By John Reichard, CQ HealthBeat Editor

July 11, 2013 -- Hospitals are stepping up their pleas to lawmakers to delay cuts in a type of payment that framers of the health law thought would become less necessary as more uninsured Americans get health coverage.

At issue are so-called "DSH payments." The term refers to Medicare and Medicaid payments to facilities that policy wonks call "disproportionate share hospitals."

Hospitals in that category collectively get billions of dollars each year. The money compensates them for treatment they give to patients that lack health coverage and are too poor to pay their medical bills.

Because coverage is not likely to expand as quickly as a result of the Supreme Court's 2012 health law ruling that states are not required to expand Medicaid eligibility, hospitals say the health law's schedule of DSH cuts needs to be scrapped and reworked.

The health law calls for Medicaid DSH payments to be reduced by a total of $18.1 billion through fiscal year 2020. Those cuts grow year by year, starting at $500 million in fiscal 2014. After that, the cuts are: $600,000 in fiscal 2015; $600 million in fiscal 2016; $1.8 billion in fiscal 2017; $5 billion in fiscal 2018; $5.6 billion in fiscal 2019; and $4 billion in fiscal 2020. Medicare DSH cuts total $22 billion over 10 years.

Last week's announcement by the Obama administration that the employer coverage mandate start date will be delayed from 2014 to 2015 casts further doubt over how fast coverage will expand, hospital lobbyists say.

They're urging lawmakers to pass a bill (HR 1920) introduced by Rep. John Lewis, D-Ga., that would delay Medicare DSH cuts by two years and eliminate the first two years of Medicaid DSH cuts.

Democrats Behind Proposal

In contrast to other proposals to modify the health law (PL 111-148, PL 111-152), this one is mainly supported by Democrats. Introduced on May 9, the House measure has 49 co-sponsors, 46 of them Democrats. So far Republicans have been largely unwilling to tinker with health law provisions for fear they would be seen as supporting any aspect of the overhaul.

"There has been good momentum with the bill," says American Hospital Association spokeswoman Alicia Mitchell. "Folks understand what the issue is."

Hospitals point to Congressional Budget Office (CBO) projections to buttress their argument that coverage is going to expand more slowly because many states are exercising their right under the Supreme Court ruling not to expand their Medicaid programs, at least not right away.

Following that ruling, "CBO has reduced its coverage estimate from 32 million to 25 million," the American Hospital Association said in a July 2 letter to Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner, referring to the Congressional Budget Office. "The two-year delay of DSH reductions proposed in HR 1920 would allow more time for health coverage expansions under the ACA [Affordable Care Act] to be more fully realized," the letter said.

"Already, health care coverage may fall short of projections by more than 7 million people due to state decisions against Medicaid expansion," said Brice Siegel, president of America's Essential Hospitals, the lobby that represents public safety net hospitals. Now that the employer mandate has been delayed and Republicans are trying to force a delay in the mandate that individuals obtain coverage starting in 2014, coverage expansion is in further doubt, he added. "Delaying mandates on employers and individuals would further erode coverage," he said in a July 10 statement.

Whether the employer mandate delay will slow down coverage expansion is debated, however. The Urban Institute has said coverage expansion won't be materially affected by the delay. And the White House issued a strong statement last week against the idea of delaying the individual mandate. Getting rid of the mandate would be tantamount to repealing the health law because it would make coverage unaffordable in insurance exchanges, the statement said. That suggests Democrats will hold fast against dropping or delaying the individual mandate.

But Beth Feldpush, senior vice president for advocacy at America's Essential Hospitals, said in an interview that although there is uncertainty over the impact on coverage of delaying the employer mandate, "uncertainty is not good for hospitals' plans to care for their patients." What is certain now, she said, are the DSH cuts and the lack of certainty about coverage gains. And that makes it difficult for hospitals to go ahead with plans to expand or renovate, she suggested.

