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May 13, 2013

Washington Health Policy Week in Review Archive b6df5128-a487-4ca6-8e5f-8e2215a3373c

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CMS Posts Data Showing Big Hospital Price Swings

By John Reichard, CQ HealthBeat Editor

May 8, 2013 -- Government officials plan to fund the creation of "health care pricing data centers" to widen public awareness of new information released last week showing sometimes huge differences in what hospitals charge for surgical and other medical procedures.

The hope is that consumers, businesses, and insurers will shop for better deals based on the data, and that hospitals will be embarrassed into charging uninsured Americans prices for health care that are more in line with what Medicare or other insurers pay.

Health and Human Services (HHS) Secretary Kathleen Sebelius described the effort as part of a multi-stage program that for the first time gives consumers information on what hospitals charge.

HHS is making $87 million available to the states "to create health care pricing data centers to help consumers and to continue enhancing their health insurance rate review programs," the department said in a news release.

The pricing data posted on an HHS website last week is not easy to access.

HHS is apparently acknowledging the complexity of this data and said that the Robert Wood Johnson Foundation is planning "a data visualization challenge which will further the dissemination of these data to larger audiences."

The data include the prices charged by more than 3,000 U.S. hospitals and are based on 60 percent of the patient discharges from those facilities in fiscal 2011. They are hospitals that receive Medicare inpatient prospective payment system payments for the 100 most common types of Medicare inpatient stays.

"Users will be able to make comparisons between the amount charged by individual hospitals within local markets, and nationwide, for services that might be furnished in connection with a particular inpatient stay."

The data show that the charge for a joint replacement can range from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a facility in Monterey Park, Calif. Or within the same area, charges range from $21,000 to $46,000 to treat heart failure in hospitals in Denver, Colo.

Hospitals say the postings fail to take into account differences in how sick patients are or the higher costs that facilities may have because they are academic medical centers, for example. And higher sticker prices are a tactic to counter insurers that are negotiating for better discounts. But consumer advocates say that the uninsured sometimes do get stuck with the full charge.

Deputy Centers for Medicare and Medicaid Services (CMS) Administrator Jonathan Blum made that point too in a noon press call during which reporters expressed skepticism about how useful the data are since in many cases consumers are covered by insurers who pay far lower prices than what hospitals charge. "There are clearly consumers who are subject to the chargemaster," Blum said. The term "chargemaster" refers to a hospital's listing of prices. When reporters asked Blum how many people, he didn't give any specifics, instead turning the question around and suggesting that it would be a good one to ask local hospitals.

The aim appears not be to simply allow comparison shopping but also to put pressure on hospitals to lower high prices. Blum said CMS does not see any business reason to justify such wide price variations.

Blum also indicated CMS might publicly post much more price data in the future. While the release is for 100 "diagnosis related groups" in Medicare, the data set could be expanded to all 760 Medicare inpatient DRGs, he said. Or it could be expanded to include what hospitals charge for outpatient services.

Senate Finance Committee Chairman Max Baucus, D-Mont., applauded the release of the data, praising the health care law (PL 111-148, PL 111-152) in doing so. "That's why the Affordable Care Act made price transparency a priority. Informed consumers make smart, efficient choices," he said.

"The data shows that there is no rhyme or reason to how much hospitals bill patients for common procedures," Baucus said in a news release. "Exposing this information to the light of day is a major step forward in the effort to bring down health care costs."

The American Hospital Association (AHA) issued a statement saying its members seek to assist patients without coverage.

AHA President Richard Umbdenstock said "hospitals have long followed AHA's guidelines on financial assistance for those of limited means. In addition, all tax-exempt hospitals are required by federal law to have financial assistance policies readily available to those who cannot afford to pay for their hospital care. Hospitals were pleased to be able to provide $41 billion in total assistance in 2011." He added that AHA favors legislation to more widely publicize pricing data.

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Researchers Propose Combining Medicare Plans

By CQ Staff

May 6, 2013 -- Researchers from Johns Hopkins and The Commonwealth Fund are proposing a new structure for Medicare, one that they say could save beneficiaries, employers, and state and local governments a combined $180 billion over a decade.

