Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



August 11, 2014

Washington Health Policy Week in Review Archive b7007bf2-fe5e-49a5-8693-74d98c585477

Newsletter Article


Medicaid, CHIP Enrollment Rose 600,000 in June, CMS Says

By John Reichard, CQ HealthBeat Editor

August 8, 2014 -- Enrollment in Medicaid and the Children's Health Insurance Program (CHIP) is continuing to steadily grow under the health law, with an added 602,210 people signing up in June, federal officials said last week.

The increase is based on preliminary data. About 7.2 million more people have signed up in the two programs since the Oct. 1 start of the law's initial open enrollment period last fall, said Cindy Mann, the top Medicaid official at the Centers for Medicare and Medicaid Services (CMS).

"Because enrollment in these programs can happen year-round, our latest report shows that number is still growing," Mann wrote in a blog post.

In announcing May sign-up figures last month, CMS said enrollment in the two programs had increased by 6.7 million.

The health law (PL 111-148, PL 111-152) relies on expanded eligibility for Medicaid and subsidized private insurance as the means to extend medical coverage to most Americans. As of June, 25 states and the District of Columbia have expanded their Medicaid programs.

Mann wrote that enrollment in states that expanded Medicaid eligibility has risen by 18.5 percent since before open enrollment began but by only 4 percent in states that kept the status quo.

"If the remaining 24 states accept federal funding to cover low-income adults in Medicaid, 5.7 million more low-income Americans could have access to affordable, quality care," she wrote. The latest tally does not include figures for Maine and North Dakota, which did not submit enrollment data for June or May, according to CMS.

A 26th state, New Hampshire, expanded its Medicaid eligibility effective July 1, with coverage kicking in Aug. 15. An expansion in Michigan that took effect April yielded 12.6 percent enrollment growth in the first three months of expanded eligibility, CMS said.

Nine of the states whose expansions were in effect as of June reported increases of 30 percent or more over the Oct. 1 start of open enrollment.

The health law actually began having an impact on Medicaid and CHIP enrollment well before the first open enrollment period began.

The law gave states the option of expanding Medicaid coverage for adults starting April 1, 2010. Seven states exercised that early option and nearly 950,000 people gained coverage as a result.

State and federal lawmakers opposed to the Medicaid expansion say the program offers low quality care. They also say the Medicaid entitlement threatens future generations with unsustainable levels of federal debt.

But states that haven't expanded face near term economic pressure to do so.

A study released late last week by the Urban Institute says those states are foregoing $423.6 billion in federal Medicaid funds from 2013 to 2022, lessening economic activity and job growth. The study estimated hospitals in the states are also losing $167.8 billion in Medicaid revenue that would come from larger caseloads.

"Every comprehensive state-level fiscal analysis that we could find concluded that expansion helps state budgets, generating savings and revenues that exceed increased Medicaid costs" to the states, the Urban Institute study stated.

Publication Details


Newsletter Article


States Where Obama Polls Badly Make Strides Rolling Out Health Law

By John Reichard, CQ HealthBeat Editor

August 7, 2014 -- Arkansas and Kentucky saw the biggest drops among states in their uninsured rates since a health law requirement took effect Jan. 1 that Americans carry health insurance, according to the Gallup polling organization.

West Virginia—another state where President Barack Obama has low approval ratings—ranked fifth among states in coverage expansion.

The results suggest that Obama's low popularity scores in some places aren't stopping his signature policy achievement from having an effect.

"While a majority of Americans continue to disapproved of the Affordable Care Act, the uninsured rate is declining, as the law intended," Gallup reported. Nationally, 18 percent of U.S. adults reported being uninsured in the third quarter of 2013, but that figure dropped to 13.4 percent in the second quarter of 2014.

Gallup assessed rates of uninsurance by polling individuals on whether or not they had coverage.

States that voted overwhelmingly against Obama in the last election—no county in West Virginia, for example, went for him—were among the most cooperative implementing coverage goals of his health law.

