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June 3, 2013

Washington Health Policy Week in Review Archive b431f51a-5bb9-479f-bb05-217ed16b4895

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Medicare Solvency Extended but Trustees Warn Against Complacency

By Emily Ethridge, CQ Roll Call

May 31, 2013 -- Medicare trustees said recently that the program's hospital insurance trust fund will be insolvent in 2026, two years later than projected last year, but warned that the extension does not mean the program should remain the same.

In their report, the trustees attributed several signs of hope for Medicare to changes brought about by the 2010 health care law (PL 111-148, PL 111-152), as well as lower health care spending thanks to the sluggish economy.

"The Medicare report demonstrates, once again, the importance of the Affordable Care Act, which has strengthened Medicare's finances by reining in health care costs," said Treasury Secretary Jacob J. Lew, who's also the managing trustee.

But lawmakers and trustees warned that additional legislative action remains necessary to keep the Medicare program sustainable over the long term, and urged stakeholders not to become complacent. Under current law, scheduled hospital insurance fund tax income would cover only 87 percent of estimated expenditures through 2023, decreasing to about 70 percent in 2050.

Robert Reischauer, a trustee, warned that even though he sees reasons for optimism, it would be a mistake to see the two-year extension of solvency as "a significant development."

"Further major legislative initiatives above and beyond the Affordable Care Act will be required," he said.

Lew said that lawmakers would need to work in a bipartisan manner to save the programs.

Leaders on the Senate Finance Committee agreed with the need to take action quickly.

"These numbers can allow us to be optimistic, but they are not a reason for inaction. We are facing a wave of retiring baby boomers. Close to 10,000 people a day qualify for benefits," said Chairman Max Baucus, D-Mont., in a statement.

Ranking Republican Orrin G. Hatch of Utah said in a statement that "these reports shouldn't give anyone any comfort." Hatch added that improving Medicare "is a national imperative."

Indeed, the Medicare trustees issued a "Medicare funding warning" for the seventh straight year, largely because money from the government fund is projected to continue to account for more than 45 percent of Medicare's outlays. By 2035, Medicare costs will be 5.6 percent of the gross domestic product (GDP), up from 3.6 percent of GDP in 2012, they added.

Senior government officials said the two-year extension of the hospital insurance trust fund's solvency primarily was attributable to lower-than-expected health spending in 2012, as well as lower program costs in Medicare Advantage required by the health care law.

The trustees noted that per-beneficiary spending in Medicare grew at a 1.7 percent annual rate from 2010 to 2012 and is expected to continue growing slowly over the next decade. They also said preliminary estimates show that Part B premiums for 2014 are expected to stay the same as 2013, which is $104.90 for the standard monthly premium.

Medicare's total expenditures were $574.2 billion in 2012, up from $549 billion the previous year, according to the report.

Senior government officials noted that the hospital insurance fund's expenditures in 2012 were roughly $3.6 billion lower than expected. The vast majority of that, they said, was due to lower payments in skilled nursing facilities, as well as lower hospital and health system payments.

Reischauer said an important factor in improving Medicare's future is whether private insurance companies will follow the program's lead—so that providers will stay in Medicare, and health care costs come down overall.

"The big question for the future is whether initiatives in the private sector will complement and reinforce, or undermine, the fiscal restraints Medicare is attempting to introduce by health care reforms," said Reischauer.

Health and Human Services Secretary Kathleen Sebelius said she hoped more private insurers would adopt delivery system changes encouraged in the law, such as accountable care organizations and medical homes.

"There's a certain irony in the continued votes to, on one hand, repeal the Affordable Care Act, and on the other to capture the savings that are part of the structure of the Affordable Care Act," she said. "I'm hoping that, as demonstrated, that some of that structure is not only benefiting the public health programs but actually looking at and complementing the private side, there will be a more significant embrace of the framework to really transform the underlying delivery system."

Stakeholders said the trustees' report showed that Medicare's fiscal challenges could be addressed without drastically changing the program as congressional Republicans have proposed.

"Today's release of the 2013 Medicare Trustees Report confirms what we already know to be true: Medicare is not in crisis," said Medicare Rights Center President Joe Baker, in a statement.

