By Erin Mershon, CQ Roll Call

August 9, 2016—Large employers are expecting employee health benefit costs to rise by 5 percent in 2017, less than half the increase expected for consumers who purchase health care on the public exchanges created by the 2010 health law.

The figure comes from an annual survey of companies with an average of 20,000 employees conducted by the National Business Group on Health. The group this year emphasized the differences between coverage on the exchanges and in the employer market, where premium and deductible increases are projected to be lower.

Affordability remains a challenge across most insurance markets, especially those established by the health law. Plans on public exchanges are requesting premium increases of an average of 23 percent, according to an analysis this week from the ACA Signups blog, though regulators may not approve those requests in full.

"When we look at where employer-sponsored health care is today versus the public exchanges, it's still the most effective and efficient way for employers to provide affordable health care to their employees," said Brian Marcotte, the president and CEO of the National Business Group on Health.

Employees for large companies can expect "pretty much business as usual" during the upcoming enrollment season, Marcotte said. Premium increases will be about on par with prior years, and most employers aren't anticipating major plan design changes.

Employers continued to push back on the so-called Cadillac tax on high cost health plans in their survey responses. Most said their most popular health plans would trigger the tax by 2020, if it is implemented. Congress last year passed a two-year delay of the tax, and there is bipartisan support, including from both major presidential candidates, to repeal the tax entirely.

Though there are few major innovations in plan design, the survey found, employers are increasingly experimenting with new delivery system models like accountable care organizations and so-called centers of excellence as alternate ways to improve affordability.

"Once you have a high deductible plan, where do you go from there?" Marcotte asked. "You really need to turn your sights on the delivery system if you want to control high health care costs."

Telemedicine is far and away the most popular new model in the employer market. Five years ago, about 7 percent of employers offered telemedicine choices to their employees. By 2017, about 90 percent will do so, the survey said.

The survey also found that specialty pharmacy was the biggest driver of cost increases, even though those costs applied only to 2 or 3 percent of employees on a given plan. Three years ago, Marcotte said, specialty pharmacy cost was not even in the top five contributors to cost increases.

The survey was conducted among 133 large employers, 75 percent of which have at least 10,000 employees. Thirty percent of respondents have over 50,000 employees. Together, the survey's respondents cover 15 million employees and their dependents, about 10 percent of the employer market nationwide and more than the number of people covered through the health law exchanges.

By Erin Mershon, CQ Roll Call

August 11, 2016—Federal officials are heralding a new analysis that suggests the government-run insurance exchanges attracted a healthier pool of customers in their second year of operation. The officials say the data could counter industry concerns about the viability of the exchanges—and that it suggests premium increases for health law marketplace plans could also stabilize.

Medical costs for individuals who purchased health insurance in the marketplaces stayed essentially unchanged between 2014 and 2015, even as medical costs in broader insurance markets rose by as much as 6 percent, the data shows.

That suggests that the so-called risk pool—a measure of how well healthy consumers balance the costs of sick consumers—improved between those years, as more people signed up for coverage under the 2010 health care law. It could continue to improve as enrollment continues to grow, officials suggested.

Federal health officials have fielded years of insurers' complaints that the marketplace consumers are sicker and costlier than those in other markets. Medical costs and the strength of the risk pool are major factors in how insurance companies set their premiums, and this year, premium hikes into the double digits remain a chief concern for regulators and others hoping to make insurance products more affordable.

The risk pool has also been a factor in several plans' decisions to leave the marketplaces in several states, including UnitedHealth Inc.'s exodus from more than 30 states for 2017.

"Growth in enrollment is leading to a broader, healthier risk pool and that is bringing down costs," said Aviva Aron-Dine, senior counselor to the secretary at the Department of Health and Human Services (HHS). "A risk pool getting stronger does not guarantee [insurer] profitability, but it is a promising sign for the overall health of the marketplace."

A stronger risk pool should help keep premium costs more stable, Aron-Dine said. She acknowledged that there are other factors contributing to premium increases, including the phase-down of the so-called reinsurance program and efforts to make up for prices that may have been too low in prior years.

The data isn't shocking, Aron-Dine admitted. Because of the troubled technological rollout of the health law insurance portal HealthCare.gov, in many cases only the sickest consumers persisted in getting coverage in 2014, the first year it was available. It makes sense, then, that healthier people would sign up in 2015 and the risk pool would improve, Aron-Dine said.

The data also reflects just one year of marketplace trends, and arguably one of the most volatile years, given the glitches in rollout of the website and their effect on enrollment. The figures were calculated based on the claims data insurers submitted to participate in two premium stabilization programs of the health law, it's so-called reinsurance and risk corridor programs. Those figures are not yet available for 2016.

