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February 3, 2014

Washington Health Policy Week in Review Archive e0a72d6c-7236-4904-967b-2fbfd3e9aff2

Newsletter Article


Five States Won't Implement Health Care Law or Review Insurers

By Rebecca Adams, CQ HealthBeat Associate Editor

January 31, 2014 -- Five states have refused to implement or enforce the health care law, according to a new state-by-state analysis of actions across the country by the nonpartisan Commonwealth Fund.

The 21-page report examined state activities through Nov. 1, 2013 and found that 32 states and the District of Columbia have taken some regulatory or legislative step to carry out the law. But Alabama, Missouri, Oklahoma, Texas and Wyoming have said they will not scrutinize insurers in their states to make sure that they comply with the law and will do nothing to implement it.

States sometimes manage different parts of the law in very different ways, the study found. Maine, South Dakota, and Virginia declined to run their own insurance marketplaces and have not expanded Medicaid, but those states have been among the best in the nation in implementing health insurance market changes such as a ban on preexisting coverage denials or ensuring that insurance companies provide a minimum level of health benefits.

The study called attention to the states which have done the most to implement the health care law’s major components. They are California, Colorado, Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, New York, Oregon, Vermont, and the District of Columbia. Each has set up its own insurance marketplaces, expanded Medicaid coverage and enacted all, or nearly all, of the insurance market changes to ensure that consumers benefit from the law.

However, those states have had a mixed record of success, with some such as Oregon and Maryland beset by technical problems with their websites.

“State actions will play an important role in determining whether the law achieves its goals,” said Commonwealth Fund President David Blumenthal.

Rebecca Adams can be reached at [email protected].

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New Savings Figures Buoy Hopes for Potential of Medicare ACOs

By John Reichard, CQ HealthBeat Editor

January 30, 2014 -- Federal officials delivered an upbeat report Thursday on experiments launched under the health care law to re-engineer health care, reporting a “strong start” to programs to establish accountable care organizations (ACOs) and “bundled payment” contracts in which doctors and hospitals coordinate to deliver more efficient care.

A top Centers for Medicare and Medicaid Services official said the preliminary savings figures of about $400 million in the first year were so strong they show that ACOs are an excellent long-term strategy for controlling spending in Medicare.

At least one independent analyst also responded positively. The results are encouraging enough to begin pursuing refinements to the ACO model, said Paul Ginsburg, former president of the Center for Studying Health System Change.

The ACO concept aims to begin bringing organized treatment to the traditional fee for service side of Medicare. Beneficiaries in the traditional part of the program have unfettered choice of providers. Those in the private plans that make up the Medicare Advantage side of the program face more restrictions on where they get treatment.

Medicare began contracting with ACOs—groups of providers that team up to deliver more efficient, higher quality care —two years ago. Each year the number of ACOs has grown. They either participate in the “shared savings” program at CMS, or may be designated as “pioneer ACOs” if they are more experienced and better able to deliver efficient care.

The level of savings pale in comparison to the magnitude of savings that entities such as the Congressional Budget Office project Medicare will need to make the program sustainable in future decades.

But Jon Blum, the top deputy administrator to Centers for Medicare and Medicaid Services, was emphatic in telling reporters about the promise shown by ACOs.

A total of 5.3 million Medicare beneficiaries, or about 12 to 13 percent of all of its enrollees, now receive care under ACO arrangements, said Blum.

“This number is far higher than what we had guessed would happen three years into the program,” he said in a press call Thursday morning.

Results from the first year show that more than half of the initial group spent less on care than they had projected.

And 29 of the 114 ACOs that were in the first group that contracted with Medicare in the shared savings program were able to deliver large enough reductions to be able to share in the savings with the federal government. Collectively, those 29 ACOs are getting $126 million as a result.

They “demonstrated that their care models have produced greater Medicare savings than the underlying dramatic low trend rate” for Medicare spending, Blum said.

Another 23 pioneer ACOs get to keep $147 million of the savings they have produced for Medicare.

Under the ACO program, savings are divided between the provider organizations and the U.S. Treasury. The Medicare trust fund has been able to keep $128 million in savings thanks to the ACOs, Blum said.

The cumulative savings for both the providers and the government is $401 million.

Blum says ACOs that delivered savings did so by using medical imaging more wisely, reducing unnecessary visits to the emergency room, and doing a better job of preventing hospital readmissions, for example.

