By CQ Staff

August 14, 2013 -- Nearly half of all Americans who currently buy their health insurance in the individual market will be eligible for health law tax credits, according to a recently released Kaiser Family Foundation analysis.

Kaiser officials estimate that the tax credits for policies people buy on the new marketplaces average $5,548 per family and cover 66 percent of the premium costs.

For consumers who select the bronze plan, which has a less rich benefit package and costs less, the tax subsidies under the health law (PL 111-148, PL 111-152) would cover a greater portion of their premiums, the analysis finds. For individuals, the subsidy they get for the bronze plan would cover 38 percent of the premiums.

Tax credits, Kaiser researchers said, "have the potential to cover a substantial portion of the premiums paid by current individual market enrollees."

It's still difficult to say exactly how much people will be paying when coverage on the new exchanges kicks in on Jan. 1. (The marketplaces are set to open for enrollment on Oct. 1 but the policies will take effect on Jan. 1.) While a number of states have released their rates, the majority of people enrolling in the exchanges will do so in the federal marketplace and those rates are not expected to be made public until September.

The Kaiser analysis, which used the Congressional Budget Office's estimate of an average premium for the second-lowest cost silver plan in 2016, estimates that, for example, the national average benchmark premium for a 40-year-old in 2014 would be $3,857 a year. Kaiser officials said that estimate is consistent with the rates that some states have released.

"There are many reasons why premium costs in the individual insurance market will change under the ACA before tax credits are applied," the analysis said. "For instance, insurance companies will be prohibited from discriminating against people with pre-existing conditions, leading to higher enrollment of people with expensive health conditions. More young, healthy people may also enroll due to the ACA's individual mandate and premium subsidies."

The analysis also pointed out that the minimum benefits the health law requires for all health insurance policies will raise premiums for those who currently have more bare-bones coverage. But the result of having insurance policies that cover more services is also expected to lower consumers' out-of-pocket costs.

"Premiums before and after the law goes into effect are not necessarily comparable as health plans in the new marketplaces will be required to cover a broader range of services than are found in many current individual market policies and the health needs of people who will enroll are likely to be different," Kaiser officials said.

By John Reichard, CQ HealthBeat Editor

August 13, 2013 -- The Obama administration emphasized last week that a wide swath of American consumers will benefit in 2014 from the first-ever federal limits on how much health insurers can require their policyholders to pay out of pocket for medical expenses, as the White House attempted to fend off a new flurry of Republican attacks on its implementation of the health law.

The limits are a "still a major win" for consumers, even though in some cases the new financial protection consumers will get on how much they shell out for prescription drugs won't take effect until 2015, said an administration official who spoke on background.

The official's comments followed a fresh round of attention to the cost-sharing limits generated by a recent New York Times story that focused on a delay in one type of protection insurers and employers must adopt for consumers enrolled in certain health plans.

Republicans seized on the story as evidence that the Obama administration is cushioning big business from difficulties in complying with the health law, but not the public.

The Labor Department disclosed the delay in February. But the administration called little attention to it in its press materials. And it escaped the notice of many lawmakers on Capitol Hill.

However, patient advocacy groups did see it and in subsequent weeks urged the administration to cancel the delay, to no avail. The postponement was granted to some plans because employers and insurers said they needed more time to retool computer systems to comply with the new limits on out-of-pocket spending.

Under the health law, plans in 2014 can't require an enrollee to pay more than $6,350 a year out of pocket for medical services and pharmaceuticals covered under "essential benefits" provisions of the overhaul (PL 111-148 PL 111-152). The limit for families is $12,700. There are no such federal protections in effect now.

When Plans Are Split

The one-year delay applies to health plans that have different benefit administrators for medical services and for pharmaceuticals, the federal official said. For example, plans that carve out their drug benefits and have them managed by a different vendor fall into this category. These plans must abide by the $6,350 limit on medical services in 2014, just as other health plans must. They also must have a limit of $6,350 in 2014 on drug expenses if they currently limit out-of-pocket drug expenditures.

In effect, that means that in 2014, plans that split up their benefits administration can have double the out-of-pocket limit that plans who administer medical and drug plans together must abide by. And plans that have no out-of-pocket caps for drug costs don't have to institute one in 2014.

However, by 2015 all the plans granted the one-year delay must comply with the single limit of $6,350 for medical and pharmaceutical expenses.

According to the administration official, all of the plans offered to individuals and small employers in the new insurance exchanges opening in October will have the single limit in 2014 with no delays in the cost-sharing protections.

