By Erin Mershon, CQ Roll Call

June 9, 2016—Officials from the Department of Health and Human Services (HHS) on Thursday hailed successes some insurers are experiencing on the health law exchanges, even as officials acknowledged that the new insurance markets will need more time and potentially further changes to stabilize.

The exchanges, established by the 2010 overhaul, have helped nearly 12.7 million Americans gain insurance coverage, many for the first time. But consumers have complained about high and rising premiums and deductibles. Many health plans have struggled to price their products appropriately and still earn profits in the fledgling space.

A Thursday forum at HHS was designed to showcase best practices from a wide range of insurance companies, including Aetna, Blue Cross Blue Shield (BCBS) of Florida, and Molina. BCBS of New Jersey and Utah's SelectHealth highlighted marketing practices and market research successes, and CareSource of Ohio and BCBS of Massachusetts, among others, focused on efforts to overhaul delivery systems, some of which were in place before the launch of the exchanges, to reduce costs and better coordinate care.

"We've moved from a market that kept millions of people out, to a market that puts people's health, no matter their health history, at the center," HHS Secretary Sylvia M. Burwell said in opening remarks. "Even when it's taking us in the right direction, I know that rapid change can be hard. I recognize that this transforming market hasn't been easy."

Centers for Medicare and Medicaid Services (CMS) Director Andy Slavitt suggested the marketplaces would need five years to fully stabilize and highlighted changes CMS has implemented to improve matters for participating insurers.

"As in all markets, strategies won't succeed the first time, every time," he said. "Over the course of these five years, we need to allow for continued experimentation. But problems that have plagued certain health care markets for years, lack of access, higher prices, poor social determinants of health also won't get solved overnight."

Slavitt said if more issues arise, he is "highly confident in the focus and expertise of the career staff at CMS, and at the tools at their disposal, to continue to make the Marketplace attractive, stable, and successful."

By Erin Mershon, CQ Roll Call

June 10, 2016—House Republicans pushed a series of legislative measures they see as tweaks aimed at improving the Affordable Care Act at a Friday legislative hearing, but Democrats cautioned that the bills would undermine access to coverage for many Americans.

The Energy and Commerce Health Subcommittee hearing represents a slightly different tack for House Republicans, who have largely focused on efforts to repeal, not tweak, the health law. While Congress somewhat quietly has passed at least 18 laws revising the health law, many Republicans who are fearful of angering conservatives often publicly vow to accept nothing less than full repeal.

The path forward for the changes debated Friday is unclear. Subcommittee chairman Joe Pitts, R-Pa., said there was "time on the schedule for a markup," but no decision had been made on which bills, if any, would receive a vote.

The measures, some of which are still discussion drafts, are largely aimed at insurance industry regulations in the health law. Republicans say walking them back will help address some of the major ongoing complaints with the health law: that it is unaffordable and its markets remain unstable.

"Americans are paying higher premiums and deductibles for health insurance and care as a result of the law," Pitts said. "We can do better. We must make health care costs more transparent and give people the freedom to choose the insurance that they want, with the benefits they value most at a price that is fair."

Insurance companies applauded the proposals. The industry's main lobbying arm America's Health Insurance Plans called them "promising strategies" and said they could help lower premiums and stabilize the marketplace.

But Democrats caution that most of the bills discussed Friday are not pragmatic, bipartisan efforts to improve the law—rather, they called them attempts to make it harder for many Americans to get or maintain coverage.

"There are ways we can strengthen and improve the law," Energy and Commerce ranking member Frank Pallone Jr., D-N.J., said. "However, I'm concerned that this hearing is taking a cynical approach to doing so. Rather than have a legislative hearing on bills that would help get more people health coverage, three of the bills being discussed today are designed to make it more difficult for people to get health care coverage."

Among the bills up for debate was a discussion draft from Rep. Bill Flores, R-Texas, to give people less time to repay late premiums before losing their coverage. Another from Rep. Marsha Blackburn, R-Tenn., would require people signing up for coverage during a special enrollment period, outside of the normal sign-up window, to prove their eligibility before receiving insurance. Currently, consumers can send documents after enrolling. A third, from Rep. Susan W. Brooks, R-Ind., would let insurers charge older Americans five times as much for care as younger Americans. Current law limits that ratio to three times as much, which can drive up costs for younger people while depressing costs for older people.

