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March 18, 2013

Washington Health Policy Week in Review Archive 751c1566-0577-46e6-bda3-a00c4d4b8d50

Newsletter Article


State Officials Concerned About Oversight of Benefits in Health Law

By Rebecca Adams, CQ HealthBeat Associate Editor

Officials in 10 states question their insurance departments’ abilities to ensure that plans comply with the requirements of the federal health care law, and some are looking to their legislatures to enact measures to give them more authority to do so, according to a report released by The Commonwealth Fund.

The 2010 health care law (PL 111-148, PL 111-152) requires 10 categories of benefits to be offered in new marketplaces that are scheduled to begin operating in January. The Centers for Medicare and Medicaid Services released the final rule on these “essential health benefits” in late February.

Similar requirements are in place for people who will become eligible for Medicaid in states that expand their programs.
States, particularly those that will run their own exchanges, will have the primary responsibility for ensuring that the benefits that insurers propose match federal requirements. But a number of state officials told researchers that they don’t have the ability to do that.
The interviews were conducted from Jan. 1, 2012, through Oct. 15, 2012, by Georgetown University Health Policy Institute’s Center on Health Insurance Reforms for The Commonwealth Fund.

While insurers must follow federal law, the report said that some state departments of insurance may not have explicit legal authority to enforce federal standards. “Because of this limitation, several officials noted that they would likely need to enact state legislation to ensure the [department of insurance's] ability to reject noncompliant policies and conduct ongoing oversight,” said the report.

The study pointed to Arizona, for example, where officials said that the insurance department would not have the authority to enforce the essential health benefits requirements. Montana officials also said their agency does not have explicit authority to enforce federal law, but officials said they could review plans for voluntary compliance with the law’s requirements.

In other places, state officials said that even though they have the legal authority to oversee the standards, they may not have the resources to do a good job.

The report quotes Arizona officials as noting that their staff of experts has been cut. “It’s not just about adding more bodies, but about finding the bodies with the right skill set,” Arizona officials told interviewers.

Some officials worried that relying on software to review many of the forms is risky because they could miss problems.

The report quoted one anonymous official as saying: “A policy might say it covers prescription drugs, but in the fine print there could be an exclusion saying they’ll never pay for drugs in a certain category.”

Rebecca Adams can be reached at [email protected].

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HHS Working on Contingency Plans in Case Exchanges Not Ready in Time

By Jane Norman, CQ HealthBeat Associate Editor

March 14, 2013 -- Federal officials are developing contingency plans in case the health insurance exchanges are not fully ready to begin enrolling people on Oct. 1, the head of the agency that’s building the massive 50-state marketplace structure said last week.

Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, also said there is “some possibility” that some states now conditionally approved to run their own marketplaces might not be able to launch them on Oct. 1. But he vowed that every state will have an exchange, which could mean the federal government might have to have more of a role than anticipated in states that can’t get to the finish line in time.

His remarks at a national policy meeting of America’s Health Insurance Plans (AHIP) marked the first time that Health and Human Services (HHS) leaders have veered even slightly from their insistence that exchanges will be totally functional by Oct. 1. Cohen’s comments came on the same day that HHS Secretary Kathleen Sebelius conducted her second closed-door meeting with members of the Senate Finance Committee to discuss the health care law’s implementation.

Making contingency plans for October is necessary, Cohen said. “I think it’s only prudent to not assume everything is going to work perfectly on day one and to make sure that we’ve got plans in place to address things that may happen,” added Cohen, whose division is part of the Centers for Medicare and Medicaid Services (CMS).

Cohen appeared on an AHIP panel with Henry Chao, a CMS official who’s overseeing the technology for the exchange launch.

Chao was frank about the stress and tension of the compressed time frame involved in setting up the exchanges. “We are under 200 days from open enrollment, and I’m pretty nervous,’’ he said. “I don’t know about you,” he added, to murmurs from the insurance industry audience. Members peppered Chao and Cohen with many questions about the format for the health care policies they will submit to HHS for approval so the plans can be marketed in the exchanges.

Chao said the main objective is to get the exchanges up and running and signing up the uninsured. “The time for debating about the size of text on the screen or the color or is it a world-class user experience, that’s what we used to talk about two years ago,” he said. “Let’s just make sure it’s not a third-world experience.”

Cohen said his staff continues to work toward the October start date and expects that the exchanges will be ready to oversee enrollment in insurance plans by individuals and small businesses. There are 18 exchanges expected to be run by states and the District of Columbia, seven by state-federal partnerships and 26 by the federal government.

