By John Reichard, CQ HealthBeat Editor

May 5, 2014 -- The latest health law sign-up report from the Obama administration revealed some surprises that were overshadowed by the much-reported metric that 8 million people have applied for coverage in the new insurance marketplaces.

There has been fairly strong interest in exchange coverage in states with Republican governors bitterly opposed to the law. And outreach efforts to the Latino population have so far yielded unimpressive results.

Overall, the state-by-state figures for exchange plans, Medicaid and the Children's Health Insurance Program offered a rich vein of data as plans gear up for the next open enrollment period that begins just over six months from now.

Some of the takeaways:

• Enthusiasm in states whose leaders want no part of the law. The 36 states whose leaders walked away from hundreds of millions in federal dollars to help create their own exchanges collectively saw more than twice as many people sign up for marketplace plans as in the 14 states and the District of Columbia that created their own exchanges.

Although the uninsured populations in the 36 states are obviously bigger than in states that run their own marketplaces, the contrast was noteworthy. The federal insurance exchange serving the 36 states signed up 5.4 million people compared to 2.6 million for the state exchanges. In Florida, 428,000 people had signed up for a marketplace plan through April 19; in Texas, the figure was 223,000.

People picking marketplace plans in Florida made up 39 percent of those eligible, according to the Kaiser Family Foundation. Florida wasn't far behind California, where the figure was 43 percent, and it was well ahead of Maryland, which only signed up 16 percent of those eligible. The federal government gave California and Maryland hundreds of millions of dollars to set up exchanges and conduct outreach.

Both Florida and North Carolina "have both blown their projections out of the water," said Caroline Pearson, vice president of the Avalere Health consulting firm.

• Latino populations remain slow to sign up. The Hispanic community hasn't been gravitating to exchanges the way health law supporters had hoped. Obama administration officials said their data was preliminary and incomplete, so the final figures may produce different conclusions. But compared to the population eligible for exchange enrollment, "Asians and African-Americans were somewhat overrepresented; Latinos underrepresented," said Washington and Lee University law school professor Timothy Jost in a Health Affairs blog post.

"Spanish language enrollment materials were late in coming, and although there was a surge in enrolling Latinos at the end, enrollment fell short," he said.

Mayra E. Alvarez, the associate director for the Office of Minority Health at the Department of Health and Human Services, told reporters last week that the enrollment of minorities was an "important first step forward in addressing disparities" but that "we recognize there is more work to do."

The information in the enrollment report on ethnicity and race does not include data from state-run marketplaces, including those in places like California and New York. The overall results could change when that information is added.

• Signups exceeded expectations. According to the Urban Institute, as of April 19 the marketplaces signed up 115 percent of those projected to apply for coverage. Its projections were based on the Congressional Budget Office's original estimate that 7 million people would be enrolled in exchange plans in 2014.

Whether the final tally will actually beat those projections is unclear. Some of the 8 million enrolled through the exchanges won't actually pay their premiums and get health coverage. "On the other hand, others will enroll in marketplace plans after April 2014 because of special enrollment periods," the institute notes.

A separate analysis by the Avalere Health found that exchange enrollment met or beat expectations in 22 states. "Even after accounting for potential nonpayment, enrollment exceeds 100 percent of projections in nearly half of states," said Avalere's Pearson.

Avalere assumed 15 percent of those who signed up wouldn't pay premiums. Its projections were based on a revised CBO projection that 6 million people would enroll, not seven million because of online enrollment malfunctions.

That enrollment will come close to CBO projections and perhaps even exceed it, despite political hostility, multiple technical glitches in the federal website healthcare.gov and other factors demonstrates the marketplaces were able to offer products that were in demand, despite predictions to the contrary.

Rep. Henry A. Waxman, D-Calif., was declaring victory last week. "Medicare Part D enrollment, which Republicans hailed as an unqualified success, only reached 70 percent of its CBO estimated enrollment," he told an American Hospital Association meeting in Washington, D.C.

But health law supporters will still have to hold their breaths. Much of the coverage sold on exchanges has high deductibles. When Americans of modest means who are straining to pay their first premiums find that out later this year, its unclear how many will opt to re-enroll.

• The uninsurance rate appears to have dropped. Hundreds of thousands, if not millions of people, saw their policies canceled last fall because the coverage packages didn't comply with the health law. Some coverage was restored when the administration scrambled to limit the political fallout. Others signed up for new plans.

