By Dena Bunis, CQ HealthBeat Managing Editor

July 16, 2013 -- The first-year report card for the Medicare Pioneer Accountable Care Organizations (ACOs) shows that more plans saved money than lost, but also that some providers have decided to either exit the program or take a step back and move to the less risky traditional shared-savings model.

The Pioneer ACO model was designed for more advanced, higher-performing organizations. The 32 provider groups that signed up to be Pioneers agreed to generate more savings than traditional shared-savings ACOs. Some of the Pioneers also agreed to take on more risk. The upside was if they met their savings and care benchmarks, these providers would get a larger return on that effort.

After one year, the Centers for Medicare and Medicaid Services (CMS) released performance results on Tuesday. They show that of the 32 Pioneers, 18 had savings and 14 generated losses in 2012. Of the 18 that saved money, 13 had a high-enough savings margin that they will get money from Medicare. Of the 14 that generated losses, two plans that had agreed to take on more risk had high-enough losses that they will owe Medicare money.

Two Pioneers—which CMS officials have not yet named—have decided to drop out of the ACO program. Seven other Pioneers want to transition into the traditional shared-savings program, which has more modest goals and doesn’t require the providers to risk losing money if they don’t meet the shared savings requirements.

Overall, CMS reported that for the more than 669,000 Medicare beneficiaries who belong to Pioneer ACOs, costs to treat them grew by 0.3 percent in 2012. That compares with costs for similar beneficiaries outside the ACO model, which grew by 0.8 percent. CMS said the Pioneers that produced shared savings netted $33 million for the Medicare Trust Funds and that those ACOs together shared in more than $76 million as a result of their coordination of care.

CMS attributed part of the savings to reduced hospitals admissions and readmissions.

Paul Ginsburg, president of the Center for Health System Change, was impressed that the Pioneers could get good first-year results despite the challenge of slow overall spending growth. A champion of the ACO model as a bridge between traditional fee-for-service Medicare and the Medicare Advantage managed care program, Ginsburg did acknowledge that the slower rate of health care spending may well have made it easier for the Pioneers to achieve the shared savings goals.

He remains bullish on the ACO model and said expectations should not have been too high for this first year. (CMS has not yet released the results of the first-year performance for the traditional shared savings ACOs. Officials said those findings would be released later this year.)

“I wasn’t expecting much in the first year,” Ginsburg said in an interview Tuesday. “It’s really a testimony that these organizations were able to put in place some delivery changes. These things are hard to do and they take time.”

Ginsburg also said that he wasn’t concerned about the seven provider groups that plan to step back into the traditional ACO model.
“They are still trying to do this,” he said, and what he hears from out in the field is that many people haven’t been realistic about what it will take to truly achieve accountable care.

Sticking With It
Atrius Health in Massachusetts is one of the two Pioneers that lost money in 2012. But Emily Brower, executive director for the company’s accountable care program, said the company is taking the long view and sticking with the program.

“This is a five-year program for us,” Brower said in an interview. “We have been making investments deep into the local practices that we believe will pay off. We understood that there was a possibility that we would have losses in the first year.”

Brower said Atrius serves the full spectrum of Medicare beneficiaries. That includes about 30,000 in the Pioneer ACO; 50,000 in Medicare Advantage; small numbers of patients in traditional fee-for-service and in commercially insured plans; and some who are dually eligible for Medicare and Medicaid.

“Our Pioneer work is part of a broader strategy to improve care for the Medicare population,” she said, pointing out that Atrius scored above the Pioneer median when it came to quality measures. “That’s something you need to sustain,” she said. “The costs will probably move up and down in the program but we really wanted to build the quality side of performance and we’re very happy that we’ve achieved that.”

Getting Out
Presbyterian Health Services in New Mexico is one of the two Pioneers that is dropping out of the Pioneer program and not asking to join the traditional shared savings ACO.

