By Rebecca Adams, CQ Roll Call

January 27, 2015—Indiana officials and the Centers for Medicare and Medicaid Services (CMS) reached a deal on the state's unconventional version of Medicaid expansion.

The agreement makes Indiana the 28th state plus the District of Columbia to broaden eligibility for Medicaid, the federal–state health program for the poor. 

The state received approval to continue using health savings-type accounts for Medicaid beneficiaries.  

But officials didn't get everything they sought. Republican Gov. Mike Pence will have to use state money instead of federal money to connect Medicaid beneficiaries to state job search and training programs. Beneficiaries are not required to enroll in the programs to get Medicaid benefits, state and federal officials said.

The deal allows two benefit packages: HIP Plus and HIP Basic. Each covers the basic essential health benefits required by the health care law (PL 111-148, PL 111-152).

People who get HIP Plus will make monthly premium payments through contributions to their savings-type accounts. In return, they will get additional benefits and have no other out-of-pocket costs except for some emergency room copayments ranging from $8 for the first time someone has an inappropriate visit that could have been handled by a doctor's office to $25 for subsequent visits. Beneficiaries can reduce their premiums through incentives like receiving preventive care. 

If people don't pay their monthly premiums, the consequences vary, depending on their income level.

Those whose income is above the poverty line, which this year is $11,670 for a single person, could lose their benefits and be unable to get back into the program for six months. People who do not make all of their required contributions to their accounts and have to leave the program are responsible for any medical debt they may have, said Pence's staff.

The monthly premiums cannot be more than 2 percent of household income. People who are very low-income, with income than 5 percent more than the federal poverty line, will have premiums of $1 per month.

If people below the poverty line do not put money into their HIP Plus accounts, they will not be forced to make the monthly payments in order to keep coverage but will instead get HIP Basic. They will be asked to pay copays. Their total cost sharing cannot be more than 5 percent of the family income.

Individuals with income below the poverty line who do not make an initial contribution into their accounts must wait 60 days after applying for their coverage to start, according to a state summary. Unlike other states who have not gotten a waiver, Indiana will not have to retroactively cover the health care costs of enrollees going back 90 days before their coverage started, according to a waiver letter from federal officials.

The plan also offers low-income workers a chance to get state help in buying insurance through their jobs. Indiana will be the first state to use health savings accounts as part of a Medicaid plan to offer extra benefits to people covered through their employers.

Pence had submitted the waiver request in July. Since then, he became frustrated with CMS Medicaid staff over the negotiations. The governor spoke to the president about his waiver during an Oct. 3 presidential visit to Indiana. He then talked by phone with Health and Human Services Secretary Sylvia Mathews Burwell a dozen times after that, most recently on Jan. 9, according to Pence's staff.

"This has been a long process, but real reform takes work," said Pence in a statement.

The state was eager to get approval quickly because some people, those whose income is between the poverty line and 38 percent above the poverty line, were eligible for marketplace plans until the expansion was approved and granted those people eligibility. Now the state will have to shift those people from private marketplace plans into the new Medicaid coverage.

The deal allows hospital foundations or non-profit organizations to help people pay for their care. Hospitals also will contribute to the overall budget for the program starting in 2017, when the federal matching rates begin to decline. The federal government pays all of the costs of people in the expansion category through 2016 and then the federal contribution phases down until it is 90 percent of those costs in 2020. The state will agree to pay hospitals higher rates, and the hospitals will send some of the money back to pay for coverage.

Pence will boost providers' pay by about 25 percent, his staff said. A temporary two-year increase in Medicaid primary care payments has expired.

The state will not have to meet a federal requirement for states to cover non-emergency transportation.

Federal officials want other governors, such as those in Tennessee, Utah, North Carolina, Idaho, Wyoming, Virginia, and other places, to convince legislators to expand Medicaid.