The paper, published in the May edition of Health Affairs, would combine Medicare's Part A for hospital care, Part B for doctor visits and its Part D prescription drug benefit, along with supplemental coverage, into one plan they call Medicare Essential.

Authors Karen Davis, director of the Roger C. Lipitz Center for Integrated Health Care at The Bloomberg School of Public Health, as well as Cathy Schoen and Stuart Guterman of the Commonwealth Fund, say by offering a comprehensive set of benefits that includes drugs and lower deductibles, their Medicare Essential plan "would offer beneficiaries better financial protection, a limit on out-of-pocket spending and the opportunity for additional savings in premiums and out-of-pocket expenses for those who select high-value health care providers and hospitals that are able to provide quality care while keeping down costs."

Retooling Medicare has been the subject of numerous reports and studies by health economists and researchers. The pace of such research has increased recently as lawmakers say they want to tackle the spiraling costs of entitlements.

"This plan builds on traditional Medicare, which beneficiaries are more satisfied with than private coverage," Davis said in a news release. "But Medicare is overly complex, and it fails to protect beneficiaries against high costs unless they buy supplemental coverage. Medicare Essential would simplify and modernize Medicare for beneficiaries and help keep premiums and out-of-pocket costs reasonable."

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Health Spending Slowdown May Last Beyond Economic Rebound, More Analysts Say

By John Reichard, CQ HealthBeat Editor

May 7, 2013 -- The current health spending slowdown may persist after the U.S. economy rebounds, with a potentially dramatic impact on deficit reduction efforts, three leading policy analysts concluded in separate studies released this week.

A host of fundamental changes in the health care system, such as slower-paced innovation in the pharmaceutical and medical imaging spheres, increased cost-sharing by patients, and greater provider efficiency account for most of the recent slowdown—not the recession—said the author of one of the studies, David Cutler. The Harvard University economist spoke at a Washington, D.C., forum sponsored by Health Affairs, which featured his study in its May issue.

The 2007–09 recession, a one-time event, accounted for 37 percent of the slowdown between 2003 and 2012," Cutler and coauthor Nikhil Sahni wrote in study. Sahni is a senior researcher in the economics department at Harvard.

"The evidence thus suggests at least as strong a case for structural changes as for cyclical factors" relating to the economy, they said.
One of the structural changes relates to a growth in high deductible health plans. "These deductibles are now greater than most families have in the bank," Cutler told the forum. "I say this is unrelated to the recession because nobody that I know of when they are making a forecast about the future thinks that if economic growth returns very rapidly, cost sharing is going to come down," he added.

"If these trends continue during 2013–22, public sector health care spending will be as much as $770 billion less than predicted," the authors said in the study. "Such lower levels of spending would have an enormous impact on the U.S. economy and household finances."

In 2021, they would wipe out 20 percent of the expected budget deficit in the year 2021, "the equivalent of doing a massive deficit reduction effort," Cutler said.

The findings were released on the same day the Congressional Budget Office estimated that deficit spending is $231 billion lower so far in fiscal 2013 than in the same period in fiscal 2012.

While more analysts seem to think the slowdown doesn't just stem from people having less money to spend because of joblessness or shrinking incomes, some warn that the current wave of optimism may be overblown.

Speculation that the nation's health spending problem has somehow been solved or cut down to size is unrealistic, said a Kaiser Family Foundation study released April 22, which concluded that 77 percent of the slowdown stems from the weak economy.

It would be a mistake to think deficit reduction is fading as a political issue even if some recent trends and studies are creating some cautious optimism.

But the idea that the spending slowdown isn't going away soon got backing in two other studies released this week.

Chernew Weighs In

Harvard health policy professor Michael Chernew, vice chairman of the Medicare Payment Advisory Commission, said in a study conducted with other Harvard researchers that from 2009 to 2011, per capita national health spending grew about 3 percent a year compared to an average of 5.9 percent annual growth during the previous ten years.