A bill from Rep. Rick W. Allen, R-Ga., would require audits for failed state insurance exchanges (HR 4262).

Republicans and insurance companies often say such lax policies allow people to game the system. They say loose rules governing special enrollment periods let people sign up for coverage only when they need it. Three-month grace periods for those who don't pay their premiums, as current law allows, let people stop paying their premiums for the last three months of the year, then sign up again during the next open enrollment period. And critics say limits on high costs for older people lead to higher premiums for young people—keeping them out of the exchanges and destabilizing the exchanges' risk pools.

Democrats, however, say requiring too much documentation under special enrollment could deter younger, healthier people from getting coverage during those times, leading only the sickest to persevere. They say grace periods aren't abused the way Republicans allege, and that expanding the age-rating bands will dramatically increase costs for older consumers—and simultaneously grow the law's subsidies for those Americans.

The committee also discussed one bipartisan bill, from Reps. Morgan Griffith, R-Va. and Diana DeGette, D-Colo., that would allow consumers to buy stand-alone dental plans for children inside and outside the exchanges (H.R. 3463).

By Marissa Evans, CQ Roll Call

June 8, 2016—Health care providers in states with expanded Medicaid programs are seeing financial gains that have helped them increase services and hire more staff, according to a new study from the Georgetown University Center for Children and Families.

A report released on Wednesday found that safety-net providers in states that have expanded Medicaid were seeing fewer uninsured low-income patients, a result that has allowed hospitals to redirect dollars to other needs.

"Our interviews suggest that Medicaid expansion has had a substantially positive impact on safety net health care providers located in expansion states," researchers wrote. "Furthermore, the positive impact has been felt beyond the walls of these health care facilities."

Under the 2010 health law, states can broaden eligibility for the joint federal-state health insurance program for the poor. The federal government picks up the tab until 2017, when states will then have to share the costs until by 2020, they would pay for 10 percent of the expansion population's spending on their own. Thirty-one states and the District of Columbia are participating.

In a series of interviews with hospital executives and federally qualified health centers, or FQHCs, in states that expanded Medicaid, researchers found that providers are using the cash infusion to increase services for behavioral health and primary care, hire more staff, open or improve health centers and clinics, and upgrade equipment.

Meanwhile, many providers in non-expansion states were financially struggling and taking on uninsured patients, according to the study. Researchers found that providers in these states were less likely to see a decrease in uncompensated care. Some of the providers interviewed said their state not expanding Medicaid has led to layoffs and clinic closures.

However, while providers in expansion and non-expansion states saw a difference in finances, there was a shared concern about being unable to connect patients with specialists.

By Erin Mershon, CQ Roll Call

June 8, 2016—The Obama administration is taking aim at affordability issues in the health law's individual exchange with a series of proposals officials say will help stabilize the markets and premium costs.

The new tweaks focus on restricting the use of limited coverage plans and improving a program that protects insurers with a large number of unhealthy consumers from steep losses. The changes come as the Obama administration faces increasing criticism about the affordability of the insurance plans offered on exchanges established by the 2010 health overhaul.

The announcement comes during a period of tumult and uncertainty for the exchanges. Insurers this summer are proposing average premium increases as high as 50 percent in states like Arizona and Oklahoma. Nationally, proposed hikes so far this year average about 21 percent, according to ongoing calculations by Charles Gaba, an analyst who supports the health law. Those premium increases come as the nation's largest insurer, UnitedHealthcare, is making a dramatic exit from nearly all of the state exchanges in which it was participating.

Department of Health and Human Services Secretary (HHS) Sylvia Mathews Burwell outlined the developments in a webcast meeting with the New York Times editorial board Wednesday, when she was asked what HHS is doing to improve the long-term stability and viability of the marketplaces.

HHS is committed to "closing a loophole" that allows people to buy short-term plans outside of the exchanges. The move is "designed to make sure insurance companies are not cherry-picking healthy people and damaging the risk pool," she said in the webcast portion of the meeting. "You don't want to have people jumping in and out of a risk pool so that when they have health care costs, they burden others because they're not part of the system."

