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December 23, 2013

Washington Health Policy Week in Review Archive efd918fc-6bab-4d0c-b8ca-2db7fc11c39e

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Medicaid Applications Drop in November, Administration Touts Marketplace Enrollment Growth

By Rebecca Adams, CQ HealthBeat Associate Editor

December 20, 2013 -- The number of applications from people trying to sign up for Medicaid and the Children's Health Insurance Program (CHIP) fell by almost 30 percent from October to November, according to recent estimates released by the Obama administration. The Obama administration sought to downplay the Medicaid estimates and highlight the recent enrollment growth in the private plans offered through the new marketplaces.

President Barack Obama addressed the issue of enrollment in a wide-ranging press conference last week.

"For all the challenges we've had and all the challenges that we've been working on diligently in dealing with both the ACA [health care law] and the website these past couple months, more than 500,000 Americans have enrolled through in the first three weeks of December alone," said Obama in the news conference. "In California, for example, a state operating its own marketplace, more than 15,000 Americans are enrolling every single day. And in the federal website, tens of thousands are enrolling every single day. Since October 1st, more than 1 million Americans have selected new health insurance plans through the federal and state marketplaces."

Obama said, "All told, millions of Americans—despite the problems with the website—are now poised to be covered by quality affordable health insurance come New Year's Day."

Congressional Republicans quickly noted that even with increased enrollment in the marketplace, the administration is far short of its own projections. The Ways and Means Committee said that the administration is 1.9 million people short of internal White House goals.

"These are not just arbitrary numbers," said a Ways and Means GOP statement. "Not meeting these targets will have repercussions—Americans whose plans were cancelled may not be able to enroll (and will face a gap in health care coverage) and premiums will skyrocket."

Estimated Medicaid Enrollments Decline

The number of people who applied and were determined to be eligible for the programs fell by about 20 percent from October to November, according to the report by the administration. In October almost 2.2 million people were determined to qualify for Medicaid or CHIP, while more than 1.7 million were considered eligible in November.

The estimates reflect a surge of 2,472,933 applications in October that apparently slid in November, when 1,736,809 applications came from people who tried to sign up through state agencies.

Enrollments were down in November even when compared to figures before the publicity around the health care law's open-enrollment period started. The number of applications fell by more than 10 percent from a three-month average from July through September.

The data are preliminary and incomplete, and they could change. The state of Pennsylvania, for instance, didn't report any data from November.

Indeed, federal officials significantly revised the October estimates upward from numbers they released last month. The Department of Health and Human Services adjusted the number of determinations in October from less than 1.5 million in Medicaid alone when reported last month to 2.1 million in the October estimates released last week.

Some states also used different criteria for counting people, another reason why the report can only be considered an estimate.

One health policy expert cautioned that the November data might be so preliminary that it might not be accurate.

"You might expect that once they finalize the data in November, you could see a similar rate as in October," said Sara Collins, vice president for the Health Care Coverage and Access Program at The Commonwealth Fund.

But though the specific numbers could change, there are several reasons why it is possible that more people tried to sign up in October than in November.

Momentum may have faded because some people who were easy to identify as Medicaid candidates sent in applications in October. In May, the Centers for Medicare and Medicaid Services (CMS) had encouraged states to reach out to people that they believe would be entitled to Medicaid based on their eligibility for other programs designed to help low-income individuals. Those groups included people who qualify for food stamps and parents of Medicaid-eligible children.

A handful of states took CMS officials up on that offer and made it easy for people who get other benefits for the poor to enroll. Some of the states that used targeted outreach early on—Arkansas, Illinois, Oregon and West Virginia—have seen a burst of Medicaid applications since open enrollment began on Oct. 1.

The people who are eligible but remain unenrolled may be harder to find.

And the holiday week of Thanksgiving also could have interfered with enrollments in November.

The 12-page enrollment report said the month-to-month drop could be due "to both the preliminary nature of the November data as compared to the finalized October numbers, as well as the low number of business days in November."

