By Rebecca Adams, CQ HealthBeat Associate Editor

September 12, 2013 -- Pennsylvania Republican Gov. Tom Corbett appears to be on the cusp of announcing his support for an expansion of Medicaid, according to advocates.

Corbett has faced tremendous pressure from medical providers, the seniors' group AARP and consumer advocates to support a broadening of the program for people in households with income of up to 138 percent of the federal poverty line as is called for in the health care law (PL 111-148, PL 111-152).

State officials did not immediately respond to requests for comment.

Advocates who have heard of Corbett's support said he would announce his change in position next week.

In February, Corbett said, "At this time, without serious reforms, it would be financially unsustainable for the taxpayers, and I cannot recommend a dramatic Medicaid expansion."

But after Secretary of Public Welfare Gary Alexander, a sharp critic of expansion, left his post after Corbett's February speech, the Corbett administration has been holding talks with federal officials about the possibility of expansion.

The closely divided Pennsylvania legislature is controlled by Republicans. Democrats, both in the statehouse and in Congress, along with some Republicans, have pushed Corbett to expand the program.

Starting in January, the federal government will pay states 100 percent of the costs for the newly eligible Medicaid recipients. That federal matching aid declines to 90 percent by 2020.

While the framers of the health overhaul envisioned that Medicaid would be expanded throughout the country, last year's Supreme Court decision on the overhaul paved the way for each state to decide whether to expand. So far about half the states have decided to broaden Medicaid eligibility.

State officials have said any expansion would have to be coupled with changes, similar to what has been proposed in Arkansas, that would allow Medicaid dollars to be used for private coverage in the exchanges. Federal officials appear inclined to support that. The governor also would like to ask patients for co-pays for the emergency room that are significant enough to deter overuse. That would be allowed under the health law for people who are newly eligible for Medicaid.

"Governor Corbett does not support growing an entitlement program and has been very clear about the need for Medicaid reform," Christine Cronkright, a spokeswoman for Corbett, said in an email. "There are a number of interesting options that the state has been considering to ensure access to quality, affordable healthcare. The Governor will have more to say on this issue sometime next week."

By CQ Staff

September 12, 2013 -- Insurers were less likely to seek health premium increases greater than 10 percent in 2012 because of the provision in the health overhaul law that requires them to justify such requests, explanations that are then publicly posted for consumers to see, according to a recently released federal report.

The second annual rate review report from the Department of Health and Human Services (HHS) says that 6.8 million consumers with insurance in the individual and small group markets saved an estimated $1.2 billion on health insurance premiums in 2012 because of the overhaul's rate review provision. The health law (PL 111-0148, PL 111-152) also provides for $250 million in grants to state insurance departments for fiscal years 2010 through 2014 to help them beef up their rate review activities.

According to the report, the average rate request increase in the individual market dropped by 12 percent (from 8.1 percent to 7.1 percent) after rate review, saving consumers an estimated $311 million. And in the small group market, the average rate increase request declined by 19 percent (from 5.8 percent to 4.7 percent), saving consumers an estimated $866 million after rate review.

In 2012, 26 percent of requests for rate increases in the individual market were for an increase of 10 percent or more, significantly lower than the 43 percent requested in 2011, the report said.

Because insurance regulation is vested in the states, it varies from state to state whether insurance commissioners have the power to stop an insurer from increasing their premiums. But the theory behind the rate review provision was that insurers would be deterred from filing huge rate increases if they had to explain why they were planning rate increases above 10 percent and if state insurance regulators also would post an online notation when they believed an increase was unreasonable.

By Rebecca Adams, CQ HealthBeat Associate Editor

September 13, 2013 -- The final rule reducing Medicaid disproportionate share hospital (DSH) payments that was released late last week looks much like the proposed version.

The regulation cuts $500 million per year in fiscal 2014 and $600 million in fiscal 2015 allotments.

Hospitals had pushed for a delay in the cuts, but the Centers for Medicare and Medicaid Services (CMS) said no.

In the health care law (PL 111-148, PL 111-152), Congress had cut the DSH payments because lawmakers assumed that hospitals would get more revenue because the law expanded coverage through new marketplaces and Medicaid. But the Supreme Court said states would not lose all their Medicaid dollars for failing to broaden the eligibility for the program. The rejection of the Medicaid expansion in many states has made things more financially difficult for hospitals.

