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January 20, 2015

Washington Health Policy Week in Review Archive 3ae571ba-2fcf-4145-9721-56943f90880e

Newsletter Article


Obama's Medicare Chief to Step Down

By Adriel Bettelheim, CQ Roll Call

January 16, 2015 -- Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner will step down as chief of the government's two big health programs in February, she said in an email to agency staff at the close of last week.

The former nurse and hospital executive was the first Senate-approved administrator of CMS in nine years. She was confirmed in a 91-7 vote in May 2013, even as Republicans were unleashing criticism of the health care law (PL 111-148, PL 111-152) that Tavenner was charged with implementing.

"I feel fortunate to leave here with a great sense of accomplishment, a wealth of knowledge, many new friends and the comfort of knowing that the citizens of this country and I are in great hands with all of you and your incredible drive and commitment to continue transforming our healthcare system," Tavenner wrote in her message to CMS staff.

An agency spokesman said Tavenner planned to take some time off before exploring other opportunities.

Her departure could trigger a contentious confirmation process with the Republican-controlled Senate over a successor. CMS issues rules clarifying how insurance companies, drugmakers, hospitals, and other providers of medical services operate under the health law. It also serves as the biggest purchaser of health services in the United States.

Health and Human Services Secretary Sylvia Mathews Burwell said Principal Deputy Administrator Andrew Slavitt will serve as acting administrator.

Tavenner was the last major administration appointee outside the White House who was involved with implementing the health law after it was enacted in 2010. Many other CMS officials left in 2013 and 2014. 

Her departure comes as a number of key federal Medicaid officials are also on the way out, including CMS Deputy Administrator Cindy Mann, who has overseen Medicaid policy for the Obama administration since the beginning of the first term. 

Tavenner drew quick praise from Senate Finance Committee Chairman Orrin G. Hatch, R-Utah, whose panel has jurisdiction over Medicare and Medicaid.

"Marilyn has done a great job in a very difficult position under near impossible circumstances," Hatch said in his statement. "She has proven herself to be a strong leader and a straight-shooter who brought in much-needed private sector sensibility into the agency."

Senate Majority Leader Mitch McConnell, R-Ky., called on President Barack Obama to nominate a successor who can focus on seniors and other vulnerable populations and who won't be burdened with "implementing a gigantic, unworkable law that hurts hardworking Americans." 

America's Health Insurance Plans President and CEO Karen Ignagni said Tavenner "leaves behind a legacy of leadership at a time of unprecedented change in our health care system.

"She was a thoughtful strategist and balanced manager who time and time again rolled up her sleeves to work with all stakeholders on solutions to advance patient care," Ignagni said in a statement.

Timothy S. Jost, a Washington and Lee University law professor and supporter of the health law, said Tavenner's departure comes at a time when things have improved for the federal health law exchange, whose glitch-filled launch drew widespread criticism.

" has just turned around 180 degrees in the last year," Jost said in an interview.

Sara Rosenbaum, a health law and policy professor at the George Washington University, said that "despite the initial setbacks in the operation of, she can point with great pride to the implementation of the new marketplace, the expansion of Medicaid to millions of new beneficiaries, and the introduction of landmark Medicare reforms in organization and financing."

But California Republican Darrell Issa, who chaired the House Oversight and Government Reform Committee in the 113th Congress, said in a statement that Tavenner's departure was necessary. Tavenner apologized before his panel in December for previously testifying that about 7.3 million people had paid and enrolled through the exchanges authorized by the health law. The committee had found that nearly 400,000 sign-ups were from dental plans—which Tavenner said she believed had been inadvertent error—prompting CMS to revise its figures.

"Tavenner had to go," Issa said. "She presided over HHS as it deceptively padded the Obamacare enrollment numbers. It was a deplorable example of an agency trying to scam the American people. They weren't successful this time because of congressional oversight. We deserve better."

Tavenner started her health care career as a nurse and rose steadily through the ranks at Hospital Corp. of America. She later became Virginia's secretary of health and human resources under then Gov. Tim Kaine, now the state's junior senator.

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Health Cost Burden Higher in States Without Expanded Medicaid, Study Finds

By Kerry Young, CQ Roll Call

People living in states where Medicaid has not been expanded are far more likely to still lack health insurance and face more burdensome medical bills, according to research from The Commonwealth Fund.

More than a third, or 35 percent, of adults with incomes below the poverty line remained uninsured last year in the states that had not expanded Medicaid as of mid 2014, Commonwealth researchers said in a report released last week. That was the case for only about one-fifth, or 19 percent, of people in the same economic situation in states that had expanded Medicaid. The income cutoff in this example ranged from $11,490 for an individual to $23,550 for a family of four.

"The ability of the nation to insure most of its residents will be stymied by states that do not expand their Medicaid programs," the researchers concluded.