“New Mexico has historically been a low-cost and low-utilization environment, which resulted in fewer opportunities to achieve savings in the Pioneer ACO model,” the company said in a statement. “ We have chosen to focus our efforts on our current accountable care model of managing the risk of our health plan members and in developing partnerships with employer groups. The Pioneer ACO population of 12,000 was very small compared to our Medicare Advantage population of 36,400 and the nearly 300,000 lives we manage under full risk contracts.

“We will continue to work with CMS and [the Center for Medicare and Medicaid Innovation]—as well as other partners committed to improving quality and lowering costs—as opportunities arise to ensure our patients and members have access to consistently excellent and efficient healthcare,” the statement added.

Stepping Back
Physician Health Partners, based in Denver, is one of the Pioneer ACOs that is applying to step back into the traditional program.

“We’re 100 percent committed to the ACO model,” said Abby Brookover, spokeswoman for the group, which serves about 25,000 Medicare beneficiaries. She explained in an interview that Physician Health Partners are all primary care doctors. Because the group is not affiliated with a hospital system or specialist group, managing the population has been challenging.

“Our population was already healthy,’’ she said, so achieving the high level of savings called for as quickly as the Pioneer program demanded was a little difficult.

“In just one year it was hard to do,” she said. “A lot of the quality measures are things that are more long term.” So they decided to move to a model where the “goals are a little more modest and savings can play out over time.”

Seton Health Alliance in Austin, Texas, is another Pioneer that wants to step back to the regular ACO program.

“In its first 18 months of operation, the Alliance met its quality targets and made substantial improvements to the efficiency of care,” Greg Sheff, the group’s president and chief medical officer, said in a statement. The alliance serves about 10,000 Medicare recipients.

“This is going to give them a little more flexibility,” Seton spokeswoman Adrienne Lallo said in an interview. “It gives them the opportunity to continue to build the infrastructure without the downside risk of failing to meet benchmarks.”

Blair Childs, senior vice president of public affairs for Premier, an alliance that represents hospitals, characterized the Pioneer program as a learning experience. Premier is a trade group that’s not in the ACO program.

“From the provider point of view, the Pioneer program is extremely ambitious, even for the most advanced health systems,” Childs said in a statement. “Participating providers ramped up at impressive speeds to meet the challenge of the Pioneer program, making necessary investments in ACO infrastructure, [health information technology], governance and care delivery models, all of which involves a high degree of risk.”

At the American Medical Group Association, another trade association, its president and CEO Don Fisher also urged patience.
“As with any ambitious effort of this scale, the movement to value-based, coordinated care for patients is an evolutionary process,” Fisher said in a written statement. “Programs like the ACO initiatives will take many years to mature.”

While the results were mixed when it came to savings, CMS reported that all of the Pioneers met the reporting requirements for 15 clinical quality measures, such as readmissions, blood pressure control and cholesterol control for diabetes patients. That success entitled all the Pioneers, CMS officials said, to incentive payments.

Besides Seton Health Alliance and Physician Health Partners, the other Pioneers that plan to either leave the ACO program or step down to the traditional one: Prime Care Medical Network Inc.; University of Michigan; Plus (North Texas Specialty Physicians and Texas Health Resources); Healthcare Partners Nevada; Healthcare Partners California; JSA Care Partners, and Presbyterian Healthcare Services.

Dena Bunis can be reached at [email protected].  

By CQ Staff

July 17, 2013 -- On the same day that House Republicans called votes to delay the health care overhaul’s employer and individual mandates, New York Democrat Louise M. Slaughter opened her floor speech with praise for her state’s exchange rates, which show deep reductions for individual plans.

New York is the latest state to release which insurers will be participating in the new marketplaces, scheduled to open for enrollment on Oct. 1, and what they will charge consumers. According to a news release from Gov. Andrew M. Cuomo, premiums for the most expensive exchange policies—the gold and platinum plans—will be reduced by 53 percent over what individual policyholders paid this year.

