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July 30, 2012

Washington Health Policy Week in Review Archive 7489b35d-6f18-4389-b3ca-58a5d20548cd

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New CBO Numbers on Health Law Paint a Mainly Pleasing Picture for the White House

By John Reichard, CQ HealthBeat Editor

July 24, 2012 -- New independent congressional analyses of the health care law, released Tuesday, underscore the takeaway that the Obama administration fared far better in the Supreme Court’s June 28 ruling than many, if not most, observers predicted it would.

The latest take from the Congressional Budget Office and Joint Committee on Taxation: The ruling leaves intact much of the law’s unprecedented expansion of insurance coverage. And getting rid of the law would make deficit spending worse rather than improve the nation’s fiscal outlook, according to the analysts.

From a practical policy point of view, the findings don’t make it an easier for opponents of the law to get rid of it in the wake of the Supreme Court ruling—although there are findings here and there that sharpen some of the GOP arguments against the measure.

The impression of the law created by the new CBO reports stand in sharp contrast to the growing Republican confidence in the days leading up to the ruling that the high court would deal a dramatic blow to the law, a sense so strong that House Speaker John A. Boehner, R-Ohio, warned his troops against “spiking the ball” when the ruling was announced.

Despite high-profile statements by a number of state officials in the days after the ruling that they will turn down the billions of dollars the law provides for expanding Medicaid, CBO says just 3 million fewer uninsured Americans will get coverage than would have been the case if the entire law (PL 111-148, PL 111-152) had been upheld.

To be sure, 3 million people is a large number, and it’s likely to raise eyebrows among hospital executives looking for relief from the costs of uncompensated care. But CBO is still predicting that 27 million uninsured Americans will gain coverage under the law by 2022—not dramatically fewer than the 30 million it had predicted had the law survived unchanged.

CBO didn’t say how many or which states it expects to opt out of Medicaid.

In addition to its report Tuesday on the cost of the health care law as modified by the high court, CBO issued a study on what the impact on deficit spending would be if a Republican bill (HR 6079) repealing the overhaul become law.

Passage of the repeal would add $109 billion to federal budget deficits between 2013 and 2022, CBO Budget Director Douglas Elmendorf noted in his blog on the report.

Other numbers are more problematic for the White House, however. Hospital associations agreed to Medicare and Medicaid cuts in the health care law totaling $155 billion over 10 years, on the assumption the measure would increase coverage so that 95 percent of the American people would have health benefits.

But CBO now says the increase will be to 92 percent rather than 95 percent. That undermines the case for hospital support of the law. Former Clinton White House health budget chief Dan Mendelson tweeted that the “CBO estimates of coverage loss seem high. States will be under pressure from hospitals and others to grow Medicaid.”

Sen. Orrin Hatch, R-Utah, said in a statement that the CBO report shows that “the cuts to Medicare to fund the law are now over $700 billion” rather than the $500 billion that CBO estimated in a 2010 analysis of the law. An Obama administration official did not dispute the figure, but said that changing budget windows account for the higher figure and that Republicans have voted for the same level of cuts in approving budget legislation in the House.

CBO also says that premiums in the individual market and for policies sold through new insurance exchanges will be 2 percent higher than it estimated in March. Why? Because the people who would have obtained Medicaid coverage but instead will get health benefits through private plans sold on exchanges are in poorer health and are likely to consume more health care.

On the other hand, the latest CBO analysis arguably weakens somewhat the argument that the health care law is a government takeover of health care in that it forecasts 3 million more people will get private coverage through exchanges—25 million instead of 22 million.

John Reichard can be reached at [email protected].

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On Exchanges: This Summer the Policy Community Is Sweating Implementation Details

By John Reichard, CQ HealthBeat Editor

July 27, 2012 -- It was not everything they wanted to know about health insurance exchanges, but it was a lot. With deadlines looming, audience members at a standing-room-only Capitol Hill forum Friday peppered federal and state officials with dozens of questions about the nitty gritty of creating the new insurance marketplaces. And they got answers.