Their study examined two factors that might account for the slowdown: job loss and benefit changes that shifted more costs to insured people. "We conclude that such benefit changes accounted for about one-fifth of the observed decrease in the rate of growth," they said.

The researchers tried to find a group that was not as affected by the recession in their study. So they looked at spending patterns among workers who did not lose their health coverage. They found that "spending growth slowed even for this population," Chernew told the forum.

So the slowdown had to involve factors other than the direct effects of job loss, he said. That suggests "other factors, such as a reduction in the rate of introduction of new technology," were also at work.

"Our findings suggest cautious optimism that the slowdown in the growth of health spending may persist—a change that, if borne out, could have a major impact on U.S. health spending projections and fiscal challenges facing the country," the study said.

Chernew said "I share David's [Cutler] sense of good news. This is a really big deal." But simply because spending growth is slow does not mean policymakers should stop efforts to make spending more efficient, he warned.

"There's more going on than just the recession," added John Holohan of the Urban Institute, who led a third study.

In reviewing health spending growth over the last decade, Holohan and fellow Urban analyst Stacey McMorrow found that that growth began to slow well before the most recent recession.

Medicare spending growth began to slow in 2004, he said. "A variety of payment policies for imaging, home health, durable medical equipment and Medicare Advantage have contributed to slower Medicare spending growth," according to the Institute's study.

"State Medicaid programs have also tightened payment policies, expanded managed care, and increased community-based long-term care alternatives under intense budgetary pressures. Moreover, slower growth in prescription drug spending has affected all payers due to the development of fewer blockbuster drugs, the adoption of tiered formularies, and increased substitution of generics for brand-name drugs," the study added.

The analysts at the Urban Institute were more skeptical that changes such as medical homes and accountable care organizations are driving the slowdown. Their study instead pointed to trends over the past decade such as "declines in real incomes and a shift towards less generous insurance arrangements," that have "slowed the growth in provider revenues and forced cost-containment efforts. Some of the more recent payment and delivery system reforms may help to sustain this slow growth, but this remains to be seen."

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On the States: HHS Accepts Utah Proposal for Hybrid Exchange

By Jane Norman, CQ HealthBeat Associate Editor

May 10, 2013 – The Department of Health and Human Services (HHS) recently gave its blessing to yet another form of health insurance exchange, this one a Utah creation that lets the state operate the small business market while the federal government oversees the sale of policies to individuals.

In other developments regarding the health care law, Kentucky's Republican governor announced that the state will expand its Medicaid program and GOP state legislators in Michigan moved that state a little closer to Medicaid expansion as well.

In Utah, the new hybrid option allowed federal officials to gain cooperation from a heavily Republican state in implementation of the health care law (PL 111-148, PL 111-152) while still allowing Utah's exchange a degree of political independence perceived as greater than that in a "partnership" exchange. State officials had been insistent they did not want to have any part of enforcing mandates that employers provide health insurance and that individuals obtain it.

Utah Republican Gov. Gary R. Herbert said in a conference call with reporters that the state wanted something different than a state exchange, federal exchange or state–federal partnership. "We didn't feel like any of those models fit with what we believed to be a better way," said Herbert.

Other states will be permitted to take the same route though there's no indication yet any plan to do so. The Center for Consumer Information and Insurance Oversight's Gary Cohen said in a letter to Herbert that "similarly situated states would have the same opportunities as Utah." The center is part of the Centers for Medicare and Medicaid Services (CMS).

Herbert said that after months of lobbying, HHS had accepted Utah's proposal to run what he called a "bifurcated" exchange model. "We feel good about this fourth option," said Herbert. "We think other states might want to consider it."

Utah already has had its "Avenue H" marketplace up and running for four years and wanted to continue its operation. In the version proposed by Herbert to Health and Human Services Secretary Kathleen Sebelius, Utah would run Avenue H as a certified Small Business Health Options Program (SHOP) exchange, "servicing small business without a competing federal SHOP solution or interjection from the federal government," Herbert said in a May 9 letter to Sebelius.

Utah will maintain oversight over qualified health plans in the SHOP, including certification, recertification, decertification, and compliance, the governor said. The state would expect HHS to be responsible for operating the individual exchange, including precertification for Medicaid and Children's Health Insurance Program eligibility, and managing tax credits, Herbert said.

