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July 1, 2013

Washington Health Policy Week in Review Archive 2ed6ce6c-2f4c-4be2-9188-0d01fa6fcbb9

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On Medicaid: Expansion Decisions Nearing Conclusion

By Rebecca Adams, CQ HealthBeat Associate Editor

June 28, 2013 -- On the one-year anniversary of the Supreme Court ruling that says states would not lose their entire Medicaid funding if they decided not to expand the program, the nation is closely divided.

With the fiscal year beginning in most states on July 1, many have decided whether or not to expand eligibility for adults starting on Jan. 1, 2014, as allowed by the health care law. So far, 23 states and the District of Columbia have announced they will expand eligibility. Another 22 have either said they will not expand or appear unlikely to expand on Jan. 1, while a handful remain unsettled.

Because there is no deadline to expand, state officials could change their minds later this year or decide next year to start offering expanded coverage in 2014 or 2015. And there is nothing to prevent states from starting their Medicaid expansion programs on another date—say, a year from now—as some new fiscal years start on July 1, 2014, not Jan. 1.

But states that expand later will lose some of the benefits of federal financing. The Centers for Medicare and Medicaid Services (CMS) will cover all of the costs for newly eligible adults for the first three years, but that phases down afterwards. In 2020, the federal matching rate will decline to 90 percent, where it is supposed to remain. The health care law (PL 111-148, PL 111-152) allows states to expand Medicaid for people with annual incomes of up to 138 percent of the federal poverty level.

The year has brought surprises, such as the announcement by nine GOP governors that they would support expansion. Arizona GOP Gov. Jan Brewer, who had been considered a favorite by conservatives until she backed expansion, went so far as to veto unrelated bills and call a special session until she got her way.

Expansion Advocates Still Pushing

Advocates for the expansion are still hoping the issue can succeed, one way or another.

In Montana, a state where the level of support for expansion was very close in the state Legislature and Democratic Gov. Steve Bullock backed it, a coalition of advocates is trying to get the issue on the 2014 ballot.

In Maine, the Legislature has passed an expansion, but Republican Gov. Paul R. LePage vetoed the legislation, and the Legislature does not have the votes to override it.

Among the states that are left, Ohio seems to have the strongest chances for passing an expansion. State officials have warned that implementation could take up to six months there, but supporters say they believe the state potentially could still be ready on Jan. 1.

"I'm feeling pretty good about Ohio, that it'll get done in time for a Jan. 1 implementation," said Georgetown University Center for Children and Families Senior Fellow Tricia Brooks, who visited the state last week. "Is it ideal to have six months to plan?," she added. "Once the legislature has signed on, you can do expedited administrative rules," she said, noting that IT systems for Medicaid are already being updated nationwide. "Would it be challenging? Yeah. ... I think you could do it in three to four months, if you really wanted to make it happen."

One thing that could make expansion more complex in Ohio is that Gov. John R. Kasich is interested in using Medicaid dollars to buy coverage in the exchange for at least some beneficiaries. Arkansas also has pursued a similar approach and released a copy of its proposal recently. CMS officials are reviewing it and previously indicated that they did not have major problems with the concept. Other states, such as Michigan, could end up looking to that type of plan as a way to expand eligibility.

Here is a state-by-state guide of some states to watch.

    • Florida: The state's hospitals are planning a major lobbying push to try to persuade Republican Gov. Rick Scott, who announced in February that he supports the expansion, to call a special legislative session this fall and to persuade lawmakers to accept expansion.

Florida's regular session ended in May without an authorization for expansion. The state Senate had supported legislation that would allow the more than 1 million Floridians who would qualify for coverage to use Medicaid dollars for private coverage through a program called "Healthy Florida." But the House did not approve it. Advocates for expansion see a chance that Scott could call a special session in September, when lawmakers will be back in Tallahassee for committee meetings. So far, Scott has not indicated that he will schedule a special session. The governor told reporters in Florida last month that "unless the House is going to make a change in their decisions, it wouldn't make sense to have a special session."

