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July 18, 2016

Washington Health Policy Week in Review Archive ea8d618d-8c8c-4d62-b25d-f60c9376dfcd

Newsletter Article


CMS Mulling Physician Payment Delay, Shorter Reporting Periods

By Erin Mershon, CQ Roll Call

July 13, 2016 -- Under pressure from lawmakers, the Obama administration may delay the rollout of major changes to the way Medicare pays physicians, which were slated to kick in next year.

Centers for Medicare and Medicaid Services (CMS) Acting Administrator Andy Slavitt, whose agency is overseeing the rollout of the physician payment overhaul (PL 114-10), signaled a willingness to delay the start date for the program at a Senate Finance Committee hearing Wednesday. Lawmakers in both parties expressed concerns in the hearing about how small physician practices will fare under the new rules.

"We remain open to multiple approaches," Slavitt said. "Some of the things that are on the table, that we're considering—they include alternative start dates, looking at whether shorter periods could be used, and finding other ways for physicians to get experience with the program before the impact of it really hits them."

Slavitt wasn't specific on how long a delay the agency was considering. Currently, doctors face a potential 4 percent pay cut in 2019 if they perform poorly on the program's quality reporting requirements next year.

Implementing the overhaul—a system designed to replace the much maligned Sustainable Growth Rate formula—is among the Obama administration's biggest remaining health priorities. The changes are designed to transition Medicare away from fee-for-service care and toward paying for quality.

But the program's proposed rules were heavily criticized by doctors in small and solo practices. An Obama administration analysis showed that about 87 percent of those doctors would face Medicare payment reductions under the new program, compared with 18 percent of doctors in practices with more than 100 physicians.

The American Medical Association and several other physician groups have asked the agency to delay the program's launch.

Slavitt also said the agency hopes to make so-called alternative payment models more attractive to physicians—especially those that expect doctors to lower costs and improve quality. But he added that neither physicians nor policymakers should get too caught up with the details of different alternative payment models, but instead focus on the physician and the patient relationships. The models should "work in the background" within that relationship, he said.

"We have to be conscious of the fact that we're putting an awful lot of change into the system and on our physician practices, and too much change on top of an already burdened physician practices is just not where we should be going," Slavitt said. We want "to reduce the burdens at the same time that we're working through these changes."

The agency is also considering changes to the threshold that would keep doctors who only see a few Medicare patients from being subject to the new reporting requirements.

"We're currently looking at that," Slavitt said. "The juice has to be worth the squeeze." 

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Newsletter Article


Per-Capita Health Spending Likely to Top $10,000 for First Time

By Kerry Young, CQ Roll Call

July 13, 2016 -- Spending on health care in the United States is expected to inch past $10,000 per person for the first time this year, due in part to the rising tab for hospital care, insurance administrative costs and prescription drugs.

The Centers for Medicare and Medicaid Services (CMS) on Wednesday released national health expenditure projections showing the cost of health care rising to $10,346 per person this year, up from $9,960 last year. The widely followed CMS report provides insights into how the aging population and recent laws have changed medical spending and may continue to do so in the future.

The nation is facing what the CMS staff called "differential pressures on health spending growth" in a paper published in the journal Health Affairs. Congress has enacted several measures that include curbs on Medicare spending, including the sequester triggered by the 2011 budget deal (PL 112-25) and the 2010 health overhaul (PL 111-148, Pl 111-152). Yet the overhaul also has helped many Americans obtain insurance and thus get costly treatments they might not otherwise have been able to afford.

"Economy-wide and medical-specific price growth have been very low, helping restrain inflation’s impact on health spending, and the Medicare program is experimenting with various alternative payment approaches," wrote Sean P. Keehan, a CMS economist who is the paper's lead author, and his colleagues. "Meanwhile, many Americans are gaining access to health coverage for the first time, aging into Medicare, or finding that a greater share of their health expenses needs to be paid out of pocket."

The balance of cost-control efforts against rising demands for medical care appears to be stabilizing the growth of national health expenses for now. The total tab for health care rose 5.5 percent last year to $3.2 trillion, with the growth rate little changed from the 5.3 percent increase in 2014.