But HHS emphasized as its "most powerful evidence" data showing that the trend was more pronounced in states that saw higher enrollment growth. In the 10 states with the highest enrollment growth in 2015, medical costs per enrollee per month actually fell by 5 percent, compared with a broader 0.1 percent decrease in medical costs across all states.

HHS also highlighted that the improvements in the risk pool shown in the data predated several federal policy changes aimed at further improving the risk pool and addressing insurers' complaints. This year, the agency has tightened its rules around special enrollment periods that let people sign up for coverage outside of the annual open enrollment period. It has also improved data matching efforts and changed the way it reaches out to Medicare-eligible enrollees.

America's Health Insurance Plans CEO Marilyn Tavenner termed the report "overly optimistic."

"The reality is that the risk pool has not significantly improved. That is a serious concern," she said. "This analysis also overlooks the current challenges that are driving up premiums for consumers, including the state of the risk pool at the local level and the lack of pre-enrollment verification for special enrollment periods. We need policy solutions that will address the affordability concerns facing consumers, and that starts by tackling these issues directly."

By Kerry Young, CQ Roll Call

August 12, 2016—A sweeping report on the prices that federal agencies pay for prescription drugs could be made public within weeks, providing new fodder for the intensifying debate about the rising costs of medicine in the United States, according to the office of the lawmaker who requested it.

Rep. Marcy Kaptur, D-Ohio, used her post as an appropriator to attach a mandate for this report to the fiscal 2016 spending package (PL 113-114). Congress ordered the Department of Health and Human Services, in consultation with the Department of Veterans Affairs, to present an analysis of drug spending including the changes they have seen in prices since 2003. Kaptur told CQ HealthBeat that she is seeking to learn how these agencies have been affected by the spikes in the cost of medicines that consumers have reported. 

"There isn't a day that goes by that I am not approached by a constituent who brings up the issue of escalating prescription drug prices," Kaptur said. "They have seen medications that they've taken for years double, even triple in price, and they don't understand why. And neither do I."

Public concern about the cost of drug is forcing the issue into the center debates about health policy. Both Donald Trump and Hillary Clinton have pointed to the problems many Americans face paying for medicines. The Pharmaceutical Research and Manufacturers of America has shaken up its staff and ramped up lobbying efforts in recent months, anticipating a closer congressional examination of the issue in the next session.

"Voters have made this their number one concern in health care," said John Rother, the president and chief executive of the National Coalition on Health Care, which is leading a campaign addressing high drug costs. "The dollars involved are getting to be painful and are squeezing out other high-priority items."

Spending on medicines in the United States rose by 8.5 percent to $310 billion last year, according to consultant IMS Health, while the inflation rate as measured by the Consumer Price Index was little changed. In defending rising costs of drugs, the pharmaceutical industry has continually pointed to the significant investment needed to discover new medicines and bring them to market.

Yet, people in Rep. Kaptur's district are sometimes struggling to afford a bedrock medicine of the pharmaceutical industry that's been sold since the 1920s. Insulin costs are straining the budgets of many senior citizens even though they have Medicare Part D coverage, said Tina Elmlinger, health care advocate trainer and affordable medications coordinator for Sandusky, Ohio-based

Serving Our Seniors, which advocates for older adults and their ability to maintain their independence. 

"They are getting sticker shock," she told CQ HealthBeat.

Indeed, the cost of insulin appears to be helping drive some older consumers into what's called the donut hole, or a temporary gap in coverage in the Medicare Part D drug insurance. The mean price of insulin increased from $4.34 per milliliter in 2002 to $12.92 in 2013, according to research published in the Journal of the American Medical Association in April.

Biotech Insulin

Companies such as Eli Lilly & Co. and Sanofi argue that they have made great strides with insulin, a product initially derived from the pancreas glands of pigs. They've created long-acting biotech versions of insulin, a critical protein that helps escort glucose into cells to serve as a kind of fuel. Innovations with insulin include the development of so-called pens for easier delivery, an advantage for older people who may struggle with syringes.

But prices have been rising for even well-established insulin products that have been on the market for a while, such as Sanofi's Lantus franchise, according to Medicare. The Food and Drug Administration approved long-acting Lantus in 2000 and the SoloStar pen version of it in 2007.

There was a 41 percent increase in the average cost per unit for Lantus in 2014 from the previous year, and a 27 percent on for the SoloStar version, according to Medicare's drug spending dashboard. The tool is being used by the agency to address concerns about the affordability of medicines. Lantus SoloStar cost Medicare's Part D drug insurance program $2.02 billion in 2014, while the original version of the cost it $1.73 billion.

Competition could heat up soon for Lantus in the United States, with Lilly allowed to launch its long-acting Basaglar in December. Copycat versions of biotech drugs in general, though, have not generated the kinds of steep savings seen with pills, with the difficulties of producing these protein-based medicines limiting entrants to the market.