AARP Executive Vice President Nancy LeaMond suggested improving care coordination, limiting high drug prices and reducing unnecessary services as ways to save Medicare money.

"Too many people in Washington think the only way to address Medicare's financial challenges is to cut benefits or ask seniors to pay more. But that's not the answer," she said in a statement.

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Exchange Rates: Feel-Good Story for the White House—or Not So Rosy?

By John Reichard, CQ HealthBeat Editor

May 29, 2013 -- Buoyed by last week's news that premiums in California's insurance exchange will be lower than expected, health care law supporters are seizing on the story line that predictions of rate shock under the overhaul are not coming true.

While word on the premiums insurers plan to charge on the federal exchange that will serve Georgia residents ties in with that story line, the proposed rate increases for the Rhode Island marketplace suggest that premiums charged by insurers under the health care law may be a mixed bag.

Seven insurers have filed to offer individual coverage on the federal exchange in Georgia, according to a report by Georgia Health News, which describes itself as a nonprofit, independent news organization unaffiliated with any political party or partisan interest.

Those insurers include Aetna, Alliant, Blue Cross and Blue Shield of Georgia, Coventry, Humana, Kaiser, and Peach State.

Based on information obtained by Georgia Health News under a Georgia open records law request filed with the state's insurance department, "it does not appear that rate shock is a major issue in Georgia," says William Custer, director of the Center for Health Services Research at Georgia State University. Custer is a former director of research at the Employee Benefits Research Institute and an economist with the American Medical Association.

Premiums for someone in his or her 40's buying individual coverage on the exchange will be comparable to, or even lower than, those charged on average in Georgia's small group market, Custer suggested. "Young individuals may pay more in the individual market then they do now, but less than they would for group coverage."

But what if the comparison is not between individual plans and the small-group market, but year-to-year between 2013 and 2014 for individual coverage? Industry and consulting-firm studies have predicted huge rate increases under that scenario, saying benefits will be more comprehensive and that the health care law imposes various fees that will be passed along to consumers.

Custer says he has very limited data on that point, and it comes from the Kaiser Permanente high-deductible plan his son has. That plan now offers coverage that appears to be comparable in scope to a plan Kaiser will offer on the exchange. In that case, premiums will rise by 10 percent, much less than predictions of rate shock, Custer said.

Meanwhile, in Rhode Island, four insurers have filed to offer coverage on the exchange in that state, says Patrick Tigue, a policy associate in the office of the state's insurance commissioner. Those insurers have requested unusually large rate increases for 2014, he says. For example, the Rhode Island Blue Cross Blue Shield plan has requested an 18 percent hike and a 15 percent hike in the small-group market. United HealthGroup wants to hike premiums by 13 percent for a PPO in the small-group market and 18 percent for an HMO. Tufts Health Plan wants rate increases of 10 percent and 11 percent respectively for those types of plans.

Proposed double-digit hikes suggest that the rate picture won't be as rosy in Rhode Island's exchange, but even there it's too soon to say that the Obama administration and supporters of the health care law (PL 111-148, PL 111-152) won't ultimately be happy with the rate picture in Rhode Island.

Tigue says he wouldn't use the term "sticker shock" to describe the impending premium increases in the state. "We have a very robust review process" for rates, he says. Rhode Island is among the states that have the power to reject proposed increases, he notes. "We don't put a lot of stock in what they've estimated" as the rates they need, he added. Rate review has "always resulted in a significant decrease."

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Greater Competition on Tap in Health Exchanges, Obama Administration Says

By Emily Ethridge, CQ Roll Call

May 30, 2013 -- Consumers in the new state health insurance marketplaces overseen by the federal government will see increased competition and choice when insurance plans launch in 2014, the White House said in a recent memo.

Those marketplaces will offer consumers on the individual market much greater choice than they currently have, the memo said, noting that 120 issuers already have applied to offer health plans in the exchanges run by the Department of Health and Human Services (HHS).

"While these data are not final, the early signs are promising and demonstrate a significant increase in competition and an array of options for consumers everywhere," the memo stated.