Contributors to this year's expected increase were hospital costs, which rose to nearly $1.1 trillion from more than $1 trillion. The tab for prescription drugs climbed to $342 billion from $322 billion. The net cost of health insurance rose to $220.4 billion from $209.7 billion.

Looking out to 2025, the growth rate for national health expenditures may inch up to 6 percent. CMS staffers noted that the growth rate of health care in recent years has lagged the annual increases of nearly 8 percent that were seen in the two decades preceding the 2007-2009 recession.

A major contributor to the continued growth of health costs will be Medicare, with spending expected to grow faster than that of other large insurers, averaging 7.6 percent in the 2020–2025 period. Baby boomers are aging into eligibility for the program, while people already in the program are getting hospital care and doctors’ offices at higher rates than have been seen recently.

By 2025, about one in five Americans will be enrolled in the Medicare program for senior citizens and people with disabilities. That's 72 million enrollees in a national population of 351 million, the CMS staff said. The program now covers 55.8 million enrollees, with the U.S. population at about 329 million.

Other key findings from the report include:

  • CMS expects the number of people without health insurance to drop to 8 percent in 2025 from about 11 percent in 2014.
  • Medical prices will likely rise by about 2.4 percent per year from 2017 to 2019. Growth for 2016 was estimated at 1.5 percent.
  • Expenses for private health insurance increased by 5.1 percent from 2014 to 2015, reaching $1 trillion. Average annual growth through 2025 is expected to be a similar rate of roughly 5.4 percent, CMS said.

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HHS Highlights Lower Deductibles as Republicans Blast High Premiums

By Erin Mershon, CQ Roll Call

July 12, 2016 -- The Obama administration touted new data Tuesday showing that for consumers, median deductible costs fell by about $50 per person from 2015 to 2016. The administration hopes the data will counter an ongoing narrative from Republicans and some customers that marketplace plans are increasingly costly.

House Republicans highlighted rising premiums for the plans in a Tuesday hearing at the Ways and Means Committee and are expected to emphasize the point again at a House Oversight Committee meeting Wednesday.

The affordability of health insurance offered on the exchanges will be a key test of the success of the 2010 health care law. The law expanded access to insurance for about 20 million people, according to administration estimates.

"This comprehensive analysis makes clear that two key misconceptions about marketplace coverage are fundamentally incorrect: first, that people have deductibles of several thousand dollars, and [that marketplace policies don't give people access to care comparable to other insurance," said Christen Linke Young, principal deputy director for the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services, pointing to services available before the deductible.

The new statistics show that the median individual deductible for plans is $850, down from $900 last year. The administration also highlighted that the plans cover an average of seven services before consumers have to pay the deductible. About a third of enrollees have deductibles of $250 or less, the administration said. Most people who have purchased exchange coverage have incomes below about $60,000.

The figures run counter to reports and headlines focused on skyrocketing deductibles and high out-of-pocket costs. The Obama administration attributes those differences to two factors. First, consumers often choose silver plans, which have slightly higher premiums but lower deductibles than the bronze plans offered on the exchanges. Additionally, deductibles and other out-of-pocket costs for many consumers are subsidized by the law's so-called cost-sharing subsidies, which the administration took into account in the analysis.

Those subsidies are at the center of a lawsuit from House Republicans, who allege that the Obama administration illegally funded the program without an appropriation from Congress. A federal judge ruled for the Republicans earlier this year, effectively striking funds for the program, but the Obama administration appealed that decision.

Still, the administration's report is unlikely to quiet Republicans, who used the Tuesday hearing to blast rising premiums for 2017, which they say could be twice as high as this year's increases. Ways and Means Chairman Kevin Brady, R-Texas, singled out several increases that could top 50 percent.

"The law has been one broken promise after another—starting with the promise in its very title: 'Affordable,'" Brady said. "Millions of Americans have seen the cost of health care increase to astonishing levels while quality, choice, and access have hit new lows.