Another factor may be that some people who applied in October were individuals who actually were already enrolled in the program, according to some state officials. They may have heard about open enrollment and believed that they needed to reapply.

The Congressional Budget Office has estimated that about 9 million more people would enroll in Medicaid in the first year of implementation of the health care law (PL 111-148, PL 111-152).

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White House Opens Up Catastrophic Plans to People with Canceled Health Policies

By John Reichard and Melissa Attias, CQ Roll Call

December 20, 2013 - Health and Human Services (HHS) Secretary Kathleen Sebelius said in a letter late last week to Sen. Mark Warner that Americans with canceled health policies will be permitted to buy low-cost catastrophic coverage so they can comply with the mandate in the health care law that they have health insurance in 2014.

The announcement means that in the case of those policyholders, they can be age 30 or older and still comply with the individual coverage mandate through the purchase of catastrophic protection, Sebelius told the Virginia Democrat. Previously, the Obama administration said that under the health care law (PL 111-148, PL 111-152) only those below age 30 would be able to comply in that way, or those with hardships, such as being homeless.

"The President and I want to do everything we can to ensure that individuals with canceled plans have as many options as possible," Sebelius wrote. Warner had raised the issue in a letter to HHS also signed by Democrats Tim Kaine of Virginia, Jeanne Shaheen of New Hampshire,Mary L. Landrieu of Louisiana and Heidi Heitkamp of North Dakota. Angus King of Maine, an independent, also signed the letter.

Warner had asked for clarification on whether a hardship exemption under the law for those who cannot obtain affordable coverage would apply to consumers with canceled plans who might be having difficulty paying for an existing bronze, silver or gold plan.

"I agree with you that these consumers should qualify for this temporary hardship exemption, and I can assure you that the exemption will be available to them," Sebelius said.

Sebelius also described "aggressive efforts" by insurers and the federal government to assist the millions of Americans whose policies were canceled in recent weeks because they do not meet 2014 standards in the law for a comprehensive package of benefits.

"The policy that President Obama announced in November that allows states and insurers to renew their 2013 health plans for 2014 is already helping many consumers who faced loss of their coverage," she said.

"Over half the states have accepted this option and many insurers have opted to renew plans so individuals can keep their coverage if they choose to do so," the secretary said.

She said the population of canceled policyholders lacking quality, affordable coverage for 2014 "is clearly shrinking."

Through its own "aggressive casework," HHS staff has "resolved nearly half of the cases we have received about canceled plans and another one-third are in progress," Sebelius said. She said the Centers for Medicare and Medicaid Services is setting up a separate hotline (1-866-837-0677) to help consumers with cancellations.

The group that would be permitted to buy catastrophic coverage is relatively small, an insurance industry source said, estimating that 90 percent of those hit by the cancellation notices have lined up other sources of coverage for 2014.

Under the health care law (PL 111-148, PL 111-152), Americans under age 30 and those with hardships are permitted to buy catastrophic plans sold on exchanges, so this would be a major policy shift just as the law is poised for full implementation in 2014, and one already drawing intense criticism from Republicans who argue the mandate should be delayed for all Americans.

An insurance industry consultant, speaking on background, said such a policy is problematic.

"Plans have not priced any such [catastrophic] plans for anyone over 30, so no plans will be available come Jan. 1, as they would have to get state approval," the consultant said.

Allowing an exemption from the individual mandate for those hit by cancellation notices "would further decimate the individual mandate by splitting up the risk pool, which must attract a good balance of young healthy people to offset the higher costs associated with expanding coverage to those who have existing medical conditions," the consultant said. "It will put pressure on premiums for 2015."

America's Health Insurance Plans President Karen Ignagni said in a recent statement, "This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers."

"No bandaid can heal the hemorrhaging this law has and will continue to cause," Rep. Marsha Blackburn, R-Tenn., vice chairman of the House Energy and Commerce Committee said in a statement.