The cost-sharing protections are not required in plans that are "grandfathered" under the health law, however. According to a 2012 employee benefits survey sponsored by the Kaiser Family Foundation, 48 percent of enrollees in employer-sponsored coverage are in plans that were in place in March 2010 when the overhaul became law and so are exempt from many of the overhaul's requirements as long as they do not make major modifications to their coverage. The number of grandfathered plans is expected to dwindle over time.

Insurance industry and administration officials had no immediate estimate as to what percentage of enrollees in health insurance plans are in those with separate benefit administrators for medical and drug benefits.

But patient advocates said that the delay would create undue hardship.

Delay Could Be Hardship

Myrl Weinberg, CEO of the National Health Council, said in a June 7 statement reacting to the initial word of the delay that even a one-year postponement "will disproportionately harm people with chronic diseases and disabilities. The administrative burden to collect and share data on a timely and accurate basis for plans that utilize multiple service providers is understandable. However, permitting these plans to have a total annual out-of-pocket limit that could be twice the amount of other plans is contrary to ACA."

This out-of-pocket limit of roughly $13,000 in 2014 "would be in addition to the cost of the patient's insurance premium," Weinberg noted.
But the Obama administration is emphasizing that the health law is putting into effect consumer protections not now required by law—and that would disappear if Republicans succeeded in repealing the overhaul.

Although most health plan enrollees have protection against out of pocket costs now, until the health law there was no federal requirement for such out-of-pocket limits.

According to the Kaiser survey, 87 percent of people enrolled in health plans have out-of-pocket limits in those plans. And only 2 percent of health plan enrollees are in plans that have limits above $6,000, roughly the limit in the health law. But the same survey shows that a large majority of people with health insurance are in plans that do not count prescription drug spending toward the out-of-pocket maximums.

David Dross, who tracks managed pharmacy plans for the Mercer consulting company, said in an email that his sense is that it is rare for companies to have separate out-of-pocket maximums for their prescription drug coverage. A separate study by Takeda Pharmaceuticals found that in 2011 only 14 percent of employers had out-of-pocket limits on pharmaceutical spending.

• Lambrew blog
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By Elham Khatami, CQ Roll Call

August 13, 2013 -- The assumption by some insurers, state officials and Americans shopping for coverage that premiums under the health care law will skyrocket compared to current prices is unfair, some experts said last week.

Insurance rates under the state exchanges that open for enrollment on Oct. 1 will not necessarily result in a rate shock, Uwe Reinhardt, an economics and health policy professor at Princeton University, said during a recent webinar hosted by the Alliance for Health Reform.

Reinhardt said the 2010 health care overhaul's switch from medically underwritten premiums to community rated premiums could lead to higher rates for healthier, younger people. But sicker, older individuals will pay lower premiums.

"They will experience premium joy," Reinhardt said, referring to older Americans. "That's why it's not fair to talk about a premium shock all the time."

Under community rating, people cannot be charged different rates based on their health status. This form of premium setting, Reinhardt said, depends on healthier, younger individuals joining insurance risk pools.

"If most young people don't join it, then you will have a sicker risk pool and that will drive up the community premium," he said.
Several states have reported "reasonable premium levels" so far, said Linda Blumberg, a senior fellow at The Urban Institute, who specializes in private health insurance.

"Premium rates are coming in generally lower than expected," she said, citing a July 2013 brief by Health and Human Services's assistant secretary for planning and evaluation. That report highlighted rates released by 11 states, including California, Colorado, the District of Columbia, New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia and Washington.

In those states, the brief said, the lowest cost silver plan in the individual market is an average of 18 percent less expensive than the Congressional Budget Office had predicted.

Blumberg added that large majorities of exchange enrollees will have incomes that qualify them for tax credits, thereby limiting premiums to a fixed percentage of their incomes. She said that many factors must be taken into consideration when analyzing premium costs.

"It's not just the premium that people should be thinking about," Blumberg said. "They should be thinking about the out-of-pocket expenses, as well." Even though premiums may be higher, the essential benefits covered under the health law (PL 111-148, PL 111-152) mean people will see more of their medical expenses paid for and that could lower their out-of-pocket costs.

Congressional Republicans and other health law critics have repeatedly raised the specter of premium rate shock. They say the public needs to know what premiums will be before the open enrollment for exchanges begins on Oct. 1, particularly if rates are going to be a lot higher so they have time to prepare.

While a smattering of states have released their rates, not all of them have and the federal exchange, which will serve the majority of states, will not post its premiums until September.

