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June 6, 2011

Washington Health Policy Week in Review Archive ccaff69b-60f9-4861-9d7a-e9d8e1bad6c5

Newsletter Article


Medicare Will Release Data So Consumers Can Get More Accurate Rankings of Providers

By Rebecca Adams, CQ HealthBeat Associate Editor

Medicare officials released a proposed rule that would make claims data available that analysts can use to evaluate the performance of doctors, hospitals, and other providers.

For years, those who measure the quality of providers' care or rate their performance have been frustrated because they haven't been able to get Medicare data for their reports. In the past, they've relied on information from private health plans. Under the proposed rule, groups who prepare these analyses would be able to combine Medicare information with private insurance claims data and provide more complete public reports about which physicians and hospitals provide the best care.

Over the past decade, a wide range of groups have begun evaluating providers' performance in order to help consumers, employers and others choose the most cost-effective and highest-quality providers. Some groups that might be interested in using the Medicare data in their reports include the Pacific Business Group on Health, the Indiana Health Information Exchange, and the Robert Wood Johnson's Aligning Forces for Quality initiative.

"Performance reports that include Medicare data will result in higher quality and more cost effective care," said Donald M. Berwick, administrator of the Centers for Medicare and Medicaid. "And making our health care system more transparent promotes competition and drives costs down."

Niall Brennan, acting director in the Policy and Data Analysis Group in the CMS Center for Strategic Planning, said in an interview that the proposal fits in with the administration's overall aim of improving the quality of health care for seniors. Under Berwick, CMS officials have launched several initiatives in recent months that would encourage hospital officials or other providers to measure the quality of the care they are offering.

Brennan, who helped develop the rule, noted that the proposal would allow providers a chance to see the information before it is published and request corrections. CMS officials hope that the new policies and access to Medicare data will lead to more trustworthy information about providers that consumers and others can rely on.

"Making Medicare data available will make it easier to make smart decisions about health care," Brennan said.

The rule includes strict privacy and security requirements in order to reduce the risk that patients' personal health information could be exposed.

The Business Roundtable responded to the proposal with a statement calling the rule "a key step in addressing rising health care costs for all Americans and marks another positive milestone toward ensuring consumers have timely and accurate information on health care costs and quality."

"Business Roundtable CEOs have long called for the release of Medicare claims data so all consumers can know how much their health care costs and the quality of their providers," said the statement. "The actions by CMS today, along with congressional efforts and legal actions to obtain the data, are all critical. There is no reason why government data should not be available to ensure consumers have access to actionable and accurate information for their health care choices. In fact, it is long overdue."

The proposed regulation is expected to be published in the Federal Register on June 8 and will have a 60-day comment period.

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Federal Officials Seek Comments on How to Improve Care for Dually Eligible Patients

By Rebecca Adams, CQ HealthBeat Associate Editor

The Centers for Medicare and Medicaid Services is looking for ideas on how to better align and coordinate benefits for people who are eligible for both of the entitlement programs.

Such patients, known as dual eligibles, are some of the most expensive to cover because many of them have multiple chronic conditions. The 2010 health care law (PL 111-148, PL 111-152) created a new office within CMS, the Federal Coordinated Health Care Office, to try to find ways to make the two programs work together better. The goal is to eliminate waste, improve care and save money.

Melanie Bella, who leads the office for the 9.2 million dual eligibles, said that officials hope to open a technical resource center for all states in the near future to help state officials figure out ways to better align the care of Medicaid programs with Medicare. She also encouraged the crowd at an Alliance for Health Reform briefing to submit comments on ways to better coordinate Medicare and Medicaid services for patients in six areas: coordinated care, fee-for-service benefits, prescription drugs, cost-sharing requirements, enrollment and appeals mechanisms. Those comments are due July 11.