"Rather than more White House delays, waivers, and exemptions, the administration should provide all Americans relief from its failed law."

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CHIP Offers Lower Costs, Comparable Benefits to Marketplace Benchmark Plans, GAO Says

By Rebecca Adams, CQ HealthBeat Associate Editor

December 20, 2013 -- Consumer's costs in five state Children's Health Insurance Programs (CHIP) were lower than in the benchmark health plans that were a model for benefits in plans to be available in those states' new insurance marketplaces, according to a recent Government Accountability Office (GAO) report.

CHIP is a better deal because the benefits were roughly equivalent to those in the plans that marketplace plans were based upon, but CHIP plans had lower premiums and out-of-pocket costs.

One example cited in the 58-page report was a hypothetical office visit if a child to a specialist in Colorado. The cost in CHIP was between $2 to $10 per visit, depending on the family income, compared to $50 per visit for kids who were enrolled in the standard plan available in the marketplace.

Costs for CHIP coverage are expected to stay about the same in the next year, according to state officials. But the cost of the marketplace insurance "is less certain," according to the report.

"The CHIP plans in four of the five selected states did not include any deductibles, which means that enrollees in those states did not need to pay a specified amount before the plan began paying for service," the report stated. Utah did have a deductible, but only for certain higher-income families.

But the private plans that were the model for marketplace plans had deductibles which ranged from $500 in Illinois and Kansas to $3,000 in Utah for a single person, and $1,000 in Kansas to $6,000 in Utah for a family.

Comparing CHIP coverage with private insurance is relevant because CHIP insurance may be phased out. The health care law (PL 111-148, PL 111-152) provided funding for the more than 8 million kids enrolled in the children's insurance program only through fiscal year 2015.

The GAO report noted that starting in October 2015, any state that does not have enough funding to cover all the children who are eligible for CHIP will have to screen low-income children to see if they qualify for Medicaid. If they don't, the children should be enrolled into a marketplace health plan that the Department of Health and Human Services says is comparable to CHIP.

The report compared CHIP plans with a private plan that was selected as a benchmark for the marketplaces in Colorado, Illinois, Kansas, New York and Utah.

"We determined that the CHIP and benchmark plans in our five selected states were comparable in that they included some level of coverage for nearly all the services we reviewed," the report stated. There were a few exceptions: Hearing tests and hearing aids were not covered by the private benchmark plan in Kansas. Outpatient therapy was not covered by CHIP plans in Kansas and Utah or by the benchmark marketplace plans in Colorado, Kansas, or New York.

The use of medical care was roughly the same for families, regardless of whether they had CHIP, Medicaid or the private insurance that existed before the marketplaces were created.

However, there is some evidence that in some cases CHIP and Medicaid patients may have had some trouble finding a physician to take care of them. When compared to children enrolled in private insurance, more CHIP patients used emergency room services, and a lower proportion of CHIP children reported visiting dentists and orthodontists.

The report was requested by Sen. Jay Rockefeller, D-W.Va., who chairs the Senate Finance Subcommittee on Health Care.

The advocacy group First Focus said that the health care law contained legislative authority, if not funding, for the CHIP program through 2019, and that lawmakers should pass legislation to provide more money because the program offers much-needed affordable care.

"With CHIP funding scheduled to drop dramatically in 2015, Congress must act early next year to ensure that CHIP will always be there to keep our children healthy," said First Focus President Bruce Lesley.

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New Orleans Health Commissioner Named HHS Health IT Coordinator

By John Reichard, CQ HealthBeat Editor

December 18, 2013 -- New Orleans Health Commissioner Karen DeSalvo will start Jan. 13 as the new national coordinator for health information technology at the Department of Health and Human Services (HHS).

"DeSalvo has been at the forefront of efforts to modernize the New Orleans health care system," HHS Secretary Kathleen Sebelius said in an email to staff announcing the appointment.