Congressional Republican have asserted that the cancellations mean the law may actually be producing a net drop in coverage. But evidence increasingly points to a large net increase.

Surveys by Gallup, the Rand Corporation, and the Urban Institute all reported declines in the percentage of uninsured Americans since open enrollment began last fall. An updated Gallup survey released recently found that the percentage of U.S. adults without health insurance fell to 13.4 percent in April, down from 15.6 percent in the first quarter of 2014 and 17.1 percent in the fourth quarter of 2013.

Apart from marketplace plans, enrollment since the open enrollment period began has swelled in Medicaid and the Children's Health Insurance Program. It's unclear how many were previously uninsured, but the sheer numerical increase suggests a substantial number were without coverage. As of March Medicaid and CHIP enrollment had grown by 4.8 million compared to the total as of Oct. 1 last fall.

• Subsidies really matter. By the end of the open enrollment period, 85 percent of those selecting marketplace private plans got financial assistance in the form of tax subsidies to help pay premiums. Many more were eligible for subsidies–3.6 million–but did not pick a plan. That could mean there's lot of room for enrollment growth or that that the coverage is too costly, even with the promise of subsidies. Time will tell.
• Some markets may be in trouble. Despite the national trend toward higher-than-projected marketplace enrollment, signups in some states were low relative to size of the uninsured population. Pearson rated Hawaii, South Dakota, West Virginia, New Mexico, and Iowa as states "where you worry that the markets may not be sufficiently attractive" to insurers.

By Melissa Attias, CQ Roll Call

May 7, 2014 -- Democrats recently seized on health insurer estimates that 80 percent to 90 percent of the people who signed up for coverage on the health law's insurance exchanges also paid their first month's premiums, emphasizing the disconnect with a Republican report claiming only 67 percent had paid up.

Republicans on the House Energy and Commerce Committee released the figure last week and immediately drew fire from Democrats and the Obama administration. Diana DeGette of Colorado, the top Democrat on the Energy and Commerce Oversight and Investigations Subcommittee, noted at a hearing last week that the report cut off responses at April 15, before some premiums were due.

"I'm glad we've got the insurers here today to clear up this record," DeGette said.

While insurers emphasized that the enrollment data is not final and continues to change, some provided estimates for the lawmakers.

Paul Wingle, Aetna Inc.'s executive director of individual business and public exchange operations and strategy, said the payment rate of those who had reached their due date on the federal exchange as of the third week of April has been in the low to mid-80 percent range.

Dennis Matheis, president of central region and exchange strategy for Wellpoint Inc., noted that the pay up rate varies depending on whether the total number of applications and payments are included or if the calculation is limited to people whose payment due dates have passed. Applying the second criteria on the federal exchange from Oct. 1 through April 15 yields a figure of up to 90 percent, Matheis said.

J. Darren Rodgers, senior vice president and chief marketing officer of Health Care Service Corp., provided a chart that showed that policies with effective dates of Jan. 1 to April 1 had on-exchange first payment rates of 83 to 88 percent. That compares to a 68 percent payment rate for policies with a May 1 effective date, according to his testimony, because the payment deadlines may not have all passed. The company does business as Blue Cross and Blue Shield of Illinois, Montana, New Mexico, Oklahoma and Texas.

The hearing also prompted visible frustration from Republicans, who asked for additional data from the companies without much success.

Subcommittee Chairman Tim Murphy, R-Pa., asked whether people are paying less than the amount they paid in previous years and how many had lost their insurance. He also asked whether premiums for 2015 will increase, but the insurance executives said their rates are not yet finalized and will vary based on geography and other factors.

By John Reichard, CQ HealthBeat Editor

May 7, 2014 -- Don't look now, but the private sector is quietly strengthening its grip on the Medicare program, at least if enrollment in the Medicare Advantage plans is a good proxy.

It's happening despite the payment cuts to private Medicare plans under the health law.

The Congressional Budget Office (CBO) originally estimated that the law would rock Medicare Advantage, by cutting payments that are 14 percent more per patient than reimbursements to providers in traditional Medicare.

But an analysis by Kaiser Family Foundation researchers Tricia Neuman and Gretchen Jacobson notes that the number of people in Medicare private plans reached an all-time high this year of nearly 16 million beneficiaries.

That's 6.3 million more than the CBO projected in 2010 soon after the health law (PL 111-148, 111-152) was enacted, they said. And CBO "now projects Medicare Advantage enrollment will reach 22 million beneficiaries by 2020, more than double the number projected shortly after the ACA was enacted."