Small businesses with one to 50 employees can apply and enroll online in qualified health plans through Avenue H, Utah state officials said.

Herbert said state officials also felt strongly they did not want to share any data about residents from Avenue H with the federal "hub" that will process health insurance information.

That seemed acceptable to HHS. Cohen, the CCIIO director, in his letter said that detailed enrollment information for SHOPs would be optional under proposed amendments to federal regulations. "SHOPs would be required to report only aggregated data that contains no information that identifies an individual or an employer," Cohen said.

The entire arrangement proposed by Utah would also be covered in the amendment to final rules already issued on exchanges, he said.
Also, Utah under the amendment would run a SHOP-specific navigator program, with the navigators conducting consumer outreach and education, Cohen said.

In the individual exchange, the federal government would rely on the state's recommendations for certifying qualified health plans for the marketplace, but the federal government "would ultimately maintain its legal responsibility for ensuring that the recommended" plans meet all standards, he added.

Medicaid expansion

Meanwhile, in Kentucky, GOP Gov. Steven L. Beshear announced last week that an additional 308,000 state residents would be covered by health insurance with the state's agreement to expand its Medicaid program. Beshear called it the "single-most important decision in our lifetime for improving the health of Kentuckians," and said it will create 17,000 new jobs.

Beshear said the expansion to extend Medicaid eligibility to adults earning up to 138 percent of the federal poverty level came after months of internal analysis and outside studies conducted by the University of Louisville and Price Waterhouse Coopers. And the governor said he was tired of seeing his state at the bottom of national health rankings, and expanding Medicaid would bring big improvements in health care for the poor.

Beshear said he was moving ahead with the expansion as the state's executive, although lawmakers could conceivably reject his action.
In Michigan, Republican lawmakers in the House proposed a plan in which Medicaid eligibility would be expanded but adults would be given only a temporary, four-year safety net for coverage. The Republicans said they would include health savings accounts, incentives for healthy behavior and no-cost or low-cost preventive coverage. But the plan would need the approval of Republican Gov. Rick Snyder, Democrats and the Obama administration.

The Republicans said their plan would be preferable to a straight Medicaid expansion. "Instead of expanding an open-ended federal entitlement, we found a way to reform the system and cover more people with better coverage, all at a cost savings to Michigan taxpayers," said state Rep. Al Pscholka, a Republican, in a statement.

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White House Effort to Draw Healthy People into Exchanges

By Emily Ethridge, CQ Roll Call

May 10, 2013 -- The Obama administration has identified specific groups of people it would like to focus on as it promotes enrollment in the state health insurance exchanges next year.

The administration plans a localized approach to reach 2.7 million healthy people who are 18 to 35 years old and without health insurance, according to information provided by senior administration officials.

Enrolling that population group is crucial to stabilizing the marketplace, because the healthier people will balance out the costs of covering enrollees who are older and sicker. The ratio of healthy people to sicker people who participate in the exchanges will affect the premium rates in the second year.

The Congressional Budget Office (CBO) expects 7 million people to enroll in the insurance exchanges in the first year, and the administration expects that nearly 5 million will be those with pre-existing conditions or those who already buy insurance on the individual marketplace.

Of the 2.7 million young people being pursued, 96 percent have no chronic conditions, 57 percent are female, and 52 percent are non-white, according to senior administration officials. In addition, one-third of the population lives in one of three states: California, Florida and Texas.

The administration's focus now is on consumer outreach and assistance, as nearly all of the guidances and rules for the health care law's (PL 111-148, PL 111-152) marketplaces are complete, the officials said.

Speaking at a recent White House event, President Barack Obama touted the law's benefits and tried to assure people who are anxious about the law.

"I am 110 percent committed to getting it done right," he said. "It's not an easy undertaking. If it were easy, it would have already been done a long time ago. Undoubtedly there will be some mistakes and hiccups as the thing gets started up, but we're learning already from them."