Hospitals had argued that it doesn't make sense to cut their Medicaid DSH payments, which help compensate facilities for the fact that they treat low-income people, when they will not get as much funding as they would have gotten if every state had expanded Medicaid.

"HHS has no flexibility to institute a delay of the DSH allotment reductions without congressional action," the final rule responded.

CMS officials did say, though, that they expect to revisit the methodology in future years, which many commenters had requested. The health care law calls for DSH cuts from 2014 through 2020, but the rule only finalizes the reductions for the first two years of that period. The range of cuts outlined in the law vary by year, peaking in 2019 at $5.6 billion for that year.

The rule said that another regulation on DSH payments would be finalized later. That would finalize a proposed rule issued on Jan. 18, 2012, titled, "Medicaid Disproportionate Share Hospital Payments—Uninsured Definition." That proposal would define ''individuals who have no health insurance (or other source of third party coverage) for the services furnished during the year'' in order to calculate hospital-specific DSH limits on a service-specific basis rather than on an individual basis.

The final rule follows the requirements laid out in the health care law. The statute's requirements include provisions saying that states get cut more if they have the lowest percentages of uninsured people or if they don't target their DSH payments to hospitals with many Medicaid beneficiaries or to hospitals with high levels of uncompensated care.

By Rebecca Adams, CQ HealthBeat Associate Editor

September 12, 2013 -- The Medicare Payment Advisory Commission (MedPAC) plans to more closely examine Medicare accountable care organizations (ACOs) and at its meeting last week reacted to a potential new way to encourage patients within ACOs to use in-network providers.

Within the next few months a contractor for MedPAC will interview some of the participants in Medicare ACOs and report back on those experiences. Currently, the Medicare shared-savings program includes 220 groups of providers and 23 groups are in the Pioneer ACOs.

The interviews will focus on the Pioneer program, which generated some controversy in July when Medicare officials reported that seven of the groups switched to the shared-savings model and another two dropped out of Medicare ACOs altogether.

The July 16 report summarizing the first year of the Pioneer program showed that of the 32 Pioneer ACOs, 18 groups saved money (with 13 generating enough to get some money back from Medicare) and 14 ACOs lost money in 2012.

The Pioneer program was intended for higher-performing groups. It has both more difficult requirements and higher potential rewards than the shared-savings program. Some of the reasons organizations seem to find the Pioneer program less attractive included the challenges of identifying beneficiaries and encouraging them to get care within the networks that the ACO has created; the methods used to calculate savings; and the concern that organizations that are already high-performing may not be able to make further improvements and make enough money to make the investments worthwhile.

Commissioners noted that the savings in the first year of the Pioneer program were reported to be 0.5 percent, while the costs of using more care coordinators and running the ACOs were 1 to 2 percent that year.

"Is that sustainable? It doesn't seem so," said commissioner David Nerenz, the director of the Center for Health Policy and Health Services Research at the Henry Ford Health System in Detroit.

The MedPAC staff also revealed a proposal that could encourage seniors to go to doctors and other providers that are part of the ACO in which the patients are enrolled. Commissioners noted that some beneficiaries may have no idea that they are even in an ACO because patients can still choose to go to any provider that accepts Medicare. The commission staff brought up the idea of promoting the creation of a Medigap supplemental insurance plan that could give beneficiaries discounts for visiting providers within the ACO networks.

Some commissioners seemed to buy into the notion that a new Medigap plan would increase loyalty among consumers to ACO providers.
However, some felt that creating a new plan could be complicated.

"That could be even more confusing to the beneficiaries," worried commissioner Jack Hoadley of the Georgetown University Health Policy Institute, MedPAC Chairman Glenn Hackbarth outlined two major areas that he wants the panel to start exploring. The first is whether the panel should come out with a recommendation about whether Medicare officials should require providers in the next contract rounds of the programs to face penalties if they do not achieve savings targets. The second is whether the commission should examine whether the savings targets that are being set are appropriate for each type of organization.

"If people are losing money because they're being punished for being efficient in the past, there's going to be a lot of unhappiness," said Hackbarth.