Push for Healthier Consumers in Exchanges

The loophole refers to a type of limited coverage offered outside of the marketplaces that isn't subject to the 2010 law's new coverage requirements or discrimination rules, and which can be cheaper for healthy individuals.

HHS says insurers have been targeting healthy consumers for the short-term plans, keeping them out of the exchanges, which drives up costs for everyone else who buys individual coverage. The agency, along with the departments of Labor and Treasury, proposed in a new rule Wednesday to restrict how long consumers can stay on the plans and eliminate the option to renew them. If more healthy people join the exchanges, the low costs of covering them will balance out the high costs of sicker consumers.

"The proposed changes will help strengthen the risk pool by ensuring that short term limited duration plans are used only as intended, to fill truly temporary gaps in coverage," HHS wrote in a release.

HHS also hopes to tweak its risk adjustment program for insurers, which is designed to mitigate the risks plans face for taking on high-cost enrollees, by making it more accurately reflect partial-year enrollees as soon as next year. Going forward, risk adjustment calculations also will take into account data about patients' prescription drug use. The agency intends to propose both tweaks in future regulations, and cautioned that more changes to risk adjustment could come for the 2018 plan year.

A spokeswoman for the insurance industry's main lobbying arm, America's Health Insurance Plans, said the changes will help improve predictability and stability for both consumers and insurers.

HHS also said it is working to reduce problems that can prevent people from remaining eligible if they do not prove they qualify for coverage. The change is designed to prevent "younger and healthier consumers [who are] less motivated to overcome obstacles such as extra paperwork, from losing coverage mid-year." In 2015, younger people who experienced a data-matching issue were 25 percent less likely to resolve it than older consumers, the agency said.

HHS outlined its implementation plan for new rules surrounding eligibility determinations for its special sign-up periods outside of the normal enrollment window. The agency will begin requiring documentation later this month.

HHS also said it will ramp up its outreach to marketplace enrollees who will soon turn 65 and become eligible for Medicare so the consumers will sign up for the program for seniors and people with disabilities.

The agency will make further announcements this month about improving its work with insurance companies and state regulators, as well as about outreach plans ahead of the fourth open enrollment period that begins in November, officials said.

By Erin Mershon, CQ Roll Call

June 8, 2016—The Centers for Medicare and Medicaid Services (CMS) helped five participants in one of its most ambitious, high-profile Medicare payment models avoid nearly $6.8 million in penalties that would have gone to the Medicare Trust Funds—and didn't reveal that to the public or other providers interested in the program, according to the agency's inspector general.

The Office of Inspector General (OIG) report released Tuesday centers on the Pioneer accountable care organization (ACO) model, a program launched in 2012 as part of the Obama administration's efforts to transition Medicare away from fee-for-service payments. The program, which was aimed at some of the country's most efficient and top-performing hospitals, rewards participating organizations with bonus payments if they keep costs low and penalizes them if they fail to do so.

But CMS helped five organizations switch to a different payment structure to avoid those penalties in the first year, the OIG said. The organizations had originally chosen to be on the hook for penalties as well as bonus payments—but after a year of participation, data showed they'd be hit with big penalties. CMS let them switch, retroactively, to a penalty-free track. Four would have been on the hook collectively to repay CMS a combined total of $6.8 million; the fifth did not lose enough to trigger the penalties.

What CMS did wasn't illegal, according to the OIG—but the watchdog group maintains CMS should have been more transparent. When it announced the first-year results, CMS did not disclose which ACOs had taken on risk or that any switch had occurred.

Providers involved in the ACO program voiced similar criticisms, lamenting the loss of a learning opportunity for a fledgling program that has become a focal point of efforts to transition Medicare toward a system that bases provider payments more on performance rather than volume.

The agency "should have been transparent and forthright about this change," said Clif Gaus, who heads the National Association of ACOs.

"It should have made known in some way, shape, or form," added Dave Introcaso, senior director of regulatory and public policy at the American Medical Group Association (AMGA). "They could have gotten away with saying, 'Hey, this was the first year, we'll made mistakes, we're trying to make it better, but this is important information everyone should know.' It has these sort of ripple effects—it's a lesson lost that could have been learned."