When asked for a comment on the Lantus price increases reported by Medicare, Sanofi responded by raising issues about insurers. It said its rebates to these firms and pharmacy-benefit managers increased significantly in recent years. Sanofi also noted that many consumers are paying a large share of their drug costs directly due to changes in insurance plans.

"Recent cost-shifting to the consumer by insurers through insurance design changes should be a key element of any discussion about the affordability of pharmaceuticals for the patient," Sanofi said in a statement.

By Marissa Evans, CQ Roll Call

August 8, 2016—The health care overhaul's Medicaid expansion didn't significantly alter the overall use of hospital emergency rooms, according to a new Health Affairs study that suggests newly insured individuals don't visit ERs more frequently.

The study released Monday found that from 2012 through 2014, overall emergency department use differed by less than 1 percent between states that expanded their Medicaid programs and those that opted out. Some 17 million people gaining coverage through private insurance and expanded Medicaid, the joint health insurance for the poor and disabled.

"Our finding of a lack of an effect of Medicaid expansion on total emergency department visits suggests that emergency department use for the newly Medicaid insured was not substantially different for previously uninsured individuals," the authors wrote.

Under the 2010 federal health care law states can expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level. By 2020, states will have to cover 10 percent of the cost of the expansion. Thirty-one states and the District of Columbia have currently taken up the offer. The Health Affairs study looked at the 19 states that expanded as of the beginning of 2014.

Researchers used monthly emergency department data from 478 hospitals. The authors noted some limitations, including that the number of hospitals assessed only represented about 10 percent of ERs nationwide. They also were not capable of distinguishing which patients had new insurance. And they were unable to track the long-term effects of expansion.

Emergency rooms in expansion states saw a 25.5 percent increase in Medicaid beneficiaries between 2012 and 2014 while non-expansion states saw a 1.7 percent increase. Among private insurance policy holders, researchers found a 1.3 decrease in emergency room use in expansion states while non-expansion states saw a 7.1 percent increase. Between expansion and non-expansion states there was a 6.7 percent overall decrease in visits paid by private insurance. Researchers said that may have been attributable to some policyholders becoming Medicaid-eligible under expansion and moving into the program.

By Kerry Young, CQ Roll Call

August 8, 2016—A recent flap over consumer-friendly hospital ratings is prompting some in Congress and the Centers for Medicare and Medicaid Services (CMS) to wrestle with whether to make allowances in quality measures for facilities that serve poor communities. It's an issue that's certain to pervade fights over health care payments for many years.

The American Hospital Association, the Federation of American Hospitals, and the Association of American Medical Colleges protested last month that CMS's new simplified star ratings are weighted against hospitals that have significant numbers of homeless patients or ones with low incomes who may struggle to get transportation for follow-up medical visits and to buy food and medicine.

Hospitals argue that they are being blamed for poor results for these patients due to circumstances beyond their control. The debate over socioeconomic factors may be revived when Congress returns from recess. The Senate Finance Committee will face pressure to move a House-passed Medicare package (HR 5273), which includes a bid to address concerns about readmission penalties for hospitals. The bill proposes a comparison that would group hospitals that serve significant populations of low-income elderly patients who qualify for both the Medicare and Medicaid program.

CMS officials have shown some skepticism about making such distinctions. The agency says it wants to avoid making changes that would "mask potential disparities or minimize incentives to improve the outcomes of disadvantaged populations." CMS repeated this exact phrase in three separate fiscal 2017 payments rules, which cover services of hospitals, skilled nursing centers (SNFs) and inpatient rehabilitation facilities (IRFs). The last two categories of providers, SNFs and IRFs, form a large share of what's called post-acute medicine, which accounts for roughly $60 billion in annual Medicare spending and is directed at patients after surgeries and serious illnesses and injuries.

Ashish K. Jha, a Harvard University researcher and doctor who has published widely on the question of socioeconomic differences and quality measures, said he is sympathetic to CMS's aim of spurring improvements in care by tracking and comparing outcomes. Still, he argues for a need to make allowances when a hospital serves many poor people.

"I get it. I like it," Jha said of CMS's goal. "But we need to acknowledge that the job of the hospital is very different when you have lots of poor people and homeless people versus wealthy, well-to-do patients. And if you agree that the job is very different, then you should be held responsible in different ways."

In recent payment rules, CMS acknowledged that treating large numbers of poor people may affect quality ratings. Agency officials said they are monitoring a two-year test by the National Quality Forum to determine if risk adjusting for patient income may be appropriate. Separately, an in-house policy shop for the Department of Health and Human Services (HHS) is conducting its own research. The office of HHS's Assistant Secretary for Planning and Evaluation is looking at the question of a socioeconomic adjustment in connection with a 2014 law intended to set the stage for an overhaul of payments for post-acute care (PL 113-185).