Kentucky established its own state insurance exchange to offer private insurance coverage options. Arkansas and West Virginia have "partnership" exchanges, splitting functions with the federal website, and, in the words of Gallup, "make key decisions based on local market and demographic conditions." Each state also expanded its Medicaid program.

The 29 states that were neither involved in creating exchanges nor in expanding Medicaid, or that took only one of those steps, saw only a 2.2 percentage point drop in their uninsured rate, while the 21 states that did both saw a decline almost twice as great—4 percentage points.

A total of 22.5 percent of Arkansas residents were uninsured in 2013, a proportion that dropped to 12.4 percent by mid-2014. Rounding out the top 10 were Kentucky, which went from 20.4 percent to 11.9 percent; Delaware, 10.5 to 3.3; Washington, 16.8 to 10.7; Colorado, 17 to 11; West Virginia, 17.6 to 11.9; Oregon, 19.4 to 14; California, 21.6 to 16.3; New Mexico, 20.2 to 15.2; and Connecticut, 12.3 to 7.4.

Publication Details


Newsletter Article


Boom in Managed Care Alters Medicaid's Calculations

By Rebecca Adams, CQ HealthBeat Associate Editor

August 6, 2014 -- Health insurance companies have not always been eager to cover Medicaid recipients, in part because some low-income people have complex medical needs and don't have all the resources that help wealthier people stay healthy.

But that reluctance has turned to enthusiasm in recent years as more states have switched their Medicaid programs to managed care plans, some of which seek to control costs by, among other steps, limiting a patient's choice of physicians and the fees that doctors charge. Some health insurers cover Medicaid patients in return for a flat monthly payment from the government. The expansion of Medicaid to many more low-income Americans under the 2010 health care law is making the program even more attractive to insurers.

As a result, federal spending on Medicaid managed care is expected to increase 39 percent, from $74 billion in 2013 to $103 billion in 2015, according to the Congressional Budget Office (CBO). The higher federal spending, as well as the enrollment of 13 million people in plans through new insurance marketplaces, makes it more attractive for health plans to offer government-financed coverage.

Though states manage their own Medicaid programs and pay for part of the cost, they must get federal permission to make big changes. In the Obama administration, the Centers for Medicare and Medicaid Services (CMS) is drafting regulations for Medicaid managed care that are being closely followed by lobbyists.

Insurance companies that provide managed care coverage are lobbying for as few new regulations as possible, as are the states that run the programs.

The first step for CMS, however, has been to gather more data, because it's not clear that managed care is universally better for consumers or taxpayers than the traditional fee-for-service program that allows patients to see any doctor that accepts Medicaid.

"There's an increasing recognition that we really don't have data of the quality and rigor that are needed to answer the quality and access and cost questions that everyone is interested in," says Julia Paradise, a Medicaid expert at the Kaiser Family Foundation. "It's hard to assemble a coherent national picture. It's hard to make categorical statements about whether managed care is a good thing or bad thing, or something in between."

As part of its efforts to learn more, CMS is conducting another survey. The agency contracted with NORC, an independent research organization affiliated with the University of Chicago, to poll an additional 1.5 million Medicaid beneficiaries. The results are expected next spring. Federal officials appear to be exploring whether additional quality reviews should be added to requirements for managed care plans.

One complaint that federal officials already started to address about health plans offered in the new marketplaces under the health care law is that some plans allow patients to use only a limited number of doctors, hospitals and other medical providers. Federal officials are urging health care plans in the insurance exchange to create larger networks of providers. CMS may consider whether similar action is needed for Medicaid managed care plans.

Some states report saving money through managed care plans, which typically limit patients to a network of medical providers, but there isn't evidence that such plans save money nationwide. Some studies suggest that managed care gives patients better access to treatment, but not all reach that conclusion.

"It's an issue that's important to keep an eye on," says Joan Alker, executive director of the Georgetown University Center for Children and Families, who doesn't view managed care as inherently positive or negative. "We do want accountability for these taxpayer dollars and to ensure that beneficiaries are going to receive high-quality care."

Almost 72 percent of people covered by Medicaid now are in some kind of managed care, including a version that pays doctors and other providers largely for the services they give but also offers them more money to coordinate patients' care, according to the federal commission that provides policy and data analysis on Medicare and the Children's Health Insurance Program.