Chip Kahn, president of the Federation of American Hospitals, said in an interview that his membership supports passage of the Lewis bill "and basically any effort to give some relief here, because under any measure it's unlikely that coverage is going to reach expectations immediately with the implementation of ACA."

The employer mandate also could mean "another increment that may not get covered," he said. "So we need help here because the load of uninsured hopefully will go down but I don't think it will reach expectations in the near term."

Getting Lewis' bill passed won't be easy, he acknowledged. "I think at this point if nothing else changes between now and the end of the year it would be a hard lift for any changes in ACA to actually be enacted. We know from observation that ACA is a Gordian Knot and there's such disagreement on it between Republicans and Democrats that consensus is hard to envision. But that doesn't mean that we will back off on the really important accommodations that we think need to be made."

One of the challenges is that postponing or shrinking the cuts might require offsetting spending cuts of several billion dollars elsewhere in the federal budget.

The Obama administration's fiscal 2014 budget proposal does provide for some relief. It calls for canceling the fiscal 2014 Medicaid DSH cut but recouping the savings by making heavier cuts in future fiscal years. But Kahn said "I think relief is self defeating if it's done in a zero sum game."

By Emily Ethridge, CQ Roll Call

July 10, 2013 -- A Treasury Department official in a letter released by Democrats last week continued to defend the legality of the administration's decision to delay for one year enforcement of the 2010 health care law's requirement that most employers offer health insurance.

Several Republicans have questioned the administration's legal authority to delay enforcing certain provisions of the law (PL 111-148, PL 111-152) after the administration announced the postponement July 2. The two-page letter, as well as comments in a briefing by White House Press Secretary Jay Carney, represented the most extensive explanation so far of the surprising move by the administration, which was announced in an evening blog post.

Mark J. Mazur, assistant secretary for tax policy at the Treasury, in the letter provided information on why the administration made the decision, in response to an inquiry from House Energy and Commerce Chairman Fred Upton.

Mazur also noted the department's "long-standing administrative authority to grant transition relief when implementing new legislation like the ACA," referring to the health law. He cited section 7805(a) of the tax code, which Treasury officials have previously pointed to in defense of the decision. That reads, in part, that the "Secretary shall prescribe all needful rules and regulations for the enforcement of this title, including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue."

"This authority has been used to postpone the application of new legislation on a number of prior occasions across Administrations," Mazur wrote in the July 9 letter to Upton, R-Mich. The letter was released by Democratic members of Energy and Commerce.

At the White House, Carney also defended the administration's decision in a recent press conference, saying there are numerous examples of laws being delayed during implementation.

"This is not an unusual process," said Carney, who directed reporters to look in the Federal Register for examples of delays.

"People who suggest that there's anything unusual about the delaying of a deadline and the implementation of a complex and comprehensive law are, you know, deliberately sticking their heads in the sand or are just willfully ignorant about past precedent," he said.

As examples, Mazur cited an aviation fuel tax (PL 112-27) Obama signed Aug. 5, 2011, that applied retroactively to July 23, 2011. The administration delayed enforcement until Aug. 9, 2011. Mazur also cited a 2007 small-business bill (PL 110-28) that made changes to standards for tax return preparers to avoid paying penalties effective May 25 of that year. But the IRS announced it would not enforce the new rules on returns due before 2008.

Mazur's response is unlikely to satisfy the several Republicans who say the administration is overstepping its authority. In response to a request from Rep. Phil Roe, R-Tenn., the Congressional Research Service (CRS) released an analysis that found there "may be major obstacles" to a decision in the courts on the administration's legal authority.

In a written statement, Roe said the CRS report "confirms that there are significant questions about the legality of the administration's actions."

House Oversight and Government Reform Chairman Darrell Issa, R-Calif., has also questioned the administration's legal authority.

Mazur said the decision to delay the requirements was made after extensive conversations with stakeholders and a review of comments requesting a transition period. The law requires employers with 50 or more employees to offer affordable health insurance or pay a penalty.