    • Indiana: Republican Gov. Mike Pence is open to expansion if it can be operated much like the current Medicaid program, Healthy Indiana. That program, which was approved through a waiver and is expiring at the end of the year, offers beneficiaries a set amount of coverage, like a health savings account.  Policy experts doubt CMS officials would allow the newly eligible group to be covered in that way. "The administration is not real keen on that," said Matt Salo, executive director of the National Association of Medicaid Directors. "They certainly have not signaled any interest in doing the Indiana version. If that's what Indiana is going to hang its hat on, they may be waiting a long time."
    • Michigan: Republican Gov. Rick Snyder, who supports expansion, has been touring the state to put pressure on the Senate to approve authorization of the Medicaid expansion, which the House passed earlier this month. Snyder called on the state Senate to "take a vote, not a vacation." The legislature meets year-round and will come back after a break. Meanwhile, a half-dozen GOP senators said they will meet over the summer to try to work out a solution.
    • New Hampshire: Democratic Gov. Maggie Hassan still hopes the legislature will pass an expansion this fall. The House supported it. But the legislature recently approved a state budget, which Hassan supported, that puts off the Medicaid decision by creating a commission that is supposed to study the issue, with a report due by Oct. 15.

"I am confident that once the study is complete the legislature will seek to move quickly to implement expansion through a special session in order to improve the health and financial wellbeing of our citizens," Hassan said in a June 26 statement about the budget and the Medicaid legislation. Spokesman Marc Goldberg said the governor believes that the expansion could be implemented within a few months.

The vote in the legislature is "really close, and it's a little hard to judge exactly who they might be able to move," said Georgetown's Brooks, who is a New Hampshire resident. "I still think there's hope in New Hampshire, and in time for Jan. 1. But I'm not sure I'd put as much money on it as I would in Ohio."

    • Ohio: Republican Gov. John Kasich is pushing hard for an expansion. He is backed by a large coalition of health industry officials, employers, and religious groups. Republican legislators have been reluctant so far, and stripped Kasich's plan to expand Medicaid from the two-year state budget. But the legislature meets throughout the year.

In recent weeks, Kasich has been making a moral argument, according to The Columbus Dispatch, which recounted a conversation that Kasich said he had with a legislator. Kasich is quoted as telling the lawmaker, "I respect the fact that you believe in small government. I do, too. I also know that you're a person of faith. Now, when you die and get to the meeting with St. Peter, he's probably not going to ask you much about what you did about keeping government small. But he is going to ask you what you did for the poor."

    • Pennsylvania: The Pennsylvania legislature, which is controlled by Republicans but closely divided, meets throughout the year, and backers of expansion hope that Republican Gov. Tom Corbett will come around to the idea of supporting an expansion.
      Corbett initially resisted expansion in Pennsylvania. But after Secretary of Public Welfare Gary Alexander, a critic of expansion, left his post several months ago, Corbett's administration has been holding talks with CMS officials. Advocates, including hospital groups and the seniors group AARP, are pushing state officials to support expansion.
    • Tennessee: Some policy experts are watching to see if action emerges in Tennessee, but the state looks like a long shot to expand Medicaid by Jan. 1.

The legislature is out of session. Republican Gov. Bill Haslam has expressed some support for the idea of using Medicaid dollars for private health insurance. Salo said that what Tennessee officials really want is permission to expand Medicaid for part of the newly eligible population—an idea that CMS officials have clearly rejected. "What Tennessee is saying ... is, are we going to do an expansion this way, with partial expansion, or nothing? Wouldn't you rather have people covered?" said Salo, outlining the state's position to CMS officials. "Tennessee is holding out hope that this argument is strong enough to give them what they want. Will it be? If I'm a betting man, I'd say no, but that's way above my pay grade."

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On Exchanges: Uncertainty Not So Much Will They Open—But What They'll Charge

By John Reichard, CQ HealthBeat Editor

June 28, 2013 -- Will the health law insurance exchanges open on time in fewer than 100 days? So much drama seems to surround that question that one might think the fate of the entire overhaul rests on the answer.

Republicans on the Hill frequently express doubt that the new marketplaces will be ready on time. Meanwhile, with almost robotic regularity, Obama administration officials say that the grand opening will occur as scheduled on Oct. 1—often without saying much else.
But given the massive size of the job, snafus and delays here and there are a sure thing.