Budget analysts say Medicare in the long run needs to reduce its projected spending growth by hundreds of billions of dollars.

Blum was asked what potential ACOs have for eventually generating far higher level of savings than the figures announced Thursday.
He replied that they are only one part of the strategy.

“One thing I think [we] have seen in the last four years is unprecedented slowdown in total Medicare cost on a per capita basis,” he said. There are “many things driving that result—new care models, new payment models, more vigilance on fraud and abuse, and putting in place a menu of different tools and programs,” he added.

Blum suggested that many more beneficiaries will fall under ACO arrangements in the future.

“We are tremendously surprised with the overall growth of the program,” he said. “We are adding about a hundred new ACOs each year.” Blum said if “these growth trends continue, then it’s going to be a continued phenomenal story for the Medicare program.”

Ginsburg said there is such a broad consensus among policymakers that payment changes are a promising way to tackle Medicare spending “that I felt a sense of relief that the results looked positive. I say relief because we have to get this to work.”

“It means we’ll be able to move forward without hesitating” on use of the ACO model, Ginsburg said. “Medicare getting out front and doing this on a fairly large scale has been very important. It’s so important for long term success for there to be consistency across the payers in any area so that the providers have similar incentives for most of their patients.”

“I think it’s time to start talking about evolving the model,” Ginsburg added

The next step is to get beneficiaries more directly involved with ACOs so the entities might better direct patients to providers, he said. Right now, beneficiaries are assigned to ACOs but do not have to actually enroll in them and aren’t steered in any way in where they have to go for care.

Getting beneficiaries more directly involved will be a heavy lift, he said. “It seems as though both parties in Congress don’t want to ask beneficiaries to do anything.”

Former CMS Administrator Mark McClellan, who heads a health care innovation program at the Brookings Institution and has led efforts there to foster ACO growth, said in an interview that “the results are promising.” But “I think there’s a lot more to do both in terms of figuring out why some have been more successful than others and figuring out what the Medicare program can do to encourage and support more successes and perhaps terminate ACOs that haven’t been working.”

McClellan said it’s also important to watch innovation among Medicare Advantage programs in assessing potentially promising changes in Medicare. “There are a lot of Medicare Advantage plans that are doing things like the Medicare shared savings program in terms of changing payments to providers in a way that supports better care,” he said. “In many cases, they are going further.”

John Reichard can be reached at [email protected].

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Health Care Law's Definition of Full-Time Employees Draws GOP Scrutiny

By Melissa Attias, CQ Roll Call

January 28, 2014 -- Republicans continued to voice concern Tuesday about a provision in the health care law that defines full time as working 30 hours a week, and they were bolstered by an analysis that found 2.6 million workers are vulnerable to having their hours cut under the current threshold.

The definition has drawn scrutiny, which continued at a House Ways and Means hearing, because the overhaul (PL 111-148, PL 111-152) generally requires employers with 50 or more full-time workers to offer insurance or pay a penalty.

Critics say businesses typically consider 40 hours to be full time and that the 30-hour mark creates an incentive for employers to cut hours to avoid having to provide coverage or pay the penalty.

Lanhee J. Chen, research fellow at the conservative-leaning Hoover Institution, said that his organization recently updated a study by the Labor Center at the University of California at Berkeley to come up with the 2.6 million figure, which equates to 3.1 percent of the U.S. workforce. He also said the law’s provision disproportionately affects women, those who lack a college degree, young people and the poor.

But Helen Levy, research associate professor at University of Michigan’s Institute for Social Research, said research suggests the concern about incentives to limit workers’ hours below the 30-hour threshold has been overstated. She also said that changing the definition to 40 hours, as some lawmakers have proposed in legislation that won praise at the hearing, would make the problem worse.

According to Levy, a larger number of uninsured workers is closer to the 40-hour mark than the 30-hour mark. She said about three times as many employees would be vulnerable at the higher threshold, and that the change would boost federal spending on Medicaid and subsidies in the health insurance exchanges.

Sander M. Levin of Michigan, the top Democrat on the committee, also said that less than 1 percent of employers are affected by the employer mandate provision in the law, which includes the 30-hour definition. That mandate was expected to take effect this year, but the Obama administration delayed enforcement of its penalties until 2015.