This same debate is likely to arise with the continued implementation of another major payment change, last year's overhaul of Medicare reimbursements for doctors (PL 114-10), said David Nerenz, a researcher at Detroit's Henry Ford Health System. CMS is in the midst of establishing an initial framework, known as the merit-based incentive payment system, or MIPS, for pegging Medicare reimbursement to judgments about the quality of care delivered.

Doctors in poor areas might find it more difficult in the future to obtain the kinds of scores needed to prevent cuts in pay, due to circumstances they perceive to be beyond their control, Nerenz said.

"We are going to have similar questions about whether these measures should be adjusted at a patient level or a community level for socioeconomic factors," Nerenz said of MIPS, adding that the stakes in creating these metrics may be higher in this case.

"It's hard to pick up and move a hospital that's been for a hundred years in an inner-city area, but doctors are more mobile," Nerenz said. "You may find a real problem in finding physicians willing to go to or stay in underserved areas."

By Kerry Young, CQ Roll Call

August 10, 2016—A House Republican said he will try to get a law enacted this year addressing Medicare readmission penalties for hospitals that serve many poor patients, even with the November elections complicating efforts to clear any legislation.

"We need to push to get some of these issues cleaned up in lame duck," Rep. James B. Renacci of Ohio, told CQ HealthBeat in a Monday interview, referring to an anticipated post-election session. "Although I continue to hear that there will be very little done in lame duck, I am hoping that we can at least get some of these key issues accomplished."

Renacci has significant bipartisan support. A House Ways and Means package of Medicare policy changes largely incorporated his plan (HR 1343), which has 41 Democratic cosponsors and 44 Republicans ones. The broader Ways and Means Medicare package (HR 5273) sailed through the House in June by voice vote.

Hospital groups with significant lobbying clout have been arguing that they may be penalized for circumstances beyond their control under the current system, because poor people have a greater chance of returning for care within 30 days of an initial stay. Patient struggles to make it to follow-up medical visits and even obtain food and shelter point to the need for adjustments, the hospital groups maintain.

The Ways and Means measure calls for moving toward a transitional benchmark for poverty in assessing penalties. This would be based on how many patients qualify for two major federal programs: Medicare for senior citizens and the disabled and Medicaid for people with low incomes. The bill also directs CMS to consider further research on the question of socioeconomic status and readmission penalties.

The financial stakes for hospitals are rising as the Centers for Medicare and Medicaid Services (CMS) fully implement the readmission penalty program, which was created by the 2010 health care. The penalties will save Medicare about $528 million in fiscal 2017, an increase of $108 million from the estimate for the current budget year, CMS said. The agency attributed the expected rise in penalties to a change in a measure of readmission cases linked to pneumonia and the addition of a measure for coronary bypass cases. 

Renacci said his challenge in building support for his bill has been making it clear that the measure would refine the readmission penalty, and not undermine its goal of improving care. Hospitals don't want to be dinged for cases where patients couldn't buy needed medicines or make it to follow-up visits.

"It's okay to penalize hospitals that have readmissions due to infections or issues related to operation that may have occurred at that hospital," said Renacci, who was a health care executive before joining Congress.

There are concerns that adjusting the readmission penalty will result in different standards of care. Rep. Charles B. Rangel, D-N.Y. raised the issue at a May Ways and Means markup of the Medicare package. He argued that the challenge is to make sure that hospitals serving low-income communities should have the resources they need to prevent admissions of their patients, rather than rejigger the penalty. Still, Rangel agreed with a need to preserve the funding for medical centers serving the poor.

"I don't want these hospitals to be put out of business just because we don't provide the funds for them to do the right thing," said Rangel, who is a cosponsor of Renacci's bill.

CMS is continuing to look broadly at the question of whether to adjust measures of the quality of care for so-called socioeconomic status. It's an issue that's also been raised in connection with measures being developed in the field of post-acute care and the new simplified star ratings CMS posted for hospitals.

There are many policy experts who are skeptical of bids to readjust readmission penalties. Yale University researchers, including Harlan M. Krumholz, reported this week in the journal Health Affairs the results of a study, in which they found socioeconomic status of patients didn't "change hospital results in meaningful ways" in terms of readmission.

In a Monday interview, Debra Ness, president of the nonprofit National Partnership for Women and Families, said many hospitals that serve poor communities have fared well in both the readmission assessments and in the new CMS star ratings. She sees this as evidence weakening the case for making socioeconomic adjustments. These might mask poor services at some hospitals with many patients who have low incomes, she said. 

"You don't want to disguise those differences," Ness said.  "You want to be able to see that they are there and then take action to reduce those disparities."