The much less complex launch of the Medicare prescription drug program in 2006 had glitches too, even though the Bush administration had a couple of years to prepare. Seniors complained about the bewildering variety of plans. In some cases, there were delays in getting poor and sick elderly Americans enrolled in prescription plans that had the medicines they needed.

In the end, the good value seniors got and the protection against illness that came with ready access to pharmaceuticals, made the drug benefit a smashing success.

So glitches associated with the launch of exchanges will likely fade in importance if premiums charged to exchange visitors are affordable and the coverage they get protects them against financial catastrophe.

So far, it looks like rates are going to be a mixed bag next year. Big-population states enthusiastic about implementing the law may wind up being able to offer more attractive premiums. States with smaller populations or that are hostile to the law may see less attractive rates. Why? Because outreach efforts will be weak, insurers won't expect a big exchange enrollment, and there may be problems in those places with little insurer competition.

Such an uneven experience geographically suggests the current red-state, blue-state divide over the law may never end. But if rates are all over the place and the pocketbook impact of high rates is lessened by widely available premium subsidies, the collapse of the law over the next few years that some Republicans are forecasting is less likely to occur.

Lots of Resources to Make Exchanges Available

There's been plenty of money flowing from Washington to the 17 states that have decided to open their own marketplaces, and the federal spigot won't be shut off until 2015.

To date, the Department of Health and Human Services (HHS) has awarded $3.8 billion in grants to states and the District of Columbia to plan and open exchanges, according to a June 19 Congressional Research Service report.

The health law (PL 111-148, PL 111-152) "provided an indefinite appropriation for HHS grants to states to support the planning and establishment of exchanges," the report says. "For each fiscal year, the HHS Secretary is to determine the total amount that will be made available to each state for exchange grants." HHS can award the grants through the end of 2014.

To the extent there are operational problems, that suggests the resources will be there to fix them. What about the 33 states that are depending in whole or in part on a federal exchange to offer health plan choices in their states? Congress isn't providing added money for outreach for that exchange, but the Obama administration nevertheless has the resources of the federal government, its employees, and their data handling capacities to devote to getting that marketplace going.

HHS officials appear increasingly comfortable with their repeated predictions that the federal exchange will open on time. They have been more forthcoming about exchange details after many months of saying very little. And during the past week HHS officials invited reporters to its headquarters for an extended question-and-answer session on the exchanges and on outreach. And they said they would schedule such meetings regularly in the weeks remaining before the exchanges open. The Government Accountability Office raised doubts about exchanges opening on time in a recent report, but analysts say it's possible to get the marketplaces started with a less sophisticated computer interface in the early going.

Rate Shock and Rate Joy

If rates for individuals and small businesses in the exchanges were uniformly unaffordable, Democratic support for the health law could begin to crumble threatening its survival. But in recent weeks gleeful supporters of the overhaul have pointed to rates in California and a number of other states as evidence that rate shock at a minimum won't be the typical marketplace experience.

A recent study by the consulting firm Avalere Health concluded that premiums in nine states for "silver" plans will be lower than the Congressional Budget Office has predicted.

Princeton University economist Uwe Reinhardt recently said the shopping experience for some consumers will be "rate joy" because of the difficulty some Americans have getting coverage at all and the availability of subsidies to lower premium costs.

An Urban Institute study released late last week that looked at small business exchanges in six states found that these marketplaces will expand consumer choices, ease administrative burdens involved in signing up for coverage, and increasingly give small business employees a choice of plans, a "rarity" now.

On the other hand, it's a certainty that rates are going to rise because of the health law because it will require more comprehensive coverage and because of various fees it assesses on insurers. In Ohio, state officials forecast a rate hike of 88 percent in the individual market. In a U.S. Chamber of Commerce report released earlier this week, Brookings Institution analyst Mark McClellan suggested that small businesses would see rate hikes of up to 30 percent in many instances because of the overhaul.

And even if rates are reasonable, a poor user experience that makes it difficult to compare plans and enroll online could turn many people off initially. And a significant data privacy breach involving personal health and tax data flowing through a federal "data hub" central to the operations of the federal exchange could undermine already shaky public support for the health law.