The Obama administration memo came at a time when some Democrats have expressed concerns over implementation of the health care law (PL 111-148, PL 111-152) and whether the marketplaces will be ready to function. Open enrollment in the insurance exchanges begins Oct. 1, with coverage beginning Jan. 1, 2014.

Senate Finance Committee Chairman Max Baucus, D-Mont., famously said the law could be a "train wreck" if not implemented correctly.
Meanwhile, Republicans have shared reports and studies that warn that health care premiums, especially on the individual market, will significantly increase once the law is fully in place.

In 2014, HHS will run the exchanges in 19 states, while 16 states plus the District of Columbia will run their own. In 15 states, the federal government and state governments will work together on the exchanges.

The White House memo did not address competition in state-run or partnership exchanges. It also did not discuss specific premium rates, but it noted that most insurance plans will have much more competition next year in the individual market.

Currently, most people expected to enroll in state, partnership or federal exchanges live in states with limited health choices, the memo said. The administration found that in 29 states, more than 50 percent of all individual market enrollees are covered by one insurer, while in only five states were a majority of enrollees covered by three or more insurers.

The memo also noted that one out of every four insurance companies proposing to offer coverage in federal exchanges is a new participant in the individual market, and about 75 percent of states with HHS-run exchanges will see at least one new insurance company in the exchanges.

HHS plans to post premiums for the states where it is running the marketplaces in September, once the final contracts are signed, but states running their own marketplaces can post initial rate filings or approvals before then.

So far, it's a mixed picture when it comes to rates in the state-run exchanges. California recently announced that premiums in its individual market exchange would be lower than expected, but in Rhode Island, four insurers who filed to offer coverage requested larger rate increases.

HHS also is reviewing more than 200 proposed multistate health plan options, which will offer similar coverage across state lines, the memo said. Multistate plans will be offered in at least 31 states in 2014, with coverage expanding to all states and the district by 2017.

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State Medicaid Leaders See Challenges in Covering the Dual Eligibles

By Rebecca Adams, CQ HealthBeat Associate Editor

May 30, 2013 -- State Medicaid officials last week questioned whether the national experiment to find a better way to coordinate care for people eligible for Medicare and Medicaid will be worth the effort and time the pilot program is taking.

The state leaders also talked about their concerns over implementing the health care law and dealing with a shortage of primary care doctors willing to accept Medicaid patients. The handful of Medicaid directors and other officials—from the District of Columbia, Kansas, Maine, Massachusetts and West Virginia—spoke about their concerns at the National Medicaid Congress in Washington.

Most of the state Medicaid officials said more needs to be done to coordinate care for beneficiaries who receive both Medicare and Medicaid—the group of people known as "dual eligibles." But several said they were relieved that federal officials had denied their requests to be part of a national experiment to move those patients into managed care plans.

The managed care demonstration project was announced in 2011. Initially, 26 states asked to participate. So far, six have been approved.
Massachusetts is the first state approved to start its demonstration. Robin Callahan, Massachusetts deputy Medicaid director for policy and programs, told the audience that in the two decades she has been involved in Medicaid policy, on the scale of challenges, the demonstration is "very, very high up there.

"We hope we can pull this off but as you probably know, these duals demos have been difficult to launch," she said. The challenges include negotiating the details, including rates, with all of the providers; ensuring adequate benefits, including mental health services; and anticipating the needs of patients who need complex care.

But the officials also said the current fee-for-service system for the 10.2 million people who receive coverage under Medicare and Medicaid needs fixing, and more coordinated care is necessary.

Fee-for-service, or FFS, should be known as "fend for self," said Nancy Atkins, the Medicaid commissioner in West Virginia.

Izanne Leonard-Haak, a former Medicaid official in Pennsylvania, said that the state had a tortured history of shifting dually eligible patients into managed care and back out again. In 1997, the state tried managed care for dually eligible people but in decided in 2006, as the Medicare Part D program was being implemented, that the structure was too complicated.

"Pennsylvania is still struggling with where to go with our duals," she said.

Some officials said that states should not count on saving a lot of money by coordinating care for the dually eligible patients.