"I continue to be encouraged by interest from governors from all across the country who want to bring health care coverage to low-income people in their states by expanding Medicaid," said Burwell. "They understand both the economic benefits of Medicaid expansion and the health and financial security it brings to their residents. The Administration will continue to work with governors interested in expanding Medicaid to devise approaches that work for their states while keeping faith with the law's goals and consumer protections."

Children's advocates had mixed reactions to the agreement and had concerns about the premiums contributions that people will be asked to pay. The good news is that Indiana will extend Medicaid coverage, said Joan Alker, the executive director of the Georgetown Center for Children and Families. But she called the idea of creating health savings-type accounts for people whose income is barely above poverty, including some who are homeless, absurd. "The less than good news is that this is an enormously complicated program which will likely prevent some low-income adults from getting the health care services they need," she said.

January 26, 2015—The Obama administration said last week that it expects to significantly raise the percentage of Medicare payments to doctors and other health providers that are tied to the quality of care delivered, continuing an effort to move away from a system that pays based on the volume of procedures and tests that performed on patients.

The share of Medicare payments shifted to alternative spending models that reward coordinated care will rise from 20 percent of payments in 2014 to 30 percent in 2016, according to new targets released by the Department of Health and Human Services (HHS).

The targets are the first the government has set for the new spending models and track with goals of the 2010 health law (PL 111-148, PL 111-152) that aim to promote value-based care instead of pay doctors and hospitals for every test and treatment given to patients. 

The announcement will likely continue to stoke a national conversation about health care spending in the United States, which is higher than other industrialized nations, without any better outcomes. Some health policy experts, including Democrats, have criticized the law for not going far enough to curb medical inflation.

By 2018, half of Medicare fee-for-service spending could be shifted to the new models for paying medical providers, if a new administration does not make changes. That amounts to $213 billion, said HHS officials.

Health and Human Services Secretary Sylvia Mathews Burwell said at a briefing for reporters that the goals were achievable and that the target for 2018 would mark a tipping point for the health sector.

The targets could be met without any additional legislation, said another administration official by phone. However, the official said anticipated bipartisan legislation to replace the current formula for Medicare physician reimbursements "aligns very well" with the administration's priorities. And the administration would like Congress to expand some authority in the health law by, for instance, getting rid of limits in the law affecting how much HHS can tie hospitals' pay to value. The bill on doctors' pay could include such changes.

The health care law allowed the administration to experiment with new ways of paying providers through pilot programs. Mechanisms include so-called accountable care organizations, which allows doctors, hospitals and other medical providers to share in any savings that they may get by better coordinating care and avoiding unnecessary tests. The Medicare program has saved $417 million so far through the organizations, according to HHS officials.

Another cost-saving device is bundled payments, in which Medicare pays a group of providers a set amount for a particular case instead of being paid for each individual test, drug or medical service.

Burwell said further savings will come from measures such as penalties the health law levies on hospitals whose patients are discharged but readmitted to the hospital within 30 days. Currently, a majority of Medicare payments are tied in some way to quality measurements. Burwell said he agency wants 85 percent of Medicare fee-for-service payments to be linked to efforts to improve quality by 2016 and 90 percent of payments by 2018.

"We want to encourage everyone to be moving and to have some measures of quality," Burwell told reporters.

Federal officials intend to bring together health industry officials, employers and state officials such as those that run Medicaid programs beginning in March to explore other new ways to improve quality and lower costs, Burwell said.

The targets were largely applauded by a large coalition of health care industry leaders, including insurers and family physicians.

"Government works best when it works in little nudges rather than sledgehammers," said Andrew Racine, senior vice president and chief medical officer of Montefiore, a medical center in New York that has already saved money for the government and its own bottom line through a pilot program to encourage coordinated care, known as the Pioneer program. Burwell "is pushing on an open door. If you are trying to augment what's already a trend, your likelihood of success is much greater."