Results Will Vary by State

According to Joel Ario, an industry consultant who previously led exchange development efforts in the Obama administration, the operational challenges involved in setting up exchanges will prove manageable, while premiums are likely to vary from state to state.

Ario said in an interview that, in general, thanks to "a focus on mission critical elements, and a willingness to jettison things that can be second-year priorities," the exchanges in general will open on time. "The first iteration on both the state and federal side will not have state-of the-art consumer tools that will make this an Amazon-like experience for people," he predicted. But "it will keep getting better."

Ario says that the 17 states planning to open their own exchanges will in most instances succeed. "A couple of them will need assistance from the federal government on the eligibility and enrollment side," he said.

"You've already seen some success stories—California, Oregon—I think you're going to see some additional success stories, particularly in the larger, more competitive states, including by the way in some federal exchange states. But there will be smaller states, and some of the less cooperative states ... that will produce less positive results. So it's like it usually is about the state marketplace, they vary a lot state by state."

Attracting the Young Will Be Key

Probably the more pivotal question about the durability of exchanges is not on the operational side but on who they attract. Without young and healthy customers rates will become unaffordable over time. "Pricing matters a lot there," says Ario. "If the pricing can stay particularly under $200 as it has per month in some of the states on the low end and you add a catastrophic plan that could be even cheaper than that, I think those prices are critical to attracting that group," he said.

Also important is whether young people take seriously the so-called personal responsibility—mandate—in the law that requires them to get insurance and penalizes them if they don't. "If we don't get the sign-up we want, then maybe there should be some additional cost that accrues" for those who wait to sign up as is the case in the Medicare program, Ario said.

The battle over effective strategies for signing up the young is beginning to heat up, with opponents of the law also realizing it will be critical and objecting to tactics eyed by the Obama administration.

HHS is particularly keen on enlisting sports leagues to urge the young to sign up for coverage but Republicans are fighting back. Senate Minority Leader Mitch McConnell, R-Ky., and GOP Whip John Cornyn, R-Texas, sent a letter last week to the National Football League, the National Basketball Association, Major League Baseball, the National Hockey League, and NASCAR urging them not to cooperate. "It is difficult to understand why an organization like hours would risk damaging its inclusive and apolitical brand by lending its name to promotion," the letter said.

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Sebelius Says Federal Exchange Pressuring Plans for Affordable Rates

By John Reichard, CQ HealthBeat Editor

June 24, 2013 -- Health and Human Services (HHS) Secretary Kathleen Sebelius said last week that federal officials are negotiating with insurers over the rates they'll charge on the federal exchange this fall despite previous statements by her department that it won't be what in the insurance world is known as an "active purchaser."

The insurance industry has strongly objected to the active purchaser model for the new health care law (PL 111-148, PL 111-152) marketplaces. Only a small number of states plan to use it for their exchanges.

"I think that what consumers should be confident about is that we intend to do rate negotiation and make sure that the plans offer consumers the best possible choices," Sebelius told a reporter roundtable.

Sebelius also said the administration is in discussions with the National Football League both to run paid advertising about the insurance exchanges and to spread the word in some sort of partnership arrangement. "We're hopeful that 7 million is a realistic target" for enrolling people in coverage in exchanges in 2014, Sebelius added.

The secretary spoke during an extended session with the press that was meant to call attention to intensified administration outreach efforts under the overhaul. Such activities include a relaunch of the website to promote health coverage options and a new 24-hour call center.

The remarks by Sebelius come at a time when critics of the health care law are saying premiums will be too high among plans sold on exchanges. Insurers also are warning that rates may be unaffordable in a number of cases. Democrats have also expressed some concern about what the premiums will be in the new marketplaces.

"It isn't an active purchaser in the way that I think some states would regard it," Sebelius said. But exchange officials are reviewing with insurers what they plan to charge, what coverage they will offer and whether they will have "an active network that's able to satisfy the consumers," she said.

California employs an active purchaser model. Recently, it announced rates that eased worries among health care law supporters that predictions of rate shock would come true.