Still, Republicans argued that the provision is already having a real impact, citing individuals who they said have been negatively affected.
“If you don’t think this 30-hour mandate is hurting workers and cutting hours, you’re in deeper denial than Justin Bieber,” said Health Subcommittee Chairman Kevin Brady, R-Texas.

Full Committee Chairman Dave Camp said after the hearing that a group of members on his panel are working on health care issues and that the hearing was part of a review of health care policy.

“We want to make sure that we can have credible fixes to problems that we learn about in the bill and this is clearly something many members have been hearing about, I have as well, in terms of the hours per week,” the Michigan Republican said. “But also to look at other principles that might actually reduce the cost of health care, which this bill doesn’t.”

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With Waxman's Retirement, Another Health Policy Giant Departs Congress

By Emily Ethridge, CQ Roll Call

January 30, 2014 -- Henry A. Waxman’s announced retirement brings to an end the legislative career of the top Democrat shaping health care policy in the House, and adds to the growing list of health giants leaving Congress next year.

An architect of the health care overhaul (PL 111-148, PL 111-152), Waxman has been a relentless leader in nearly all areas of health policy, including the Food and Drug Administration, Medicare and Medicaid, tobacco regulations and HIV/AIDS.

His retirement means the departure of four decades of institutional knowledge and health care expertise that has earned him the respect of colleagues on both sides of the aisle. Despite being a staunchly liberal Democrat, Waxman has been able to compromise with Republicans to pass major pieces of legislation.

“He’s been one of the great congresspeople, whether you agree with him or not,” said Sen. Orrin G. Hatch, R-Utah, who counts Waxman as a good friend. “He’s a very, very bright man with a tremendous ability, and I’m gonna miss him.”

Hatch added, “He’s as good as it gets.”

President Barack Obama praised Waxman’s career and accomplishments expanding access to health care.

“Henry will leave behind a legacy as an extraordinary public servant and one of the most accomplished legislators of his or any era,” Obama said in a statement.

House Energy and Commerce Chairman Fred Upton said his proudest collaboration with Waxman was working to double research funding for the National Institutes of Health in the 1990s.

“Working together over the last three years, we have never allowed our principled differences to prevent us from finding common ground where we can and delivering a number of bipartisan successes, especially in the effort to improve the public health,” Upton, R-Mich., said in a statement.

Even though Democrats are unlikely to take control of the House next year, whoever replaces Waxman as the top Democrat on the Energy and Commerce Committee will have a chance to shine—and enormous shoes to fill.

Waxman has left his mark on some of the most important pieces of health legislation of the past few decades, and his replacement will be responsible for overseeing the continued implementation of those laws.

Next in line is Michigan Democrat John D. Dingell, the longest-serving member of Congress and one of the few who can claim as much health knowledge and experience as his erstwhile rival. Waxman ousted Dingell as chairman of the Energy and Commerce Committee back in 2008.

Dingell issued a statement taking notice of Waxman’s departure. “I’ve had the honor of serving alongside of him on what is the very best committee in Congress, and we’ve worked together for many years to pass legislation that helps the American people,” Dingell said.
But he wouldn’t say if he plans to seek reinstatement to the top Democratic spot on the panel.

“I’ve been Chairman and Ranking Member of this committee before, and I’ve done both jobs well,” Dingell said in another statement. “But I just learned of Henry’s retirement as I landed at the airport back in Michigan, so I’m going to take a deep breath and look at everything, and from there I’ll speak with my colleagues when I return to Washington. I’ll make the best decision I can on behalf of the people I’m so blessed to represent in Michigan’s 12th District.”

Behind Dingell is Frank Pallone Jr., who currently serves as the ranking Democrat on the panel’s Health Subcommittee and has built knowledge of the major health issues, particularly those relating to the FDA. Pallone is also a liberal who regularly pushes back against Republicans when they attack the health care law.

Still, compared with Dingell and Waxman, Pallone is a relative newcomer. And with the retirements of Democratic health policy giants Rep. George Miller of California and Sens. Max Baucus of Montana, Tom Harkin of Iowa and Jay Rockefeller of West Virginia, the health policy world will experience a major shakeup next year.

One of Waxman’s most significant laws is the Hatch–Waxman Act (PL 98-417). Enacted in 1984, it made it easier for generic drugs to enter the market and compete with brand-name pharmaceuticals, and is credited for much lower drug costs.

“Hatch–Waxman is one of the all-time great consumer bills and that couldn’t have happened without Henry,” said Hatch.

