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March 16, 2015

Washington Health Policy Week in Review Archive 4598e4bb-2088-4a0d-a168-9936c360817e

Newsletter Article


Burwell Defends Nationwide Subsidies for Health Law

By Rebecca Adams, CQ Roll Call

March 9, 2015 -- The fact that 87 percent of the 11.7 million people who got covered in the health law's individual exchange market received subsidies shows "just how important the tax credits are to millions of Americans and to the insurance markets in those states," said Health and Human Services Secretary Sylvia Burwell last week.

The subsidies are at the core of a Supreme Court case against Burwell and the Obama administration that was argued March 4. The challengers contend that people in the 34 states that did not set up their own marketplaces should not get federal tax credits to subsidize the costs of their insurance under the health care law (PL 111-148, PL 111-152).

Burwell said the Obama administration is "confident that we will prevail" because she said the structure of the law is clear.

"Those who support this lawsuit believe that the law should be dismantled or repealed and they are content to back the progress that we have achieved," she told supporters at a White House event.

The numbers that Burwell released last week update previous estimates that the administration released on Feb. 17 showing that 11.4 million people had enrolled. A week later, administration officials provided a partial update with data from federal exchanges only.

The new numbers include data from both federal and state-run marketplaces through Feb. 22.

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Newsletter Article


Many Households Lack Liquid Savings to Pay Deductibles, Study Shows

By CQ HealthBeat Staff, CQ Roll Call

March 11, 2015 -- About a quarter of non-elderly U.S. households do not have enough liquid savings to pay the annual mid-range deductible for a private insurance plan, raising the prospect that many Americans could forgo care, according to a new Kaiser Family Foundation study.

While concerns about cost-sharing are not new, the study notes that coverage expansions under the health care law have put a new focus on defining affordable coverage. Family expenses can easily exceed $10,000 when someone becomes seriously ill, the study notes.

"The goal of the law was to cover more of the uninsured, many of whom have limited means," the study's authors note. "The issue for some families ... is that the policies with affordable premiums may have cost-sharing requirements that would be difficult for them to meet when they access services."

The study uses Federal Reserve data to compare households' liquid financial assets with cost-sharing representative of health plans offered by employers or available on the individual market, including in health law exchanges.

Researchers found 32 percent of lower-income households have sufficient liquid resources—defined as bank accounts, CD's and stocks—to pay a $1,200 annual deductible for an individual or a $2,400 deductible for a family. Only 20 percent of those households can afford an annual deductible of $2,500 for an individual or $5,000 for a family. The cohort is defined as having income of 100 percent to 250 percent of the poverty level, or $11,770 to $29,425 for an individual.

The study also found 38 percent of moderate-income households lack the liquid savings to cover a mid-range deductible. Moderate-income is defined as 250 percent to 400 percent of the poverty level, or $29,425 to $47,080. Because the health law doesn't provide cost-sharing for this group, individuals would have to borrow money or become indebted to health providers if they get seriously ill.

The study found less than half, or 47 percent, of households without enough assets to pay deductibles could obtain $3,000 from friends or family to help in an emergency.

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Biggest Hurdle to Permanent 'Doc Fix' Could Be Time

By Melissa Attias, CQ Roll Call

March 13, 2015 -- House leadership's involvement in the effort to permanently replace Medicare's physician payment formula is seen as a serious signal that a bipartisan deal could be within reach. But keeping any grand bargain from unraveling before scheduled cuts take effect April 1 will be a tall order, to say the least.

Ever since House and Senate leaders struck an agreement on the policy last year, the hang-up has been how to pay for bipartisan legislation to replace the cost-control mechanism dictating the cuts, known as the sustainable growth rate formula, or SGR.

Congress has stepped in 17 times since 2003 to temporarily protect doctors' fees, and House Ways and Means Chairman Paul D. Ryan said last week that this time would be no different. The recently raised $174.5 billion price tag for the compromise bill added to the challenge, along with the general distrust between the parties.

Earlier this week, however, House leadership aides confirmed that their teams are working on the issue, igniting fresh hope that the era of perennial payment patches may soon be over.

