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June 9, 2014

Washington Health Policy Week in Review Archive 221fb22e-dd84-4bbf-9b7b-96bf85e740c6

Newsletter Article


Medicare Releases Trove of Claims Data Showing Regional Variations

By John Reichard, CQ HealthBeat Editor

June 2, 2014 -- Medicare officials have released volumes of 2012 claims data featuring interactive "dashboards" permitting analysts to compare how per capita spending varies down to the county level and pinpointing the sharply varying burden of chronic diseases in the Medicare population across different parts of the United States.

The geographic variation dashboard shows that per capita Medicare spending in Florida's Miami-Dade County totaled $14,905 in 2012. But at the southern tip of the state, in Monroe County, which includes the Florida Keys, it stood at $7,678. Statewide, per capita Medicare costs averaged $10,728.

Thousands of miles away, in the northwestern United States, per capita Medicare spending in Oregon totaled $6,402 in 2012. In the geographic center of the state, Crook County, per capita spending a averaged $5,715.

The data also breaks down spending at the county level by categories such as inpatient, post-acute care, hospice, physician/outpatient department/tests/imaging, durable medical equipment, part B drugs and outpatient dialysis facility spending.

In Miami Dade, post-acute care spending averaged $5,432 or 142 percent more than the state average of $2,206. In Monroe County, post-acute care spending per capita totaled $1,162, or 47 percent below the state average.

In Oregon, Medicare per capita spending in 2012 totaled just $6,402 in 2012. Post-acute care spending per capita in Crook County added up to $491.

The figures are "standardized," meaning they adjust for geographic differences in how much Medicare pays for a particular service.

The sharp variations illustrate differences in the health status of Medicare beneficiaries in different states and in different counties within states. They also offer leads for additional studies examining how differences in treatment approaches contribute to spending variations.

The chronic disease dashboard shows that Alaska and Wyoming bore the lightest burden of chronic disease, while Florida and New Jersey had the heaviest.

Among beneficiaries with six or more chronic conditions, prevalence rates were lowest in Alaska and Wyoming at 7 percent, while in Florida and New Jersey 18 percent of Medicare beneficiaries had six or more chronic conditions.

In that population, the rate of readmissions to the hospital was lowest in Utah at 19 percent and highest in Washington, D.C., at 31 percent. The number of emergency department visits per beneficiary was lowest in New York and Florida, at 1.6 on average in the group with multiple chronic conditions, and highest in Washington, DC at 2.7. And Medicare spending per beneficiary with six or more chronic conditions was lowest in Hawaii at $24,086 and highest in Maryland, Washington, D.C. and Louisiana at over $37,000.

The Department of Health and Human Services also said the data can be used to examine the burden of different types of chronic diseases at the county level.

"These public data resources provide a better understanding of Medicare utilization, the burden of chronic conditions among beneficiaries and the implications for our health care system and how this varies by where beneficiaries are located," said Bryan Spivak, HHS chief technology officer in a news release.

The data and research tools were unveiled last week to a Washington, D.C. audience of some 2,000 entrepreneurs, investors, researchers and others at the annual HHS "Datapalooza." The department hopes to spur software development in the private sector to improve the efficiency and quality of care.

The "big data" trend has already featured the release of Medicare physician billing figures that helped identify the highest billing doctors in Medicare and the sometimes questionable use by physicians of high priced drugs and relatively unorthodox procedures.

The cornucopia of claims analysis also included the first annual update of Medicare hospital charges comparing the average amounts billed for various types of hospital services.

The data cover the 100 most common types of Medicare inpatient stays at over 3,000 hospitals in all 50 states. Now that two years of data are available, researchers were able to show that average charges for back problems rose 9 percent from $23,000 in 2011 to $25,000 in 2012 but the total number of discharges from the hospital for the condition dropped by nearly 7,000.

A "research cohort estimate tool" permits estimates of the number of Medicare enrollees with certain health conditions, HHS said. Before the data conference ends, the HHS health IT coordinator will announce the winners of two "data challenges," including software to identify which doctor in a particular zip code does the most cardiovascular procedures, for example.