During a background briefing after Sebelius' remarks, administration officials elaborated on the way that the federal exchange is negotiating with plans. Unlike in California, the federal marketplace won't exclude a plan if it charges rates that it considers too high. But it's putting considerable pressure on plans nonetheless.

Rates will likely make or break the success of the health care law in expanding coverage. Much of the nation will be served by the federal exchange, which will offer plans in 26 states and will assist seven "partnership" states in offering coverage. Seventeen states plan to open their own marketplaces.

Sebelius said the federal exchange won't be making its rates public until September, while the states control when to release the rates in their exchanges.

She contrasted the procedure that the federal exchange is following with what she called a "file and use" approach used by some states. Under that approach, "a company comes in with plan rates and you take what you get."

An administration official said that in the federal exchange, plans will be told whether their rates are high relative to what other insurers plan to charge, though specific competitor rates won't be divulged as part of that process.

"We're doing, in essence, what's kind of like an outlier analysis,'' the official said. "So when we see things that are ... high or low ... out of kind of what the norm is, we go back to the company. We want to make sure that it's right."

If a state served by the federal exchange has the power to reject rates under its insurance regulations, it appears that the feds will rely on that process. "We very much work with the states," the official said. "Even states that don't have prior approval authority ... often engage in conversations and discussions with issuers."

Mix of Enrollment Matters

When it comes to enrollment targets, Sebelius said the right mix of enrollees also is important, along with total enrollment.
"It's both about numbers and hopefully getting a balanced risk pool," she said. "So a lot of our efforts will be using creative ways to outreach to sort of the young healthy population who is eligible but who may not get up every morning thinking about health insurance."

Sports leagues offer a demographic critical to the success of enrollment efforts: young males.

"It's clear that we're having active discussions right now with a variety of sports affiliates both in terms of what will end up being paid advertising, but hopefully some partnership efforts," Sebelius said. "The NFL, for instance, in the conversations that I've had, has been very actively and enthusiastically engaged because they see health promotion as one of the things that they think is good for them and good for the country."

Sebelius was asked whether she's worried about the Medicaid expansion under the law because many states aren't cooperating. "What we know right now is we've got 24 states who will be expanding come January 1st of 2014, probably another four or five currently debating. And then the remainder of the states, at least as of right now, won't be expanding Medicaid on January 1st. There is no timetable. The door is open.

"We're confident looking at the history of CHIP expansion that states will eventually come in," she said.

"We are very concerned that in some states there will be people who are [below] 100 percent of poverty so they will not, absent Medicaid expansion, qualify for any financial assistance for health insurance. That message is going to be complicated ... There will be a huge gap between what they can afford and what is available. Officials said that in those instances, website visitors and callers will be told about nearby community health centers.

Officials also addressed the issue of how large the menu of plans will be on exchanges. Big insurers like United HealthGroup, Cigna, and Aetna will only offer coverage on a relatively small number of exchanges, in contrast to Blue Cross Blue Shield plans which are likely to be offered on all the marketplaces at least in the individual market. United, Cigna, and Aetna aren't big players to begin with in the individual insurance market, one official said, downplaying their decision not to take part widely.

Sebelius said "early reports indicate that the markets are going to be far more competitive than people are seeing in today's static marketplaces. For example, while in 29 states today more than half of enrollees in the individual market are covered by a single insurer, starting in October insurers plan to offer more than 15 qualified health plans per state on average."

Under its relaunch the site is changing considerably. It's been getting one million visitors a month to obtain information such as what health plans are now available to consumers locally. That information is being moved to a links section at the bottom of the site. Other information has been moved in recent weeks to the website for the Center for Consumer Information and Insurance Oversight.

Officials also said that some 9,000 people will staff the call center, compared to 2,000 now for the toll free Medicare information line. They didn't specify a goal for maximum wait times callers would face. In contrast to recent concerns expressed by the Government Accountability Office about exchanges being delayed, officials said exchanges would open on time. With respect to the federal data hub that is supposed to feed information on incomes, citizenship status, eligibility and tax credits to the exchanges, an official said it would be like other large data projects. While there likely would be "hiccups" here and there they would be straightened out as they arose, he predicted.