"We are extremely optimistic about the rekindled negotiations that are occurring regarding how to advance this policy before March 31 to permanently reform the system," said Ray Quintero, vice president of government relations for the American Osteopathic Association.

Lobbyists for doctors said a deal could be rolled out early next week.

But navigating the tight pre-recess legislative schedule could be the biggest challenge. The House is in session for only eight days before the March 31 deadline, jetting home for the spring recess on March 26. The Senate's tentative schedule shows that March 27 will be its last day before the two-week break, and senators are expected to spend their final week having a long series of votes on a budget resolution.

Physician lobbyists said the cost of an agreement will only be partially paid for, which has already sparked pushback from the conservative group Heritage Action for America. Communications Director Dan Holler said any permanent fix "must be financed with permanent Medicare savings, period" and that anything that "only offsets a fraction of the cost" is a non-starter.

"Americans didn't hand Republicans a historic House majority to engage in more deficit spending and budget gimmickry," he said in a statement.

Senate Finance Chairman Orrin G. Hatch indicated a partially-offset bill isn't necessarily a deal breaker. Asked if it should all be paid for, the Utah Republican said he would do it "no matter what it takes."

Democrats have argued that the legislation doesn't need to be offset.

While optimistic about the prospects for a long-term fix, Hatch said he couldn't say whether lawmakers will be able to pass it before the current patch (PL 113-93) expires March 31. The Senate is taking a backseat to the House, with Hatch saying that his chamber will see what the other comes up with.

Lobbyists for doctors expect a deal to include a two-year extension of funding for the Children's Health Insurance Program, which serves low-income children whose families aren't poor enough to qualify for Medicaid. A four-year extension is a priority for Democrats - funding expires Sept. 30 - while Republican committee leaders released a discussion draft last month that would make a number of changes to the program.

Negotiators are also expected to renew various expiring health payment extenders that accompanied the last "doc fix" patch for two years, which would add to the cost. But they're keeping the proposed offsets for the package confidential and will likely will continue to do so for as long as possible, anticipating that advocates will quickly descend on Capitol Hill in protest.

A hospital lobbyist acknowledged that some level of cuts is necessary to get over the hump but is looking to mitigate those, noting that hospitals have seen a series of reductions. The lobbyist is also optimistic that things are headed in the right direction, characterizing the effort as a very serious give-and-take on both sides of the aisle.

The Congressional Budget Office, meanwhile, has released estimates of the health care proposals in President Barack Obama's fiscal 2016 budget, offering fresh insight into how much money possible offsets might save.

A proposal to change payment updates for some post-acute care providers clocks in at $78.5 billion in savings through fiscal 2025, another to shrink Medicare bad debt payments saves $31.3 billion, one that raises income-related premiums for Medicare outpatient coverage and its prescription drug benefit brings in $62.5 billion, and another to line up Medicare drug rebates with those in Medicaid for low-income beneficiaries saves $121.3 billion.

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MedPAC Makes Strong Pitch for Primary-Care Incentive Payments

By Kerry Young, CQ Roll Call

March 13, 2015 -- Advisers to Congress recently issued a strong recommendation for a new Medicare incentive payment that would attract more physicians to work in primary care, widely seen as the backbone of the U.S. health system.

Primary-care doctors now face the loss of a 10 percent bonus on Medicare fee schedule payments at the end of this year. This bonus was created as part of the 2010 health law (PL 111-148, PL 111-152).

"Allowing the program to expire without replacement could send a poor signal to those primary care practitioners," Glenn M. Hackbarth, the chairman of the Medicare Payment Advisory Commission (MedPAC), told Congress. "While Medicare beneficiaries generally have good access to care now, access in the future could be at risk because of the aging of the population and health care workforce and the increased use of services by the newly insured."

Hackbarth highlighted this recommendation by placing it in his opening letter to the March MedPAC report to Congress, an annual document that's used by both lawmakers and the Centers for Medicare and Medicaid Services. In the months ahead, CMS will begin work on 2016 payments rules for services that covers some of the federal government's biggest expenses, such as the roughly $118 billion paid directly by Medicare for hospitals stays for the elderly and disabled. Separately, lawmakers are continually looking for ways to tweak Medicare policies, in search of both savings for taxpayers and chance to try to improve patient care.