Bella's office had opened up the opportunity for comments on May 16 with a request for information. In the request, CMS officials provided a chart summarizing how particular benefits are covered for the dual eligibles through Medicare and Medicaid as a guide for people who want to suggest ways to improve the coordination of those benefits. The government is asking those commenting to focus on six questions as they think through ways to update specific benefits:

  • How can the Medicare and Medicaid programs better ensure dual eligible individuals are provided full access to the program benefits?
  • What steps can CMS take to simplify the processes for dual eligible individuals to access the items and services guaranteed under the Medicare and Medicaid programs?
  • Are there additional opportunities for CMS to eliminate regulatory conflicts between the rules under the Medicare and Medicaid programs?
  • How can CMS best work to improve care continuity and ensure safe and effective care transitions for dual eligible beneficiaries?
  • How can CMS work to eliminate cost-shifting between the Medicare and Medicaid programs? How about between related health care providers?

CMS Request for Comment (pdf)

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Georgia's Governor Launches Advisory Committee on Health Exchange

By Jane Norman, CQ HealthBeat Associate Editor

Saying that Georgia has to prepare for the full implementation of the health care law, Gov. Nathan Deal signed an executive order establishing an advisory committee to study whether the state should set up a health insurance exchange.

Georgia is a party to the 26-state lawsuit filed against the overhaul law (PL 111-148, PL 111-152). Deal, a Republican and former House member, has been under pressure from the tea party not to implement any part of the law even though the state has accepted a federal grant for exchange planning.

Earlier this year, Deal and Republicans shelved an exchange planning bill pending in the legislature.

Deal's order creates the Georgia Health Insurance Exchange Advisory Committee, which will include a member of the tea party as well as state legislators, business leaders, health insurance industry representatives and state officials. The committee is directed to "focus on free market principles" in its recommendations, which are due in preliminary form by Sept. 15.

"I want Georgia to have time to thoroughly study this issue as we wait for the judicial process to play out," said Deal in a statement issued through his office.

But he indicated that if the law is found constitutional, he favors an exchange run by the state. Under the law, the federal government will step in and establish exchanges in states that don't do so.

"I want to engage Georgians about how we can expand access to health care insurance while lowering the burdensome costs on our state's families," Deal said. "Georgians don't want more federal 'solutions,' and the best way to fight back right now is to manufacture a Georgia solution."

He added, "It is my hope that this committee will construct the appropriate avenues for our state to implement our own exchange, based on delivering free-market solutions for increasing the access and affordability of health insurance."

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Brokers, Agents Push for Review of 'Broker Rule,' Supporters Fight Back

By Jane Norman, CQ Healthbeat Associate Editor

Congress is under pressure from insurance brokers and agents to alter a provision in the health care overhaul to protect the income and jobs of those who sell insurance.

Consumer groups and many of the law's supporters are fighting back, pointing to studies suggesting the situation is not as dire nor as clear cut as the industry portrays. But pressure from a powerhouse of small businesses and heightened anxiety over the economy has captured the attention of House lawmakers and state insurance commissioners. A panel of state regulators will review a detailed internal report June 7 on the requirement known as the "broker rule."

The drive to repeal the provision has many of the markings of the successful effort in April to roll back a controversial tax reporting requirement in the health care law that attracted the ire of small businesses. The new controversy stems from a section of the law (PL 111-148, PL 111-152) intended to rein in rising premium costs. Beginning Jan. 1, insurers in the individual and small-group markets must devote at least 80 percent of the revenue earned from premiums to health care services and quality improvement. If the threshold is not met, insurers must issue policyholders rebates.

The rub is: Broker commissions are not considered a service or a quality improvement cost. The Health and Human Services Department said in a rule in December those fees are administrative expenses just as insurer salaries, profits and marketing expenses.

Janet Trautwein, executive vice president and CEO of the National Association of Health Underwriters, told a House Energy and Commerce panel June 2 that independent agents, who are members of her group, face a "desperate economic situation" that is causing "real people to suffer harm."

And Randi Reichel, an America's Health Insurance Plans lawyer, predicted individuals and small businesses will be hurt because fewer brokers and agents will be available to guide such customers through a complex system when seeking a health plan.

Brokers say, as insurers struggle to meet new federal rules, they are cutting broker fees to trim administrative expenses. The Bureau of Labor Statistics makes it clear that this is not an insignificant group, saying there were more than 434,000 brokers in 2008.

