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March 26, 2012

Washington Health Policy Week in Review Archive b3369abb-7ee8-4f35-a572-821096414536

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Beyond the Health Care Arguments: The Waiting Games

By Jane Norman, CQ HealthBeat Associate Editor

March 23, 2012 -- When the Supreme Court finishes its third and final day of arguments about the health care law on Wednesday, a national waiting game for a decision will begin. And for some of the states charged with the nitty-gritty work of implementing the overhaul, there will be a second waiting game that might not end until after the November elections.

Experts in state health policy say that political leaders in Republican-controlled states that have fiercely resisted the overhaul might not let this matter drop, even if the justices uphold the entire health care law, which 26 states are challenging. They predict some elected officials will insist on waiting for the voters to decide who will occupy the White House and control Congress next year, hoping that if it’s a good election for the GOP, Republicans would repeal the law, regardless of what the court decides. Such a delay would give state officials even less time to meet their deadlines to implement the law by 2014.

“There are actually two waiting games going on,” says Matt Salo, executive director of the National Association of Medicaid Directors. “Regardless of how the [court decision] plays out, there is also an election coming up.”

The court is expected to issue its ruling by June 29 at the latest, which is the Friday before the July 4 holiday and the last day of the court session. Lawyers with long experience before the high court say they doubt that the justices’ deliberations will continue past late June, providing they can muster a majority in the difficult and complex health care case. Lawyers also say they anticipate each justice will write his or her own separate opinion.

Supreme Court decisions in recent history have almost never lingered into the summer, says Tom Goldstein, a veteran Supreme Court lawyer and the publisher of SCOTUSblog, which tracks the court. “They are religious about this,” says Goldstein, though he allows as to how “there can be a first time for anything.”

Joe Onek, a lawyer with the Raben Group and former senior counsel to House Democratic leader Nancy Pelosi of California, also says he doubts the decision will be later than June. Onek says the justices likely already have been thinking about their opinions of the health law (PL 111-148, PL 111-152) and may already have them formed. Lyle Denniston, a veteran court observer, says that the comments made by justices during oral arguments are aimed more at persuading other justices than at the lawyers arguing the case.

Plus, it’s summer. Says Onek: “They have their own vacation plans.”

Some have compared this matter to another extremely high-profile summertime case that moved rapidly—the Pentagon Papers. In that case, on June 30, 1972, the Supreme Court allowed the Washington Post and the New York Times to publish articles detailing government decisions in connection with the Vietnam War. But that order, just days after the arguments, came quickly because it involved an attempt to block publication.

It is unlikely that the court will rule as quickly on the health care law. But the longer the justices wait to issue their decision the more difficult it will be for the overhaul to be implemented on time.

So far, “this case has moved incredibly quickly for federal litigation,” says MaryBeth Musumeci, a lawyer and senior health policy analyst at the Kaiser Commission on Medicaid and the Uninsured.

Thirteen states filed suit the day the law was signed by President Obama — two years ago Friday—on March 23, 2010. On Jan. 31, 2011, Federal District Court Judge Roger Vinson ruled the law’s individual mandate unconstitutional, a decision the 11th Circuit Court of Appeals upheld on Aug. 12. The Supreme Court accepted the case on Nov. 14.

Decision Date Could Impede Implementation
If the court does wait until late June to issue its ruling, that would be well past the time when many state legislatures have adjourned for the year, including Republican-controlled states where work on setting up health insurance exchanges has slowed or stopped pending the court decision. That means that if the court upholds the law, a long slog is ahead.

Unless states convene special sessions, the legislative work needed to establish exchanges wouldn’t begin again until early 2013. States are facing a Jan. 1, 2014, deadline for exchanges to be up and running.

In recent months, some GOP governors and legislators have announced publicly that they won’t proceed with health care implementation without the go-ahead from the high court. At the same time, Department of Health and Human Services officials have trumpeted the success of other states which are accepting federal exchange grant funds and moving ahead.

Alan Weil, executive director of the National Academy for State Health Policy, says what is really happening lies somewhere in between. States that claim to be resistant actually are working on implementation quietly behind the scenes. States that are actively setting up exchanges are just as quietly experiencing stumbles and setbacks. “The reality is a lot more in the middle than the rhetoric is,” he says.

But Weil also says he has no doubt that a decision in June will not be an end point for states that have fiercely resisted the law, such as Florida, the leader in the health care suit. He predicts that if the law is upheld, leaders in states in which the law is particularly unpopular will then wait for the results of the November presidential and congressional elections.