In his letter, Hackbarth stresses that Congress needs to do more than simply extend the current approach to compensating primary-care doctors. He urges lawmakers to consider a per-beneficiary payment "as a step away from the fee-for-service payment approach" and help shift toward a model that encourages greater coordination of care. If the new payment were kept in line with the 2010 health law's fee-based bonus, many health care providers were now get a payment of about $31 a beneficiary, MedPAC said.

The report gave an example showing that a primary-care doctor with a practice that includes about 280 people enrolled in traditional Medicare would get about $8,700 in additional revenue. The average payment might be smaller, about $3,900, reflecting a smaller number of Medicare patients seen, the report said.

"The physician would essentially have that payment upfront," MedPAC Executive Director Mark E. Miller told reporters at a recent briefing. "We think this helps the physician with important primary-care functions like coordinated care, non face-to-face types of consultation and activities."

The 2010 health law's primary-care bonus totaled about 1 percent of spending through fee payments, or $664 million, MedPAC said. That averaged to about $31 for each beneficiary that year.

There's great concern among health policy experts about building up the primary-care workforce. The Health Resources and Services Administration has estimated that by 2020, the United States may have a shortage of 20,400 primary care doctors.

"This isn't going to solve or correct the primary care problem overnight, but it's an important signal that Medicare values primary care services," Miller said of the proposal for a new kind of incentive payment.

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Hospitals Try to Use 'Doc Fix' to Alter Health Law Penalties

By Kerry Young, CQ Roll Call

March 12, 2015 -- Hospital lobbyists are trying to weaken a penalty for readmitting a higher-than-average number of discharged patients using anticipated legislation that would delay a scheduled Medicare fee cut to physicians.

With Congress under pressure to block the cuts by the end of the month, the American Hospital Association (AHA) is trying to win relief for those hospitals that treat large numbers of poor people, who typically need more intensive levels of care. The vehicle could be a "doc fix" bill to replace a payment patch (PL 113-93) that expires March 31, said Megan Cundari, senior associate director of federal relations for the group.  

The AHA and allies such as the Association of American Medical Colleges also are trying to bolster support of companion bills (S 688, HR 1343) offered in the House and Senate addressing hospital readmission policy.

"Hospitals serving disproportionate numbers of disadvantaged, low-income patients have higher rates of readmissions, even when those hospitals provide high-quality, patient-focused care," said Sen. Joe Manchin III, D-W. Va., in a March 10 statement about the Senate bill he is sponsoring. "Failing to recognize this reality has led to unfair penalties at many rural hospitals in West Virginia and around the country."

Manchin's bill would require the Centers for Medicare and Medicaid Services (CMS) to account for patients' socioeconomic status when calculating risk-adjusted readmission policies, according to a summary. It would require separate studies of the 30-day threshold for readmissions after discharge that would trigger penalties, and whether certain medical conditions that require frequent hospitalization should be excluded in calculating the penalties. Both the Manchin bill and the House measure, offered by James B. Renacci, R-Ohio, have bipartisan support.

The effort is rekindling a long-running debate about how to apply the hospital readmission reduction penalty program, which many policy experts see as one of the clear wins arising the implementation of the 2010 health care law (PL 111-148, PL 111-152).

Medicare saw 150,000 fewer readmissions of people enrolled in the program between January 2012 and December 2013, with the penalty in place for people suffering heart attacks, heart failure and pneumonia. Capped first at 1 percent of a hospital's inpatient base operating payments, the penalty has risen to 3 percent in fiscal 2015.

"The readmissions policy is having the desired effect of inducing hospitals to make greater efforts to coordinate care and reduce readmissions," said Medicare Payment Advisory Commission Chairman Glenn M. Hackbarth in a comment on CMS' fiscal 2015 payment rule for hospitals. "However, there is an urgent need to improve the methods used to compute readmission rates and set readmission targets."