“Today’s attempt to undermine the law occurs on the same day that my home state of New York delivered incredible news to New York families,” Slaughter said on the floor. “New York is just the latest in a growing number of states, including Washington, Oregon, and California, where the cost of health care premiums are being reduced because of the Affordable Care Act.”

Cuomo attributed the slashing of current premium rates by more than half to the expectation that “a greater number of uninsured individuals are expected to obtain coverage in the individual insurance market—lowering overall premiums,’’ New York’s high rates have severely curtailed participation in the individual market. State officials estimate that up to 615,000 people will get insurance in the exchanges in the first few years the health law (PL 111-148, PL 111-152) is in effect. That compares to the 17,000 who now buy insurance on the individual market. About 2.6 million New Yorkers are uninsured.

The state’s release noted that the reductions in rates do not factor in the impact of subsidies available to those who meet the income thresholds. That will lower people’s rates even more. The news release did not give exact comparisons for the less expansive silver and bronze plans. They instead said that the “approved rates for the benchmark individual ‘silver plan’ in New York would be in line with (nearly 10 percent lower) the nationwide average previously forecast by the independent, non-partisan Congressional Budget Office (CBO) for when health care reform is implemented.”

That also likely contributed to the lower premiums is the number of plans that will be selling insurance in the exchanges. New York’s exchange approved 17 plans. They include: Aetna, Affinity Health Plan, Inc., American Progressive Life & Health Insurance Company of New York, Capital District Physicians Health Plan, Inc., Health Insurance Plan of Greater New York, Empire BlueCross BlueShield, Excellus, Fidelis Care, Freelancers Co-Op, Healthfirst New York, HealthNow New York, Inc., Independent Health, MetroPlus Health Plan, MVP Health Plan, Inc., North Shore LIJ, Oscar Health Insurance Co., and United Healthcare.

New York officials said it was more difficult to make a comparison for the premiums in the small group plans because in 2013, insurers offered more than 15,000 different small group plans that significantly varied in terms of the quality and level of coverage provided. “The approved small group rates, however, are generally lower than indicated by the estimates of other independent forecasters,” Cuomo’s release said.

By Rebecca Adams, CQ HealthBeat Associate Editor

July 18, 2013 -- About 6.4 million people will not become insured next year unless officials in the 27 states that have not committed to expanding Medicaid change their minds, according to a new analysis released the Kaiser Commission on Medicaid and the Uninsured released Thursday.

The analysis, produced by the Urban Institute for the Kaiser commission, found that nearly two-thirds of those who were originally expected to be covered by the Medicaid expansion live in the 21 states that are not expected to expand as of Jan. 1 and the six states that are still debating the issue. Framers of the health law (PL 111-148, PL 111-152) had counted on a nationwide Medicaid expansion to take care of a large proportion of the uninsured. But last year’s Supreme Court decision validating the health law also ruled that states would not lose their base Medicaid reimbursements if they didn’t expand, effectively giving states the choice of whether to broaden Medicaid eligibility.

Texas, Florida and Georgia are among the states that decided not to expand. The uninsured in those states account for 55 percent of those in the 27 states not expanding who would not have the opportunity to get coverage, the 24-page report says. Because of the way the overhaul subsidies are constructed, people with incomes who would have qualified for the expanded Medicaid, may not be able to get federal help to buy insurance. Without such help, most are unlikely to be able to afford to health insurance.

The 21 states that are not planning to broaden Medicaid eligibility at this time would miss out on the chance to get $35 billion in federal funds in 2016, the analysis said, and the six states still currently debating would forgo $15.2 billion that year if they don’t extend the program before then. The analysis did not estimate what those states would lose in 2014 and 2015.