Even if Obama is re-elected and Congress does not change control, there still may be states that don’t accept the law if it is upheld, says Weil. In that case, some GOP states that would have preferred to keep their exchanges state-run could wind up with a federal partnership for their exchanges or even a federally run marketplace.

Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services, emphasized at a recent meeting with insurance company representatives that the federal government is aggressively moving ahead on its federal fallback system.

Salo says that at the same time states are “all over the map” in their progress on revamping their Medicaid systems so they can comply with the law’s requirement that they expand Medicaid to uninsured adults and align the program with private insurance plans in the exchanges. Between now and 2014, there’s an “enormous amount of work” that must be done and any delay makes it that much more difficult, says Salo.

“If you wait until after November, and rolled the dice and lost at that point, you really don’t have a lot of time,” he says. While lawmakers might be able to move relatively swiftly on putting together an “exchange in a box,” using an existing model developed by another state, it will be much tougher for the staff members developing individualized state systems. They will likely encounter delays that are typical of such projects, he says.

The Medicaid expansion is the subject of an hour of argument on its own on Wednesday, with the states that oppose the law contending that they have been forced into accepting the expansion because without it, they would lose their Medicaid funds. Thus the debate over Medicaid is “incredibly important” for states and the poor people enrolled in the program, says Jane Perkins, legal director for the National Health Law Program.

Jane Norman can be reached at [email protected].

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Nixing Medicaid Expansion Would Leave Millions Uninsured Below the Poverty Line

By John Reichard, CQ HealthBeat Editor

March 21, 2012 -- If the U.S. Supreme Court affirms the health care law but strikes down its Medicaid expansion, millions of uninsured Americans with incomes below the poverty line won’t get government help to line up health coverage, unlike their somewhat better-off compatriots.

Hospitals would find themselves with rising uncompensated care costs at the same time their Medicare payments are being cut.

And despite years of funding increases supported by both Democrats and Republicans, the nation’s growing network of community health centers would be unable to meet many of the medical needs of those poor people who would not be covered.

To date, there are no indications that Republicans would propose to cover everyone below the poverty line as part of their “repeal and replace” strategy against the health care law.

Until January, many legal analysts downplayed the chances the high court would block the Medicaid expansion, which, starting Jan. 1, 2014, raises Medicaid eligibility to those with yearly incomes of up to 133 percent of the federal poverty line (or 138 percent if a state doesn’t count 5 percent of the income of a Medicaid applicant, something states now do).

But then the Supreme Court surprised legal observers by scheduling an hour of oral arguments March 28 on the constitutionality of the Medicaid expansion. Observers now take more seriously the possibility that the Medicaid provision could be struck down.

If the court does block the Medicaid expansion and the justices left the rest of the law intact, Americans with incomes between 133 percent and 400 percent of the federal poverty line would still have access to the federal subsidies the health law provides to Americans with modest or middle-class incomes to help them buy coverage in insurance exchanges.

But the estimated 17 million uninsured Americans who would have qualified for the expanded Medicaid program would earn too little to qualify for the subsidies. So millions of poor people wouldn’t qualify for the program that the media usually describes as the federal–state insurance safety net for the poor.

Uninsured Americans who are more needy would be left out, notes Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured.

“Ironically, if the Supreme Court throws out the Medicaid provision, but not the rest of the ACA, people under the poverty level are not eligible for subsidies through the exchanges,” she said, referring to the Affordable Care Act, the common name of the law (PL 111-148, PL 111-152).

If the justices were to declare the Medicaid expansion unconstitutional but keep the rest of the law, “It would be a political bombshell,” says a Senate GOP aide, who adds that he doesn’t know how Congress would react. “God knows. But I don’t.”

A Historical Note
The reason many poor people do not qualify for Medicaid relates to its historical ties to the federal welfare program, says Ron Pollack, executive director of the liberal-leaning advocacy group Families USA. The assumption underpinning that program is that only poor people falling into certain categories should receive federal cash assistance.

Pollack notes that “when Medicaid was established in 1965, it was built upon our social welfare system that was enacted in 1935. What that means is that the pathway onto Medicaid was by virtue of getting welfare benefits,” he says.

“The Social Security Act created four groups of people who would get welfare benefits,” Pollack adds. “They were people over 65 years of age . . . aid to the blind, aid to the permanently and totally disabled, and fourth, aid to families with dependent children.” That essentially meant children who are missing a parent in the household.

“So if you did not get any of these social welfare benefits, you were ineligible for Medicaid.” Congress subsequently “attenuated the link” to the welfare system, “but you still see the vestiges of it,” Pollack says.