For example, it now appears that a proposed rule for the “essential health benefits” that must be offered by plans sold in exchanges will come out in August.

A supplemental guidance document on the operational details of the “federally facilitated exchange” is likely to come out next month too. The federal government will run exchanges in states that are not ready or that choose not to run their own exchanges. A previous guidance document on the federally facilitated exchange was released in May.

Michael Hash, acting head of the Center for Consumer Information and Insurance Oversight (CCIIO) at the Centers for Medicare and Medicaid Services (CMS) did not specifically mention August as a release month for either document. But he did say “shortly” with regard to the essential benefits proposal, and “summer” in the case of the guidance document.

Brian Webb, an exchange expert at the National Association of Insurance Commissioners (NAIC) who also spoke at the event, said afterwards he is assuming both will be out in August. Washington and Lee University law professor Timothy Jost, a third speaker at the forum sponsored by the Alliance for Health Reform, said the benefits proposal has to be released within a month.

Time is pressing on exchange developers. Insurers have to know what benefits they will be required to offer as they prepare to begin signing up people for coverage on the exchanges 14 months from now. The first open enrollment period starts Oct. 1, 2013.

Much has been written about how troubled the mammoth undertaking of creating exchanges is.

But Hash said the federally facilitated exchange is going to be up and running and ready to go in October, 2013. Webb said that every time he has heard from federal officials about the federal data hub that states will need to access to verify citizenship and income information, they say that the hub will be ready on time too.

Speakers were asked to say how many states will be ready to run their own exchanges by next fall with a questioner setting the “over-under” at 19 states. Webb said “over,” adding later that he expects the number of states to be 26.

Jost was more conservative. “If we’re looking at strict state-run exchanges with no federal involvement, then maybe under,” he said. “You’re not going to be able to vote in the spring of 2013 to establish and have one up and running.”

One questioner wanted Hash to address the widespread speculation by hospital officials that plans offered on exchanges would pay Medicaid level payment rates, which are relatively low.
“I’m not aware of anything in the Affordable Care Act that imposes requirements on issuers of health insurance or qualified health plans and the providers that will actually deliver the benefits,” Hash replied. “That’s a matter between the health plans and the providers and I don’t believe there are provisions in the Affordable Care Act that actually speak to that.”

Krista Drobac of the National Governors Association (NGA) said that the Congressional Budget Office (CBO) has assumed that health plans on exchanges will pay providers payment rates more typically found in the commercial health insurance market.

In remarks at the forum and in an interview afterward, Webb said states—with the exception of Massachusetts and possibly New Jersey or Vermont—will not try combining small businesses and individuals into a single exchange. But small businesses in all states will be able to go to exchanges in 2014, he said, either because the state has a “SHOP” exchange—the term for insurance marketplaces for small businesses—or there will be a federally run SHOP exchange.

Webb also said that essential health benefit minimums will vary from state to state, even where the federal government operates the exchange. HHS will use the small business plan with the largest enrollment in a state to set the minimum benefits for that state, he said.

In June, the Department of Health and Human Services posted the three biggest small business plans in each state and federal officials will choose from among the three, he said.

Webb also said NAIC is gearing up an effort to educate those who will assist consumers learn about exchanges and the plans they offer, including training “navigators” required in the health law to provide that help, as well as insurance agents and brokers.

NAIC has a meeting coming up in Atlanta that will address the issue, he said. It will start developing educational materials for those who will educate consumers and for consumers themselves, he said. “As we saw in Massachusetts it takes a lot of effort and frankly a lot of resources to get people the knowledge they need to make good choices,” Webb said. 

Small business plans (pdf)

John Reichard can be reached at [email protected].  