DeSalvo made health IT a "foundational element" of efforts to redesign the city's health care system after it was devastated by Hurricane Katrina, Sebelius said. "Further, she has led the planning and construction of the city's newest public hospital, which will have a fully-integrated HIT network."

DeSalvo also serves as senior health policy adviser to Mayor Mitch Landrieu, the brother of Sen. Mary L. Landrieu, D-La.

While DeSalvo is viewed as an expert on information technology, her career has focused more broadly on developing efficient systems of care to treat the medically underserved and to improve the health of local populations.

She won national recognition for her work after Katrina in 2005 to create a new system of primary care in the city. The flood forced doctors to practice out of makeshift clinics around the city, according to a profile in Governing magazine that named her one of nine top public officials in 2013. DeSalvo was chief of internal medicine at the Tulane School of Medicine at the time, where she had earned both a medical degree and a public health degree. She also has a master's degree in clinical epidemiology from the Harvard School of Public Health.

"DeSalvo was instrumental in developing a network of more than 100 neighborhood-based 'medical homes' providing health care access for uninsured, underinsured and low-income patients," the profile said.

Mayor Landrieu hired her in 2011 to overhaul the city's approach to public health. She sought to "transform the health department from a reactionary agency focused on clinical care into a comprehensive resource aimed at making New Orleans a healthier place to live," the magazine said. She worked with an estimated 100 or so organizations in leading the development of "Fit NOLA" to address obesity, diabetes and high blood pressure, including by adding bike lanes and building parks and by bringing supermarkets to underserved areas, the magazine said.

The announcement by Mitch Landrieu's office also noted that DeSalvo "has been instrumental in implementing the Mayor's comprehensive murder reduction strategy."

HHS and New Orleans city officials declined requests to interview DeSalvo.

The network of neighborhood clinics developed in New Orleans focused on delivering comprehensive primary care through the medical home model, DeSalvo said in a presentation earlier this year to a national health IT conference. She defined a medical home as "not just a place to get health care, but a place where you are understood." The medical homes are linked together into an information network in which doctors use electronic health records to follow a patient as they move through the city's health system.

As national health IT coordinator, DeSalvo will be closely involved in the implementation of Medicare and Medicaid payment incentives to make increasingly "meaningful use" of health IT to improve the safety and efficiency of care. But her career in New Orleans suggests she could focus more broadly on using the technology to improve primary care and reduce spending growth. In her presentation at the IT conference, DeSalvo said widespread adoption of primary care could save the U.S. up to $175 billion over 10 years.

Sebelius said DeSalvo also has been a leader in local efforts to set up a computerized network among providers for exchanging health data, and has been involved in setting up regional centers that assist doctors and hospitals in adopting health information technology.
"She served as President of the Louisiana Health Care Quality Forum, the Louisiana lead for their health information exchange and regional extension center grants," Sebelius said.

Salvo succeeds Farzad Mostashari, who stepped down Oct. 4 after two years in the position. Mostashari is now with the Brookings Institution.

Jacob Reider, the acting national coordinator, will serve as chief medical officer in the national coordinator's office. "Every minute has been inspiring, educational, and energizing," Reider said in an email welcoming DeSalvo's appointment.

"She has deep knowledge and experience in health policy, medical education, and public health," Reider said of his new boss.

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Fears About Insurance Market 'Death Spiral' Overblown, Kaiser Analysis Suggests

By Rebecca Adams, CQ HealthBeat Associate Editor

December 17, 2013 -- Insurers are likely to eke out small profit margins even if fewer young adults enroll in health exchanges than the administration is targeting, according to a new analysis by the nonpartisan Kaiser Family Foundation. The report suggests that the online marketplaces will be viable even if young adults enroll at a 50 percent lower rate than older people.

The Obama administration has said that it would like young adults to make up about 40 percent of the people who sign up through the exchanges, which will start providing benefits on Jan. 1. The younger adults are needed to even out the risk of caring for older adults who are likely sicker and more expensive to cover.

The five-page report analyzed the impact of lower-than-projected enrollment for young adults under two scenarios.