Separately, a new "openFDA" initiative was unveiled recently to ease access to big new data sets. Developers may develop software making it easier for consumers to track recalls of drugs and foods.

OpenFDA starts with a pilot program that includes "millions of reports of drug adverse events and medication errors submitted to the FDA from 2004 to 2013," HHS said. An expansion at some point the future will include product labeling as well as recalls.

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2012 Medicare Data Shows Wide Swings in Hospital Charges

By John Reichard, CQ HealthBeat Editor

June 2, 2014 -- Although hospital charges for the most common inpatient procedures didn't spike in 2012, there were wide geographic variations in the prices set for the same procedure even within the same markets.

Federal officials have released a second installment of data reflecting what hospitals charge for the 100 most common Medicare inpatient stays, following up on last year's release of 2011 data.

Charges rose in 2012 but by less than 5 percent for most of the procedures studied, according to a fact sheet issued by the Centers for Medicare and Medicaid Services (CMS). Charges for services to treat chest pain saw the largest increase, growing by almost 10 percent.

The CMS figures are a de facto sticker price for hospital care. Just as in car sales, few buyers actually pay that price because they can often negotiate a better deal. The bigger the payer, the better the deal; thus Medicare and Blue Cross Shield plans pay substantially less than the sticker price. But there are exceptions. In some instances, the uninsured, with no individual negotiating power, have had to pay posted prices.

Another area of increase was for a payment category called "circulatory disorders except acute myocardial infarction with cardiac catheter and major complications or comorbidities." Nationally, charges rose 6 percent from $61,7000 to $65,600, according to the analysis of data for some 3,000 hospitals. In Manhattan, average charges increased from $72,500 to $87,100—an increase of 20 percent, the CMS document noted. Three of the 10 hospitals in Manhattan largely accounted for that jump.

More dramatic than price changes were price disparities. Average inpatient charges for services associated with joint replacement ranged from a low of $15,901 in Baltimore to a maximum of $239,138 in Los Angeles. The national average was $50,132.

Swings were observed within the same city. So in Newark, New Jersey, treatment for heart failure ranged from $32,750 to $142,000.

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Study Sheds Light on Insurance Increases Before Health Care Law

By Rebecca Adams, CQ HealthBeat Associate Editor

June 5, 2014 -- In 2010, the year that the health care law passed, insurance premium rate increases for individual insurance ranged from 3 percent in Idaho to 21.8 percent in Nebraska, according to a recent study from The Commonwealth Fund.

The report is by Jonathan Gruber of the Massachusetts Institute of Technology, who has advised the Department of Health and Human Services on implementation of the law (PL 111-148, PL 111-152).

Gruber analyzed data from the three years before the law passed in order to provide context about the state of the individual health insurance market.

Health insurance rates for people buying coverage for themselves grew an average of 10 percent or more a year during those three years, Gruber found.

In 2008, rate increases ranged from 2.8 percent in Iowa to 14.7 percent in Wisconsin, according to Gruber's analysis. In 2009, increases ranged from 4.1 percent in New Jersey to 20.1 percent in Connecticut.

"This report provides a baseline for evaluating the effects of these changes on premium costs, and reminds us that before the law many families buying coverage on their own saw their premiums skyrocket even when their plans didn't adequately cover the care they needed," said Commonwealth Fund President David Blumenthal.

"The individual insurance market has always been volatile, and people with individual coverage often experienced large premium increases," said Gruber, who noted that data about increases has been rare. "While there are some limitations to these data, they provide a baseline snapshot of the market before passage of the Affordable Care Act to help track whether the law's marketplaces are providing better protection at a cost that consumers, and the federal government, can afford."

Gruber said in a call with reporters that the rationales for the increases are not known.

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Medicaid Enrollment Stood at 55.4 Million at End of 2013

By John Reichard, CQ HealthBeat Editor

June 5, 2014 -- At the end of 2013 a total of 55.4 million people, or almost 1 in 5 Americans, were enrolled in Medicaid, according to a new Kaiser Family Foundation analysis.