But “there is contingency planning that is going on to address foreseeable things that may be problematic on day one,” Cohen said. “Everyone recognizes that day one will not be perfect.”

No Backup Details
Cohen would not be much more specific and said details of backup plans are not yet worked out. “But as we move closer to October, my hopes are the range of things that could go wrong gets narrower and narrower,” he said. “Then we will be in a position to know better which contingency plans we actually have to implement.”

Speaking with reporters afterward, Cohen said, “I’m absolutely confident every state will have an exchange that will be functioning and ready for enrollment” on Oct. 1. However, he added, “I think there is some possibility that the type of exchange may be different than what we’re looking at today.”

He noted that 18 states have been “conditionally” certified to run their own exchanges, which means approval is not yet final. “There are conditions on that they have to meet to be operational,” Cohen said. “That’s a process that’s ongoing. We are working with every state and hope that they all get there.”

He would not estimate how many of the 18 states might not be ready but said repeatedly that no state will be left high and dry without an exchange. The federal government is required by the health care law (PL 111-148, PL 111-152) to operate exchanges in states that don’t have them. “There will be an exchange in every state,” Cohen said.

Some states may just run out of time to develop their eligibility and enrollment systems, he said. “I think the biggest challenge is for states that started later,” Cohen said. “Obviously they have less time. Some states were way out in front. Our early innovators were out in front, got their grants, got working very quickly. Other states have come in later. We welcome that. We are glad they are engaged and they are working with us. But it’s really a challenge for them.”

Some states have had challenges to their legal authority to implement state-based exchanges, he noted.

As for the contingency plans, Chao said that “we are having those discussions” and that a different section of the Centers for Medicare and Medicaid Services has been asked to develop options because CCIIO officials are so tied up with putting the exchanges in place.

“We are having those discussions, but they’re not fully baked yet,” said Chao, deputy chief information officer for the Office of Information Services at CMS. But he indicated that the contingency plans will include everything the exchanges are expected to do — from computer operations to call centers.

“There’s at least one for every aspect of the functions we are trying to put in place and the various models that are being implemented,” Chao said.

Cohen acknowledged that some members of Congress want more input from HHS about implementation in their states. “It’s perfectly understandable people have concerns. This is a big thing we’re doing,” he said. “We’re doing the best we can to make sure folks are aware of all the work we’re doing.”

Jane Norman can be reached at [email protected].

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Key Medicare Advisory Panel Stresses Need to Overhaul Doctor Payments

By John Reichard, CQ HealthBeat Editor

March 15, 2013 -- Testimony by the head of the Medicare Payment Advisory Commission (MedPAC) Friday focused attention on skilled nursing facilities and home health agencies as potential targets for cuts to offset the costs of overhauling the troublesome Medicare physician payment formula.

MedPAC Chairman Glenn Hackbarth singled out the need to overhaul the sustainable growth rate (SGR) doctor-payment mechanism among the dozens of recommendations the panel made concerning payment and delivery system changes in a 435-page report submitted to Congress on Friday.

The report was the subject of a hearing by the House Ways and Means Health Subcommittee.

“If I could just highlight one thing in our statement it would be our recommendation to repeal the sustainable growth rate system,” Hackbarth told the panel. “As you well know, the [Congressional Budget Office) recently estimated the cost of repeal is dramatically lower than it has been in recent years,” he added. “From our perspective, the SGR repeal is now on sale, and the sale price may not last.”

The Congressional Budget Office (CBO) recently lowered its estimate of the 10-year cost of replacing the SGR with a 10-year freeze on payments at $138 billion, down from roughly $300 billion two years ago.

Hackbarth noted that MedPAC, the independent expert group Congress relies on for unbiased counsel on Medicare payment and other policy, has made about $100 billion in recommended payment changes that Congress hasn’t acted on and that could serve as payment offsets.

House Republican Kevin Brady of Texas, who chairs the subcommittee, echoed Hackbarth’s sense of urgency about the need to scrap the SGR and said that sense is bipartisan. “Democrat or Republican, enough is enough,” he said, referring to the many years of frustration experienced by lawmakers about having to enact costly payment patches to block reimbursement cuts scheduled under the SGR.

Holding up a copy of MedPAC’s shiny new March report to Congress, which evaluates whether Medicare payments are too high or too low in a variety of health care sectors, Brady likened the document to the annual issue of Parade Magazine that tells how much money people earn in different occupations in the United States. He asked Hackbarth how lawmakers should use the report to redesign the SGR.