Smaller hospitals and physician practices may have difficulty adjusting to the new climate, but the goals that Burwell set forth are not so ambitious that it would affect them immediately. Insurers who have been trying to hold down costs support the push toward more value-based care.

"Health plans have been on the forefront of implementing payment reforms: for other patients, including those in employer-provided insurance and Medicare managed care plans, said Karen Ignagni, president and CEO of the trade group America's Health Insurance Plans, who called the targets a "major step forward" in transforming the way Americans pay for health care. 

The administration has been urged by its allies to do more to promote value-based care. In 2012, the liberal Center for American Progress said that by 2022, Medicare and Medicaid should base at least 75 percent of payments on alternatives to fee-for-service payment, such as accountable care organizations, known as ACOs. Sen. Sheldon, D-R.I., suggested that the goals announced by the administration would put Medicare on a path to base 75 percent of its payments on alternative payment models by 2020, a goal he has espoused.

Paul Ginburg, the Topping chair in medicine and public policy at the University of Southern California, said the announcement is "encouraging, but mostly because it indicates a willingness to contract with many more ACOs.  But setting a goal is different from achieving it. The ACO model needs to be made more compelling to providers if these goals are to be achieved."

By Kerry Young, CQ Roll Call

January 26, 2015—The cost of expanding insurance coverage under the Affordable Care Act dropped by roughly $101 billion, or 7 percent, according to the Congressional Budget Office's (CBO) latest analysis of federal finances.

The revision for the 2015–2024 period stems from an estimated $97 billion increase in expected revenue and an associated cut in costs from certain refundable tax credits, due to projected changes in employer-sponsored health coverage, the CBO said last week in its broad economic outlook. Also in the mix is a $68 billion reduction in the net costs of subsidizing insurance purchased on exchanges. At the same time, the estimate for federal spending on Medicaid and the State Children's Health Insurance Program was bumped up by $59 billion.

Working with the Joint Committee on Taxation (JCT), the CBO had last published detailed estimates for the implementation of insurance provisions of the health law in April 2014.

In their latest estimates, the CBO and the JCT state that about 42 million people in the United States were uninsured in 2014, a number that would have been 12 million larger without the health law. In 2015, the number of uninsured will be about 36 million, a group that would have been 19 million larger without the law. 

There will still be a large pool of people in the United States lacking insurance more than a decade after the health law was enacted, the CBO report projected. It pegged this group at 31 million in 2025, representing about one in every nine residents under the age of 65. At that time, about 30 percent of this group may be unauthorized immigrants, while another 10 percent will be people ineligible for Medicaid because their states have not expanded these programs.

While the health law addresses the population under 65, lawmakers and health policy experts have been looking for ways to curb the rising growth in Medicare costs.

Recently, the CBO said the government's spending for Medicare is expected to grow by an average of nearly 7 percent a year over the next 10 years. It also estimated that the number of people enrolled in Medicare will rise to about 73 million in 2025, from 54 million last year.

January 30, 2015—The Obama administration wants all medical providers and even consumers to be able to send, receive, and use electronic medical records with a nationally universal set of data—such as a patient's name, smoking status, medications, and health history, among other things—by the end of 2017. 

The goal was included in a 166-page roadmap that the Department of Health and Human Services (HHS) released late last week. HHS' Office of the National Coordinator for Health Information Technology also released a draft advisory on interoperability. Both are open to comments from the public.

The documents tie in with two other initiatives that HHS officials focused on this week: President Barack Obama's initiative to encourage personalized medicine and efforts to encourage providers to coordinate on patients' care through new Medicare payment models. Karen DeSalvo, the national coordinator for health IT, called the efforts a "three-pronged plug" that will help medical professionals sort through and use information about their patients.

The ability to share electronic health data among providers helps achieve goals in the other areas. The most efficient way for medical providers to coordinate and tailor their patients' care is by using medical records that can be easily shared electronically.