Analysts explain the growth by noting that the plans are attractive to the many baby boomers entering Medicare. They can be cheaper than sticking with traditional Medicare and buying supplemental Medigap and Part D drug coverage. For many boomers accustomed to managed care, the transition is not especially harsh.

Medicare Advantage enrollment has jumped 41 percent since 2010, the Kaiser researchers said.

"The ACA froze payments to plans for 2011 and then phased in reductions between 2012 and 2017," they wrote in a research brief released last week. "The reductions were implemented by county on a two-year, four-year and six-year schedule, with the longest phase in allowed for counties with relatively larger payment reductions."

The phased-in approach was designed to give insurers more time to adjust and find ways to deliver services at a lower cost without negatively affecting patient care.

The cuts "have now been fully implemented in more than half of all counties and will be fully implemented in about another quarter of counties next year," they said.

The insurance industry recently wound up a fierce advertising and lobbying effort to pressure Medicare officials to take administrative action to lessen cuts in 2015. Although the reductions won't be as large as originally proposed, they still are significant, insurers and Wall Street analysts say.

America's Health Insurance Plans spokeswoman Clare Krusing said the full effects of the cuts are yet to be felt.

"While that the impact of 2015 final rates will vary by plan, it's also important to note that the ACA cuts are still being phased in and the vast majority have not yet taken effect," she said in an email message. "Only about 20 percent of the cuts CBO originally projected will have gone into effect by the end of 2014 with another 25 percent implemented in 2015 and 2016."

She added that while seniors continue to enroll in Medicare Advantage because of the additional benefits and quality of care, "our concern is that the year-over-year cuts to the program put at risk the coverage seniors like and rely on today."

Insurers note reports that plans are bumping up premiums, passing along more costs to enrollees, and cutting the size of their networks, costing enrollees access to longtime doctors.

Also, a program that awards bonus payments to plans based on the quality ratings is coming to an end. That may mean enrollment could start to take a hit in the next few years. For the moment, data such as that presented in the Kaiser analysis isn't helping insurers make the case to lawmakers that Medicare Advantage is being hit too hard.

By John Reichard, CQ HealthBeat Editor

May 9, 2014 -- Although the federal insurance exchange serves as a backup for states whose own marketplaces prove unreliable, the transition can be rocky both in terms of the cost to taxpayers and their menu of plan options.

A case in point is Massachusetts.

Officials recently approved a two-track plan to fix the state's dysfunctional marketplace at a cost of $121 million. The state is changing contractors to fix the Connector website and is at the same time preparing to send residents to the federal healthcare.gov marketplace this fall.

Sometime this summer, perhaps in mid-July, it will decide whether to rely on its Connector online marketplace or switch to healthcare.gov. Officials say they only would rely on the federal site in 2015 and switch back to the Connector in 2016.

Similarly, Maryland officials are expected to need another $40 million to $50 million to repair their exchange.

House Republicans estimated at a recent hearing that the federal government overall has spent $4.7 billion to set up state exchanges.

But spending money on faulty websites isn't the only headache. At a board meeting of the Massachusetts Connector last week, officials noted that "there are significant challenges" associated with switching to healthcare.gov. It will mean more work and more financial risk for insurance carriers, who have varying levels of infrastructure developed to participate in the federal marketplace, they said.

And in some cases they may not have enough time to get ready.

Health plans in the state issued a warning to the Connector board about the impact of the dual-track approach.

"We cannot overstate the complexity and technical issues that come with having to develop two separate systems," said a letter to the board May 7 from Eric Linzer, senior vice president of the Massachusetts Association of Health Plans.

"The combination of the technical requirements, compressed time frame and significant additional costs of having to build two systems may result in some health plans being unable to participate," he said. "This outcome will take options away from consumers" and may mean higher premiums, he said.

It's unclear whether the federal government will foot the costs of the repairs, or when they will make a decision on the matter. The federal spigot for state exchange operations remains open until the fall under a grant program established by the health law (PL 111-148, PL 111-152). But political considerations are paramount at the White House, with congressional elections drawing closer and Republicans portraying outlays for the state marketplaces a big waste of money.

Maryland officials recently voiced confidence federal officials wouldn't try to block the funds. With a federal funding stream in place, Massachusetts could ultimately get its money too.

It's not a certainty, however.

A Centers for Medicare and Medicaid Services official said that "if a state requests to re-scope their existing grant, they must document in writing their proposed revised scope of project, identifying what activities they are terminating, what activities they are continuing and or adding, and any impact on the budget. This is something we would need to approve."