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Medicare Doc Payment Bill May Be Vehicle to Tighten Quality Measurement

By John Reichard, CQ HealthBeat Editor

Medicare and other insurers should sharply reduce the number of measures they use to assess the quality of care so that they focus on a few pivotal outcomes of treatment—not on how care is delivered.

That was the message delivered in testimony last week before a Senate Finance Committee hearing that included sometimes blistering criticism of the state of the national quality improvement movement.

Chairman Max Baucus, who described the hearing as a "gut check" on national efforts to improve quality over the past decade or so, appeared strongly interested in winnowing down the number of measures. More than once he broached the possibility of including such changes in legislation addressing Medicare physician payments.

Medicare "uses 1,100 different measures in its quality reporting and payment programs," the Montana Democrat said in his opening statement. "Do we really need more than a thousand measures?"

"The collection of data needs to be as streamlined as possible," agreed the panel's top Republican, Sen. Orrin G. Hatch of Utah.

Former Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan called for action this year by his old agency to shift the focus of quality measurement to such outcomes as whether a patient actually loses weight or quits smoking rather than more "process" oriented measures, such as whether a physician tracks the body mass index of a patient or provides counseling on smoking cessation.

Part of the process needs to involve changing payment, McClellan said. Adding outcomes measures on to the current fee-for-service system won't be effective, he said. Such measures need to increasingly be incorporated into models of team-based care, such as accountable care organizations and patient centered medical homes, he said.

McClellan said even a short-term doctor payment fix could be a vehicle to begin setting such changes in motion.

David Lansky, CEO of the Pacific Business Group on Health, spoke on behalf of such purchasers as Boeing, Target, Disney, Wal-Mart, Intel, GE, Wells Fargo and the California Public Employees Retirement System.

"When I asked our members last week how they would describe the value of our national quality measurement efforts to their own companies, they responded with one word: 'abysmal,' " he said.

"Our large employer members believe that providers should be required to measure and report the outcomes that American families and employers care the most about—improvements in quality of life, functioning and longevity," Lansky said.

"After a patient has a knee replaced, is her pain reduced, can she walk normally? Can she return to work? When a child has asthma can he play school sports, can he sleep through the night? Unfortunately, the measurements we use today leaves us unable to make many of these vital judgments about the quality of doctors, hospitals or health care organizations.

"Congress should direct CMS to identify and adopt useful standardized measures that address consumer and purchaser concerns far more quickly," Lansky added.

Minnesota a Model

Lansky cited Minnesota as an model for CMS to follow. Its statewide quality reporting and measurement system requires all orthopedic surgeons in the state to measure patient outcomes one year after surgery and to ask patients standardized questions about pain and functioning, he said.

Lansky said process measures can help providers improve quality but mean little to consumers. They "lock in the care processes of today that may not be the most useful tomorrow."

Process measures "should be developed and implemented by providers and professional societies in whatever ways they deem helpful toward improving the publicly reported outcomes," he said. "That way, patients have the information they most need to guide their choice of providers and treatments, and providers can identify priority areas and drive rapid improvement."

Christine K. Cassel, who heads the group that develops consensus among providers, government, consumers and others about which quality measures should be applied to providers in Medicare and elsewhere, said "the nation has not come as fast or as far as expected."

One reason is that electronic health records, although they are spreading through the health system, aren't well designed to capture performance data to assess quality of care, said Cassel, the new CEO of the National Quality Forum.

Data exists to begin developing outcomes measures, she added, but stakeholders have to agree on what to adopt. "If everyone agrees on the same basic measures, then we're all rowing in the same direction," Cassel said.

Cassel along with another witness, Elizabeth McGlynn, agreed that measures now aren't very useful to consumers. Wider use of a star system, such as the ratings of quality in the Medicare Advantage program that assess some plans as five-star plans would be more useful, they said.

McGlynn directs the Kaiser Permanente Center for Effectiveness and Safety Research. She said that the Kaiser health plan pays a lot of attention to getting high ratings on the star system. McClellan added that it would be nice if the Medicare Advantage program incorporated more outcomes measures into the star rating system.