“The 1935 Social Security Act has its antecedents, believe it or not, in the 16th-century Elizabethan poor laws, which did the same thing. They said, ‘It’s not just sufficient that you’re poor, but you have to fit a deserving category.’ ”

Children make up one such deserving category in the Medicaid program. “In virtually every state, the income eligibility standards for kids is at least 200 percent of the federal poverty level,” whether in Medicaid or the closely related Children’s Health Insurance Program (CHIP).

But “for parents of those very same children, you have different eligibility standards, such that the kids may be eligible for Medicaid or CHIP, but the parents are not eligible for public coverage. And the median income eligibility standard among the 50 states . . . is 62 percent of poverty.”

So in Florida, “you are ineligible for Medicaid as a parent if you are above 58 percent of poverty. For a family of three, that’s $11,072. If you’ve got more than that, you’re ineligible.” In Texas, Pollack adds, the eligibility cutoff is 26 percent of poverty. “For a family of three, if you have income more than $4,964 you’re ineligible as a parent for Medicaid.”

“Now consider adults who do not have kids. I’m talking about singles” or couples who either have no children or whose children are no longer dependents, Pollack says. “They literally can be penniless and they’re ineligible for Medicaid.”

“So what the Affordable Act does, it says ‘Wait a minute. We’re not going to continue to have these differentiations based on family status. We’re going to create a nationwide floor on eligibility.’ That floor is now 133 percent of the federal poverty level.” So an individual with income below $14,856 is eligible for Medicaid. A couple with income below $20,123 is eligible for Medicaid.

If the court strikes down the expansion, the United States “would continue to have the most meager eligibility standards for adults.”

Doubts About a Replacement Plan
Gail Wilensky, who ran the Medicare and Medicaid programs under President George Bush, says that if there hadn’t been a “my way or the highway” approach to overhauling health care during the Clinton administration, Medicaid eligibility could have been increased to the federal poverty level as a compromise between Republicans and Democrats, and the needs of the poorest uninsured Americans would have been dealt with.

Later, as an independent policy analyst early in the George W. Bush administration, Wilensky proposed increasing Medicaid eligibility to 100 percent of the federal poverty level for all Americans. Alternatively, her plan would have provided people in that income category subsidies to buy private coverage. That proposal, which Wilensky, now senior fellow at Project Hope, estimates would have covered about 16 million uninsured Americans, was never adopted.

Wilensky says she agrees with recent proposals by House GOP leaders to address the problem of lack of insurance through association health plans and the ability to buy coverage across state lines. But that won’t be sufficient to cover everyone below the poverty level. “That takes real money,” Wilensky says.

She says she hears no talk among Republicans now of such an expansion if the court strikes down the broader expansion under the health law. “This is not the focus of their attention,” she says. “They are clearly focused on other things.”

The Senate GOP aide agrees that Republicans aren’t heading in that direction. “We’d sit back and watch them stew,” he says of Democrats if the Court blocks the expansion.

John Reichard can be reached at [email protected].

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HHS Slams Two Insurers for 'Unreasonable' Premium Hike Requests

By Dena Bunis, CQ HealthBeat Managing Editor

March 22, 2012 -- The John Alden Life Insurance Company and Time Insurance Company have proposed health insurance premium hikes in nine states that Health and Human Services (HHS) officials said Thursday are “unreasonable.”

“These unreasonable rate increases would affect more than 40,000 residents,” said Steve Larsen, director of HHS’ Center for Consumer Information and Insurance Oversight (CCIIO). The premium hike requests ranged from 12 percent in Louisiana to 24 percent in Wisconsin.

Under a rate review process authorized by the health care overhaul law (PL 111-148, PL 111-152), HHS can decide whether premium increases of more than 10 percent in the individual and group markets are unreasonable. While federal officials don’t have the power to deny such rate hikes, companies that go ahead with them “have to post a public justification for proceeding with a rate that we conclude is unreasonable,” Larsen said.

In an email statement officials at Assurant Health said they are “committed to setting premium rates at a level that will allow us to continue to serve the needs of our customers. We believe our recent rate filings are reasonable and necessary.

“Assurant Health uses medical trend data that factors in both the rising cost of health care and the utilization of medical services and prescription drugs by our customers in determining premium rates.”

The states involved in this announcement include Arizona, Idaho, Louisiana, Missouri, Montana, Nebraska, Virginia, Wisconsin, and Wyoming. The increases were for products in the small group and individual markets.

Larsen said HHS relies on an independent expert review of the rate filings as well as communication with the companies before determining that specific rate increases are unreasonable.

