommendation. And when the unapproved proposal went to the House floor, it only attracted a few dozen votes.

But in the coming months, as Capitol Hill aides and lawmakers debate how to compromise on large-scale deficit reduction, Simpson-Bowles is sure to come up. That's because of its detail, and the fact that it can't be identified with either party.

In terms of health care, the proposal contains two big elements: taxation of health benefits and many changes to Medicare and Medicaid to for once and for all replace the Medicare physician payment formula known as the SGR, or Sustainable Growth Rate formula.

The chairmen's mark produced by the panel—the chairmen were former Clinton chief of staff Erskine Bowles and former Republican Sen. Alan K. Simpson of Wyoming—included options for handling taxes. One would have ended the current exclusion of employer health care outlays from taxation—in effect, taxing health benefits. Another would have scaled back the exclusion.

Changing the exclusion is a policy long advocated by a number of economists as a way to incentivize employers to offer more efficient health plans. Altering the exclusion has long been opposed by Democrats and particularly by organized labor.

Global Budget Sought

Simpson-Bowles would institute another never-attempted change: a long-term global budget for total federal health care spending. Starting in 2020, it would hold yearly growth in such spending to GDP plus 1 percent. The cap would take into account federal spending for Medicare, Medicaid, the Children's Health Insurance Program, the Federal Employees Health Benefits program, TRICARE, insurance exchange subsidies and the cost of the remaining tax exclusion for health care.

If growth exceeded the target, the president and Congress would have to act. "We recommend requiring both the president and Congress to make recommendations whenever average cost growth has exceeded GDP plus 1 percent over the prior five years," the proposal says. "To the extent health costs are projected to grow significantly faster than that pace, we recommend the consideration of structural reforms to the health care system." Options in the proposal include moving to premium support in Medicare—the Romney-Ryan approach that pollsters say rates very low among the elderly. Other suggestions involved such too-hot-to-touch proposals as block granting Medicaid, adding a "robust public option in the health care exchanges," raising the Medicare eligibility age and expanding the powers of the Independent Payment Advisory Board beyond Medicare.

Proposal Would Fix Doctor Payments

In the shorter term, the proposal would make numerous changes to pay for ending the SGR. It would save $9 billion through 2020 by strengthening government powers to fight Medicare fraud. It would save $110 billion by establishing a single combined annual deductible of $550 for Medicare Part A and B and a 20 percent uniform coinsurance on health spending above the deductible. At the same time, it would provide catastrophic protection for seniors by reducing the coinsurance rate to 5 percent after beneficiary costs exceed $5,500 and cap total cost sharing outlays by seniors at $7,500.

It would scale back Medigap coverage, saving $38 billion. "This option would prohibit Medigap plans from covering the first $5,000 of an enrollee's cost-sharing liabilities and limit coverage to 50 percent of the next $5,000 in Medicare cost-sharing," the proposal says.
Another change would save $49 billion by requiring drug companies to extend Medicaid rebates to those dually eligible for Medicare and Medicaid. The drug industry has fiercely resisted this change in the past.

The proposal would reduce payments to hospitals for medical education, saving $60 billion. It would also cut Medicare home health payments to save $9 billion.

In Medicaid, it would save $44 billion by ending a tactic that involves state taxation of providers to increase the amount of federal payments. And it would save $12 billion by placing all of the dually eligible in managed care. All Medicare enrollees, including those also eligible for Medicaid, have the power now to say no to managed care arrangements. And it would save $17 billion by changing the medical practice system.

All of these changes to pay for ending the SGR would arouse intense opposition by powerful lobbies. But that doesn't mean they won't get serious consideration if the debt crisis intensifies.