McGlynn also said that quality has improved under process measures. She said that "within Kaiser Permanente, we were able to use our electronic health records to assess the delivery of preventive care interventions such as mammography screening" to detect breast cancer. "As a result, our rates are among the highest in the nation and our patients benefit."

She seconded McClellan's notion that payment must change if quality is to improve.

"Making progress on quality is hard work," she said. It "requires a team approach to problem-solving; it requires robust and timely information, effective leadership, and it might be easier to achieve if the way we paid for health care rewarded higher quality, not greater quantity."

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CMS Offers Grants to Create Ombudsman Programs for Duals Demos

By Rebecca Adams, CQ HealthBeat Associate Editor

June 27, 2013 -- Federal officials plan to provide $12 million over three years to help states create ombudsman programs for demonstration projects that will shift people who are dually eligible for Medicare and Medicaid into managed care.

The ombudsman programs could quell some concerns that the move to managed care could be confusing for elderly or frail beneficiaries. The ombudsman programs in states that have been approved for the dually eligible demonstration projects are intended to make sure that patients can get help with any problems in the transition and to keep government officials informed of any problems.

The Centers for Medicare and Medicaid Services (CMS) demonstration projects, which were announced in 2011, drew national attention because of the scale and the population of patients involved. CMS officials, led by Melanie Bella, have said that they hope that moving more patients to managed care will improve the coordination of care, lower costs and offer higher-quality medical services. About 10 million people are eligible for both Medicare and Medicaid, and they represent some of the sickest and most vulnerable patients in the country. As many as 2 million people could be part of the three-year demonstration projects, although the scope is expected to be much smaller than that because of the work involved in setting each one up.

So far, CMS has given six states the go-ahead to launch the demonstrations. Five states—Massachusetts, Ohio, Illinois, California and Virginia—will test out the use of managed care plans. One state, Washington, will experiment with a fee-for-service system that is designed to better coordinate and manage beneficiaries' care.

The CMS funding announcement estimates that $4.8 million is projected to be given to states in fiscal 2013 and $4 million in fiscal 2014. The total amount expected for each state ranges from $275,000 to $3 million over three years.

The grants for the ombudsman programs will come from the budget of the CMS Center for Medicare and Medicaid Innovation.

States can apply in one of three rounds, depending on the schedule of their launches. Those that are launching soon should get in their applications by July 30. The other due dates are in October and January.

The proposed ombudsman programs will be overseen by CMS and the Administration for Community Living.

Sen. Jay Rockefeller, D-W.Va., who has kept a close watch on the duals demonstration projects, praised the action.

"Trying to find the best way to provide care for seniors and people who are disabled eligible for both Medicare and Medicaid has not been an easy task," said Rockefeller in a statement. "But because of the Department of Health and Human Services' (HHS) decision today, independent watchdogs in every state will be able to provide us with a reliable snapshot of the care being provided to these men, women and children, who are often among our most vulnerable populations, so we can make informed improvements to these programs. I'm glad to see HHS take this step forward—it's one I've long advocated for—and I'll be monitoring the reports closely to make sure these programs are putting patient care first."

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California Experiment with Managed Care Offers Lessons

By Rebecca Adams, CQ HealthBeat Associate Editor

June 25, 2013 -- When California managed care plans took on the challenge in 2011 of caring for seniors and people with disabilities, the insurers initially didn't know which providers had been caring for the beneficiaries or even how to contact the new enrollees, according to panelists at a Kaiser Family Foundation forum last week. The session examined lessons from the transition that could apply to other states now shifting patients to such plans.

One of the biggest problems in the ongoing California experiment as it started was a lack of information about who was signing up for coverage and a dearth of providers to care for the beneficiaries. State officials have tried to mitigate those problems as they prepare to move more Californians into managed care through two other major initiatives that will start Jan. 1: a large managed care demonstration project for people who are dually eligible for Medicare and Medicaid, and new coverage through the health care law (PL 111-148, PL 111-152) marketplace.

California's situation is similar to that in many other states that are steering more people into managed care.

About 51 percent of Medicaid beneficiaries nationwide, or more than 29 million people, got their coverage through risk-based managed care plans in 2011, according to the nonpartisan Kaiser Commission on Medicaid and the Uninsured, which hosted the briefing. About four-fifths of the states offer managed care to at least some Medicaid recipients, and an increasing number of states want to use managed care for more of their beneficiaries.