The MedPAC chief said the skilled nursing and home health sectors are two areas in which the commission has consistently found that providers make double-digit profit margins on Medicare patients. Payment levels should be lowered through “rebasing” of reimbursements to bring them more in line with the actual costs of treatment, Hackbarth said.

Hackbarth said in an interview after the hearing that a big chunk of the $100 billion in pending — but not yet enacted — payment recommendations by the commission relates to skilled nursing and home health. Rebasing skilled nursing rates would save $20 billion over 10 years while rebasing home health payments would net another $10 billion.

Republicans Tom Price of Georgia and Jim Gerlach of Pennsylvania raised questions about changing home health payments. Price wondered about the methodology used by MedPAC to calculate home health margins, and cited research showing far lower margins. He also asked Hackbarth whether the real challenges with excessive home health payments are in just 25 out of some 3,000 counties nationwide. The reference was to parts of the country analysts say are hot spots for fraudulent home health care providers.

Hackbarth replied that MedPAC relies on home health agencies’ own cost data to calculate their margins. He agreed that the 25 counties are particularly troublesome, but said that there is still a problem overall with excessive home health payments.

Gerlach asked about charging copayments to home health patients, something MedPAC has recommended to prevent excess use of the benefit. He asked whether doing that would harm low-income patients. Hackbarth said that MedPAC does not recommend charging the co-payments to the poorest Medicare beneficiaries, those who are also eligible for Medicaid.

Brady said in an interview after the hearing that his most important takeaway from the session was the need to move this year on the SGR. MedPAC has also noted that CBO projections of the cost of an SGR overhaul have been “volatile,” suggesting the price tag could sharply rise again if lawmakers don’t act.

But Brady said he’d prefer to offset the costs of an SGR overhaul, not by looking first at the $100 billion in recommended cuts, but at more fundamental changes in the design of the Medicare program. But in the end an offset package could contain elements of both, he added.

John Reichard can be reached at [email protected].

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White House Economic Report Says Health Law Helps Slow Spending Growth

By Jane Norman, CQ HealthBeat Associate Editor

March 15, 2013 -- An economic report the White House issued Friday dived into one of health care policy’s hottest and knottiest recent debates: the slowdown in the growth of health care costs.

Policymakers differ on why the slowdown is occurring, but the Obama administration said in the report that it appears to be connected in part to sections of the 2010 health care law (PL 111-148, PL 111-152) that already have been implemented. Sections of the law “appear to be having positive effects” on care coordination, hospital outcomes and spending, said the report’s 23-page chapter on reducing costs and improving the quality of care.

In the future, changes in Medicare payment systems that better align payments with costs and provide incentives for efficiency through methods such as bundled payments “hold potential to improve care quality and reduce medical spending,” the report added.

Republicans and conservative analysts, however, have disagreed about whether the slowdown will continue and what the health care law’s contribution is to the trend. Douglas Holtz-Eakin, president of the right-leaning American Action Forum, told the Senate Finance Committee earlier this month that Medicare pilot programs to try out new ways of delivery and payment typically go nowhere . “The recent slowdown in national health care cost growth is something you can’t rely on,” Holtz-Eakin said, adding that it has happened before and likely will reverse once the health care law’s expanded coverage of the uninsured goes into effect.

In addition, GOP members of the House Energy and Commerce Committee earlier this month issued their own report that maintained the health care law isn’t working to control costs because individual health insurance premiums are projected to increase sharply in 2014.
The annual economic report issued by the president is written by Alan Krueger, the chairman of the Council of Economic Advisers. It presents the administration’s economic agenda and provides a look at the economic situation. Rising health care costs “could jeopardize our prosperity and security in the years ahead,” said its opening chapter.

“While the immediate budgetary concern in 2013 is the need to replace the sequester, it is also important to remain focused on the main driver of our long-term budget challenge: the cost of health care for an aging population,” the report said. By 2030, one in five Americans will be older than 65 and per capita medical costs are three times higher for that group than younger people.

The report pointed out that the rate of growth in nationwide per capita health spending has been on a downward trend since 2002 but has particularly slowed during the past three years. Since 2010, the rate of growth has been essentially the same as GDP per capita, says the report. That’s unusual because growth in health care spending has been outpacing overall economic growth for the past five decades.
Although some of the slowdown can be attributed to the recession, also responsible are structural changes in the health care system, spurred on in part by the health care law, said the report. The law is projected to increase the number of Americans with insurance by 14 million in 2014 and more as the years go on.