"Sometimes it's going to cost a little more on the front end before you see a decrease in avoidable hospitalizations and so forth," said Linda Elam, Medicaid deputy director in the District of Columbia.

Atkins said West Virginia had not been approved by the Centers for Medicare and Medicaid Services (CMS) to participate.

"Actually I'm glad because when I talk to some of the other Medicaid directors, it's a very heavy lift," she said. Kansas Director of Medicaid Services Susan Mosier also said it would have been too much work if her state's application had been accepted, in part because of the demands of scrambling to finish implementing the health care law (PL 111-148, PL 111-152).

Callahan said that in Massachusetts, the state whose health program the federal overhaul is modeled on, local officials have fewer changes to make than some states. But they are still concerned about implementation, particularly about whether the rules and updates they've put in place to implement the law will pass muster with CMS officials who will decide whether to approve them.

"We're not really sure all those rules are finally going to be accepted because many of them are a matter of our interpretation," she said. "I think we're kind of holding our breath that there won't be any major hiccups" or changes required by CMS, because "certain things will be pretty hard for us to change quickly."

Even after states start the process of enrolling new beneficiaries in Medicaid and the new health insurance marketplaces starting in October, some state officials are worried that the biggest problems could come months later when patients start trying to get care.
One big issue in most states is the lack of primary care providers who will agree to care for Medicaid patients.

Washington, D.C., officials decided to increase pay for primary care doctors in April 2009, said Elam. The government increased Medicaid payments to be the same as in Medicare, compared to previous rates that were 60 percent of Medicare on average. In later years, the government had to decrease the rates to 80 percent of Medicare rates because of the recession, she said.

"We didn't see a great influx of providers with that increase," she said.

The health care law called for similar changes in 2013 and 2014 for Medicaid primary care providers, although the higher rates have not yet been implemented in most states.

"I don't know how that translates into the national experience, but we did not see an influx," said Elam.

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Medicaid Pay Increase Still Missing in Action in Most Places

By Rebecca Adams, CQ HealthBeat Associate Editor

May 28, 2013 -- The authors of the 2010 health care law were so worried about a potential shortage of primary care physicians that they included a sweetener, a pay raise that was supposed to start Jan. 1, designed to persuade providers to treat Medicaid patients. But most doctors are still waiting to see the money.

The law was designed to boost Medicaid payments in 2013 and 2014. With 2013 nearly half over, physicians' groups blame state and federal delays, as well as confusion among doctors, for the slow start.

If the goal was to convince physicians that Medicaid can be a simple and profitable business, the late takeoff may be having the opposite effect.

"It's disappointing, for sure, that Medicaid wasn't ready to go with this on Jan. 1," said Charles Cutler, a Pennsylvania internist who is chair of the board of regents of the Association of American Physicians.

The health care law (PL 111-148, PL 111-152) requires that in 2013 and 2014, primary care rates for physicians who treat Medicaid patients be the same as Medicare rates. In most states, Medicaid payments are significantly lower than those in Medicare, the federal program for the elderly and people with disabilities.

To implement the payment hike, state Medicaid officials must file a state plan amendment with the Centers for Medicare and Medicaid Services (CMS). CMS officials gave states until March 31 to send in their plans. Federal officials can take up to 90 days to review and approve the applications. After that, before doctors can get the higher reimbursements, they must submit forms attesting that they are eligible for the pay boost.

So far, federal reviewers have approved 17 state plan amendments, a CMS official said. The rest of the state reviews are supposed to be completed by the end of June.

In four states—Florida, Massachusetts, Michigan and Nevada—physicians have started getting higher payments, according to a coalition of seven physicians' associations that are trying to expedite implementation.

One state, Alaska, was allowed to keep its current Medicaid rates because they were already higher than Medicare reimbursements.
In some states, physicians may get the higher payments retroactively. But that's not true everywhere.

Each state can set its own deadline for physicians to send in their eligibility forms in order to qualify for retroactive raises. Those deadlines have passed in many states, and physicians there can only start getting the higher Medicaid reimbursements after they send in their eligibility forms.