The figure provides a rough benchmark against which to measure subsequent increases in enrollment driven by the health care overhaul.

The Kaiser tally consisted of 27.9 million children, 12.7 million adults who were not elderly or disabled and 14.8 million people who were elderly or disabled. It compared enrollment tallies in December 2013 and December 2012, finding overall enrollment growth of just 1.1 percent because of an improving economy.

Medicaid enrollment picks up during economic downturns and when unemployment increases.

Expanded eligibility for Medicaid began in January 2014 under the health care law (PL 111-148, PL 111-152).

Kaiser said its snapshot provides the necessary context to understand new federal data on the Medicaid expansion that was released Wednesday by the Centers for Medicare and Medicaid Services.

That data showed that the number of people enrolled in Medicaid and the Children’s Health Insurance Program at the end of April was 65 million.

The CMS tally did not break out Medicaid and CHIP figures separately. Kaiser showed combined Medicaid/CHIP enrollment in December of 61.1 million, including 5.8 million in the CHIP program. Kaiser said its method of counting Medicaid enrollment and that of CMS were not precisely the same.

Exactly how much Medicaid is growing because of the health law remains unclear, in no small part due to the fact that some 2.9 million people haven’t had their Medicaid applications processed since the open enrollment period began for 2014 coverage.

But it’s on a sharp upswing in those states that expanded eligibility, and efforts continue to open it up to more people in states such as Virginia that haven’t taken that step.

In an analysis released Thursday, the advocacy group Families USA said 360,000 Virginians would be able to sign up for Medicaid if the state expanded its program. Sixty percent of them, or 212,000 people, are employed but don’t make enough to afford coverage, the report said. Of the other 40 percent, roughly half include people such as students, non-working spouses, the disabled, and other people who have left the work force, the report says.

Virginia Gov. Terry McAuliffe (D) is weighing executive action to expand Medicaid in the state.

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Health IT Office Shifts from Grants to Interoperability

By John Reichard, CQ HealthBeat Editor

June 2, 2014 -- Now a decade old, the Office of the National Coordinator for Health Information Technology is shifting out of the grant-making role it played earlier in the Obama administration to an organizational structure that aims to advance the exchange of data among different types of providers.

The buzzword is "interoperability." It's a dimension some employers, vendors, consumers and lawmakers say the office too long has de-emphasized because of pressure from doctors and hospitals.

"Health IT infrastructure and program investments are ending and it is our responsibility to take this opportunity to reshape our agency to be as efficient and effective as possible," Karen DeSalvo, the national coordinator, said in a message to staff late last week announcing the reorganization.

Health IT provisions in the economic stimulus law (PL 111-5) provided hundreds of millions of dollars in grants to establish regional extension centers, "beacon communities" and health information exchanges. As billions of dollars in bonus payments began flowing through Medicare and Medicaid to help providers pay for technology, the Department of Health and Human Services also awarded the grants to guide how that money was being used.

The extension centers teach providers, particularly rural hospitals and small physician practices, in installing the technology. The beacon grants have gone to help 17 pace-setting communities adopt health IT to further realize its potential. And the grants for health information exchanges also aim to promote the exchange of medical data among various players in local health care systems.

But those funds are only temporary. Interoperability is essential to the success of health IT—it refers to the easy exchange of medical data not just within a health system, but among different parts of the system to avoid duplicative testing and coordinate treatment.

To realize the technology's potential to make care safer and more efficient, experts say data must be shared among clinicians, labs, hospitals, pharmacies, and patients regardless of the application or application vendor.

"This realignment will support our focus on developing and implementing an interoperability road map" and support "care transformation," DeSalvo said. New offices under the reshuffled structure include an Office of Care Transformation headed by Kelly Cronin and an Office of the Chief Scientist headed by Doug Fridsma. Fridsma's office will be responsible for spurring development of more innovative products and systems.

Whether the new structure will satisfy critics of the health IT program remains to be seen, but the nod toward interoperability recognizes their concerns.