The roadmap and interoperability standards build on a framework that the Office of the National Coordinator put out in June. DeSalvo said on a call with reporters that with the flurry of activity around electronic health records, "the time has come for us to be more explicit about standards."

Federal officials will be focused on putting encouraging medical professionals to build onto their electronic capabilities so they can share data.

"We are considering our regulatory options and considering how we can leverage certification to ensure accountability with rules of road," said Jodi Daniel, director of the Office of Policy in the Office of the National Coordinator, on the call.

The administration is working on a rule that will be released soon on certification and is evaluating other regulatory and certification program options.

The interoperability standards that HHS has released will be updated annually.

The administration plans to enhance incentives, through grants and other opportunities, for sharing electronic health information according to common technical standards, starting with a common set of facts about each patient's health history and information.

Federal officials also said that they would try to knock down confusion or gaps in providers' and the public's knowledge about federal privacy laws such as the 1996 Health Insurance Portability and Accountability Act, known as HIPAA (PL  104-191).

"Many organizations have misinterpreted HIPAA rules and other regulations and therefore refrain from sharing health information, even with individuals themselves," said the roadmap.

"To realize better care and the vision of a learning health system, we will work together across the public and private sectors to clearly define standards, motivate their use through clear incentives, and establish trust in the health IT ecosystem through defining the rules of engagement," said DeSalvo. 

The announcement came a day after HHS officials acknowledged concerns of the health care industry about so-called meaningful use requirements, which ultimately cut Medicare payments to providers who do not adopt electronic medical records. The administration said CMS is considering proposals to realign hospitals' electronic health record reporting periods to the calendar year to allow more time to incorporate 2014 edition software into workflows, and to shorten the reporting period in 2015 to 90 days. 

A number of business leaders praised the roadmap and new standards.

"The benefits to patients and to the future of American health care in achieving full interoperability are enormous," said Mary R. Grealy, president, Healthcare Leadership Council. "We applaud HHS and the Office of the National Coordinator for making interoperability a national priority and we believe that, by bringing together the ideas and technological expertise from both the public and private sectors, it is a foreseeable and achievable goal.

When DeSalvo was asked on the call whether providers' systems will soon be able to "talk" to each other and share information, she sounded optimistic.

"The truth is that today, it does happen in this country" already, she said. "Communities all across this country have shown us the way."

January 30, 2015—About one-third of the people who were enrolled in Medicaid early last year under expanded eligibility guidelines in the health care law could have already been collecting benefits from the health program for the poor, according to an analysis of Medicaid data.

The statistics from the Centers for Medicare and Medicaid Services (CMS) illustrate how states that expanded Medicaid eligibility before the law was enacted in 2010 are getting expanded funding to sign up a population they already covered. The data also underscore how difficult it has been to establish precisely why the Medicaid population is growing.

States' ability to broaden eligibility for Medicaid is one of the linchpins of the health care law. The law allows states to broaden eligibility so that anyone whose income is up to 138 percent of the federal poverty line can qualify. Previously, people had to not only meet income requirements but also fall into certain categories, such as pregnant women, people with disabilities, children, and some parents of children. 

The complexity of the rules about how to characterize people makes it difficult for states to ensure they are putting everyone in the right category—band getting paid appropriately.

"Making sure people go into the right grouping is a very high priority for the federal government and for states," said National Association of Medicaid Directors Director of Federal Policy and Strategy Andrea Maresca.

Earlier government data documented how the Medicaid population has grown since states began reaching out to people who would qualify under the health law's expansion, not how many in the expansion category were already eligible.

In January 2014, 36 percent of the people who were signed up under the expanded eligibility standards could have already been collecting benefits. By March 2014, about 32 percent of people who qualified under the new standards would have been eligible before the health law's Medicaid expansion was implemented on Jan. 1, 2014.

In New York, 96 percent of the people counted as part of the state's expansion population in January—763,341 of 791,665 residents—qualified under the state's pre-health law expansion. The figure was 95 percent in Delaware. And all the Massachusetts and Vermont residents counted in the expansion population were eligible before the law incentivized states to broaden Medicaid.