About half of Medicaid beneficiaries are in the type of managed care in which plans are paid a preset amount to cover all of a patient's medical needs. In 1995, just 15 percent were in such programs.

Most states embarked on their managed care strategies years ago by shifting families with children, who are relatively inexpensive to treat, into the plans. A growing number of states have since moved over more costly patients with complex medical problems, including disabilities.

In addition, CMS officials encouraged some states to direct people who are eligible for both Medicaid and Medicare, the federal program for seniors and people with disabilities, into managed care through a demonstration program.

Thirty-six states and the District of Columbia contract with risk-based Medicaid managed care plans, according to the Medicaid Health Plans of America, which represents managed care organizations.

The health care law (PL 111-148, PL 111-152) allows states to choose whether to expand eligibility to more people. Starting this past January, states can cover low-income people with income of up to 138 percent of the federal poverty level. The 27 states including the District of Columbia that broadened eligibility are enrolling many of those people in managed care.

"The Medicaid market has changed irrevocably," says Matt Salo, executive director of the National Association of Medicaid Directors. "We're not going back to uncoordinated fee-for-service, so now how do we pivot as government officials, state and federal, to best maximize that and prepare for the future?"

States' experiences with managed care have brought mixed results, according to an analysis of 20 studies by the Robert Wood Johnson Foundation in 2012 and a separate 2012 paper by the Kaiser Family Foundation.

"There is little evidence of national savings from Medicaid managed care," said the Robert Wood Johnson report, by Columbia University School of Public Health professor Michael Sparer.

A 2011 paper by the National Bureau of Economic Research found that "shifting Medicaid recipients from fee-for-service into [managed care] did not reduce Medicaid spending in the typical state" from 1991 through 2003. On average, moving to managed care "did not lead to lower Medicaid spending."

That 2011 study did find that in some states that already generously paid medical providers in the traditional program, health care plans were able to reduce spending somewhat. The opposite was true in states that paid low rates to providers in the traditional program.

The Kaiser Foundation found that managed care may have the potential to save money over time by avoiding expensive hospitalizations through encouraging preventive or primary care and managing patients' chronic conditions. But savings "are unlikely in the short term," the paper found, "and budget-driven efforts to achieve savings from managed care could have adverse consequences for beneficiaries' access to needed care."

Even in some states where managed care plans haven't been more cost-effective than regular Medicaid, though, state officials like managed care because they can predict their costs more accurately.

Risk-based managed care plans are paid predetermined monthly rates for each person they enroll, while under the traditional fee-for-service program, state officials pay for each medical service that a patient receives.

One concern about the managed care plans, though—and one that might lead to regulation—is that they may spend fewer of their premium dollars on medical claims than insurers that cover other populations.

The 2010 health care law requires private insurance plans to spend at least 80 percent of their premium revenues on medical costs or initiatives to improve the quality of patients' health care, instead of on administrative costs or profits. Large group plans and Medicare plans must spend at least 85 percent of premiums on medical care. But no such federal requirement, known as a medical loss ratio, exists yet for Medicaid.

Eleven of the states that responded to a 2011 survey by the nonpartisan Kaiser Family Foundation reported that they have a state requirement that Medicaid plans spend at least 80 percent of premiums on medical costs.

But the Health and Human Services inspector general found that plans that did not meet state requirements often failed to pay states back the excess revenue that the plans had inappropriately kept, as they are supposed to do.

Federal officials have told Medicaid directors privately that CMS may add a minimum spending requirement for managed care plans, to match the responsibilities of other insurers, as part of the proposed rule.

Medicaid directors have written to say they don't like that idea. But if federal officials insist on adding a medical loss ratio requirement, then state officials suggest that several types of efforts by plans, including anti-fraud initiatives and programs to manage the care of people with serious health needs, be counted as medical costs rather than administrative costs.