In some other areas—including Delaware, Hawaii, Illinois, New Hampshire and New York—doctors could still get retroactive payments going back to January as long as they send in their forms by deadlines that will kick in this summer, according to the physicians' groups. For example, in Florida, physicians who fill out their forms by May 31 can still get back payments.

Physicians' groups say the cascade of delays began when federal officials waited until November 2012 to release a final rule explaining how the pay increase would work. Some of the details in that final regulation were different from the proposed rule. That led to confusion among state officials and doctors about how the increase would be implemented.

Officials in many states took months to sort through the requirements and send their plans to federal regulators.

One underlying question about the rate increase that some analysts have asked since it was first proposed is what would happen after it expires in 2014.

Now, physicians' groups are using the delays as further ammunition in their efforts to extend it beyond its sunset date. Such an extension would require congressional legislation, something that in this fiscal climate could prove difficult.

"Certainly, medical organizations will lobby for an extension or to make this permanent," said Cutler.

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Wellness Programs Could Factor into Employer Future Insurance Decisions, Expert Says

By Melissa Attias, CQ Roll Call

May 31, 2013 -- The success of workplace wellness programs could have an impact on whether employers decide to move their workers into the new health insurance exchanges, or marketplaces, an official from CVS Caremark suggested at an event last week. 

Troy Brennan, executive vice president and chief medical officer of CVS Caremark, said he thinks there is a big chance that many employers will be considering how they can use the exchanges in 2017 or 2018. Workplace wellness programs factor into that picture, Brennan argued, "so it's a really critical time" to examine them. "The reason why you offer workplace-based health insurance is because you think you're going to be able to promote better health in your workforce, and as a result of that, have a better operating company," he said. "If these wellness programs don't work or if they turn out to be sort of bankrupt or maybe they're just targeting the wrong people, then I think there's less and less of an argument to maintain employer-based insurance and a lot of employers are going to be looking at sort of, 'what should we be doing with the exchanges?'"

Brennan spoke at an event focused on the effectiveness of wellness workplace programs. It was sponsored by the Alliance for Health Reform and The Robert Wood Johnson Foundation. Earlier this week, the Obama administration released a final rule to implement a part of the health care overhaul that addresses these initiatives.

But while the programs have been increasing in popularity, several panelists spoke about the need for additional research on what they are accomplishing.

Mary Grealy, president of the Healthcare Leadership Council, an industry group, said she thinks "it's very fair to say that we are still very much in the learning stages." She noted that the RAND Corporation reported a scarcity of peer-reviewed studies on the efficacy of these programs and said that some employers are funding them without collecting metrics on the return on their investment.

At the same time, she said a survey of her group's members found that a key factor in the success of wellness programs is the engagement and support of senior leadership. Approaches that factor in the unique characteristics of a particular workforce also bring greater success, she said. And she named access to healthier foods, opportunities and incentives for physical activity, and information on how to lead a healthier lifestyle as unifying elements of programs that appear to be effective.

"I think there is much more that we need to learn about these programs and it's hoped that more employers will begin tracking their specific health and economic gains so we can really have that peer review proof that I think we're all looking for," she said.

Jill Horwitz, a law professor at the University of California, Los Angeles, also discussed an article she coauthored in Health Affairs on how wellness programs that are based on meeting a health standard save money. Under the health care law (PL 111-148, PL 111-152), the amount of rewards and penalties that can be tied to those programs can be up to 30 percent of the total cost of coverage starting in 2014 compared to 20 percent now. And under the final rule, the percentage jumps to 50 percent for programs that address tobacco use.

While there are piles of studies that show correlations and associations with incentives and health behaviors and spending, there is very scant evidence that incentives actually cause behavioral changes and reduce spending," Horwitz said.

Meanwhile, Karin Feldman of the AFL-CIO said she was concerned that those health-contingent programs risk introducing underwriting into the workplace. Under the health care law, she noted, insurers in the individual and small group market are limited on what factors they can use to vary premiums next year.

She also emphasized that under the new health law percentages, the amount of money involved can be large since the base is the total cost of coverage, not just the worker's contribution.

"The financial exposure is pretty tremendous," she said.

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