Much of the debate centers around how to weigh in the socio-economic status (SES) of patients seen at hospitals. MedPAC has suggested using peer grouping to adjust penalties for hospitals that treat impoverished communities, an approach that would require changing current law on the readmission reduction program.

There was far from an unanimous take on whether to adjust the penalty for hospitals that treat more people living in or near poverty, CMS said. Some commenters noted that the same protocols for care that work to prevent readmissions in affluent communities should work in poor ones. And, CMS raised objections to some ideas, such as those offered in bills introduced in the 113th congressional session by Manchin and Renacci regarding readmission penalties.

"We continue to have concerns about holding hospitals to different standards for the outcomes of their patients of low SES—we do not want to mask potential disparities or minimize incentives to improve the outcomes of disadvantaged populations," CMS said in its fiscal 2015 payment rule.

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Health Law Cost Estimates Drop on Slowdown in Medical Inflation

By Melissa Attias, CQ Roll Call

March 9, 2015 -- The projected cost of the 2010 health care law's coverage provisions has "decreased notably" on a year-by-year basis since its enactment, according to the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT), which put the tab at $506 billion from fiscal 2015 to 2019.

The agencies, in a recent report, said a general slowdown in medical inflation combined with factors such as a Supreme Court ruling that effectively made the law's Medicaid expansion optional for states, dropped the cost 29 percent from their March 2010 estimate of $710 billion. 

"Although it is unclear how much of that slowdown is attributable to the recession and its aftermath and how much to other factors, the slower growth has been sufficiently broad and persistent to persuade CBO and JCT to significantly lower their projections of federal costs for health care," the agencies wrote.

The estimates were included in CBO's updated budget projections, which were set to be released last week before a snowstorm prompted the closure of federal offices.

According to CBO and JCT, the projected cost of the health law's insurance provisions dropped $142 billion, or 11 percent, from estimates from January due to lower projected premiums. That, in turn, led to smaller estimates for the cost of government subsidies provided to people buying policies in health insurance exchanges. A slightly lower estimate of the number of people who will gain coverage through the law also contributed, which stems from new data about past coverage sources and the uninsured.

The agencies said they now estimate that the law will decrease the number of uninsured by 24 million to 25 million for most of the next decade compared to what would have been the case without the overhaul. Overall, they projected that the law's coverage provisions would cost the federal government $1.2 billion from fiscal 2016 to 2025.

Based on the new data, CBO and JCT revised their pre-2014 insurance estimates by reducing the number of people with coverage through their employers, boosting the amount of workers employed by businesses with at least 1,000 employees and lowering the number of uninsured. New information from the Centers for Medicare and Medicaid Services also showed higher Medicaid enrollment before 2014 than earlier estimates.

As a result, the agencies expect, to some extent, a smaller drop in employer-based coverage under the law, fewer people getting coverage through the exchanges and Medicaid, fewer enrolling in Medicaid due to the overhaul and a smaller total number of uninsured.

CBO and JCT also lowered their estimate of exchange enrollment for calendar year 2015 to about 11 million people from 12 million, based on data through mid-February. By the end of the special enrollment period in April, they expect more than 12 million people will have chosen a plan. But they project that the average number of people with exchange coverage will be slightly under that figure since some will only be covered for part of the year and attrition is anticipated.

While premium growth for employer-based coverage and exchange coverage "will generally reflect the underlying trend in spending by private health insurers," CBO and JCT projected that the average cost of the benchmark exchange plan for calculating subsidies will rise 8.5 percent per year on average from fiscal 2016 to 2018.

That's because exchange premiums are expected to rise faster during that timeframe as payments from the government to insurers with particularly high-cost enrollees are phased out over the next two years. In addition, the agencies do not think many plans will be able to maintain the low payment rates for providers or narrow networks.

Over the fiscal 2016 to 2025 period, CBO and JCT estimated that the benchmark premium in the insurance exchanges would grow by an average of 6.4 percent a year.

The agencies also lowered their estimate of federal revenue from the law's excise tax on high-cost employer plans by 41 percent, or $62 billion, from fiscal 2016 to 2025, compared to previous estimates. Fewer employees are expected to be enrolled in plans that would be taxed because premiums are estimated to be lower.

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