Republican Mike Rogers of Michigan and Democrat John Barrow of Georgia have introduced a bill (HR 1206) to remove brokers' commissions and fees from administrative costs. The measure has the support of 82 lawmakers, including 13 Democrats.

Liberal backers of the overhaul, such as Peter A. DeFazio of Oregon and Robert E. Andrews of New Jersey, are among those suggesting bipartisan appeal to changing the law.

Among the most ardent opponents of altering the broker rule is Sen. John D. Rockefeller IV, D-W.Va., an industry foe, who says insurers are eager to eliminate as many "administrative" expenses as possible to avoid rebates. Rockefeller produced a report showing that consumer rebates would be $1 billion less if the health law had been in effect in 2010 and broker fees were not considered administrative expenses.

A May 13 Congressional Research Service report found "preliminary evidence" that commissions are being reduced, but no clear signs that consumer access to health insurance has been impacted.

The report also quotes a recent investor note from equities analysts at Citigroup Global Markets Inc. that says even though insurers have halved commissions to about 10 percent for the first year of a policy "brokers are still receiving a significant amount of compensation for the duties they are performing." The analysts added that there's "no doubt" incomes have been reduced, but "brokers and agents benefitted for many years from rising premium rates, and that trend isn't sustainable."

Also involved in the battle is the influential National Association of Insurance Commissioners, state regulators sensitive to the demands of brokers with whom they have longtime regulatory relationships. NAIC members put off a decision at their March meeting on whether to endorse the Rogers-Barrow bill, asking instead for an internal report, which the group will consider.

The draft report is inconclusive, finding in 2011, "a significant number of companies have reduced commission levels, particularly in the individual market," but a "significant number" did not. The report also found consumers haven't had trouble finding agents in states with medical payout requirements similar to the federal health care law.

No House committee has scheduled action on the Rogers-Barrow bill, though aides expect a markup and are rounding up bipartisan support in the Senate. The bill's future may well depend on state insurance commissioners. Among those waiting to stake out a position is Sen. Ben Nelson, a Nebraska Democrat familiar with the issue: He's a former state insurance director, insurance executive and NAIC chief of staff.

The senator is waiting for NAIC to devise a state-based solution before he decides whether to support the Rogers-Barrow bill, an aide said. Nelson contends, though, that "agents and brokers need to be part of the equation.

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Replacing Medicare's Geographic Payment Adjustments a Tough Slog

By John Reichard, CQ HealthBeat Editor

An Institute of Medicine panel reported that Medicare's system of geographic payment adjustments is so riddled with exceptions and flawed data that it should be replaced.

That's certain to be a tall order at best.

Hospital officials have many complaints about the current system, but in many instances they have negotiated changes to boost their payment levels. When one hospital gets more money because of a geographic adjustment, others will get less, creating winners and losers and complicating efforts to change the current system.

Forty percent of eligible hospitals, or about 700 facilities, have secured exceptions to the way they are classified for purposes of adjusting Medicare payments to account for what they pay their employees. The exceptions mean Medicare reimburses a hospital for labor costs according to a wage index from a labor market outside of the one in which the hospital buildings are located.

"One of the problems with the current system is that there are lots of what we call wage cliffs," said Duke University Professor Frank Sloan, who chaired the Institute of Medicine panel that prepared the report. The term refers to neighboring areas that have a large difference in wage index values, or in other words, large differences in how much Medicare pays to account for local labor costs.

The panel's report said where such significant differences exist "adjustments should take into account commuting patterns of health care workers. The committee believes that smoothing the boundaries will decrease the need for reclassification," a summary of the report said.

"An example of a wage cliff is found in upstate New York," the 246-page report said. "Northern Dutchess Hospital in Rhinebeck, N.Y., and Kingston Hospital, in Kingston, N.Y., are four miles apart, and although their close geographic proximity should mean that they compete against each other for labor, they have different wage indexes because they are classified as operating in different labor markets. The index for Northern Dutchess Hospital is 1.14, whereas the index for Kingston Hospital is 0.91."