In these cases, Larsen said, the rate filings relied on national medical trend data as opposed to state-specific information. And even the medical trend data that John Alden and Time submitted, he said, could not be verified. Based on the information from the companies, HHS has determined that the share of these “unreasonable” premiums that would be spent on medical care as opposed to administrative expenses was well below the 80 percent “medical loss ratio” (MLR) the health care law requires.

Insurers who don’t meet their MLR requirements must send rebates to their customers. So if these companies impose these proposed rate increases, some of which are scheduled to take effect in April or May, and they result in MLRs that are under 80 percent, these companies “will just have to give that money back,” in the form of consumer rebates, said Gary Cohen, CCIIO’s director of oversight.

Assurant officials said they expect to meet the MLR threshold.

“Rates at Time Insurance Company and John Alden Life Insurance Company, both Assurant Health companies, are set based on combined data and the projected medical loss ratio (MLR) to meet the 80 percent threshold required by health care reform,’’ the insurer said. “We price to a rate level that will allow us to meet the MLR over time in order to prevent the need for excessive rate increases in the future.”

Insurance is generally regulated by the states and HHS only steps in for those states that do not have sufficient rate review authority. Larsen said that since the health care law passed, the number of states with authority to reject unreasonable rate increases has grown from 30 to 37. So far HHS has completed the reviews of 28 premium hike proposals greater than 10 percent and has found 20 of those to be unreasonable.

Also on Thursday, HHS released a report on what has happened to rate increases since the rate review authority took effect. Larsen said that in the last quarter of 2011, premium increases dropped by about 4.5 percent.

“There has been some indication that in some states (rate increase) trends are down, Larsen said in response to a question of whether it’s the rate review authority or market forces that accounted for the lower proposed increases. “There are a number of reasons for that. We absolutely think the scrutiny this is bringing to the process is a contributing factor.”

The report also showed that:

  • States including Texas, Kentucky, Nevada, and Indiana are reporting fewer requests for rate increases over 10 percent.
  • States like California, New York, Oregon, and many others, have proactively lowered rate increases for their residents.
  • More than 180 explanations of rate increases have been posted and are open for consumer comment on

Dena Bunis can be reached at [email protected].

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Repealing IPAB Will Result in More Drastic Alternatives, Analysts Say

By Nellie Bristol, CQ HealthBeat Associate Editor

March 19, 2012 -- While some members of Congress say if the Independent Payment Advisory Board (IPAB) gets up and running there will be draconian provider and benefit cuts, several economic analysts said Monday that without the panel, the situation would be worse.

The board, which House Republicans plan to vote to repeal this week, would move Medicare toward more efficient modes of care and better value for the dollar, said Peter Orszag, vice chairman of global banking at Citigroup. Without mechanisms to streamline Medicare, “I think almost inevitably the result will be premium support because that is a falsely attractive approach that appears to save tons of money fast, even though mostly it’s just by shoving the dirty laundry under the bed than actually putting it through the washer,” he said.

Premium support, a Medicare restructuring suggested by several lawmakers, including House Budget Committee Chairman Paul D. Ryan, R-Wis, would replace the current program with set payments to help defray premium costs for insurance. An analysis by the Congressional Budget Office said that under Ryan’s plan, in 2030 Medicare enrollees would pay more than two-thirds of the cost of their Medicare-covered services rather than about a quarter of the costs if the program stays as it is. IPAB is statutorily prohibited from rationing care and must make recommendations to improve the efficiency of care delivery.

Orszag, former director of the White House Office of Management and Budget under Obama, commented during a press call hosted by the Center on Budget and Policy Priorities (CBPP). Other participants included CBPP Senior Fellow Paul Van de Water and Princeton University economics and public affairs Professor Uwe Reinhardt. The panelists said giving cost-reducing power to an independent board free of political influence is the best way to ensure that innovative programs are enacted even if they might shake up the status quo.

If Medicare were an insurance company and Congress its board of directors, said Reinhardt, “then you would have to say this insurance company is severely flawed because its system of governance is beset by incredible conflicts of interest. With Congress you really always have to worry whom do they represent, the people or particular interest groups that give them money.” IPAB members are prohibited from receiving gifts and so would be “far more dispassionate” Reinhardt said.

In addressing concerns that the panel would usurp the role of Congress in managing Medicare, Van de Water wrote in paper last week “to some extent, limiting congressional micromanagement of Medicare payment policy is desirable.” Echoing Reinhardt, he said, “Many times in the past, efforts to reform Medicare payments have been slowed or stopped by health-care interests that have successfully lobbied Congress to protect their income stream at Medicare’s expense.” He added: “IPAB can give Congress political cover for making necessary but controversial decisions such as [those] that are opposed by special interests that can finance high-powered lobbying campaigns and make substantial campaign contributions.”