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Harvard Professor, IT Expert Named to Lead Commonwealth Fund

By CQ Staff

July 36, 2012 -- David Blumenthal, M.D., a professor at Harvard Medical School and President Obama’s former national coordinator for health information technology, will succeed Karen Davis as president of The Commonwealth Fund.

Blumenthal is currently the Samuel O. Thier Professor of Medicine at Harvard and chief health information and innovation officer at Partners Healthcare System in Boston.

He signs on to lead the Fund a little over a year after he agreed to chair Commonwealth’s Commission on a High Performance Health System. He has also been elected to the fund’s board of directors. Blumenthal will take over on Jan. 1 when Davis leaves after 20 years at the Fund.

In making the announcement, Commonwealth Fund board chairman James R. Tallon, Jr., said “We are extremely fortunate to have Dr. Blumenthal take the helm of the Fund at a crucial time in the drive to achieve a high performance health system. If the U.S. is to realize the triple aims of better health, better care, and lower cost, it will need over the next 10 years unstinting efforts by health policy and practice leaders like Dr. Blumenthal. He is ideally suited to carry forward The Commonwealth Fund’s significant role in advancing delivery and payment system changes that will improve system performance.”

Blumenthal was Obama’s health IT chief from 2009 to 2011. Before that he was a practicing primary care physician; director of the Institute for Health Policy; and professor of medicine and health policy at Massachusetts General Hospital/Partners Healthcare System and Harvard Medical School. He is the author of more than 250 books and scholarly publications, including most recently, “Heart of Power: Health and Politics in the Oval Office.” Blumenthal was an aide for the now-defunct Senate Subcommittee on Health and Scientific Research.

He received his undergraduate, medical, and public policy degrees from Harvard and completed his residency in internal medicine at Massachusetts General Hospital.

The Commonwealth Fund is a private foundation dedicated to improving the health care system.

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Medicaid Expansions Linked to Fewer Deaths

By Rebecca Adams, CQ HealthBeat Associate Editor

July 25, 2012 -- As state officials grapple with the question of whether to expand Medicaid in 2014 under the health care law, a Harvard School of Public Health report released Wednesday found that in three states that already extended the program, the death rates declined on average by more than 6 percent per year.

The study looked at mortality and other factors over a decade in Arizona, Maine, and New York, where Medicaid was expanded to childless adults. Mortality in those states fell by 6.1 percent compared with neighboring states that did not expand Medicaid. That means that for every 176 people who gained coverage, one death per year was prevented.

The rate of death fell the most among older adults, minorities and people living in poorer counties. The state with the biggest decline in mortality was New York.

“Sometimes the political rhetoric is at odds with the evidence, such as claims that Medicaid is a ‘broken program’ or worse than no insurance at all,” Arnold Epstein, chairman of the Department of Health Policy and Management, said in a written statement. “Our findings suggest precisely the opposite.”

Many states’ Medicaid programs only cover low-income children, parents, pregnant women and people with disabilities. However, some states have expanded Medicaid to cover adults who don’t have children.

All states would have been required to cover low-income childless adults by 2014 under the health care law (PL 111-148, PL 111-152) as enacted or risk losing all Medicaid funding for existing programs. But the Supreme Court’s June 28 ruling says that states must be allowed to choose whether to extend coverage to this population without jeopardizing federal matching funds for the rest of the program. Governors and state officials across the nation are currently weighing whether or not to expand.

The study, published in the online version of the New England Journal of Medicine, was conducted by Harvard professors Epstein, Benjamin Sommers (who is now an advisor in the Department of Health and Human Services Office of the Assistant Secretary for Planning Evaluation) and Katherine Baicker, a member of the Medicare Payment Advisory Commission (MedPAC). It will be in the Sept. 13 print edition.

The study’s authors suggested that officials should consider the health effects of expansion.

Medicaid expansions also were linked with lower rates of delaying medical treatment because of costs and increased rates of people reporting themselves to be in “excellent” or “very good” health.