The authors estimated what would happen under a worst-case scenario, if people 18 to 34 years old enrolled at a 50 percent lower rate than older people. In that case, younger adults would make up about one-fourth of all of the people who enroll in the individual market. So far, that kind of breakdown has been observed in states such as California. But state and federal officials assume that will change because more younger adults are expected to sign up later, as the March 31 deadline for open enrollment approaches.

If young adults make up about one-fourth of the population in the individual market, the costs for the plans would be about 2.4 percent higher than the insurers' revenues from premiums, according to the report. Because insurance companies often set their premiums so that they get a 3 percent to 4 percent profit margin, the insurers would probably still make a slight profit. But it would be lower than they had hoped, and insurers might raise premiums for 2015 to make up the difference.

However, the Kaiser authors say, "a 1 to 2 percent premium increase would be well below the level that would trigger a 'death spiral,' which would occur if insurers needed to increase premiums substantially, in turn further discouraging young and healthy people from enrolling."

Under a less drastic alternative, young adults might sign up at rates that would make them one-third of total enrollees. Costs would end up being about 1.1 percent higher than premium revenues in that outcome, the report found.

"Enrollment of a disproportionate share of older and sicker people will tend to drive premiums up," the report stated. "However, premiums are not as sensitive to the mix of enrollment as fears about a 'death spiral' suggest, particularly with respect to age."

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Deadlines for Paying Health Premiums Will Vary as Insurers Agree to Extend Time

By Rebecca Adams, CQ HealthBeat Associate Editor

December 18, 2013 -- America's Health Insurance Plans (AHIP) said last week that many insurers throughout the nation are willing to provide retroactive coverage to people who enroll in the new marketplaces as long as the consumers pay by Jan. 10.

But insurance exchange directors in states that are running their own marketplaces often have different deadlines, and they said they would keep them, making the insurance industry announcement somewhat less sweeping and giving rise to the possibility of confusion among consumers.

It is in the interest of health plans to give consumers a few more days to pay their premiums. Insurers want to have as many customers as possible, particularly healthy ones. Some insurers, such as CareFirst BlueCross BlueShield, are even allowing payment until the middle of the month in states such as Maryland.

But health plans also want the experiences of their new customers to go smoothly, and it will be hard to handle the influx of new customers in a short time frame.

The pay-up deadline the Centers for Medicare and Medicaid Services (CMS) set in an interim final rule was Dec. 31 for consumers who want coverage starting Jan. 1, but the Obama administration had asked insurers to give consumers more time, and many plans are relaxing that a bit.

Not necessarily the states. "National trade [association] press releases are interesting. Health care is local," said Peter Lee, the executive director of Covered California, the marketplace in that state. "Consumers in California need to have paid by Jan. 6."

"We're going to stick to those due dates," said Kevin Counihan, the CEO of Access Health Connecticut, on a call with reporters.
Some state marketplaces, such as New York's, already allow a grace period until Jan. 10.

In the federal exchange, if consumers sign up and select a plan but do not pay a premium, they'll have to pay out of pocket if they get any medical care before making their premium payment. But the plans that agree to take payment later are agreeing to reimburse the cost of services if the patient submits the premium before Jan. 10.

AHIP spokesman Robert Zirkelbach said the trade association had heard from many plans around the nation about the change.

"While every health plan will make their own decision, we have heard from health plans all across the country, including the members of our board, who are extending the deadline to January 10," he said in an email.

The 38-member AHIP board includes a variety of insurers across the nation, including several plans linked to the Blue Cross and Blue Shield Association that offer plans in the individual market.

The varying deadlines in different states and by different insurers could be confusing to consumers, but industry officials said they wanted to be flexible in response to requests from the administration.

"Our community is taking an important step to give consumers greater peace of mind about their health care coverage," said AHIP President and CEO Karen Ignagni.