A separate 10-page issue brief Kaiser also released Thursday found that more than 8 in 10 uninsured people who would qualify for Medicaid if their state broadened their Medicaid program, live in states that are currently not pursuing an expansion. Throughout the nation, nearly half of the uninsured with incomes below the Medicaid expansion income leve —138 percent of federal poverty—live in states that do not plan to increase eligibility. None of the states that have decided to skip expansion currently cover adults without children.
The decisions by state officials to avoid expansion will significantly impact minorities, the brief found. About 47 percent of all uninsured minorities who have annual incomes of less than 138 percent of poverty live in states that are not expanding.

Rebecca Adams can be reached at [email protected].

By John Reichard, CQ HealthBeat Editor

July 19, 2013 -- A provision of the health overhaul that its framers hope will help bend the cost curve in health spending that threatens to swamp government and corporate health care budgets will take effect on July 31. That’s when insurers are due to make payments to the Internal Revenue Service to help fund the institute that pays for research to pinpoint what works in medicine and what doesn’t.

And presumably the fees on insurers—which will total about $130 million this year and roughly double that next year and each subsequent year until Sept. 30, 2019—will give opponents of the law another chance to criticize the costs it creates for consumers. They are also likely to raise the specter of government directed rationing.

The money goes into the trust fund established for the Patient Centered Outcomes Research Institute (PCORI). Under the health law, there are two funding streams for that account, which is expected to receive $3.5 billion through Sept. 30, 2019, when the authorization for the trust fund expires. One source is the U.S. Treasury, the other is fees paid per enrollee by private health insurance plans, self-insured plans and Medicare.

Insurers must pay the fees by July 31 after the end of each plan year. So the payments for plan year 2012, the first year for which the fees are assessed, are due July 31, 2013.

According to the PCORI website, in fiscal 2013 the amount going into its trust fund will total $320 million, of which $150 million comes from the Treasury and the remainder from Medicare and insurers.

For fiscal years 2014–2019, the per-enrollee fee doubles to $2, with $150 million in each of those years coming from the Treasury. “The combined estimated total averages $650 million per year,” the PCORI site says. PCORI itself doesn’t collect the money.

If the research works out the way policymakers hope, the findings will identify areas of wasteful treatment that insurers will be able to avoid covering. Medicare coverage isn’t automatically changed as a result of the findings, but PCORI critics claim it will lead to government rationing, while supporters say it makes no sense to spend limited health care dollars on treatment approaches that don’t work.

Because of potential savings from the research and the relatively modest charges on insurers, it may not be a major cause of industry complaints.

But “all of the new taxes and fees will ultimately add to the cost of health coverage,” America’s Health Insurance Plans spokesman Robert Zirkelbach said in an email message. “We have been focused on the much larger health insurance tax that will increase premiums for families and small businesses at a time when all of the other [Affordable Care Act] reforms are going into effect.” Separate from the far smaller PCORI fee, the health law (PL 111-148, PL 111-152) assesses fees on insurers as a way to help fund coverage expansion under the health law including the subsidies that help people buy insurance adding to insurance industry revenues.

Zirkelbach said these other fees “will mean that next year an individual purchasing coverage on his or her own will pay $110 in higher premiums, small businesses will pay an additional $360 for each family they cover, seniors enrolled in Medicare Advantage will face $220 in reduced benefits and higher out-of-pocket costs, and state Medicaid managed care plans will incur an additional $80 in costs for each person enrolled.”

John Reichard can be reached at [email protected].

By Emily Ethridge, CQ Roll Call

July 19, 2013 -- Lawmakers introducing bipartisan, updated draft legislation to replace Medicare’s physician payment system are hopeful for its chances but wary of major challenges ahead, including finding an appropriate budgetary offset.

Rep. Michael C. Burgess, R-Texas, praised the collaboration between members of both parties and stakeholders, and said that lawmakers are prepared for the eventual fights over how to pay for the proposal.

“It’s so important to get the policy right, and get this through the committee process, and getting both sides to work together,” said Burgess, one of the sponsors of the draft bill, which was unveiled on Thursday night and is set for markup in subcommittee on Monday.

“There will be big budget fights that are coming...but at least whatever happens in that environment, there will be the framework upon which to build,” Burgess said.