Their report comes as Republican governors in states such as Utah and Tennessee are trying to convince GOP-controlled legislatures to expand eligibility for Medicaid. Change could come quickly in Indiana, where Republican Gov. Mike Pence may learn this month whether the Centers for Medicare and Medicaid Services will approve a plan that uses accounts similar to health savings accounts that some other states view as a template.​ At this time, there are active discussions in seven states to expand Medicaid, but no such significant movement in another 16, according to a separate Commonwealth Fund tally.

The authors of the study noted that the 2010 health law has triggered subsidies for insurance and consumer protections that have reduced the number of working-age people who lacked health coverage from about 37 million in 2010 to 29 million by the second half of 2014. The Commonwealth Fund study also found that the number of adults who reported problems paying their medical bills declined from an estimated 75 million people in 2012 to 64 million people in 2014.​

Companies involved in delivering medical care also are seeing financial benefits from the implementation of the law. R. Milton Johson, chairman and chief executive of Nashville, Tennessee-based HCA Holdings Inc., which operates hospitals and freestanding surgical centers, outlined some of the laws's benefits in a Jan. 14 presentation at JPMorgan's annual conference for medical investors. HCA has seen a 6.3 percent increase in Medicaid admissions, for example, and a decline in uninsured volumes of 9.5 percent through September 2014, he said.

"Health care reform is having a substantial impact," he said. "We're experiencing a significant improvement in our payer mix."

Johnson stressed that the Medicaid expansion in particular has had a large effect on HCA's finances. The chain operates hospitals both in states that have expanded their Medicaid program, such as California and Kentucky, and those that have not, such as Texas and Florida.  

"We have had significant growth in Medicaid admission in states that have expanded, as you would expect, and a significant 56 percent decline in uninsured admissions in those states that expanded," he said.

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GOP Governors Seek to Cut Deals on Medicaid Expansion

By Rebecca Adams, CQ Roll Call

January 13, 2015 --Republican governors in states such as Utah and Tennessee are trying to convince GOP-controlled legislatures to expand eligibility for Medicaid, arguing it makes financial and administrative sense to grow a program that is a linchpin of the health care law's coverage expansion.

North Carolina Gov. Pat McCrory, in a meeting last week with National Governors Association colleagues such as Utah's Gary R. Herbert, told President Barack Obama he is also open to expanding Medicaid, the federal-state health program for the poor. Some Idaho Republicans also support opening up eligibility and Wyoming GOP Gov. Matt Mead is pushing an expansion plan, although some state legislators prefer a different approach.

Change could come soonest in Indiana, where Republican Gov. Mike Pence could receive word in the next week or two about whether the Centers for Medicare and Medicaid Services will approve a plan that uses accounts similar to health savings accounts that some other states view as a template.

"The Mountain West area is really popping," said Joan Alker, executive director of the Georgetown Center for Children and Families, which tracks Medicaid policy.

To be sure, not all of the governors promoting expansion are Republicans. Independent Alaska Gov. Bill Walker wants to fulfill a campaign promise to open up the program to more adults. But he'll face a Republican-controlled legislature that has resisted the idea so far. Virginia Democratic Gov. Terry McAuliffe also is facing challenges pressuring reluctant legislators to expand.

But for a variety of reasons, it's in the interest of both the Obama administration and Republican governors to cut deals on expansion plans as soon as possible. 

The health care law (PL 111-148, PL 111-152) allows states to expand Medicaid for people with income of up to 138 percent of the federal poverty line. The federal government picks up the cost of covering all newly-eligible people through 2017, after which its share phases down. By 2020, states will have to pay 10 percent of the costs of the people who qualify under the expanded guidelines.

Delaying Medicaid expansion could lead to administrative hassles for states. Uninsured individuals living in those states that haven't expanded Medicaid can buy health coverage through new marketplaces created by the law, and people with incomes between the federal poverty line and 400 percent of the poverty line can get federal subsidies to offset the costs.

But states that opt to expand Medicaid later will have to transfer those individuals with exchange coverage who qualify for Medicaid under the new eligibility guidelines. That entails disenrolling individuals with marketplace plans and moving them into Medicaid without allowing any gaps in coverage.

In Indiana, “the governor has communicated ... that time is of the essence here,” said Brian Neale, Pence's healthcare policy director, in an interview. “Hoosiers need certainty. It’d mitigate any potential problems for individuals who might be unsure about what options they have available for this year as we look at the end of open enrollment for the marketplace, if we were to get a swift answer.”

Pence spoke with Obama on Oct. 3 during the president's visit to the state and has an ongoing conversation with Health and Human Services Secretary Sylvia Mathews Burwell.

Many state legislatures that would have to sign off on any expansion convene early in the year and adjourn in the spring, adding to the urgency. And states that expand typically will need to convince the Department of Health and Human Services to grant a waiver from existing Medicaid law, a process that takes time, before a state can implement the changes.