Mazur emphasized that the delay of the employer requirement does not affect access to premium tax credits or the effective date of any other provision of the law.

In the letter to Upton, he said the delay will give the administration more time to find ways to simplify reporting requirements, and provides more time to adapt health coverage and reporting systems.

"We recognize that the vast majority of businesses that will need to do this reporting already provide health coverage to their workers, and we want to make sure that businesses are able to comply with the reporting requirements effectively and efficiently," Mazur wrote.

The House Energy and Commerce Oversight and Investigations Subcommittee will hold a hearing on the delay July 18, and the House Ways and Means Health Subcommittee will hold its second hearing on the topic July 17 with a representative from Treasury.

By Rebecca Adams, CQ HealthBeat Associate Editor

July 10, 2013 -- UnitedHealthcare plans to more than double the amount of its reimbursements that are tied to quality and cost-effectiveness, bringing the value of its contracts that are linked to quality measurements to $50 billion by 2017, the company recently announced.

Already more than $20 billion of UnitedHealthcare's payments to providers, such as hospitals and physicians, are paid through contracts that tie part of the payment to measurements of quality and cost-efficiency.

UnitedHealthcare—which provides coverage for more than 40 million people through private insurance, Medicaid and Medicare—said that it has seen strong success from using quality and cost-control metrics. The company said that using patient-centered medical homes, in which a physician coordinates the care of patients, reduced the growth of medical costs by up to 4.5 percent.

The company is including in its projections three main types of programs:

• Performance-based payments, such as bonuses for primary care practices, or performance-based contracts with hospitals, physicians and other providers that reward them for improving patient medical outcomes and lowering costs.
• Centers of Excellence programs, in which payments are bundled for specific treatments or procedures, such as organ transplants, rather than charging for each visit or drug.
• Accountable care organizations and medical homes, in which the medical provider would get to share in any savings that result from better overseeing patients' care.
  • UnitedHealth (pdf)

By John Reichard, CQ HealthBeat Editor

July 9, 2013 -- Farzad Mostashari, the nation's top health IT official, recently said that policymakers, doctors and hospitals should take a bit of a victory lap because of the widespread adoption of electronic medical records that has occurred in their industry since the 2009 economic stimulus law.

But he warned that even though they are passing significant milestones, they have a long way to go.

"It may be a marathon, but it sure feels like a series of consecutive sprints," Mostashari, National Coordinator for Health Information Technology at the Department of Health and Human Services (HHS), said at a National Press Club event sponsored by the policy journal, Health Affairs.

Mostashari said 2014 would be a challenging year for providers. That's because many still haven't adopted the technology. Even those who have need to use it more effectively to keep from seeing their Medicare payments cut in 2015.

The stimulus law (PL 111-5) included an estimated $30 billion in Medicare and Medicaid bonus payments for health IT adoption. But it also called for reduced payments starting in 2015 for those who do not adopt IT or fail to conform to a set of expanding requirements for "meaningful use" of the technology.

Whether providers see cuts hinges on whether they make meaningful use of health IT in 2014. Next year marks the start of "stage two" of the meaningful use program in which doctors and hospitals must be able to begin electronically exchanging medical information about a given patient and provide it directly to patients over the Internet in a way they've never done before.

Mostashari noted the strides that have been made in adoption, a point backed up by the findings of a recent study posted online by Health Affairs.

"The nation's health care system is in the midst of an enormous change as hospitals and ambulatory care providers transition from paper-based to electronic record keeping systems," said the study, led by Catherine DesRoches, a senior scientist at Mathematica Policy Research in Cambridge, Mass.

The percentage of hospitals with a basic electronic health record system has climbed from 9 percent in 2008 to 44 percent in 2012, the study said.

And another new study posted by the journal found that the percentage of office-based physicians with a basic electronic health record system grew to 40 percent last year, up from 25 percent in 2010. That study was led by Chun-Ju Hsiao, a researcher with the National Center for Health Statistics at the Centers for Disease Control and Prevention.