“Policymakers should be aware that major changes in Medicaid—either expansions or reductions in coverage—may have significant effects on the health of vulnerable populations,” the study said.

Previous research has been mixed. Some observational studies have shown a correlation between Medicaid coverage and poor health outcomes for adults in the program. That has led to the claim that Medicaid coverage could be worse than no coverage at all. But the authors said that other factors affected the health of the population included in those studies in ways that “make Medicaid patients sicker than others.”

Other research in the 1980s showed lower mortality among children with Medicaid coverage compared to those who did not, according to the new study.

Arizona had expanded coverage to childless adults with incomes below the federal poverty level in 2001 and to parents with incomes up to 200 percent of the federal poverty level in 2002. Maine expanded eligibility to childless adults with incomes up to the federal poverty level in 2002. New York expanded eligibility to childless adults with incomes up to the federal poverty level and parents with incomes up to 150 percent of the federal poverty level in 2001.

Arizona’s population was compared to Nevada and New Mexico. Maine’s residents were compared to those in New Hampshire. New York Medicaid recipients were compared to similar populations without Medicaid coverage in Pennsylvania.

Rebecca Adams can be reached at [email protected].

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CMS Ready to Launch Payment System Based on Quality, Efficiency

By John Reichard, CQ HealthBeat Editor

July 27, 2012 -- One of the most surprising—if not shocking—aspects of health care in the United States is that it can take years or even decades for doctors to adopt the best ways of treating particular diseases.

But that might soon change. In a few weeks, federal officials will launch a health care law program that will pay hospitals more for inpatient treatment of Medicare patients if they provide the best types of care and less if they don’t.

More than a decade in the making, the new “Value-Based Purchasing” program is unusual in other ways. It aims to prod hospitals to make a greater effort to treat patients with dignity and respect. It’s a part of the health care overhaul (PL 111-148, PL 111-152) that has bipartisan support. And even though they have a tradition of resisting “cookbook medicine,” providers aren’t agitating to get rid of the program.

Ideally, the program would save lives and money and make hospital stays less stressful. But it’s unclear whether it will deliver results in struggling hospitals too poor to invest in the tools needed to perform well under the new system. And analysts aren’t yet willing to predict it will save Medicare money.

Consensus on Quality
One striking feature of quality measurement in health care is a consensus-building process that accounts for the views of doctors, hospitals, consumers, government, business and labor. It’s a bottom-up design that has yielded dozens of measures that caregivers accept. Hospitals in particular are key players. Faced a decade ago with an increase in demand for reports on quality, three hospital groups—the American Hospital Association, the Federation of American Hospitals and the Association of American Medical Colleges—in 2003 agreed on a standard set of measures they would follow.

Tom Scully and Mark McClellan, former Centers for Medicare and Medicaid Services (CMS) chiefs, expanded that effort in the George W. Bush administration. Hospitals had to report performance data on the quality measures to avoid payment cuts. The CMS Hospital Compare Web site allowed consumers to compare hospitals on dozens of measures, giving the facilities an incentive to improve their scores. Hospitals knew early on that the data ultimately would be used to set payment rates.

In 2010, that became a requirement under the health care law, which requires hospital Medicare payments to be based on quality beginning Oct. 1.

On Aug. 1, about 3,000 hospitals will get an “estimated payment adjuster” based on quality scores for a nine-month period that ended March 31.

Clinical data accounts for 70 percent of the score: Do heart attack patients get a clot dissolver within 30 minutes of admission or an artery-opening angioplasty in 90 minutes? Do heart failure patients get detailed instructions on how to take care of themselves when they are discharged? Do hospitals start patients on antibiotics before surgery to prevent infection?

The other 30 percent of the grade is based on how patients perceived their care. Did the nurse respond quickly when the patient pushed the call button? Did it take too long to get pain medicine? Was the room too noisy to allow proper rest? Were nurses and doctors respectful and courteous and did they answer questions?

