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May 11, 2015

Washington Health Policy Week in Review Archive a5c21a37-86b5-4125-b7aa-6178a9f83cb8

Newsletter Article


Closely Watched Accountable-Care Program Saved $385 Million, Study Says

By Kerry Young, CQ Roll Call

May 4, 2015 -- An analysis by Medicare officials pegged the savings from an early approach to better coordinating treatment of patients at roughly $385 million over two years. The study may provide a boost to the accountable care organization model, which experienced a significant dropout rate in one of its major tests.

The Journal of the American Medical Association (JAMA) recently published research from the Centers for Medicare and Medicaid Services (CMS), which is using the Pioneer Accountable Care Organizations (ACO) to test a popular premise in health care policy that more coordinated care can generate savings without compromising quality. The analysis comes as CMS is preparing to advance the concept with its Next Generation ACO, a model meant to offer both more financial risk and reward to participating institutions. The agency also is looking to more widely apply lessons about coordinating care gained from the Pioneer model.

"This gives CMS greater confidence in scaling elements of the model to benefit people across the nation, and we are working to determine the best strategies for embedding the lessons we have already learned from the Pioneer Model into permanent Medicare programs and our nation's health system," said Patrick Conway, the acting principal deputy administrator of CMS, in a recent statement.

The Pioneer program is one of the broad initiatives meant to overhaul the delivery of medical care that were created through the 2010 health law. Kicked off in 2012, the Pioneer ACOs program started with 32 medical systems already considered leaders in the field of coordinating care as participants. Only 19 organizations remain in the Pioneer ACO program now, with some having switched to the Medicare Shared Savings Program, another model meant to encourage more coordination of health services.

"It's a signal that those organizations decided that the Pioneer ACOs may not have been the best thing for them to do right now," said Stuart Guterman, a former CMS official who now studies Medicare at The Commonwealth Fund, in an interview. "They may have thought that they could do better in another arrangement."

The findings of the JAMA paper are positive, according to Guterman, who was not an author of the paper. He's among the policy experts seeking to move Medicare away from a fragmented approach to health care delivery, which can result in duplication of services and missed opportunities to head off complications of disease.

To test whether this approach truly generated savings, CMS researchers compared the experiences of people aligned with Pioneer ACOs with those of a similar group of people also enrolled in traditional Medicare.  They concluded that total spending rose less for the 1.48 million people aligned with the hospitals and medical groups in the Pioneer ACO program than for the other group, with the bulk of the claimed savings—$280 million—happening in the first year.

"This amount may seem small but if this rate of savings could be sustained, and achieved throughout a large part of the U.S. healthcare system, it would be more than enough to 'bend the curve' so that health care expenditures do not continue to increase as a percentage of the gross domestic product and the federal budget," said Lawrence Casalino of Weill Cornell Medical College in an accompanying editorial in JAMA.

In the study, the spending difference in the first year was largely due to fewer physician encounters and hospital admissions, while in the second year, reductions in preventable hospitalizations played a role.

The savings cited by CMS topped another estimate published last month in the New England Journal of Medicine. That paper pegged the first-year savings at $118 million, an amount that the authors described as exceeding the $76 million in bonuses paid by CMS to the Pioneer ACOs by $42 million.

The lead author of the New England Journal of Medicine paper said it would take some time to fully analyze the methods used for the paper in JAMA.

J. Michael McWilliams, an associate professor for health care policy at Harvard Medical School, said the comparison groups in his study were more similar in baseline spending and spending growth to the control group than in the other study. 

The New England Journal of Medicine analysis "produced results suggesting more modest savings in the first year—savings we think are more plausible," McWilliams told CQ HealthBeat in an email. "But again, the overall conclusions are more similar than different. The two studies generally tell the same story."

The savings estimated from the Pioneer ACOs program appeared to have happened without harming patients, and in fact, the approach used may offer them benefits, wrote former CMS administrator Mark McClellan in a second editorial published by JAMA on the CMS paper.

"These changes occurred without apparent adverse consequences for patient experience with care; indeed, Pioneer beneficiaries reported somewhat more favorable experiences in terms of timely access to care and clinician communication," wrote McClellan, who now is director of the Health Care Innovation and Value Initiative at the Brookings Institution.

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Study: Nearly 17 Million Gained Coverage Since Obamacare Kicked In

By Melissa Attias, CQ Roll Call

May 6, 2015 -- The number of people with health coverage grew by almost 17 million since the major provisions of the health care overhaul took effect, according to a study by the RAND Corporation published in Health Affairs.