Specifically cited are reductions in excessive payments to Medicare Advantage plans, stronger antifraud efforts in Medicare and changes in the provider payment system, such as the formation of Accountable Care Organizations that will extend the life of the Medicare trust fund by an anticipated eight years, said the report. In addition, it cited the Hospital Value-Based Purchasing System that rewards hospitals for high quality care and reduces payments for poor performance; Medicare innovation center programs that seek to test better approaches; and expanded use of health information technology.

2013 Economic Report of the President (PDF)

Jane Norman can be reached at [email protected].

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Florida Panel Kills Medicaid Expansion, but Debate Continues

By Jane Norman, CQ HealthBeat Associate Editor

March 12, 2013 -- Turbulence over Medicaid continues in Florida, where state lawmakers have killed an expansion plan supported by Republican Gov. Rick Scott, but some legislators continue to press for an alternative solution to cover uninsured adults.

A Senate select committee on the federal health care law voted 7–4 along party lines Monday against expanding Medicaid as envisioned by the health care law (PL 111-148, PL 111-152), the Miami Herald reported. Last week, a House panel also rejected expansion.

In February, Scott startled fellow conservatives when he announced that he favored a three-year expansion of Medicaid to cover single adults in Florida, though at that point the program would have to be evaluated before a decision was made whether to continue it. Scott is among a group of Republican governors who have reversed themselves on the health care overhaul and accepted the expansion.

But it was always up to Florida’s lawmakers to concur, and signs are that some of them want to explore how the state could still receive federal funding to cover the uninsured without taking part in the expansion. The state Senate committee said it wants to pursue an unspecified “third option,” and GOP state Sen. Joe Negron is working on a “Florida solution,” under which the state would buy private insurance policies with expansion funds, the Herald said.

The approach could be to allow adults to be covered in the Florida Healthy Kids program, the state’s public–private program for low-income children, lawmakers said.

Arkansas officials are considering something similar. Gov. Mike Beebe, a Democrat, has said that Health and Human Services Secretary Kathleen Sebelius has told him that Medicaid expansion funds could be used to place low-income citizens in private insurance plans.
Florida Senate President Don Gaetz, a Republican, said in a statement that the House and Senate will work together to explore how to provide private health insurance options for low-income people and replace the Medicaid program. “We welcome the governor and others concerned about this issue to join us in getting Florida out of Medicaid as it has existed in the past,” Gaetz said.

The Senate Democratic leader, Chris Smith, said in a statement that Republicans are endorsing the Medicaid expansion by moving to use the federal Medicaid dollars, even if they’re taking a different approach.

“Whatever name they opt to give the program, the bottom line is that money allocated by the federal government for Medicaid expansion will be the mechanism,” Smith said in a statement. “In the Senate, the remaining question is no longer ‘if,’ but ‘who.’”

Scott said in a statement that “I am confident that the Legislature will do the right thing and find a way to protect taxpayers and the uninsured in our state while the new health care law provides 100 percent federal funding.”

The Centers for Medicare and Medicaid Services would have to approve any plan to change the way the state receives and uses Medicaid funds.


  • Far to the north in Maine, the Portland Press Herald reported Tuesday that Republican Gov. Paul R. LePage and Democratic lawmakers appear to be nearing consensus on a Medicaid expansion in that state, with LePage saying he is open to expansion. The liberal-leaning Maine Center for Economic Policy and Maine Equal Justice Partners issued a report saying expansion would extend health insurance to more than 69,000 state residents, most of them working adults. It would also create 3,100 new jobs and stimulate $350 million a year in economic activity, the report said. 
  • The Topeka Capital-Journal reported Tuesday that a new coalition of groups encouraged by the sight of other Republican governors taking action is pushing Republican Gov. Sam Brownback and lawmakers to expand Medicaid. 
  • Arizona Gov. Jan Brewer, also a Republican, was scheduled Tuesday to announce details of her plan for the state’s Medicaid expansion
  • The Utah House of Representatives approved a measure that would ban Medicaid expansion, the Deseret News reported Monday. Republican Gov. Gary R. Herbert hasn’t yet announced what he will do.

Jane Norman can be reached at [email protected].

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Signing Up Uninsured for Health Care a Big Challenge

By Rebecca Adams, CQ HealthBeat Associate Editor

March 12, 2013 -- When a California county wanted to encourage residents to buy health insurance earlier this year, officials employed a time-tested tactic for generating interest: nudity.