"Behind every one of those hundreds of thousands of practices there's someone who stayed up late, someone who worked through the night, someone who did something in addition to their regular jobs to be able to accomplish this across the country," Mostashari said.

"The stimulus bill said this is a long term opportunity for investment in infrastructure, not just runways and railways and roadways, but in an information infrastructure," Mostashari noted. "And it worked. It worked!"

Sixty-two regional extension centers for health IT established under the stimulus law are helping 140,000 primary care providers install electronic medical records. "You policy people out there, that's pretty remarkable," he said.

Now, 79 percent of hospitals have gotten health IT bonus payments under the stimulus law, either from Medicare or Medicaid, up from 40 percent in 2012. In the case of Medicaid, some hospitals are getting the payments on the promise that they will install electronic health records systems.

Segue to Stage Two

But stage two is just around the corner—October for hospitals, January for outpatient providers. Then, "every electronic health record system will have to have some building blocks of interoperability standards," Mostashari said.

In stage two "we're able to have for the first time in our nation's history a single set of standards and vocabularies and terminologies for expressing medical terms that would be applied to medications and diagnoses and procedures and immunizations, so that information from one system doesn't have to be translated into math before it can be used by another system."

"There will be ubiquitous availability of secure exchange messaging so that every electronic health record can catch and throw those documents with every other one,'' he added. "It's right around the corner."

But at the same time, he said, "where we are today is not acceptable. And we're going to have to move just as hard as we did to get adoption, we're going to have to work just as hard, just as creatively, just as diligently, to get that secure exchange of information."

Another element of stage two "is called 'view, download and transmit,'" Mostashari said. And it's one of the measures that hospitals and doctors are going to have the greatest difficulty with because it's new. "It's not what we've been doing, we haven't been giving patients easy online electronic access to download their own clinical information and use it however they choose to use it. We've been saying '75 cents a page and 30 days' to copy records for patients."

The coming months are going to see "a rush to the wire" among the late adopters, he said.

Mostashari said his office plans to work particularly with the providers in small practices to say "don't miss the boat on this guys, you will get the penalties, we don't want you to get the penalties, we want everyone to succeed on this."

By Rebecca Adams, CQ HealthBeat Associate Editor

July 8, 2013 -- A final health law regulation—dubbed by some the "cats and dogs" rule for its wide-ranging scope—is raising concerns among policy analysts over provisions relating to Medicaid, the Children's Health Insurance Program (CHIP), and insurance exchanges.

The 606-page regulation punted on some matters that stakeholders were waiting for. The rule did not include a final word on a certified application counselor program in the new marketplaces, which will start to enroll consumers on Oct. 1. Other provisions that were not finalized include those affecting appeals processes in the new marketplaces and how they would be coordinated with Medicaid and the Children's Health Insurance Program, the simplification of Medicaid eligibility categories and other provisions affecting CHIP.

Administration officials said they released the most critical provisions now and will take more time to finalize others in subsequent rules. They did not spell out when additional rules will be released.

One children's health provision that the rule did address disappointed some patient advocates. The final regulation limits waiting periods for young people who are eligible for coverage under the CHIP program to 90 days. But some advocacy groups had hoped that the Obama administration would eliminate the waiting periods.

"This was the 'big ask' in our comments on the proposed regulations, and frankly we're disappointed that the administration missed an opportunity in their rulemaking to eliminate this red-tape barrier to continuous coverage, which can have lifelong consequences for children who are left uninsured for even small amounts of time," said Tricia Brooks of the Georgetown University Center for Children and Families. The group is also hoping that the administration will require Medicaid or CHIP coverage for all babies in their first year of life if their mothers are on Medicaid and offer coverage to former foster care children until they turn 26. This rule did not address that issue.

AIDS activists and other patient advocates were disappointed that for people enrolling in Medicaid under the health law's expansion, the rule appeared to scale back prescription drug benefits from what was included in the proposed regulation.