The House Ways and Means Committee, which has direct jurisdiction over many potential offsets, could take up the bill and add an offset there. Members of that committee have been contributing to the draft proposal. In the past, Democrats have proposed using savings from winding down the wars in Iraq and Afghanistan to pay for the fix, but most Republicans have opposed the idea.

House Energy and Commerce Chairman Fred Upton, R-Mich., has pledged the bill will be fully paid for. Burgess said he expected members would “each go to our respective corners on both sides” during the offset fight, but that he hoped an agreement could be found.

Energy and Commerce ranking Democrat Henry A. Waxman of California emphasized the importance of acting soon to repeal the sustainable growth rate (SGR), the formula that dictates payments to Medicare providers.

“I want to see the SGR problem resolved,” Waxman said. “It’s been a problem for a very long time.”

The House Energy and Commerce Health Subcommittee will begin a markup of the draft legislation Monday and continue it Tuesday. The proposal would repeal the SGR and replace it with an enhanced fee-for-service system, while also allowing providers to participate in alternative payment models emphasizing quality and efficient care.

Likely the biggest challenge for the draft legislation will be paying for it. The Congressional Budget Office estimates that repealing the SGR would cost $139.1 billion over 10 years.

Five Years of Stability
The draft proposal would first institute a five-year transition period, with annual payment updates of 0.5 percent, to give providers time to test quality measures and improvement activities. Burgess said that period would be the longest period of payment stability providers have seen in a long time.

The second phase would implement an enhanced Physician Quality Reporting System, which gives incentive payments to encourage doctors to report quality information. Under the legislation, that reporting will help set quality measures to assess performance, and providers who meet or exceed their specialties’ requirements will get payment increases.

“To me, one of the critical things was keeping modified fee-for-service, keeping a fee-for-service option in there” for physicians who are used to that system and do not want to move to new models, Burgess said. He added the draft includes “expanded, yet streamlined” mechanisms to make it easier for physicians to report information.

Under the draft, providers could opt out of the fee-for-service system at any time and participate in alternative payment models, such as patient-centered medical homes or bundled care.

American Medical Association President Ardis Hoven said in a statement that the draft “represents continued progress, though work remains to be done.”

“The new models must be accessible to physicians in all practice sizes and settings so the country’s physicians can have a stable practice environment that allows them to invest in their practices in order to provide high value care for Medicare patients,” said Hoven.

More for Primary Care?
Waxman said he hoped the bill would work for both specialists and primary care providers, but wanted to see more emphasis on primary care physicians.

“I think that they have been underpaid and are going to be in such demand, especially with the coordination of care and prevention care that we’re going to try to make available,” he said.

American Academy of Family Physicians President Jeffrey Cain agreed with Waxman’s stance, saying he was “disappointed” the draft did not specify a higher base payment rate for services provided by primary care physicians.

“Nonetheless, with this draft legislation, the Energy and Commerce Health Subcommittee has made solid progress in meaningful reforms that provide health security for elderly and disabled patients and restrain costs,” Cain said in a statement.

The Heritage Foundation has criticized legislation that would fundamentally change the SGR while making only small changes to the rest of Medicare.

“To do so would remove an impetus for the major structural reforms that Medicare needs in order to ensure its solvency for future generations,” the group said in a statement. It asked lawmakers to pair an SGR replacement with provisions to change Medicare into a premium support program.

Burgess said he would have worked for turning Medicare into a premium support program “if the election had turned out differently.” But, he noted, “there’s nothing in this preventing a premium support system from coexisting.” 

Emily Ethridge can be reached at [email protected].  

By John Reichard, CQ HealthBeat Editor

July 16, 2013 -- There’s little reason to assume that states whose leaders opposed passage of the health care law are now going to do much to promote the availability of coverage for the uninsured when exchanges open in the fall.