Last week, HHS secretary Kathleen Sebelius challenged claims by some state officials that premiums will soar. She said in a telephone briefing updating reporters on health care law implementation that "erroneous information is being advanced as if these are the final rates available in the marketplace and this is what consumers will be paying and that's just not accurate."

While the secretary did not mention specific states, officials in Indiana, Ohio and Georgia recently have indicated that rates will soar for their residents in the insurance marketplaces. Those states have all opted out of creating their own exchanges and will instead rely on the federal exchanges.

By Kelly Mae Ross, CQ Roll Call

August 15, 2013 -- The number of mobile health applications available for smartphones and other mobile communication devices is exploding, but the Food and Drug Administration has yet to offer final guidance about which of these apps it will regulate.

Mobile health apps mainly fall into two broad categories: those that consumers use to manage their own health and apps that health care professionals use to help deliver care.

The consumer apps include such services as calorie counters; apps that organize and display personal health data, such as lab results; and apps that provide information about over-the-counter drugs.

Under the draft guidance the FDA issued in July 2011, the agency said while it would exercise "enforcement discretion" toward such consumer-oriented mobile apps, it plans to focus its efforts on regulating more high-risk applications.

Most of the 29-page FDA draft guidance document focuses on apps used for clinical purposes. The FDA said such apps could "present a potential risk to patients if they do not work as intended." Specifically, the draft guidance says that the regulatory line will be drawn at apps that are used as an accessory to an already-regulated FDA medical device or that transform a mobile platform into a regulated medical device. Examples of apps that fall under this category include those that turn mobile platforms into electronic stethoscopes, allow doctors to view x-rays on their phones, assist with the calculation of drug dosages for patients, and more.

A number of health industry groups have collectively said they would like the FDA to wait to issue specific guidance on mobile apps until a broader regulatory framework regarding health information technology has been completed. But a mobile health-focused coalition said current regulatory uncertainty may be causing some businesses interested in developing these types of apps to hesitate.

The FDA had already reviewed about 100 mobile medical apps as of March. One of those applications allows doctors to use smartphone-based EKG machines. Others create smartphone-based glucose monitors and remote blood pressure monitors, according to Christy Foreman, director of the Office of Device Evaluation in the Center for Devices and Radiological Health at the FDA, who testified at one of a series of House Energy and Commerce hearings in March on health apps.

Bradley Merrill Thompson, general counsel for the mHealth Regulatory Coalition, said in an email that scientists are working on apps that would be connected to sensors that would measure different patient health statuses. One example he gave is a "smart pill" app. Patients would ingest pills with sensors. Information from the sensors in the pills would be displayed on a mobile phone so that patients could keep track of such things as exactly when they took their medicine. This pill-tracking app could help doctors too because they would have an exact record of which medicine a patient took and when.

Mobile medical apps have the potential to make it easier for health care providers to do their jobs, but flaws in the construction of these apps could result in harmful consequences for both doctor and patient by providing inaccurate information that could delay diagnoses or treatments, experts say.

Mobile health technology is advancing at a rapid pace and federal regulators are trying to keep up.

"We believe that focusing FDA oversight on a narrow subset of mobile apps will encourage the development of new products while providing appropriate patient protections," Foreman said at one of the congressional hearings.

When to Regulate

There is a continuing debate over when the FDA should release its finalized guidance. The FDA said it has so far reviewed more than 130 public comments on its draft guidance that came out more than two years ago.

The 2012 Food and Drug Administration Safety and Innovation Act (PL 112-144) requires the secretary of Health and Human Services to work with the FDA, the Federal Communications Commission and the Office of the National Coordinator for Health Information Technology to recommend a framework for the regulation of health IT. The report is required to contain a proposed strategy and recommendations on an "appropriate, risk-based regulatory framework pertaining to health information technology, including mobile medical applications, that promotes innovation, protects patient safety, and avoids regulatory duplication."

A working group was created to provide input on the development of this framework to the ONC. The group began holding meetings earlier this year and is supposed to issue a report to ONC's Health IT Policy Committee on Sept. 4. There is some speculation that the group could finish its work earlier than that.

In May, a notice was posted on the Federal Register website requesting public comment on the workgroup's report. The comment period is open until the end of August, but commenters were encouraged to submit their remarks before June 30.