Once hospitals get their tentative payment adjustments, they will have two months to review them and request changes. After that, the scores determine the payments. Future measures will reward hospitals that have lower death rates. An efficiency measure is in the works that will determine whether Medicare spends more or less than average for an episode of care at a given hospital. Efficient hospitals will get higher payments and inefficient facilities, lower ones.

Can the system make a difference if doctors are wary of change? Nancy Foster, an American Hospital Association quality expert, says there are good reasons for physician hesitancy, including the difficulty of keeping up with an overwhelming outpouring of scientific literature. It also takes time for consensus to form on what treatments are best.

On the other hand, it was clear for years that quickly giving beta blocker drugs to patients admitted for heart attacks would save lives, but many hospitals didn’t do it.

Even before CMS applies the lash of cash incentives, there’s evidence that measures matter. For example, beta blocker use is now routine thanks to public reporting of performance data.

Hospitals do have concerns. CMS will cut their payments by 1 percent in fiscal 2013 to fund bonus payments for good performers. By fiscal 2017 that rises to 2 percent. Those that perform well, either by achieving certain standards or showing improvement, earn back the money lost and more. But poor performers lose out.

“Money only goes to the winners if there are losers,” noted Blair Childs of Premier, a hospital group that pioneered quality-based payments.

“Hospitals that are financially troubled may have a hard time responding to certain of the incentives.” Foster said. Also, hospitals with sicker patients are at a disadvantage in the scoring, she added. “If you’re feeling sick still when you leave the hospital even though you are on the path to wellness, you may not give that hospital as high a rating,” she said.

But hospitals still have bought in, and Childs said the effort already is saving money.

“Part of the reason that health care spending has been going down in the last three years is because of this movement,” he said.

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GAO Puts Pressure on IRS to Change Definition of Affordable Health Insurance

By Rebecca Adams, CQ HealthBeat Associate Editor

July 24, 2012 -- Many children may remain uninsured under a definition of affordable health insurance that the IRS used in a rule implementing the health care law, according to Government Accountability Office (GAO) report released Tuesday.

Under the law (PL 111-148, PL 111-152), in 2014, people will be eligible for tax credits, based on their income, to subsidize the cost of their health insurance in the new exchange markets. People will not be entitled to the credits if they are eligible for Medicaid, the Children’s Health Insurance Program or affordable health insurance.

But a big question has arisen about how affordable health insurance should be defined. Did the law’s authors mean health insurance covering an entire family, or just individual coverage for the parent or other family member who is employed?

In the IRS rule released in May, the agency decided to define affordable coverage as the insurance offered by an employer to a worker, not family coverage. The agency has finalized all of the parts of the rule except for the language defining how affordability should be measured.

The GAO report did not specify exactly how many more children would be eligible for subsidized insurance if the IRS switched from a standard that uses the cost of insurance just for a worker to one that considered the cost of a family plan.

But the GAO noted that “a key goal of PPACA [the health care law] was to increase Americans’ access to affordable health insurance.” The study urged the IRS to “consider the impact of the proposed standard” and “whether it would be consistent with the goals of PPACA to adopt an alternative approach that would consider the cost of insuring eligible family members.”

The study also found, “One implication of this proposal is that some families in which one member has an offer of self-only, employer-sponsored health insurance could be less likely to obtain family insurance than if no employer insurance were offered, because of their ineligibility for the premium tax credit.”

The report said that while the IRS has to “weigh many complex factors, such as costs to the federal government and effects on employers and families,” the agency also should think about the purpose of the law. “Under the proposed standard, an offer of affordable employer-sponsored health insurance to one family member could impede other family members’ access to affordable insurance—an outcome which would not further the broader goals of” the law.

Federal officials at the IRS and the Department of Health and Human Services did not comment on the findings, the report said. 

GAO Report on Children’s Insurance

Rebecca Adams can be reached at [email protected].

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