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Fiscal Diagnosis Only Gets Tougher for Health Care Law

By Paul M. Krawzak, CQ Roll Call

June 4, 2014 -- For Democratic lawmakers who were hesitant to sign onto the sweeping 2010 health care law, one of the most powerful selling points was that the Affordable Care Act (ACA) would actually reduce the federal budget deficit, despite the additional costs of extending health insurance coverage to the uninsured.

Four years after enactment of what is widely viewed as President Barack Obama's key legislative achievement, however, it's unclear whether the health care law is still on track to reduce the deficit or whether it may actually end up adding to the federal debt. In fact, the answer to that question has become something of a mystery.

In its latest report on the law, the Congressional Budget Office (CBO) said it is no longer possible to assess the overall fiscal impact of the law. That conclusion came as a surprise to some fiscal experts in Washington and is drawing concern. And without a clear picture of the law's overall financing, it could make it politically easier to continue delaying pieces of it, including revenue raisers, because any resulting cost increases might be hidden.

Charles Blahous, a senior research fellow at George Mason University's free market-oriented Mercatus Center, calls the CBO's inability to estimate the net effect of the law "a real problem."

"The ACA's financing provisions were assumed to be effective so as to get a favorable score out of CBO upon enactment, but no one is keeping track of whether they're being enforced," says Blahous, a public trustee for Social Security and Medicare. "We receive occasional updates on the gross costs of the law, but none on whether the previously projected savings provisions are producing what was originally projected."

As a result, Blahous says, "there's no barrier to continually rolling back the financing mechanisms without the effect on the ACA's finances ever being fully disclosed."

When Congress passed the health care law in 2010, the CBO estimated it would reduce the deficit by more than $120 billion over a decade, compared to the agency's current-law baseline projection of spending, revenue and the deficit. That meant the health care law would, in effect, pay for itself and deliver an additional fiscal bonus.

The CBO based its estimate on the assumption that the law, which included hundreds of billions of dollars' worth of Medicare cuts and tax increases to pay for health care subsidies, would be implemented as written. Now, after a chaotic start and a series of delays or adjustments in various provisions of the act, including an employer mandate that was expected to bring in new tax revenue, it's unclear to what extent those promised savings are being realized.

In a little-noticed footnote to a report issued in April, "Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act," the CBO wrote that it and the Joint Committee on Taxation "can no longer determine exactly how the provisions of the ACA that are not related to the expansion of health insurance coverage have affected their projections of direct spending and revenues."

The CBO nevertheless maintained in the report that, based on an earlier analysis in 2012, apart from the insurance provisions in the law, "many other provisions, on net, are expected to reduce budget deficits." Still, that analysis is effectively a ballpark figure since the CBO did not include a precise estimate of the law's overall budgetary impact.

Joseph Antos, an expert on health care at the right-leaning American Enterprise Institute, says he too is surprised by the CBO's statement that it can no longer estimate the impact of the health care law.

"The reality is that they were able to do it a year and a half ago or two years ago, so you have to wonder what changed?" says Antos, a former assistant director for health and human resources at CBO and until last year a member of the agency's Panel of Health Advisers. "They don't want to admit that what they assumed two years ago is no longer correct because the administration has not implemented many provisions of the law."

But Dan Mendelson, who runs Avalere Health, a consulting company, says that after a number of years, it's always hard to track the fiscal effects of a law.

"It becomes very difficult in a fiscally valid way to assess the impact of legislation because so many other things change at the same time," says Mendelson, who served as associate director for health at the Office of Management and Budget during the Clinton administration. "It gets hard to isolate the effects."

Mendelson adds that "at a certain point it becomes irrelevant because it's all part of the baseline of expenditures. It's current law. And if somebody wants to repeal some portion of that law, then you can assess in a targeted way what that would cost or what the spending impact would be."

The CBO did say that one element of the law's fiscal impact is relatively clear: its changes to insurance coverage.

In its April report, the CBO updated its estimates of the budgetary effects of the health insurance coverage provisions of the law, including insurance subsidies, the Medicaid expansion, penalties paid by employers and individuals for not providing or purchasing insurance, and the excise tax on high-premium insurance plans.