A coalition of more than 100 organizations with an interest in mobile health, including consumer groups, medical societies and health IT startups, signed a letter sent to HHS requesting that all federal agencies wait to offer health IT-related guidance or regulations until the working group issues its report and HHS has made its regulatory framework recommendations. That includes FDA's final guidance on mobile apps.

Dan Haley, vice president of government and regulatory affairs at athenahealth, one of the organizations that signed the letter, said if any regulatory guidance involving a specific component of health IT was issued before the broader regulatory framework was finalized it would "muddy the waters" and create confusion among investors and potential stakeholders.

Not everyone agrees with this view. The mHealth Regulatory Coalition said in a position paper published in June and sent to HHS that the FDA does not need to wait for the broader framework to come out before it issues its final guidance because the guidance "does not overlap" with and has different objectives than the efforts of the working group and the HHS secretary.

According to the letter, "The FDA's guidance ... covers largely uncontroversial topics in that it simply explains what the existing FDA statutory authority means."

Thompson, a member of the working group, said that further delay of the final FDA guidance would be "industry unfriendly" because it could prevent IT startups and larger companies from investing in mobile health app technologies. In an email, Thompson said FDA guidance, written in more layman's terms would, "help entrepreneurs who just want to understand what [the] existing rules are."

An FDA official said issuing finalized regulatory guidance is a priority for the agency for 2013, but didn't provide a specific publication date.

By Elham Khatami, CQ Roll Call

August 16, 2013 -- Medical providers are increasingly e-prescribing medications since Congress passed legislation in 2008 that created Medicare payment incentives to do so, and experts say the phenomenon is likely to keep growing.

Physicians were slow to adopt e-prescribing technology until the 2008 law (PL 110-275) was enacted, directing the Centers for Medicare and Medicaid Services to provide incentive payments and payment adjustments to encourage electronic prescribing. As a result, the number of e-prescribers has grown from about 75,000 in 2008 to more than 500,000 today, Max J. Sow, director of business intelligence at Surescripts, said during a webinar hosted by the National eHealth Collaborative late last week. Surescripts operates a nationwide network used for e-prescribing.

"We are still seeing sustained growth on the network every month," Sow said. "Our estimate today is about half of eligible prescriptions are flowing through the network electronically."

The reason for the continued growth is partly due to the long-term design of the incentive program, said Seth Joseph, vice president of pharmacy business at Surescripts.

Because the plan was structured over a number of years, prescribers are able to demonstrate use each year, which gives them time to adjust and become comfortable with the system.

In addition, the program is outcome-based, requiring providers to show results in terms of the number of e-prescriptions in order to qualify for incentives. A successful e-prescriber is one who issued at least 50 percent of their Medicare prescriptions electronically.

Under the program, eligible providers who were deemed to be successful e-prescribers were rewarded with a 2 percent incentive payment in 2009. The 2 percent Medicare payment reward decreased to 1 percent in 2011, 0.5 percent in 2012 and disappeared in 2013. The design was aimed at rewarding providers who signed up early.

The program also built in penalties for providers who are not classified as successful. The penalty for 2014 and for subsequent years will be a 2 percent reduction e-prescribers will receive a 2 percent reduction in payments. These penalties have grown larger over the years, from a 1 percent reduction in 2012 to a 1.5 percent decrease in 2013. Such a structure, the experts said, pushed providers to keep writing prescriptions electronically.

The experts touted the benefits of e-prescribing, from eliminating handwriting legibility issues to providing drug allergy checks and reconciling medications prescribed by multiple providers. The gradual move toward e-prescribing of controlled substances will also allow for a "movement beyond traditional care delivery into public health issues," said Michael Furukawa, director of the office of economic analysis, evaluation and modeling at the Health and Human Services Department.

However, the experts acknowledged that electronic prescription renewals often pose problems within the e-prescribing network because the service is used inconsistently. According to a 2011 study by the Journal of American Medical Informatics Association, some pharmacies that sent renewal requests electronically also sent requests by phone and fax, even after the physician had already responded electronically. A 2011 Surescripts progress report suggested that pharmacies keep their prescriber files up-to-date and that prescribers respond to renewal requests  within  24  hours in an effort to streamline the process.

Citing the results of a July 2013 study published in Health Affairs by Sow, Joseph and Furukawa, which found that implementation of the incentive program and the increase in e-prescribers suggested a causal relationship, Joseph said that such findings could shed light on other federal incentive programs that seek to increase use of health information technology.

"Incentive programs like [the 2008 law] can be effective in driving not just adoption of health IT, but the use and sustained use of it, as well," Joseph said.