Twenty-eight jurisdictions including the District of Columbia have already expanded Medicaid. Of those, nine were led by GOP governors.

Obama and Burwell have been personally talking with Republican governors who could be persuaded to take the federal money and widen eligibility.

In Utah, Herbert spokesman Marty Carpenter said that the governor took along a new state House GOP leader to speak with Burwell about Medicaid. Advocates for expansion say they are more optimistic about expansion than in the previous legislative session, when then-House Speaker Becky Lockhart stood against it. She did not run for re-election.

"The governor is very adamant that he wants to get something done in this session," said his spokesman.

The administration is getting some lobbying help from hospital officials, Medicaid managed care company executives and employers whose workers may be able to gain coverage through expansion.

Hospital officials in Florida, for instance, are pressuring Republican Gov. Rick Scott and state legislative leaders to expand Medicaid, over the objections of many Republicans.

Some Democrats oppose job training components that many Republican governors have rolled into their expansion proposals, but governors may find a middle ground on the issue. Last year, then-Pennsylvania GOP Gov. Tom Corbett tried to require beneficiaries to participate in job search or training activities as part of his Medicaid waiver proposal. In the end, he and CMS officials agreed to make job training and referral programs optional for enrollees and to offer the potential of lower costs to those who agree to be connected to the state programs.

Alker said that some of the recent burst of activity, including Tennessee Gov. Bill Haslam's announcement last week that he would devote a special legislative session in February to debating Medicaid expansion, was unexpected because it signaled more seriousness than in the past. Governors are making decisions based on financial considerations, she said.

"The more pragmatic among the Republicans recognized that from a budget perspective, this is a very attractive offer," said Alker. 

Rebecca Adams can be reached at [email protected].

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Doctors May Shun Patients After Medicaid Compensation Cuts

By Adriel Bettelheim, CQ Roll Call

January 15, 2015 -- Starting this month many doctors who were likely to expand basic medical care offered to low-income Americans—a goal of the 2010 health care law—could see Medicaid fees drop an average of almost 43 percent.

The development could make the doctors less willing to treat patients covered by Medicaid, undermining the law and potentially creating a patchwork of payment policies across the country.

The doctors are getting paid less thanks to Congress' refusal at the end of 2014 to renew a fee bump in the health law (PL 111-148, PL 111-152) designed to level out a historic gap between what Medicaid, the federal–state program for the poor, pays doctors, and what Medicare, the federal program for the elderly and disabled, pays them.

Physician lobbies will try to persuade Congress this spring to retroactively restore the bonuses, but their best hope may be pressing states to step forward and pay the difference with their own money.

It's an ominous start to what's shaping up to be a politically dicey year for doctors. At stake is the availability and cost of care for millions of patients.

Beyond the uncertainty surrounding what's known as Medicaid pay parity, Congress will also have to decide by the end of March whether to spare physicians from steep Medicare cuts dictated by a 1997 budget law (PL 105-33). Lawmakers will later consider whether to renew funding in the health law for community health centers, as well as loan repayment and training for health professionals.

The pay parity issue affects primary care doctors, the health professionals who conduct physicals, interpret basic tests, counsel patients on lifestyle changes and often serve as a first contact in the health system. The thinking is that without such early intervention, some people would wait until they are sick to seek care, and obtain treatment in costly settings, such as hospital emergency rooms.

Doctors aren't crazy about Medicaid because it has compensated physicians at comparatively low levels since its inception in the 1960s. The program on average paid 66 percent of what Medicare spent in fees in 2012, before the payment bump took effect, according to the Kaiser Commission on Medicaid and the Uninsured.

But the program is central to the health law's insurance coverage expansion. The law allows states, which determine who is eligible, to expand Medicaid to people in families with income up to 138 percent of the federal poverty level.

Many states quickly spotted the contradiction of expanding the Medicaid program and simultaneously discouraging doctors from taking patients by cutting fees.

Fifteen states last year said they'd use their own funds if Congress didn't act.

But the 15 states, which include Connecticut, Maryland, Michigan, Nevada, and South Carolina, account for just 15.6 percent of Medicaid enrollees, according to the Urban Institute. The seven biggest states have opted not to commit, even though four of them—California, Illinois, New York and Ohio—could see an influx of new Medicaid-eligible patients under the health law's coverage expansion. A dozen states remain undecided.

The Urban Institute last year predicted the expiration of the fee bump would reduce Medicaid providers' fees for primary care by an average 42.8 percent.

The American College of Physicians predicts some doctors will limit the number of lower-income patients they see if the cost of care exceeds Medicaid payments because they're not required to participate in the program. Though dire warnings are frequently aired in debates over doctor pay, undecided states are checking whether rates affect doctor participation.