The wage index is a powerful tool for moving lots of Medicare money around. That means that Northern Dutchess gets paid much more by Medicare to adjust for its labor costs than Kingston does, all other factors being equal.

The Institute of Medicine panel said that geographic payment adjustments should take into account commuting patterns of health care workers. With both hospitals trying to attract a pool of labor from the same area, accounting for where workers live and work could lessen differences in wage index values and decrease the need for geographic reclassifications, the report suggested.

The report also calls for the use of data from the Bureau of Labor Statistics (BLS) in developing wage adjustments for hospitals and doctors. The report says that the BLS data is more accurate and independent. Now, the wage indices used to make geographic adjustments in Medicare payments to hospitals and doctors are based on hospital cost data and physician surveys, among other sources.

The report also says wage indices should factor in all kinds of health care workers. Currently, differences in regional wages are based on data for registered nurses, licensed practical nurses, health technicians, and administrative staff only, failing to reflect the full workforce in many hospitals and physician practices, the report said.

Congress would have to pass legislation in order for Medicare to switch to using BLS data. "That's always a very heavy lift depending on the context of how this happens," said the American Hospital Association's senior vice president for policy, Linda Fishman.

Fishman said there are "serious shortcomings" in BLS data. For one thing, the wage data isn't specific to hospitals, she said. Also, the data excludes the cost of benefits paid to workers and it can't be verified because "BLS has a strict confidentiality policy."

"The AHA is not going to be endorsing the use of BLS data," she declared.

Federation of American Hospitals President Chip Kahn said the BLS recommendation is a non-starter. He said the Institute of Medicine panel deserves credit for tackling "one of the most vexing and complex areas in Medicare." But "I think the cure could be worse than the disease" The current system at least is transparent and allows a hospital to vet the data on which its wage index value is based, he said. "I am hopeful that in their final report they can change direction," Kahn said. The Institute of Medicine is scheduled to submit additional reports on the issue of geographic payment adjustments.

Fishman said the idea of smoothing payments in wage cliff areas "deserves some further study." But the AHA backs an exceptions process whether there is the smoothing of payments or not, she said.

Fishman noted that the Centers for Medicare and Medicaid Services is due to file a report with Congress by the end of the year on the wage indices it uses to vary payments geographically. "I think the discussion about the issue will continue for quite some time," she said.

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CMS Announces Rule on Preventable Conditions in Medicaid

By Jane Norman, CQ HealthBeat Associate Editor

States will be expected to work harder on reducing or eliminating preventable conditions or injuries in their Medicaid programs under a final rule announced by the Centers for Medicare and Medicaid Services.

For some time, Medicare provider payments have been reduced or banned if, in certain cases, a patient's condition is considered reasonably preventable. It's part of a drive to increase quality in health care. Now this concept will be extended to Medicaid.

For example, Medicare will not pay a provider for "never events" like a surgery when a doctor erroneously performs a correct procedure but on the wrong body part, or a correct procedure but on the wrong patient. And Medicare won't cover any related hospitalizations.

Payments may be reduced for hospital-acquired conditions such as foreign objects left in patients after surgery, falls or catheter-associated urinary tract infections.

Under the health care law (PL 111-148, PL 111-152), the curb on payments for preventable conditions must also apply to Medicaid, the federal-state partnership to provide care for low-income Americans. States won't be allowed to pay providers including hospitals, doctors and other health care organizations if patients develop conditions that are deemed reasonably preventable.

Medicare's list of preventable conditions will be used as the basis for the Medicaid rule, though the regulation acknowledges that not all of them can be directly transferred to a younger Medicaid population. "While we have established Medicare as a baseline, we understand that states will, through their payment policies, appropriately address these differences," says the rule.

Donald M. Berwick, CMS administrator, said in a conference call with reporters that states will be given the flexibility to identify additional preventable conditions beyond a CMS list. He called the rule "an important step toward the health care system we deserve."

Cindy Mann, deputy administrator and head of Medicaid, said states are looking for ways to improve quality while reducing costs and some have already begun cutting back on payments to hospitals for preventable conditions. This rule will affect all states, she said.

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