By John Reichard, CQ HealthBeat Editor

August 15, 2013 -- The grants totaling $67 million that the Department of Health and Human Services announced last week to help educate people about their new coverage options will go to 34 states that frustrated architects of the overhaul by declining to set up their own insurance exchanges.

The health care law (PL 111-148, PL 111-152) generously funds outreach grants to other states—those that chose to set up their own exchanges. Drafters of the overhaul did not anticipate that so few states would create their own marketplaces, however, so they made relatively little provision in the law's mandatory funding provisions for states that decided to let the federal government operate exchanges, in whole or in part, for their residents.

That means the 34 states in that category won't get much federal money to help people get in-person assistance with understanding their coverage options when insurance expands in 2014 under the health care law, including help with finding out whether they qualify for subsidies and how to apply for them.

Although a relatively small amount, the $67 million announced was a bit more than expected. HHS originally said it would award only $54 million in so-called navigator grants.

The 105 organizations receiving the money include Ascension Health, the nation's largest Catholic nonprofit health system; Samford University in Alabama; the University of South Florida; the University of Georgia; a coalition of 11 Missouri health care and social service organizations; the Baptist Church Ministries in Mississippi; the University of Mississippi Medical Center; and an association of food banks in Ohio.

United Way organizations in Texas, one of the states most resistant to the health care law, will receive $6.5 million in navigator grants.

"Navigators are trained to provide unbiased information in a culturally competent manner to consumers about health insurance," the exchanges, Medicaid and the Children's Health Insurance Program, according to an HHS news release. "Navigators will be required to adhere to strict security and privacy standards—including how to safeguard a consumer's personal information," the release said.

During a telephone press briefing to announce the grants, an HHS official said she could not disclose how many organizations actually applied for the grants, but she said the response was "robust." She had no estimate of the number of people who would be trained with the grant money. Training would begin later this month, she said.

Republicans critical of the health care law are casting doubt on the navigator program. They say it will put people at risk of identity theft. Rep. Diane Black, a Republican from Tennessee, said that navigators won't have to have a background check to get access to sensitive taxpayer information. And "even worse" are hundreds of thousands of dollars in grants to Planned Parenthood affiliates "despite assurances from the President when the law was passed that Obamacare would not give federal funding to abortion providers." Black has introduced a bill (HR 2087) to prevent funding of the Navigator program.

Navigators won't get adequate training, attorneys general from 13 states wrote in an Aug. 14 letter to HHS Secretary Kathleen Sebelius. They also complained about the issue of background checks, though unlike Black they did not say there would be none but rather that they would not be "standardized."

The AGs' letter also suggested that HHS has cut back the number of hours of required training for navigators from 30 to 20.

A final rule on the navigator program lacks specific standards for training navigators to ensure data privacy, according to the letter. It was spearheaded by West Virginia Attorney General Patrick Morrisey, a former GOP staffer on the House Energy and Commerce Committee. The other AG signers are from Louisiana, Alabama, Michigan, Florida, Montana, Georgia, Nebraska, Kansas, North Dakota, Oklahoma, Texas and South Carolina.

House Energy and Commerce Committee Republicans complained that the timing of the grants leaves "a short training window for the navigators."

HHS also released the names of 113 organizations designated as "Champions for Coverage" that have volunteered to help inform people about new insurance exchanges and coverage options.

"They will be doing many things," said Anton Gunn, director of external affairs at HHS. Among them are posting widgets to their websites linking people to healthcare.gov, the site where people can see coverage options and sign up for plans; providing numbers of call centers; distributing posters and fact sheets about insurance exchanges; and hosting webinars and conference calls for their members.

The 113 organizations include the American Medical Association, the American Nurses Association, the American Hospital Association, the Federation of American Hospitals, the American Academy of Pediatrics, the NAACP, the National Council of Jewish Women, the National Baptist Convention and Lutheran Services in America.

In response to Black's charge that there would be no criminal background checks in the navigator program, an HHS official said background checks are not a statutory requirement but some organizations perform them and some states have laws requiring them for navigator programs. The official added that HHS may terminate grants for noncompliance, including fraud, waste, or criminal activity. Grantees have gone through a strict selection process, the official added.

Chiquita Brooks-LaSure, deputy policy director at the CMS Center for Consumer Information and Insurance Oversight, said during the press briefing that HHS never said navigators would have 30 hours of training but rather that they would get up to that amount. She said there would be 20 hours of initial training and additional training later, thus explaining the department's statement that navigators would receive 20 to 30 hours of training.