One area where Medicaid managed care plan lobbyists say they do better than traditional Medicaid is in paying doctors. A Government Accountability Office analysis released last month found that managed care plans paid doctors 12 percent more than fee-for-service plans did. Industry lobbyists say the extra money entices more physicians to accept Medicaid managed care patients.

Publication Details


Newsletter Article


California Network to Put Health Records of 9 Million State Residents Online

By John Reichard, CQ HealthBeat Editor

August 6, 2014 -- Two big California insurers recently announced a "next generation" health information exchange that will put the health records of nearly one-fourth of the state's population online by the end of this year.

Called Cal Index, it will allow "physicians, nurses, and hospitals throughout the state to share patients' health information, and will provide them with the tools to give their patients the safest, highest-quality care possible," Anthem Blue Cross and Blue Shield of California said in a joint announcement.

Enrollees in the two Blues plans can decline to have their records placed online, the announcement said. An official with the California Public Employees' Retirement System, which manages the health benefits of 1.3 million public employees in the state, said nearly 40 percent of its members are covered by the two insurers. "The value to patients when their providers have access to complete information about them is better integration and continuity of care and a quality outcome," said CalPERS Vice President Priya Mathur.

The insurers are putting up $80 million in seed money to cover the operating costs of Cal Index over the next three years and the expenses of tying in medical data from 30 large provider organizations. After three years participating providers and insurers will provide funding to Cal Index through subscription fees.

Publication Details


Newsletter Article


Hospitals Struggle to Meet CMS Goals for Electronic Health Records

By Kerry Young, CQ HealthBeat Associate Editor

August 7, 2014 -- Only about 5.8 percent of hospitals last year met all the requirements of a "stage 2" federal standard intended to more fully realize the potential of electronic health records, a troubling sign even amid the rising use of the technology, a new study found.

Medicare and Medicaid offer higher payments to providers if they make "meaningful use" of health IT, a definition that becomes increasingly difficult to meet over the three stages of a rulemaking program being put in place over a period of years.

Separately, data gathered by federal researchers and hospitals showed that most office-based doctors and most hospitals now have some form of electronic health record system.

The paper on stage 2 compliance, released last week by the journal Health Affairs, was prepared by authors who work or worked at key federal agencies including the Office of the National Coordinator for Health Information Technology (ONC). Still, a majority of hospitals met many of the requirements for stage 2 objectives for electronic health records (EHR), even if they couldn't reach the full standard, the authors said.

"For example, at least 90 percent of hospitals were able to use their EHR to record vital signs, smoking status, and patient demographic characteristics," they said. Those facilities also were able to "incorporate clinical lab test results as structured data; generate patient lists by specific conditions; provide patient-specific educational resources; and track medications using electronic medication administration records," the authors wrote.

The American Hospital Association (AHA) cited the study as proof of the need for some changes to the rules regarding Medicare payments and electronic health records. Hospitals that do not meet certain stage two requirements by Oct. 1 could face payment penalties under current rules, and also miss out on incentives meant to spur wider adoption of electronic health records.

There already has been notable progress in the field, said Linda E. Fishman, a senior vice president with the AHA. The share of hospitals using electronic health records has grown fourfold since 2010, to almost 60 percent, Fishman noted in a statement.

"Despite this remarkable increase, the article also suggests the federal 'meaningful use' program designed to support certified EHR adoption could go off the rails because the pace is too fast and the bar is too high," she said.

In Stage 2, hospitals face a demand to meet each of 16 core objectives and three of six menu-set objectives. They also need to report on 16 clinical quality measures. Gearing up to meet these demands has proven taxing.

The AHA has asked the Centers for Medicare and Medicaid Services (CMS) and the ONC to allow some flexibility with the payment rules regarding EHR to address these difficulties. But other organizations, such as consumer advocates and employers, have faulted CMS officials for moving too slowly on stage two.

In the paper that appeared in Health Affairs, the authors noted that some technical assistance may be needed, particularly for rural hospitals.

"The struggle of many hospitals to meet stage 2 meaningful use criteria suggests that the path forward remains challenging, and a particular focus on building data exchange infrastructure may be needed to support the nation's health and care improvement goals," the authors said.