Nor is there much evidence officials in those states will do much to help guide consumers through what likely will be a complex process of weighing coverage options, applying for tax credits to cut premium costs, and filling out applications. And federal funds to promote the law will be meager in those states.

But a category of helpers called “certified application counselors” (CACs), many of whom already have a track record of providing help to the uninsured, got a boost under a final regulation the Obama administration has issued.

Certified application counselors could provide the uninsured real assistance in the 34 states that declined to set up their own exchanges because they didn’t want to cooperate with the health law (PL 111-148, PL 111-152). Released July 12, the final rule requires that all states have certified application counselor programs, whether they rely on the federal exchange in whole or in part, or operate their own exchange.

The federal exchange and state exchanges will certify organizations as certified application counselors. Those organizations can, in turn, certify their own employees or get volunteers to serve as CACs, Washington and Lee University Law School Professor Timothy Jost said in a recent blog post on the Health Affairs website.

Certified individuals or organizations must agree to comply with certain requirements in the final regulation, and certified organizations must oversee compliance by their employees or volunteers.

The federal exchange can certify just organizations, while state exchanges can certify both organizations and individuals, Jost said. Others can help exchange customers enroll, but they can’t present themselves as being certified to perform that function.

Diverse Group Will Counsel
The rule lists a number of organizations that can serve as certified application counselors: hospitals; community health centers; behavioral and mental health providers and other caregivers; nonprofit social service agencies; and local governmental agencies, such as health departments or libraries.

“Medicaid-certified application counselor organizations are explicitly listed as organizations that may serve as exchange CACs,” Jost wrote. He noted that the Medicaid counselor program has operated successfully in many states.

Tricia Brooks, a professor at the Georgetown University Center for Children and Families said in a blog post earlier this year that “using community-based organizations, including community health centers and hospitals, to assist with Medicaid and [Children's Health Insurance Program] enrollment has been a core element of successful state strategies in maximizing children’s health coverage over the years.”

The counselors will help applicants figure out if they are eligible for coverage and tax credits, assist them with enrollment, while providing information in an impartial way without guiding them into a particular plan.

The federal exchange will list on its website all organizations considered certified application counselors,

Brooks said the counselors could have an impact in states served by the federal exchange as well as in other states. “Although the final regulations do not require CACs to perform outreach duties, there is little question that many will do so,” she said in an email message Tuesday. “CACs have the potential to create awareness at the local level, so the depth and breadth of their work can be far-reaching and this adds much value to effort to connect people to coverage.

“The types of organizations that will be CACs in [federal-exchange] states are likely to be either mission-driven to help low-income families access services that will improve their health and economic security or have an inherent interest in getting more people insured as health care providers do or both,” she said.

But “some organizations will be more effective than others.”

State legislation could still be an obstacle to the counselor programs, she said. It “could have a chilling effect on participation and it will be really important for the federal government to ensure that misguided state legislation does not interfere with CACs helping people get coverage,” she said.

Still, she predicted that “CACs are likely to be widely available and certainly in every state. Whether there will be a CAC in every community depends on the extent to which they are recruited or encouraged to join the effort.”

The Federation of American Hospitals has expressed strong interest in the certified application counselor program. And an American Hospital Association spokeswoman said that many hospitals are likely to provide application assistance but said she didn’t know how many would see CAC status.

Brooks said “I would certainly expect all nonprofit and rural hospitals to participate. That was my experience in New Hampshire.” Brooks ran the Children’s Health Insurance Program (CHIP) in the state and did outreach and application assistance support for both Medicaid and CHIP.

But with hospitals and health centers expected to become certified application counselors, one major question is whether the people they sign up for coverage will contribute to too many bad risks coming into insurance exchanges to keep coverage affordable in the long run.
Brooks said “the challenge is to be successful in launching a multi-faceted and comprehensive outreach and marketing campaign that brings in healthy people, as well as those with higher needs.” Providing young people with tax credits to help pay for coverage will go a long way in that regard, she said.

John Reichard can be reached at [email protected].