Waxman also wrote the orphan drug act (PL 97-414), which gives market and tax incentives to companies to develop drugs for small patient populations. He also worked to create the Children’s Health Insurance Program and to expand Medicaid. House Democratic Leader Nancy Pelosi, D-Calif., praised Waxman for being one of the first leaders to talk about HIV/AIDS, and for investing in research, treatments and care for the disease. Waxman’s work helped lead to passage of the Ryan White Care Act (PL 101-381), which provides services to Americans with HIV who do not have sufficient health care coverage or financial resources.

And Waxman was instrumental in passage of the 2010 health care overhaul, which he called “one of my lifelong dreams” in a statement announcing his retirement.

Along with passing legislation, Waxman never shied away from conflict, whether it was battling lawmakers or grilling witnesses at oversight hearings. He was the ranking member of the House oversight panel from 1997 to 2007, and chairman from 2007 to 2009.
In the early 1990s, Waxman held a series of hearings on tobacco, famously bringing tobacco company executives to testify before Congress. He held another high-profile set of hearings into steroid use in major league baseball beginning in 2005.

“While I didn’t always agree with Chairman Waxman on matters of both policy and oversight tactics, his tenure helming the Committee set important precedents and innovated new investigative tools such as the use of subpoenas for closed-door depositions,” said current House Oversight and Government Reform Chairman Darrell Issa, R-Calif., in a statement.

Waxman said he was not leaving out of frustration with Congress, but to make room for someone else to create his or her own legacy.

“After 40 years in Congress, it’s time for someone else to have the chance to make his or her mark, ideally someone who is young enough to make the long-term commitment that’s required for real public service,” said Waxman in a statement.

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Catastrophic Health Plans Attract Few Buyers, Leaving Their Future in Doubt

By Rebecca Adams, CQ HealthBeat Associate Editor

January 28, 2014 -- Catastrophic insurance plans were seen by the authors of the health care law as a way to ensure that young adults would have a way to buy affordable coverage.

But now that very few people are buying the policies, the future of the plans is in some doubt.

Only about 1 percent of the people who signed up for insurance through the state and federal marketplaces through Dec. 28—or 20,224 people out of about 2.2 million—bought the catastrophic plans, which have very high deductibles. It’s unclear how many insurers will keep offering them in future years.

“If people don’t want them, there is not a reason to continue offering” them, said insurance industry consultant Robert Laszewski.

People who buy the policies get three free primary care visits a year, as well as coverage for any preventive services they might need, such as an annual check-up. But consumers can’t get any federal premium or cost-sharing subsidies if they choose a catastrophic plan.

The lure of those subsidies may be responsible, driving down demand for the catastrophic plans. About 80 percent of the people who enrolled by Dec. 28 qualified for some financial subsidies that lowered their costs, according to a Jan. 13 analysis released by the Department of Health and Human Services.

People who have incomes of 250 percent of the federal poverty level or less also can get government help in paying their deductibles and other out-of-pocket costs, but only if they choose a silver plan. The poverty level is $11,490 for an individual.

Perhaps as a result, 60 percent of the people who signed up chose a silver plan. Another 20 percent chose a bronze plan, which has cheaper monthly premiums than the silver, gold, or platinum level plans.

Many bronze plans have similar premiums and deductibles to the catastrophic plans but provide more generous coverage.

“People are just finding the metal level plans to be a better deal than the catastrophic plans,” said Christina Postolowski, senior policy analyst for the Young Invincibles advocacy group, which encourages young adults to sign up for marketplace coverage.

One big limitation for insurers who want to sell the plans is the restriction on who can buy them.

The health care law (PL 111-148, PL 111-152) said that only people under the age of 30 or other people who could not find affordable coverage in the marketplace were eligible to purchase them. People who search on the federal exchange website do not even see the plans listed unless they say they qualify for them. In some areas, only one catastrophic plan is offered.

Insurers were concerned last year when the Obama administration announced a new category of people who would become eligible for the plans. People whose plans were not being renewed because the policies did not meet the minimum benefit requirements under the law will be permitted to buy the catastrophic plans this year.

This development was not something the insurers anticipated or could have accounted for when they set their 2014 premiums for the plans.

“Premium rates may not be sufficient to cover that new type of enrollee,” said Chris Girod, a principal and consulting actuary for the Milliman consulting firm.