While 42.7 million people lacked health insurance in September 2013—right before the start of the first open enrollment period—the study found that the figure dropped to 25.8 million in February 2015, which marked the end of the second open enrollment window. Almost 23 million people gained coverage, with most picking it up between September 2013 and May 2014, while nearly 6 million lost it.

The net increase of 16.9 million with health insurance is slightly above a federal government estimate in March that found that 14.1 million adults gained coverage since the start of open enrollment in 2013, though the study notes large confidence gaps mean it's possible the estimates are equivalent.

A recent Gallup survey found that the uninsured rate for U.S. adults for the first quarter of 2015 dropped to 11.9 percent, which was the lowest on record since tracking started in 2008.

"The ACA has greatly expanded health insurance coverage in the United States with little change in the source of coverage for those who were insured before the major provisions of the law took effect," the RAND study states.

During the study window, the authors projected that net enrollment rose by 9.6 million for Medicaid, 11.2 million for plans on the new health insurance exchanges and 8 million for employer-sponsored policies. Of the 11.2 million with coverage through the exchanges set up under the health overhaul, 4.1 million or 37 percent lacked insurance in September 2013.

At the same time, coverage through non-group plans decreased by 1.9 million and coverage through Medicare, military insurance, and other sources dropped by 10 million.

In addition, the study found that 80 percent of the 155.8 million with coverage in September 2013 did not change coverage sources during the research period while 47 percent of those who were uninsured at the start stayed that way. Citing concerns about cancellations, it also noted that only 600,000 people who initially had non-group coverage became uninsured.

"We found that the vast majority of those with individual market insurance in 2013 remained insured in 2015, which suggests that even among those who had their individual market policies canceled, most found coverage through an alternative source," the authors wrote.

Although many of the estimates were close to others already reported, the authors said a low cumulative response rate for their survey may have created bias.

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Nursing Home Industry Broadens Quality Goals Ahead of CMS Rule

By Rebecca Adams, CQ Roll Call

May 6, 2015 -- The nursing home industry plans to announce that it will expand a 2012 initiative to improve quality, in a move that could feed into an upcoming federal regulation that the Centers for Medicare and Medicaid Services (CMS) is developing.  

New goals include further reducing the number of patients who are readmitted to a hospital after a stay, decreasing staff turnover, reducing the off-label use of antipsychotics in long-term residents, and increasing the number of facilities that report data from patient satisfaction surveys.

The industry has drawn scrutiny in recent years from Congress, the Medicare Payment Advisory Commission and the Centers for Medicare and Medicaid Services (CMS). The American Health Care Association and National Center for Assisted Living—which represents skilled nursing facilities and assisted living facilities—will announce details of the program at a press conference.

The proactive move could help position operators as they await the release of a new CMS quality improvement rule mandated by the Affordable Care Act. The law requires the Health and Human Services Department to expand quality improvement efforts through an effort known as Quality Assurance and Performance Improvement standards, or QAPI.

In September 2011, CMS launched a demonstration program in a small number of nursing homes that helped the agency develop best practices for helping facilities upgrade existing quality programs. The new industry standards build on that work.

"What gets measured gets improved," said Mark Parkinson, president and chief executive officer of the American Health Care Association and National Center for Assisted Living. "While the results are evident on paper, more importantly, they are felt each and every day in the lives of millions who enter our doors. This new initiative will help us reach even higher levels of quality, affirming to Congress and policymakers alike we can help with workable solutions for programs such as Medicare and Medicaid." 

The association has updated CMS on its framework, which the group's board of directors approved last week. The association is wagering that the industry goals are consistent with the principles of the new rule, though operators don't know what it will say or when it will be released.

The industry will set eight major targets.


  • Decreasing nursing staff turnover by 15 percent or achieving turnover of less than 40 percent by March 2018.
  • Reducing the number of unintended health care outcomes by March 2018.
  • Ensuring that at least 25 percent of member companies measure and report patient and family satisfaction survey results.
  • Reducing the number of hospital readmissions within 30 days during a skilled nursing center stay post discharge by an additional 15 percent, or achieving a rate of 10 percent readmissions by March 2018.
  • Increasing discharges of short-stay patients back to the community by 10 percent or achieving a high rate of at least 70 percent by March 2018.
  • Ensuring that at least 25 percent of member companies adopt measures for mobility and self-care of short-stay residents and report functional outcome measures.
  • Reducing the off-label use of antipsychotics in long-term nursing home residents by an additional 10 percent by December 2015 and 15 percent by December 2016.
  • Reducing hospitalizations among long-stay residents by 15 percent or achieve and maintain a low rate of 10 percent or less by March 2018.