The funding controversy may primarily be a Beltway battle, but more critical to the future of the marketplaces is the cost of the coverage they will provide.

An analysis released last week by the Avalere Health consulting firm is forecasting double-digit rate hikes in many markets. The firm's president, Dan Mendelson, said in an interview that assessment is based on the combination of underlying medical cost growth, the costs of fees insurers must pay under the health law next year, and the costs of delaying some provisions of the health law.

Some insurers have signaled they will keep increases in the single digits. Mendelson didn't dispute that and said "it's going to vary by market." He said "there will be noise around the average," and that insurers that underpriced this year will charge more and those that overcharged will trim premiums. But it's likely that the average increase will be in the low double digits, he predicted.

For employers accustomed to seeing yearly insurance increases that size, that doesn't seem like such a big deal, Mendelson said. But uninsured people getting coverage for the first time in exchanges aren't used to that kind of increase — and federal officials haven't prepared them for it, he added.

By Rebecca Adams, CQ HealthBeat Associate Editor

May 9, 2014 -- An early read on proposed premium changes in Washington state for 2015 shows that, so far, most health insurers want to change their rates significantly. But the adjustments range from a 6.8 percent premium decrease to a 14.2 percent hike.

Washington is giving the public a chance to see rate changes on a searchable website. The state insurance department will release more rate filing information this week.

The five initial proposals that companies have filed for individual market plans show rate increases of 14.2 percent by Group Health Options Inc. and 11.2 percent by Group Health Cooperative. Kaiser Foundation Health Plan of the Northwest asked for a 0.57 percent increase while Molina Healthcare of Washington Inc., requested for a 6.8 percent decrease.

One company, Columbia United Providers Inc., requested to offer a new plan for 2015.

"My initial thought is they vary a lot," said Kaiser Family Foundation Senior Vice President for Special Initiatives Larry Levitt, who is tracking the data. "That's likely going to be true as we see other rates as well. Averages are going to be deceiving here because premium increases will vary tremendously across the country and even within rating areas as well."

The Washington database also includes information on coverage for small businesses.

The company requests are under review by regulators and may change.

Consumers would need to study the details of each plan to determine which is best for them. The insurers also were able to request adjustments in out-of-pocket spending and benefits.

Molina, for instance, said in its detailed filing that it would like to raise its total cap on out-of-pocket costs for patients who choose its silver plan option in health law exchanges from $6,350 to $6,600. Those consumers would see a deductible increase from $1,700 to $2,000, but reduced copays for several health services.

Washington state Office of the Insurance Commissioner spokeswoman Stephanie Marquis said that state law requires that rate information must be made public 10 days after it is filed.

Other states have different policies and schedules for releasing rate filings.

"It'll be a positive story in some places but a negative story in others," said Levitt, with health care law opponents able to point to big increases in some areas and supporters pointing to lower increases or decreases. "Possibly this year more than last year, it'll be a heavy duty game of spin."

By Rebecca Adams, CQ HealthBeat Associate Editor

May 9, 2014 -- The Centers for Medicare and Medicaid Services (CMS) said last week that it will phase in a restructuring of the Quality Improvement Organization Program that the agency believes will be more efficient and save money.

During the first phase of the restructuring, two of the private contractors that help CMS with quality improvement efforts will take a lead role in working with the program's case review and monitoring activities. That work will be done separately from the traditional quality improvement activities that contractors do.

The companies will focus on ensuring consistency in the review process and taking into account local factors in decisions. CMS announced that it has selected two contractors to do that work: Livanta LLC, located in Annapolis Junction, Md., and KePRO, located in Seven Hills, Ohio.

During a second phase, CMS will award contracts to organizations that will directly work with providers and communities on quality initiatives to improve patient safety, reduce harm, and improve clinical care.

The trade association for quality improvement organizations (QIO) said it supported the changes.

Todd Ketch, executive director of the American Health Quality Association, said the changes "will place even greater emphasis on improving the health status of communities; providing beneficiary-centered, reliable, accessible and safe care and providing better care at a lower cost."

He added, "In the years ahead, QIOs will continue to focus on improving the way in which providers coordinate patient care across settings, reducing health care associated infections, improving care for high-incidence conditions like diabetes and heart disease, and more. We applaud CMS' commitment to continuing to provide boots-on-the-ground QIO technical assistance that has been integral to national quality improvement efforts."