But Girod is not ready to say that insurers will scale back their catastrophic policy offerings next year. He said it is “way too soon to say” what the financial impacts on insurers will be. But the largest insurance companies may have the ability to keep offering the plans and see if additional interest develops.

“Most of the big carriers in particular will probably stay the course for the next couple of years,” said Girod. “If they offer them now, most will continue. There’s not a lot of impact to them to offer a few additional plans.”

But Girod can see why the plans are not attracting a groundswell of people.

“When you look at the benefits, they cover a few primary care visits but have a big fat deductible and are generally very lean,” he said.

Rebecca Adams can be reached at [email protected].

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PCORI Could Look to NIH, FDA, and Industry for Funds for Data Networks

By Rebecca Adams, CQ HealthBeat Associate Editor

January 29, 2014 -- The network of electronic patient records under construction by a research institute launched under the health law looks like it will contain the medical data of a broad swath of the U.S. population—about 28 million in 2015.

The network launched by the nonprofit Patient Centered Outcomes Research Institute (PCORI), created to identify which treatments and methods of health care delivery deliver the best medical outcomes, may include information on that number of people within 18 months, said the group’s executive director Joe Selby on Wednesday.

The organization announced last month that it is awarding $93.5 million to 29 groups and a coordinating center to build electronic networks that can be queried by researchers and others. The goal is to create databases that could be tapped to provide information that could be useful in developing new cures or to see if one treatment works better for a particular population than another one for the same condition.

"The real excitement will come once we see this network in action: helping to speed efforts by clinical researchers to test the treatments and cures that so many people urgently need,” observed National Institutes of Health Director Francis Collins in a recent blog post.

Eventually, Selby said the network and its partners have the potential to expand so that it “captures half of the country at least.” Selby said that during the next 18 months, different groups will test ways to allow researchers from organizations including NIH to tap into the records while protecting patients’ privacy and confidentiality.

Selby said during a webinar that after the 18 months are up, “We certainly anticipate we will have to make an additional infrastructure investment.” But he hopes other partners “will help to sustain the network over time.”

PCORI may look to the NIH, the Food and Drug Administration, or to health industry partners to help support and pay for the network as it continues to grow in the future.

“I sure hope the NIH finds ways to use the network,” said Selby, who also noted that Collins is providing input into the development of the network. Collins is on the board of governors of PCORI.

Selby added that working with “industry would be fantastic. We’d love to partner with them.”

The system—known as PCORnet—will be made up of two types of data networks, Selby said in a 37-page PowerPoint presentation.
One part of PCORnet, called the Clinical Data Research Networks, will include records from academic health centers, hospitals, health insurers, Veterans’ Administration clinics, pediatric hospitals and physicians, private electronic health record companies, the cities of Chicago and New York, and the state of Louisiana. The groups will build a distributed data network that allows the data to be housed in the institution where it was created but permits researchers outside of the institution to use it.

The idea is to enable researchers to pose a research question—maybe something like how many diabetic patients within a certain age range also have another specific diagnosis. The network would allow the researchers to quickly submit that question to each of the 29 PCORnet groups. Each group could run the query against their data and return a response. The networks are to be built with data security protections and are supposed to provide just the amount of information needed to answer the question.

To do that, officials operating the networks will need to overcome technical challenges with the way that different electronic records systems work together and make sure that they do not run afoul of the 1996 Health Insurance Portability and Accountability Act (PL 104-191), which protects patients’ privacy.

Those groups will work with the other part of PCORnet, known as Patient-Powered Research Network partners, which typically represent groups of patients. Those include the American Sleep Apnea Association, the COPD Foundation for Chronic Obstructive Pulmonary Disease patients, the Crohn’s and Colitis Foundation of America, the Global Healthy Living Foundation, Massachusetts General Hospital officials working on mental health issues, and University of California, San Francisco officials working on cardiovascular issues, among many others. Those groups will try to broaden the networks of patients and collect standardized data from patients.

An existing PCORI coordinating center, led by Harvard Pilgrim Health Care Institute and Duke Clinical Research Institute, will provide technical and logistical support and help oversee the program.

Collins has been a cheerleader of the new efforts. “NIH is thrilled that these organizations have come together and agreed to create a single, overarching network that will be seamlessly integrated using electronic databases,” he wrote in a Dec. 17 blog post.

Rebecca Adams can be reached at [email protected].

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