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Leavitt: Obama Has Advantage if Justices Rule Against Health Law

By Kerry Young, CQ Roll Call

May 5, 2015 -- President Barack Obama could enjoy a political advantage over a fractious Congress if the Supreme Court upends the health care law's system for distributing insurance subsidies, according to a former top health official in the George W. Bush administration.

Justices may decide next month in King v. Burwell, in which the interpretation of a sentence in the Affordable Care Act will decide whether roughly 9 million people could lose access to federal insurance subsidies. At issue is whether the assistance can be provided only in state-run marketplaces and not in the federal one,

Former Health and Human Services (HHS) Secretary Michael O. Leavitt said Obama could respond to a decision limiting subsidies by leaning on Congress to change the law and allow the existing system to continue. Leavitt said he believes that HHS officials may not be heavily involved in preparing administrative steps in such an event, with the White House focused on a political response. 

The White House response is "going to be 'Just fix the law. There's five words there'," Leavitt said last week at the American Hospital Association's annual membership meeting. "They are not poorly positioned here. They are just going to be able to continue to drive that message."

If the Republican-controlled Congress doesn't deliver a legislative fix that Obama finds acceptable, the administration could turn to its executive powers and act as if it has unilateral power, said Leavitt, who now runs a health consulting business. 

"Congress will say, 'Wait a minute, you don't have it,'" and they will say 'Sue us' and they'll take another two years in which to operate and by that time it will be 2017," Leavitt said. "This is the reality that we're dealing with."

According to Leavitt, who also is a former three-time governor of Utah, the leaders of executive branches at state and federal levels enjoy a natural advantage over legislators in that they can stick to a single message or demand, while lawmakers represent more varied agendas.

"I dined out for a very long time getting the House and the Senate to argue with each other," Leavitt said of his own experience as a governor. "You speak with one voice and they speak with multiple voices."

Looking at the state of the GOP-controlled Congress, Leavitt predicted that Republicans may split into three camps if the high court rules against the subsidies in the federal marketplace.

"The first will be those that would say 'This is our chance. Let's blow it up.' The second would be 'This is a good thing. Let's get something and move on.' And the third will be 'Let's get a lot and move on'," Leavitt said, adding that this will complicate efforts to enact health legislation.

Still, the efforts to address the health law in the conference agreement on the fiscal 2016 budget resolution (S Con Res 11) are an encouraging sign, he said. It's possible that Republicans could pass a health bill in response to the King v. Burwell decision, but then the question becomes how Obama chooses to respond.

"The president has got a good hand," Leavitt said. "He knows it."

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Drug Discount Program Guidelines Near Unveiling

By Kerry Young, CQ Roll Call

May 7, 2015 -- New draft guidelines for the 340B discount drug program are under review at the White House Office of Management and Budget (OMB), a final step needed before the Obama administration reveals the much anticipated oversight framework.

Administrators of many hospitals and drugmakers have been at odds about expanding program. Hospitals, clinics, and other participants saved about $3.8 billion on the cost of medicines in fiscal 2013. The program was created in the 1990s with a goal of helping hospitals that treat many people living in poverty. Participants have complained about a lack of transparency about drugmakers' prices, while others have criticized a lack of rules on who should benefit from the discounted medicines.

"The 340B Drug Pricing Program's omnibus proposed guidelines address many key programmatic policy issues, including the eligibility of hospitals and outpatient facilities, patient definition, contract pharmacy and manufacturer compliance," said a spokesman for the Health Resources and Services Administration (HRSA), the division of the Department of Health and Human Services that administers the program, in a statement to CQ HealthBeat.

HRSA expects that it will be able to publish the 340B guidelines in the Federal Register, with a 60-day comment period allowed, once OMB completes its review.

HRSA last year had to abandon an attempt to create a sweeping set of rules for the effort. The agency in November 2014 withdrew a proposed regulation that it had advanced as far as the stage of OMB review. It opted then to try to resolve disputes about the program through a guidance document.

HRSA had had a setback earlier in 2014 when a federal court found against its ability to make a rule related to a section of the 340B program that covered orphan drugs.