Pressure on Insurers

Health insurers were under pressure from the Obama administration to allow more time. Federal officials have threatened that insurers who don't do more to help with the launch of new coverage in January could face a tougher time getting approved to offer coverage in the marketplace next year.

Insurers are less likely to take other steps that federal officials requested. The administration also asked health plans to temporarily refill drugs that are not on their formularies. And they asked plans to cover out-of-network providers during the month of January.

Health plans have built their business strategies and IT systems around covering certain medical providers and paying for drugs according to their formularies. Adjusting all of that quickly for a short period of time would be difficult, said some health industry officials who were asked about the proposed changes.

That's especially true now, when health plans are scrambling to use new payment processes with the federal government, enroll customers and launch new plans.

Wellpoint Inc. will extend the deadline until Jan. 10, said spokeswoman Jill Becher. But the company will not let all new members continue seeing out-of-network medical providers or refill drugs that the plan doesn't cover on its formulary.

Instead, Wellpoint will keep doing what it and many other big insurers have done for years. People who are signing up may be able to keep seeing their out-of-network doctor temporarily only under certain guidelines. The temporary coverage will be available for people with serious conditions who really need to keep seeing the same specialist.

Becher said the conditions include pregnancy, chemotherapy or post-surgical care. The transitional coverage will "allow for the member to continue receiving care from an out-of-network provider for specified periods of time. These policies vary by state," Becher said.

Wellpoint officials also said it would give people that it currently covers more time to switch to a new plan if their policy is being discontinued because it doesn't comply with the health care law (PL 111-148, PL 111-152).

Some current Wellpoint members were switched to a new Wellpoint plan that does comply with the law's benefit requirements. But some of those consumers want more time to compare plans.

"For those in that situation who may be uncertain that the 'mapped' plan is best suited for their needs, they may select a different plan by the 10th of the month during the open enrollment period," said Becher in an email. "This applies to those who have not already paid their first month's premium."

Aetna Inc. a health insurer that CMS Communications Director Julie Bataille highlighted last week as an example of a plan that is being flexible because the insurer had agreed to accept payment until Jan. 8, is now agreeing to take payment until Jan. 10. But it also is not able to go as far as the administration wants in covering non-formulary drugs and out-of-network providers.

Spokeswoman Susan Millerick said that the company is doing all it can to help new customers but that the coverage will be limited to certain patients. The temporary coverage may be available for people with conditions such as pregnancy, follow-up to surgery or surgery that is done in stages, cancer treatment, and mental health or substance abuse treatment.

"Transition of care gives members time to complete a course of treatment, obtain a prescription refill and transfer their ongoing care to an Aetna network doctor," said Millerick. "Transition of care applies to specialists, mental health providers and certain other doctors who are managing the course of treatment. Treatment with the doctor must have started before the effective date of the Aetna plan."

Aetna usually limits the coverage to three months, but coverage varies depending on the condition.

Smaller health plans may not be able to allow any coverage of out-of-network providers. And insurance industry officials said that in some states, plans would need to get the blessing of state officials.

Technical Problems Persist

Health plans said in the AHIP statement that they are "voluntarily making this one-time change to the payment deadline to help protect consumers from potential gaps in their coverage caused by the ongoing technical problems with Significant progress has been made in recent weeks to improve the enrollment process for consumers, but more work needs to be done to resolve the back-end challenges, particularly those related to processing enrollment files, to ensure all consumers who selected a plan are enrolled in coverage."

CMS officials had said previously that soon after the Oct. 1 launch, about one in four enrollment reports had errors in them. For instance, about 15,000 reports of enrollments were never transmitted to insurance plans.

And another problem is "reverse orphan" enrollment reports—those that tell insurers that someone has enrolled although the federal government does not have a record of it. For a while, plans were not getting cancellation notices.

Other forms had mistakes that insurers and federal officials are still trying to clean up. Insurers don't have the authority to fix some of these problems on their own, such as incorrect Social Security numbers, inaccurate subsidy amounts or wrong geographic rating areas for customers.

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