By John Reichard, CQ HealthBeat Editor

September 9, 2013 -- Primary care physicians spend as much time with and provide comparable tests and services to their uninsured and Medicaid patients or those they treat at community health centers as they do with patients who have private insurance coverage, a new study says.

That finding was based on an examination of 31,000 visits to primary care physicians from 2006 through 2010. The study by George Washington University researchers compared safety-net patients to those covered by commercial insurance plans.

"Although safety-net patients may encounter barriers to obtaining primary care, it appears that when they do visit a physician, they are treated comparably to other patients," said the study led by Brian K. Bruen, a health policy researcher at GW. The findings were published in the September issue of the policy journal Health Affairs.

The researchers said they did the study to test the accuracy of criticism that the treatment of safety net patients is substandard. They did not examine specialty care or hospital care.

"Critics of the Affordable Care Act's expansion of Medicaid argue that the federal program provides poor care and that patients would receive better or less costly care with private insurance," they noted.

The study did not analyze differences between safety net patients and commercially insured patients in how easily they were able to get in to see a doctor. In many instances, doctors say there is a limit to the number of Medicaid or uninsured patients they can see, insisting that without enough patients with private coverage and its higher payment rates they can't keep their practices afloat. For example, the California Medical Association, which represents physicians, has said that low Medicaid payment rates in the state will keep poor people from getting access to doctors.

"It is important to remember that a patient must be able to obtain care in the first place," said the study. "The Affordable Care Act expands funding for community health centers and raises payment rates in Medicaid for primary care physicians, which should expand Medicaid patients' access to primary care providers."

The researchers said they focused on the length of a medical visit because "it is an important indicator of quality of care." They also checked for differences in diagnostic and health counseling services, and in treatment services, concluding that any differences were "modest."

On the diagnostic and treatment side, for example, they said they took into account 39 different services that a doctor could offer patients, such as checking blood pressure, screening for depression, testing cholesterol, and providing care for a wound.

The average primary care visit lasted 18-and-a-half minutes, they found. On average each visit included providing or ordering four procedures or diagnostic tests, one health education or counseling service, and two medications or immunizations. Among the study's limits they cited the fact that doctors reported the length of visits, which was not subject to independent verification.

• Health Affairs

By Emily Ethridge, CQ Roll Call

September 13, 2013 -- A House Energy and Commerce bill to change how Medicare pays physicians would cost $175.5 billion over 10 years, according to the Congressional Budget Office (CBO).

The bill (HR 2810) would repeal Medicare's sustainable growth rate (SGR) and give physicians automatic payment updates of 0.5 percent over five years, which would cost $63.5 billion, the CBO said.

Beginning in 2019, physicians would either move into an enhanced fee-for-service system known as the Quality Update Incentive Program or an alternative payment model. The CBO said that the real cost depends on how those mechanisms operate, but it estimated they would increase spending by $112 billion over 2019–23.

The score defines the bill's biggest obstacle—how to offset the cost of its provisions. Bill sponsors have not yet revealed possible ways to pay for the legislation. The cost of simply repealing the SGR over 10 years is much less at $139.1 billion, according to the CBO.

The CBO said that the bill's alternative payment models generally would not save Medicare much money. First, most physicians would choose to participate in the payment model that offers the largest payments for the services they provide.

In addition, most of the alternative payment models (APM) would be in development during 2019-2013 and undergoing testing through demonstration projects. "CBO's review of numerous Medicare demonstration projects found that very few succeeded in reducing Medicare spending," the report said. In addition, most of the alternative payment models that would ultimately be adopted would increase Medicare spending, the CBO found.

"CBO expects that the use of the APM mechanism would tend to provide physicians with rewards for good performance even when there was no change in their performance relative to current law; that effect would tend to generate higher Medicare spending than under current law," the report said.

It noted that under the bill, providers would have more influence in creating the payment models than they do under the current program at the Center for Medicare and Medicaid Innovation (CMMI). That increased influence would lead to smaller savings compared with the CMMI models, the CBO said.

The office noted there is "significant uncertainty" over how many alternative payment arrangements would be offered and adopted, and how many providers would participate, among other issues.

The House Ways and Means Committee and Senate Finance Committee are currently working on their own proposals to replace the SGR and plan to reveal them this fall.

If Congress fails to act this year, doctors will have their Medicare payments cut by about 24 percent on Jan. 1, 2014, the CBO said.