The report also highlights the challenges of running a complicated program like Pioneer—a task the administration is taking on more often as it launches new alternative payment models like other ACO programs and bundled payment demonstrations for hip and knee surgeries, among others. The agency is investing heavily in efforts to encourage physicians to take on risk in these models. They are the only models that will earn substantial bonus payments under new proposed rules for implementing a 2015 law overhauling physician payments.

But providers looking to succeed in those programs need timely data on the care they are responsible for coordinating and making more efficient—and even CMS acknowledges it has struggled to provide that data.

CMS explains in comments appended to the OIG report that it allowed the Pioneer groups to switch their payment structures because it had failed to provide the ACOs with data officials had promised them within the timeframe in their contracts. Since that data is important for preventing the penalties, CMS officials said they offered the ACOs the chance to switch programs.

CMS did not return a request for comment after the report's release.

Both Gaus and Introcaso said that given the issues with data availability, CMS was doing the responsible thing by allowing the ACOs to switch to a different payment structure.

Those same problems with data availability—which CMS did not disclose publicly at the time—have plagued other ACO and alternative payment model efforts. Both the AMGA and the American Hospital Association have lobbied for broader access to claims data. Provider comments on alternative payment model design and improvement efforts regularly include requests for better and faster access to that information.

"It's one of the persistent problems. Even the [Medicare shared savings] ACOs have claimed that data is late, data is incomplete, data is lacking," Introcaso said. "And of course with MACRA, this doesn't go away. If you're going to start rewarding on quality performance...you need to do a better job just on claims work."

By Marissa Evans, CQ Roll Call

June 7, 2016—North Carolina Republicans may be celebrating the submission of an application to overhaul the Medicaid program but some medical providers in the state are not buying in just yet.

Republican North Carolina Gov. Pat McCrory signed off on a federal application June 1 that would turn the Medicaid program into managed care, saying that would help beneficiaries "reach their full potential."

"Our proposal provides a North Carolina Medicaid Plan that focuses on patient-centered care and improves health outcomes at more predictable costs," McCrory said.

Under the proposed federal waiver, the Tar Heel State would dismantle the existing primary care management system and create two systems. Provider-led groups would be in charge of Medicaid funds and create their own networks while commercial insurers would administer services to Medicaid beneficiaries across the state.

The waiver application comes months after lawmakers voted in September to move toward a managed care program. The Republican-led legislature has long criticized the federal health law, including Medicaid expansion. Under expansion, the federal government would pay to cover 500,000 low-income North Carolina residents through 2017. By that year, states are responsible for chipping in on the cost until by 2020, they would pay for 10 percent of costs. Thirty-one states and the District of Columbia have broadened Medicaid.

Advocates are disappointed lawmakers are not considering Medicaid expansion this session, said Ciara Zachary, health policy analyst for the North Carolina Justice Center.

For the overhaul plan, Zachary said there are still unknowns with how the managed care regions would be split up, how network adequacy would be guaranteed, and how beneficiaries with more intense health care needs will be treated.

"Because North Carolina has such a strong primary care case management system that's been developed for so many years, people are just wondering is this going to be better than what we have in place," Zachary said.

That program, Community Care North Carolina, or CCNC, serves 1.3 million Medicaid patients and has saved almost $400 million a year, according to a 2015 North Carolina State Auditor report. Providers argue that some of the measures that would be implemented under the managed care transformation could have been done through CCNC.

Ben Money, chief executive officer for the North Carolina Community Health Center Association, said in an interview that providers are most worried about the looming administrative burdens that come with the overhaul. He said if the prepaid health plans have varying billing and claims processes, providers may throw their hands up, choose the simplest one and try to force patients to switch to that plan. The situation could be detrimental for low-income people in the program if the health department does not streamline the billing process, Money said.

"If access were restricted across the state because fewer providers were accepting Medicaid payments we'd have to really ramp up to make sure we could meet the demand," Money said.

While North Carolina may be focused on restructuring the program, the Centers for Medicare and Medicaid Services (CMS) could still broach the idea of Medicaid expansion during negotiations, said Trish Riley, executive director for the National Academy of State Health Policy.

"It'll be interesting to see how the negotiations go," Riley said in an interview. "There's a precedent for CMS negotiating waivers for states that don't expand but that will be the test because uncompensated care would be diminished if they expanded."