The Alameda County Social Services Agency’s ad campaign featured bare-skinned people who held up signs in strategic spots that read, “Cover your family.”

The use of naked people in ads about health care underscores the desperation felt by organizations and government entities that want to encourage enrollment as the launch of new coverage under the 2010 health care law approaches. On Oct. 1, people all over the nation can start signing up for coverage, which kicks in on Jan. 1, 2014.

One big question is whether uninsured people—especially healthy people—will get coverage or whether they’ll just pay a penalty for going without it, which in 2014 will be $95. That’s particularly true for young men without many medical needs, whose premiums will essentially subsidize everyone else. And if healthy people don’t sign up, then rates will be higher than they otherwise would be.

Enroll America—a nonprofit that hopes to spend more than $100 million to encourage people to sign up—is going after those men with a bank-shot strategy. The group plans to get out information not only to young guys but also to their nagging moms.

The Department of Health and Human Services (HHS) needs all the help it can get from Enroll America and others to supplement federal and state efforts to attract interest. Federal officials say they will do all they can to reach out to uninsured people—from asking celebrities to plug the coverage on social media sites to sending details to churches to posting info on other agency websites.

But the HHS administrative budget was hit by a more than 5 percent annualized cut from the across-the-board sequester that took effect March 1. Cash-strapped federal officials also will run the new marketplaces in 26 states themselves, rather than handing the job to state officials. That’s more than originally envisioned.

Signing up the uninsured is a huge challenge that will require campaign-style tactics, said Enroll America President Anne Filipic, a former Democratic National Committee deputy executive director and 2008 Obama campaign field director.

Filipic most recently was deputy director of the White House Office of Public Engagement, working for Jon Carson. Carson now oversees Organizing for Action, the new iteration of the Obama campaign community-building group Organizing for America, which also will encourage people without insurance to buy it.

Enroll America was started with a push from the consumer group Families USA. The organization is funded by a wide range of groups, including health care industry officials with a stake in the success of enrollment such as hospitals, insurers, community health centers, Planned Parenthood women’s health centers, drug companies and major pharmacy chains. Many industry groups also are funding their own individual efforts to expand coverage, either through outreach or by creating separate local lobbying coalitions to convince state officials to expand Medicaid.

Enroll America hopes to build a list of potentially uninsured people, Filipic said. The organization will first target areas that have high rates of uninsurance, such as parts of Texas and Florida. Then it will use marketing and demographic data to zero in on folks who fit the profile of the uninsured, including lower-income people. The group plans to run surveys to further identify people who might be uninsured and could benefit from direct contact or information left in neighborhood shops, Filipic said.

She said she wants to explore ways that health care industry officials in the coalition might provide information to guide the group’s efforts to narrow the list of people who might be uninsured, although the group will be careful to avoid violating privacy laws.

Other groups are targeting young people with tactics that worked in the past. Calling on sports heroes is a popular technique. When Massachusetts expanded coverage, the state persuaded the 2006 Boston Red Sox to tout the new benefits. The Maryland advocacy group Health Care for All has used Ravens and Redskins players to promote Medicaid coverage, and an official said they will work together again. Vermont wants to deputize hockey players.

One question is whether federal officials are doing enough now to prepare for a publicity campaign later this summer and fall. The timing is tricky because government officials can’t yet give the public specific details such as what the coverage will cost, which insurance companies will offer benefits or which doctors will participate.

Without those details, consumers who hear about the coverage could become confused or frustrated. Marilyn Tavenner, acting administrator for the Centers for Medicare and Medicaid Services (CMS), said recently that outreach will really begin in July.

“It’s a very busy year, and I think we have all of the steps in place to get it done,” Tavenner told the Federation of American Hospitals at its conference. “But we are going to need your help.”

When CMS officials were preparing in 2005 to launch the comprehensive Medicare drug benefit the following year, then-administrator Mark McClellan and other officials traveled around the country in the spring to persuade local groups to help with enrollment. In June 2005, the officials began a bus tour to raise public awareness.

The drug benefit implementation was a big endeavor, but the current rollout is clearly more complex.

“You can never do enough,” McClellan said. “Even with clear deadlines and a lot of enrollment support, there will be a lot of people who just don’t get around to signing up. The more that can be done early, the better. From that standpoint, because it is such a challenge, there is definitely more to be done.”

Rebecca Adams can be reached at [email protected].  

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