In all, nine states had at least 15,000 previously eligible people that CMS counted in the expansion category.

The details were in a package of tables that CMS released showing state-by-state data from the first three months of 2014. The tables do not detail how many eligible people were also previously enrolled. 

The data is extracted from forms that states send to federal officials to get paid.

Some states got paid higher federal rates for groups of people that they had stopped enrolling. Arizona, for example, froze enrollment from July 2011 to December 2013, said Monica Coury, assistant director of the Office of Intergovernmental Relations for the Arizona Medicaid program. The state started re-enrolling some individuals when officials realized they could draw down a higher matching rate for that group than they previously got. Arizona now gets about an 85 percent matching rate, compared to an approximately 68 percent matching rate for people who qualified under guidelines before the health law expansion.

When Congress passed the law, it gave states that had already expanded their Medicaid programs higher matching rates, so they wouldn't be at a financial disadvantage to those states that waited until the law was passed, said Robin Rudowitz, associate director of the nonpartisan Kaiser Commission on Medicaid and the Uninsured.

The law puts the federal government on the hook for all the costs of people who qualify through the new expanded guidelines through 2016. The assistance then phases down until it is 90 percent of costs for those people in 2020.

States that expanded programs before the law's enactment don't get that much for their previously insured population but qualify for annual adjustments under a higher-than-usual matching rate. By 2020, all states will get a 90 percent matching rate for people enrolled under expanded eligibility guidelines.

"It's a significant savings for us. It really helps us out a lot," said Stephen M. Groff, director of the Delaware Division of Medicaid and Medical Assistance. "We're being rewarded for having done the right thing all those years ago."

Delaware will save about $80 million in the first year through the higher transitional rates, said Groff. The matching rate for people who are in the health law expansion category was about 77 percent last year, he said. The state got about a 55 percent rate for those people previously.

The recently-released tables show that some states that expanded Medicaid before the law experienced only modest growth in Medicaid in early 2014.

Less than 10,000 new people signed up in Delaware through Medicaid expansion in the past year. "It is not more than an incremental change for us," said Groff.

Other states that provided coverage to a broad group of adults before the health law passed are taking advantage of the highest federal reimbursements, which pay for 100 percent of costs through 2016. Minnesota, for instance, covered a broad adult population before the law was enacted but funded that program without any federal contributions, said a Minnesota Department of Human Services official. In 2014, costs were shifted to the federal government.

CMS said that Medicaid and the Children's Health Insurance Program grew by a net 9.7 million people in a year through October 2014. Federal officials are expected to release updated numbers soon.

January 29, 2015—The Centers for Medicare and Medicaid Services (CMS) has said it plans to consider changes to the meaningful use requirements for electronic health records through the rulemaking process.

"These intended changes would help to reduce the reporting burden on providers" and support the long term goals of the ongoing federal effort to shift providers away from paper records, said Patrick Conway, chief medical officer and deputy administrator for innovation and quality at CMS, in a blog posting.

A new rule, expected this spring, is intended to respond to concerns from doctors and health workers about the implementation of software and information exchange readiness. These changes also will reflect developments in the electronic-health-records industry.

CMS is considering proposals to realign hospitals' electronic health record reporting periods to the calendar year to allow more time to incorporate 2014 edition software into workflows, and to shorten the reporting period in 2015 to 90 days. 

Conway said the agency is "working on multiple tracks now to realign the program to reflect the progress toward program goals and be responsive to stakeholder input."

The United States has seen "unprecedented growth" in the adoption of electronic health records since starting the federal incentive program for them in 2011, Conway said. "To date, more than 400,000 eligible providers have joined the ranks of hospitals and professionals that have adopted or are meaningfully using EHRs," he wrote, adding that this means that "millions of patients" are getting more coordinated care.