IPAB was passed as part of the health care overhaul (PL 111-148, PL 111-152). It is a 15-member presidentially appointed panel that would develop cost containment strategies for Medicare that must be adopted if projected growth in cost-per-beneficiary exceeds a specified target. Congress could supersede the proposal if it developed a plan that saved the same amount of money.

Nellie Bristol can be reached at [email protected].

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Administration Touts Medicare 'Doughnut Hole' Savings

By Dena Bunis, CQ HealthBeat Managing Editor

March 19, 2012 -- In their continuing effort to highlight the most popular aspects of the health law, Health and Human Services officials Monday said more than 5.1 million Medicare beneficiaries have been helped by the measure’s effort to close the so-called Part D prescription drug “doughnut hole.”

A Centers for Medicare and Medicaid (CMS) analysis of 2010 and 2011 data shows that the initial $250 rebate check and the 2011 brand-name drug discount have helped seniors who need medicine to treat chronic illnesses as well as those beneficiaries who fell into the coverage gap in one year only because of an episodic illness. This data shows, said CMS Deputy Director Joe Blum, that the Part D benefit of the health law “serves as an important safety-net program who may fall into doughnut hole one year but not the next.”

Federal officials pointed out that the second anniversary of the health overhaul law (PL 111-148, PL 111-152) is approaching and they are expected to bring out more ways that the measure has been successful. The challenge to the constitutionality of the measure will be the subject of three days of oral arguments next week before the Supreme Court.

CMS reports that the 5.1 million people who benefitted from the doughnut hole provisions thus far saved more than $3.2 billion. In 2011, Blum said, those who fell into the coverage gap saved an average of $610 in prescription drug costs. Also in that year the most common drug classes that beneficiaries needed were medicines for blood sugar, cholesterol, and to treat asthma and other lung conditions.

CMS also released data Monday showing that through the first two months of 2012, about 103,000 seniors and people with disabilities saved $93 million that otherwise would have fallen into the doughnut hole.

A fundamental strategy of the health law is to promote wellness and prevent illness. When Medicare beneficiaries adhere to their drug regiment, Blum said, that help “reduce hospitalization and other high health care costs. There is growing evidence that it works to keep beneficiaries healthier and avoid costly hospital stays,’’ he added, noting that one of the barriers to get seniors to take their medicine faithfully is high out-of-pocket costs.

Dena Bunis can be reached at [email protected].  

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CMS Launches Effort to Keep Nursing Facility Patients Out of Hospital

By John Reichard, CQ HealthBeat Editor

March 19, 2012 -- Nursing facility operators are under growing pressure from policymakers to prevent unnecessary hospitalizations of their residents.

Two developments last week pointed to those growing expectations.

The Centers for Medicare and Medicaid Services (CMS) announced a new program on March 15 under which doctors’ offices and other outside groups would work with nursing facilities to keep patients from having to make unnecessary trips to the hospital.

And the Medicare Payment Advisory Commission (MedPAC) released a report urging Congress to require Health and Human Services to reduce Medicare payments to skilled nursing facilities that transfer unusually large numbers of residents to the hospital.

CMS announced that it would award grants of up to $128 million to help keep the sickest Medicare patients—those who are also enrolled in Medicaid—out of the hospital once they are in nursing facilities.

The grants will fund organizations that keep patients on the right meds and get the right preventive care once they come out of the hospital and go into the nursing facility. Medications change as a result of a hospital stay, but communication between the hospital and the nursing facility is not always what it should be. CMS said doctor’s offices, care management organizations, and other public and not-for-profit entities are eligible for the grant money.

“Too often, nursing facility residents experience potentially avoidable inpatient hospitalizations,” a CMS fact sheet said. “These hospitalizations are expensive, disruptive and disorienting for frail elders and people with disabilities. Nursing facility residents are especially vulnerable to the risks that accompany hospital stays and transitions between nursing facilities and hospitals, including medication errors and hospital-acquired infections.”

Each grant recipient must partner with at least 15 nursing facilities. Among other requirements, they must hire staff who maintain a physical presence at nursing facilities.

MedPAC’s March 15 report to Congress noted that if Medicare cut payments to providers that sent many patients back to the hospital, “skilled nursing facilities (SNFs) would have a financial incentive to furnish the care necessary to avoid rehospitalizations for conditions that are potentially avoidable, such as pneumonia and dehydration.” The report noted that the way things are now, “SNFs have an incentive to rehospitalize high-cost patients as a way to shift costs they would otherwise incur onto hospitals.”

John Reichard can be reached at [email protected].

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