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Tax Repeal Could Figure in GOP Response to Obamacare Ruling

By Melissa Attias, CQ Roll Call

May 6, 2015 -- Efforts to repeal parts of the health care law that have bipartisan support– including scrapping a tax on medical devices or the so-called Cadillac tax on the most generous insurance plans—could move as part of a legislative response to the Supreme Court's ruling on the availability of the law's insurance subsidies, according to a leading House Republican.

Joe Pitts of Pennsylvania, chairman of the Energy and Commerce Health Subcommittee, also said that work is continuing on a proposal that would take the money spent on subsidies for people in states that did not set up their own health insurance exchanges and redirect it toward refundable tax credits for the 8 million estimated to lose coverage if the justices rule against the Obama administration.

The Supreme Court is expected to rule by the end of June in a legal challenge that seeks to invalidate the health law's subsidies in the 34 states that defaulted to the federal exchange.

GOP leaders in both chambers have said little about a legislative response since outlining their options in a series of op-eds timed with March oral arguments in the case, King v. Burwell. Unresolved questions, from how budget reconciliation will factor into a response to what kind of timeline is envisioned for the release of a proposal, still appear to be under discussion.

"I don't want to just get off by saying this is complicated, but it is," said John Kline of Minnesota, chairman of the Education and the Workforce Committee, who together with Energy and Commerce Chairman Fred Upton of Michigan and Ways and Means Chairman Paul D. Ryan of Wisconsin is leading the House working group on this issue. "It depends upon what the court does, what kind of timeframe they put on it. We don't know that yet."

In addition to refundable tax credits, Pitts said the House plans to scrap the law's requirement that employers provide workers with coverage or pay a penalty, allow more choice so people don't have to purchase options such as pregnancy coverage if they don't need it and promote competition and portability across state lines and a medical malpractice overhaul.

He identified the 2.3 percent excise tax on medical devices that began in 2013 and the excise tax on high-cost employer "Cadillac" policies set to take effect in 2018 as targets that could get wrapped into a response.

Kline noted that Republicans have dedicated staff in each of the three House committees with jurisdiction over the health overhaul working on the effort. Among other things, they're connecting with the Congressional Budget Office for preliminary scores and discussing what should happen when the tallies are returned, he added.

While Kline said he's gone back and forth over whether lawmakers should release legislation before the court ruling, GOP Doctors Caucus members Charles Boustany Jr. of Louisiana and Phil Roe of Tennessee both said they prefer that text be prepared ahead of the ruling. And Pitts said he would like to see a markup before the decision.

"I think that we should go ahead even though we don't know yet, tee up our vehicle so that tweaks can be made," Pitts said. "So people know what's out there."

"We need to push our leadership a little harder," Roe said, noting the tight legislative calendar.

But Kevin Brady of Texas, chairman of the Ways and Means Health Subcommittee, said he doesn't expect text to be released ahead of the ruling because it would need to reflect the court's action.

The decision about how to use budget reconciliation—the process for advancing legislation that requires only a simple majority in the Senate—may also wait until the court acts, Brady said. Pitts noted that leadership would have to make the decision based on how negotiations are going with the White House.

Although report language to a fiscal 2016 budget agreement (S Con Res 11) the Senate recently endorsed states the compromise "affirms the use of reconciliation for the sole purpose of repealing the President's job-killing health care law," the reconciliation instructions also provide flexibility for responding to the court decision.

Under the agreement, the House Budget chairman is specifically allowed to adjust the baseline for reconciliation legislation. While the same language isn't included for the Senate, a GOP budget aide said the Senate Budget chairman already has the authority to choose his baseline.

The House working group is also working on a broader replacement bill, though Kline said they're currently focused on the King v. Burwell response. Roe said the Republican Study Committee will finish up its own replacement measure in a couple of weeks.

Across the Capitol, a group of senators led by Republican Policy Committee Chairman John Barrasso of Wyoming, Health, Education, Labor, and Pensions (HELP) Chairman Lamar Alexander of Tennessee and Finance Chairman Orrin G. Hatch of Utah are also crafting a response to the high court. Alexander said they usually get together about once a week and Hatch said things are progressing pretty well.

Barrasso noted that any member can attend the meetings and estimated that about half of all GOP senators have attended at least one. He said the group is in the process of making recommendations to the HELP and Finance committees, which will draft the actual legislative language, and indicated that he sees reconciliation as an opportunity.

"If the Supreme Court rules that the president acted illegally, the way to get something to the president's desk with 51 votes is to use reconciliation," Barrasso said.

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