Nearly every Republican on the committee expressed their concern for constituents in their states who faced especially high costs or lost coverage, or highlighted the lack of competition in the market. Many attacked the costs as untenable.

Democrats blasted their counterparts for using the hearing as fodder for campaign ads and practice for the upcoming Republican convention.

"Essentially what we've heard is the campaign message of the Republican party against the ACA. That's the purpose of this hearing today—essentially bringing the campaign attack of the Republican party within the halls of Congress," ranking member Sander M. Levin, D-Mich., said.

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Poll: Clinton's Health Policy Positions Align with More Voters

By Erin Mershon, CQ Roll Call

July 15, 2016 -- Hillary Clinton may have the edge over Donald Trump when it comes to health care issues, a new poll found.

About 46 percent of voters said the presumptive Democratic nominee for president best represented their views on health care, according to a July poll from the nonpartisan Kaiser Family Foundation. That compares to 32 percent who said the same for Trump, the presumptive Republican nominee. That could be because voters feel Trump isn't spending enough time on the issue: 56 percent said he didn't pay enough attention to health care, compared to 35 percent who said the same for Clinton.

Clinton has proposed a variety of health policy changes during this election, offering a plan to expand Medicare access to individuals over the age of 55 and backing a so-called "public option" for insurance. She also called for expanding funding for community health centers by $40 billion in the next decade. 

Many of those progressive proposals were aimed at aligning her policies more closely with those of Sen. Bernie Sanders, I-Vt., who endorsed Clinton this week.

Trump, meanwhile, has stood behind Republican proposals to repeal the 2010 health law. He offered broad proposals to make health care available across state lines and to expand the use of health savings accounts, other policies long favored by the GOP.

The Kaiser poll also found that more voters trusted Democrats on health care issues like women's health, Zika, and lowering prescription drug costs. That comes even though voters' views on the 2010 health law still lean toward the unfavorable. Some 46 percent of people surveyed view the law unfavorably, compared to 40 percent who favor it.

Still, as Kaiser noted, the views may not have a dramatic effect on voting decisions. Only 37 percent said the issue was extremely important to their vote. Many more cited terrorism and national security or even a candidate's personal characteristics as more important to their decision.

The study was conducted among a random sample of 1,212 adults in both English and Spanish and by landline and cellphone. Its margin of error is plus or minus 3 percentage points.

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Texas Supreme Court Blocks Medicaid Therapy Cuts

By Marissa Evans, CQ Roll Call

July 11, 2016 -- The Texas Supreme Court delayed a 26 percent provider payment drop for Medicaid therapy services, a win for advocates and families who say the cuts would devastate access to care for children and adults with special needs.

On Friday, the state Supreme Court ordered the Texas Health and Human Services Commission, or HHSC, to temporarily hold off on slated July 15 payment cuts for Medicaid therapy services. Under Medicaid, the joint federal-state health insurance program for the poor and people with disabilities, children and adults can receive physical, speech, and occupational therapies.

Bryan Black, chief press officer for HHSC, said in an emailed statement that the agency is working with the Texas attorney general to discuss the next steps. With the temporary injunction in place, the Lone Star State's Supreme Court will consider the appeals court ruling from April and make a final decision. In addition, the federal Centers for Medicare and Medicaid Services also could reject the state's Medicaid cuts.

"Based on the Texas Supreme Court's order, the Health and Human Services Commission is halting implementation of the revised therapy rates scheduled to go into effect July 15," Black said.

The Texas legislature voted in 2015 to force HHSC to find $150 million in state savings for the therapy services between fiscal year 2016 and 2017. Legislators pointed HHSC officials to potential savings through provider rate decreases and other policy fixes. But advocates and lawmakers have been scrambling for months, asking the agency to delay the cuts until more information was available about how many beneficiaries would lose coverage.

Anne Dunkelberg, associate director for the Texas-based Center for Public Policy Priorities, said in an interview that the decision gives lawmakers a second chance. She said that because many Texas Democrats and Republicans expressed concerns about the looming cuts, the legislature may be inclined to give HHSC more time and flexibility to research potential impacts on patients.