The original version appeared to offer broad coverage of drugs, as is common today for people in the current Medicaid program. Medicaid typically covers all medicines made by companies that participate in the drug rebate program.

But the final rule said that adults who will gain coverage in January if a state expands the eligibility of its Medicaid program will get benefits that mirror those available to people enrolled in plans in the new marketplaces.

That means plans will have to cover either one drug per class or the same number of drugs that are covered in each class of drugs included in the state Medicaid plan that a state uses as a benchmark in its exchange, whichever is greater.

"We are totally shocked by this radical departure from current Medicaid practice," said Carl Schmid, deputy executive director of The AIDS Institute. "This will limit patients in the expanded Medicaid program to far fewer drugs, potentially denying them access to the medications prescribed by their doctors and putting their health at risk. To announce this when no one was looking just adds insult to injury," he added, referring to the release of the regulation on the day after the July Fourth holiday.

Andrew Sperling, director of federal legislative advocacy for the National Alliance on Mental Illness, said that advocates are concerned because it's still not clear exactly what plans in every state will offer, even though open enrollment starts in less than three months.

We cannot risk patient drug regiments being interrupted or having access to a lifesaving treatment be denied," said Sperling in a statement. "If this ends up being the case, we will be back to urge the Administration to abandon its approach so that no patient will be denied coverage of medically necessary services."

Patient advocates are also concerned that the rule appears to allow states to use other ways to pare down the use of drugs, such as limits on the amount of coverage or prior authorization requirements before patients can get medicine. Federal officials said that plans could not discriminate against patients and there must be appeal procedures in place to help make sure patients get the medication they need.

Washington and Lee Law School Professor Timothy Jost noted in a blog post that the rule requires an insurance applicant to attest whether he or she has employer coverage, how much it costs and what it covers. Employers must supply that information to the applicant by the employer.

By John Reichard, CQ HealthBeat Editor

July 12, 2013 -- The Centers for Medicare and Medicaid Services (CMS) released a final regulation late last week that calls for 30 hours of training for "navigators," the people who will be charged with providing expert advice on a wide range of issues to people signing up for insurance coverage under the health law.

The rule also outlines standards for certified application counselors, who will also help people with their questions about how to get coverage. Navigators and certified application counselors will be providing help in the 33 states that will be served by the federal insurance exchange or that will be partnering with that exchange. The remaining 17 states are setting up their own such marketplaces and will provide help, at least initially, through what are known as "in-person assisters."

Tricia Brooks of the Georgetown University Center for Children and Families, a supporter of the health law, said she was pleased with at least two of the provisions in the final rule.

In an interview, Brooks said the rule allows states to add their own licensing and certification standards for those who provide assistance, but only as long as they don't interfere with the ability of navigators to fulfill their responsibilities under the health law (PL 111-148, PL 111-152). Brooks said that a number of states are considering legislation that would interfere with navigators performing those duties, and the final rule's language should head off such restrictions.

Brooks also praised a requirement that there be a training program in each state for "certified application counselors," people who can help counsel applicants on signing up for coverage, but aren't paid by the federal government or the state. An example would be a hospital staffer who provides help. The counselors will be extremely important in providing assistance in states served in whole or in part by the federal exchange, Brooks said, noting that those are states that will receive relatively little in federal grant money to train navigators.

Navigators, certified application counselors, and in-person assisters must be knowledgeable about qualified health plans, insurance affordability programs, the tax implications of enrollment decisions, eligibility for premium tax credits and cost-sharing reductions and other topics.

The rule requires that navigator and non-navigator assistance personnel in the federal exchange states have 30 hours of training and pass a test ensuring their competence. States with their own exchanges can establish more rigorous requirements. In the case of Maryland, 120 hours is required. But Brooks said Maryland is the "outlier." She said 30 hours is a "good start." If the right people are selected as navigators; those people would already have some baseline knowledge of the law, she said. The 30 hours also can be enough if those assisters are provided good technical support, she added.