In Congress, Democratic Sens. Patty Murray of Washington and Sherrod Brown of Ohio and Rep. Kathy Castor, D-Fla., want to revive an effort they led in the 113th Congress to extend the Medicare payment threshold to Medicaid.

They're expected to face obstacles. Their best bet may be grafting their proposal on so-called "doc fix" legislation Congress is likely to craft in March to avert the Medicare physician payment cut.

If they don't succeed, some undecided states may opt in to fill the gap, wagering the long-term savings from preventive care justifies the upfront cost. That would leave a patchwork of state policies on primary care pay and an uncertain landscape during a critical year of health law implementation.

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Draft Telehealth Bill Pays Close Heed to Potential Cost

By Kerry Young, CQ Roll Call

January 13, 2015 -- A draft House bill intended to expand Medicare's payments for telehealth shows an intention to keep the costs of an expansion of these services in check.

The measure, which appears to be still in the discussion stage, is circulating among lobbying groups. The House Energy and Commerce Committee has included telehealth as one of the topics of its broad look at ways to overhaul the delivery of health care in the United States, and will review the draft bill as part of what is known as the 21st Century Cures initiative.

In its current form, the draft bill includes a provision that would require the chief actuary of the Centers for Medicare and Medicaid Services (CMS) to certify that an expansion of telehealth "would reduce (or would not result in any increase in) net program spending."

The Alliance for Connected Care, whose board is drawn from firms including the telehealth firm Specialists on Call and insurance giant Anthem Inc., said it was pleased to see the Telemedicine Working Group, led by Rep. Gregg Harper, R-Miss., advance the cause. At this time, people enrolled in traditional Medicare don't have the same access to telehealth as some participants in insurer-run Medicare Advantage plans.

"They deserve the same access to telehealth that consumers in the commercial marketplace and Medicare Advantage already enjoy," the Alliance said in a statement. "We look forward to working with the Committee to ensure the final bill reflects the realities of the telehealth marketplace while ensuring the program saves limited resources."

There's clearly a drive among some lawmakers to get CMS to take a more expansive approach, even as small-scale experiments take place around the country that may make clear both the advantages and shortcomings of the technology. Harper drew 20 bipartisan cosponsors in the 113th session of Congress for a bill intended to waive certain Medicare restrictions. 

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Medicare Adviser Renews Call for Permanent 'Doc Fix'

By Kerry Young, CQ Roll Call

January 15, 2015 -- Nearing the end of his term, Congress's top adviser on Medicare exhorted lawmakers to put an end to a widely disparaged budget mechanism that routinely threatens to slash doctors' pay from the big government health program.

Medicare Payment Advisory Commission Glenn Hackbarth, who will leave the post this year, noted that Congress has frequently overcome in other instances the same hurdle that has blocked a so-called permanent "doc fix." A bipartisan effort to overhaul the system of payments was scuttled last year due to disagreements over whether and how to offset its costs.

Savings drawn from Medicare have been used as offsets for other congressional objectives, including expanding medical insurance coverage through the 2010 health law (PL 111-148, PL 111-152) and reducing the deficit through the Budget Control Act (PL 112-25), Hackbarth said last week.

Cost-saving changes in Medicare policy also have covered some of the costs of the stopgap bills Congress has repeatedly passed in recent years to stall scheduled cuts in doctors' pay. A budget mechanism known as the sustainable growth rate (SGR) dictates now cuts in Medicare payments to doctors. There's broad bipartisan agreement that the formula, known as SGR, is flawed. Congress has acted 17 times to stop SGR from cutting doctors' pay, with the current patch (PL 111-93) expiring in March.

According to Hackbarth, "hundreds of billions" of Medicare savings have been applied to budget deals, doc fix patches, and the 2010 health law.

"Yet we never seem to have enough to pay for an appropriate payment system for physicians," he said at a recent MedPAC meeting. "That frustrates me to no end, and I am hopeful that the new Congress will at last come to grips with this."

The Congressional Budget Office (CBO) in November pegged the cost of a permanent doc fix at about $144 billion over a decade.

MedPAC members are finalizing this week the next set of formal recommendations to Congress regarding Medicare, the largest single purchaser of health care in the United States, with annual spending seen topping $600 billion. The recommendations will be made in the commission's annual March report.

Commission members have agreed to repeated suggestions made to earlier Congresses backing the need to a permanently overhaul of Medicare physician payments.
In the March 2014 report, MedPac, said there's an "urgent" need to repeal the SGR mechanism, saying that "after a decade of year-end legislative overrides, the policy is causing uncertainty for physician and other clinician practices."

The commission also noted that the seemingly perennial need to pass a doc fix takes a toll on Congress as well.

"The SGR also bogs down the policy process by focusing efforts on the yearly need to override negative fee schedule updates," it said.

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