The transition to new types of systems can be rough.

"They're always kind of hellish," said Howard Kahn, the CEO of the L.A. Care Health Plan, a public managed care plan that offers nonprofit care to about 1.2 million people.

With a huge transition in sight as states prepare for the new coverage options under the health care law, health plans around the nation could learn from some of the mistakes in California. The California Medicaid program (known as Medi-Cal) moved almost 240,000 older and disabled people into managed care plans from 2011 to 2012.

One problem that federal and state officials have already sought to mitigate is the issue of people being unable to get services because computer systems don't immediately recognize that they have enrolled. That was a big concern in California. But there is a waiting period in the federal health care marketplaces and the demonstration programs for dually eligible people. Supporters hope that will solve that problem.

The waiting periods also could help with another issue that popped up in California because of a lack of data. The health plans didn't have information about which providers the enrollees had been seeing, so about 70 percent of people who were switched to managed care were assigned doctors by the plan rather than being able to choose their own physicians. Kahn called that the "biggest single problem other than dollars."

But a related concern about whether there will be enough providers to see all of the new patients is more complicated. Kahn added that insurers also need to "hire up" other professionals to handle an influx of patients, such as administrators, nurses and people to answer the phones.

One potential solution for a lack of providers is for health plans to open and operate their own clinics. Margaret Murray, the CEO of the Association for Community Affiliated Plans, which represents plans nationwide that care for the low-income, said Care Oregon and the Texas Children's Health Plan are two insurers that are experimenting with the idea of running clinics with their own medical teams.
"And plans are using technology in innovative ways," said Murray.

For instance, Kahn's plan sends digital pictures of skin lesions and other conditions to dermatologists, who triage the problems. The most worrisome problems trigger a visit to the dermatologist, while more routine concerns are handled by primary care doctors or other medical professionals, with some quick guidance from the dermatologist.

Churning by people who move from one coverage program to another because of changes in eligibility are another problem in California and a potential concern nationwide when the new coverage options start.

Murray said she hopes that Congress will pass bipartisan legislation (HR 1698) that would require Medicaid programs to offer continuous eligibility to beneficiaries for 12 months. But lawmakers are unlikely to pass anything related to the health care law this year.

A Difficult Population to Manage

The issues that arose in California and that may emerge in other places can be difficult, particularly because of the population that is affected.

The groups of patients that are being shifted to managed care have needs that are complex and sometimes difficult to manage. That includes people with disabilities or several chronic conditions, homeless people and those with behavioral health needs. Because the patients often require more intense care than the moms and kids who have used managed care for years in many places, health plans are having to adjust their oversight of care. More are relying on care coordination and are trying to learn how to help patients with social needs, such as a place to stay.

"We're at a crossroads in managed care—what is it, what will it be, what are we managing?" said Trish Riley, a George Washington University lecturer and member of the Kaiser Commission. One of the big questions, she said, is "how much can you coordinate care?"

That leads to another big question: Does managed care for people with complex needs actually lead to significant savings without compromising the quality of care?

Kahn, the health plan CEO, said yes, but he did not provide specific estimates of savings.

"It's fair to say the state of California has shown evidence that in moving [seniors and people with disabilities] to Medi-Cal managed care there has been some significant cost savings," Kahn said. "The proof of that is they want to move more populations there."

Jane Ogle, the deputy director of health care delivery systems at the California Department of Health Care Services, spoke via Skype and didn't disagree. But she also did not provide a specific amount of savings that is projected or was achieved.

And a consumer advocate—Kevin Prindiville, the deputy director at the National Senior Citizens Law Center—remained unconvinced.

"We see a state agency that is slammed with lots of responsibilities, lots of new programs to implement, lots of changes, and at the same time a legislature that has taken resources and staff away," he said. "We continue to be supportive of the promise of these models of where the program is headed, but we also remain concerned."

Kahn suggested that the biggest concern is the transitional periods for new programs.

"When you're doing a new program like this, you always expect a mess," he said. "But you try to minimize those problems."

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