Compared with its February 2014 baseline, the CBO said payments of penalties generated by the employer and individual mandates were projected to fall by $18 billion over a 10-year period. Still, because the cost of subsidies and related spending was estimated to fall even more, the agency said the insurance provisions would cost $104 billion less over the 10-year period than projected two months before.

Beyond insurance changes, though, the deficit effects of the law are much harder to analyze.

While CBO can isolate and reassess the provisions of the ACA that expanded insurance coverage, it cannot perform the same analysis on the portions of the law that modified existing federal programs and made changes to the tax code. "Isolating the incremental effects of those provisions on previously existing programs and revenue four years after enactment of ACA is not possible," the CBO said.

In its original score of the law in March 2010, the CBO said the insurance provisions would cost $788 billion between 2010 and 2019. But that cost would be more than offset by $511 billion in spending cuts, primarily to Medicare, and $420 billion in new revenue, much of it generated by new taxes on hospital insurance and manufacturers of drugs and medical devices. As a result, the CBO estimated at the time, the health care law would reduce the deficit by $143 billion over 10 years, compared to the agency's current law baseline. The vast majority of the savings—$124 billion—was supposed to come from the health care portion of the law, but another $19 billion would be derived from changes to student loans and grants.

The last time the CBO produced an estimate based on the entire law was in 2012, when the agency said that a GOP proposal to repeal the law would add $109 billion to the deficit over a 10-year period. That implies the CBO still thought two years ago that the law would save money.

Since then, the administration has made numerous adjustments to the implementation of the law, reducing the revenue it was supposed to raise or savings it was expected to achieve. Last year, for example, the IRS delayed the employer mandate until 2015 from 2014. And earlier this year, the agency extended the delay for another year for certain employers. In its April report, CBO estimated the delay in the employer mandate would cost the government $3 billion in penalty payments in 2016.

The health care law also mandated cuts to Medicare, but the savings related to the Medicare Advantage program have been somewhat reduced by an administration pilot project that boosted bonus payments to Medicare Advantage plans since 2011.

In 2010, the CBO projected the health care law would cut Medicare as well as some Medicaid and related spending by $455 billion between 2010 and 2019.

But in a letter to House Speaker John A. Boehner in 2012, the CBO provided an updated estimate that suggested those savings may be increasing. According to that letter, repealing the law would increase Medicare and related spending by $741 billion from 2013 to 2022, which implies that keeping the law on the books would save the same amount.

Paul N. Van de Water, a senior fellow at the left leaning Center on Budget and Policy Priorities and former assistant director for budget analysis at the CBO, argues the adjustments in the law will have little fiscal impact as long as they remain temporary.

"I don't think that any of the delays that you're talking about are likely to turn the law from one that reduces the deficit into one that increases it," he says. Van de Water argues that the specific Medicare cuts in the ACA are being implemented. Two of the key tax increases in the law took effect last year, he added—a 0.9 percent increase in Medicare payroll tax rate, and a 3.8 percent tax on dividends and interest, both for upper income brackets. "My strong instinct is that all of these changes are going to leave the basic financial impact picture of the law much the same," he says.

But to Blahous, the delays stoke doubts about the viability of other cost-saving measures in the law that have yet to be implemented and may be more painful and politically challenging. "The question is, if things haven't been enforced to date, is it really a valid assumption to assume they will be fully enforced going forward?" he says. "You have this sort of invisible undoing of the financing of the ACA. But it doesn't appear anywhere in the scorekeeping, because we assume it's not going to happen in the future, and we're not keeping track of it happening in the past."

If the employer mandate were repealed rather than just delayed, for example, it would cost the government an estimated $106 billion in lost revenue between 2013 and 2022, the CBO said in 2012.

Blahous notes the delays are not surprising, since the law was pushed through Congress with little Republican input or support.

"This is what happens when a vast new spending program is passed on a partisan basis," Blahous says. "Those who opposed the law have no stake in enforcing the provisions required to finance it. Those who enacted the ACA don't want sole political ownership of its tax increases, penalties and Medicare spending cuts, so they scale them back."

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