An HHS press release on adoption levels said 78 percent of office-based doctors in 2013 reported they had installed some type of electronic health record system. About six in ten hospitals had electronic health records with certain advanced features, twice the adoption rate in 2009. The data, also reported in Health Affairs, showed the electronic exchange of medical data among doctors was relatively low in 2013 at 39 percent. Only 14 percent shared electronically medical data with ambulatory care providers or hospitals outside their organizations.

Publication Details


Newsletter Article


Florida Regulators Unveil Double Digit Rate Hikes

By John Reichard, CQ HealthBeat Editor

August 6, 2014 -- Summer's here and the time is right for fighting over rate shock.

That battle largely went to the administration last year with many young people getting access to subsidized coverage at a fairly low cost and older people able to buy coverage that earlier might have been denied to them outright.

This year the administration has painted a generally reassuring picture of what 2015 premiums will look like in the insurance exchanges when the next open enrollment period begins Nov. 15.

But no small number of Americans saw their individual coverage canceled because it didn't comply with benefit requirements of the health law and saw large premium increases.

For them, the charge that the health law produced "rate shock" rang true, even though their new benefits compliant with the health law typically were more comprehensive and in some cases they got subsidies.

It may ring true this coming year as well for Floridians of modest means who signed up for insurance in 2014 despite other demands on tight family budgets. Florida regulators this week unveiled average 2015 rate increases in the double digits. Nearly one million Floridians bought coverage on the federal site despite the opposition of state leaders to the health law and their decision not to open a state exchange or expand Medicaid under the overhaul.

During testimony before a House Energy and Commerce Subcommittee last week the number two official at the Centers for Medicare and Medicaid Services (CMS) said that rate increases will be modest.

Rate hikes that are publicly available from some states thus far have been in the mid-single digits, Andy Slavitt, principal deputy administrator at CMS, testified July 31.

"While this isn't going to be true for every single individual in every single county in America, by and large the early results look positive—very positive," he said, California officials announced that day that rate hikes would average four percent in 2015.

But early last week, the Florida Office of Insurance Regulation announced that on average premiums would rise 13.2 percent in 2015 for plans in the individual market that comply with the health law. Of 11 returning plans, eight filed hikes ranging from 11 percent to 23 percent, and three lowered their rates from 5 percent to 12 percent.

The average monthly premium for a silver plan, the most popular type of exchange plan, ranges between $938 and $1,452 for a family of four earning $51,000, the insurance office said in a statement. "Even with a federal subsidy that could mean an out-of-pocket cost of $500 or more per month to have coverage that still requires Florida families to pay about 30 percent of expenses out of pocket for deductibles, copayments and coinsurance," the statement said.

Florida  Democratic Senator Bill Nelson faulted state authorities for the size of the increases, saying they could have exercised their authority to conduct rate review under the health law but chose not to.

CMS has some leverage to bring the rate increases down.

"After tax credits, the average premium cost for people in Florida this year was $50 for a silver plan, the most popular plan type on the Marketplace," said CMS spokeswoman Tasha Bradley.

"Before the Affordable Care Act, consumers in individual market regularly faced annual double-digit premium increases. This is just the beginning of the process and as we saw last year all across the country, proposed rates were a high water mark and final rates were often lower than initially proposed."

"We are very pleased to see that the number of issuers planning to offer Marketplace plans in Florida has increased," she added.

CMS can't require an insurer to change rates through its rate review program, but it can choose not to certify a plan to be offered on the federal exchange if it decides it would not be in the interests of consumers to do so.

Even so, Families USA analyst Cheryl Parcham said "Florida's consumers would be better served if Florida's insurance department was empowered to conduct a fuller rate review."

A CMS official said that the average increase in Florida does not mean residents of the state won't have access to good deals next year. Premiums in the state were lower than the national average last year, the official said, and because of federal subsidies the average monthly premiums paid by enrollees in silver plans in 2014 were $50. And an estimated 75 percent of Floridians live in areas where premiums for the second lowest-cost silver plan will fall in 2015 compared to 2014, the official added.

Publication Details