Legislators "rushed into this one and were way too prescriptive and did not give them flexibility," Dunkelberg said.

But some community organizations are already abandoning programs such as the Early Childhood Intervention program, which serves 50,000 Texas children who receive therapy services. Stephanie Rubin, CEO of Texans Care for Children, said in an email that three organizations have already left the program "because of past state budget cuts and the anticipated Medicaid rate cut."

Still, Rubin said the court's action was welcome.

"It was great news for kids with autism, speech delays, Down syndrome, and other disabilities and delays," Rubin said. "It was also great news for our schools, since children who get effective interventions by age three are more likely to succeed in school and less likely to need expensive special education services."

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Newsletter Article


Medicare Plan on Hospital Outpatient Pay Draws Mixed Reviews

By Kerry Young, CQ Roll Call

July 11, 2016 -- Trade associations offered mixed reviews of Medicare's plans to carry out a congressional mandate to curb higher payments to hospitals for services that doctors in private practice have provided more cheaply.

The American Hospital Association chided the Centers for Medicare and Medicaid Services (CMS) for what it termed "short-sighted policies" in a draft 2017 payment rule for outpatient care. In the rule, CMS will carry out the orders included in last year's budget deal (PL 114-74) to reduce the number of cases in which Medicare pays more for services because doctors are affiliated with hospitals. This discrepancy has led hospitals to purchase doctors' offices, driving up costs for Medicare and for the senior citizens and people with disabilities enrolled in the program. 

CMS said the planned leveling of payments would reduce hospital outpatient department reimbursement by $500 million next year. Payments to doctors made under the separate physician fee schedule may rise by $170 million in 2017, resulting in a net savings of $330 million, CMS said.

The American Medical Association (AMA) welcomed the proposed reimbursement changes, saying they "could help stem the tide of consolidation by large systems and help small practices maintain their independence."

"Providing similar payments for similar professional services located outside of a hospital campus, regardless of facility ownership, could lead to a more level economic playing field," said Andrew W. Gurman, president of AMA, said in a July 7 statement. "The new policy is more equitable for patients, who, CMS notes, often pay more for the same service provided in an off-campus department of a hospital."

A group representing doctors in private cancer practices also supported the draft Medicare payment plan. "We applaud CMS for supporting the policies passed by the Congress, which intend to advance payment parity across sites of service to reduce costs for patients, the Medicare program, and taxpayers," said Dr. Debra Patt, medical director for the US Oncology Network in a July 8 statement.

Medicare spent an extra $1.3 billion in 2014 because reimbursement is higher for evaluation and management services when billed through hospital outpatient departments, the Medicare Payment Advisory Commission said in a June report. In addition, people enrolled in Medicare spent $325 million more on these services due to the higher rates charged for services provided in outpatient departments.

Hospitals would be able under the proposal to continue billing for services offered at off-campus departments that were operating as of Nov. 2, 2015, when the budget deal took effect, CMS said. Other exceptions include outpatient departments standing within 250 yards of a remote location of the hospital. The House in June passed by voice vote a bill (HR 5273) that would allow hospitals to use the outpatient codes for off-campus sites for which they had substantial construction plans at the time the budget deal was enacted. 

CMS proposed requiring that these outpatient departments remain where they were as of November 2015 to continue to get these payments. Otherwise, hospitals could move their grandfathered off-campus operations to larger offices and buy more physician practices, thus boosting their outpatient payments against the wishes of Congress, CMS said. The agency is seeking comments on whether exceptions should be allowed, noting that natural disasters may force relocation of the off-campus departments.

"We recognize that there may be circumstances beyond the hospital's control," CMS said in the draft rule.

Tom Nickels, executive vice president for government relations and public policy for the hospital association, objected to the proposal.

"CMS's refusal to continue current reimbursement to hospitals that need to relocate or rebuild their outpatient facilities in order to provide needed updates and ensure patient access is unreasonable and troubling," Nickels said in a July 6 statement. "Taken together, it appears that CMS is aiming to freeze the progress of hospital-based health care in its tracks."

CMS will accept comments on the rule through Sept. 6.

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