The administration's enrollment outreach will be tailored to each specific group, and the plan is to appeal to young people with a simple insurance application, providing new benefits, and tax credits to help buy insurance. For example, in California, 54 percent of the goal population is eligible for tax credits, and 50 percent is Hispanic.

Administration officials also said they planned on reaching out to mothers specifically, because they can encourage their children to buy insurance.

Assisting in the outreach efforts will be community health centers, which recently received $150 million from the law to help enroll the uninsured. Churches and other community organizations can also help with enrollment, the administration officials said. They noted that lessons learned from the 2012 presidential campaign have informed their outreach plan.

Open enrollment for the insurance exchanges begins Oct. 1 and lasts for six months, with coverage beginning Jan. 1, 2014. That gives the eligible population an extended period to sign up, so the outreach efforts can ramp up over time, the officials said.

The officials noted that they recently completed the paper application for insurance in the exchanges for single adults, which is three pages long. They are now translating that into an online application.

The administration said that once people enroll in the exchanges and begin receiving insurance benefits, the politics of the law could change. The GOP message of stopping the law will mean taking away real benefits, not something abstract, they said, noting that the House plans to vote on a bill (HR 45) to repeal the law next week.

Republican leaders criticized Obama's speech and promoted the upcoming repeal vote.

"The president's health care law is a train wreck for men and women alike, and that's why a majority of Americans support Republican efforts to repeal it to protect their health care—and their jobs," Speaker John A. Boehner, R-Ohio, said in a statement. "The entire law should be repealed so we can enact a step-by-step, common-sense approach to health care that starts with lowering costs and protecting American jobs."

Obama dismissed the "political bickering" over the law and told people to get informed about how the law would affect them personally.

"Precisely because there's been so much misinformation, sometimes people might not have a sense of what the law actually does. And that misinformation will continue at least through the next Election Day," he said. "This is too important for political games."

"You stand to benefit, if you're not already benefiting from this thing," Obama added. "Don't let people confuse you. Don't let 'em run the okey-doke on you. Don't be bamboozled."

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HHS Will Send $150 Million to Health Centers to Enroll Uninsured

By John Reichard, CQ HealthBeat Editor

May 9, 2013 -- Community health centers will get $150 million to enroll the uninsured under the health law, part of what Health and Human Services (HHS) Secretary Kathleen Sebelius recently called a "robust" plan to educate Americans on how they can get health benefits and to help them sign up.

Money for the effort will come from community health center funding, not from the health law's Prevention and Public Health Fund. The administration recently took money from that fund to promote a federal insurance exchange, provoking protests by public health lobbyists.

Federal officials are scrounging for money to educate millions of hard-to-reach uninsured Americans about coverage options under the overhaul. That prompted skeptical questioning during a call with reporters about the use of community health center funding for the outreach effort.

Officials pointed out that the health law (PL 111-148, PL 111-152) provided $11 billion over five years in mandatory funding for community health centers. The money was intended for construction, operations, expanded services, and outreach workers, said Mary Wakefield, head of the Health Resources and Services Administration.

"We've had outreach workers that have been assisting individuals to enroll in insurance probably for decades," she added. "It is a function that they carry out already and that we have historically helped to support."

Wakefield was asked when officials decided to devote a portion of the mandatory health center funding to the outreach effort.

"We've been working on this initiative for a period of time," she said. "I couldn't tell you the exact date, but this is something that we've been working on for a period of time." The centers treat many uninsured patients and already help to enroll those who qualify for Medicaid and the Children's Health Insurance Program.

The money will specifically go to provide in-person enrollment assistance. "Health centers will be able to hire new staff, train existing staff, and conduct community outreach events and other educational activities," an HHS news release said.

Only existing grantees are eligible for the funds. About 1,200 health centers operate nearly 9,000 service delivery sites nationwide and serve approximately 21 million patients each year, HHS said in a news release. The centers typically are located in rural areas and in inner city neighborhoods.

Sebelius sought to portray the enrollment challenge in positive terms.

"The next several months present an incredible opportunity to educate and connect millions of uninsured Americans with the security of quality, affordable health coverage, in some cases for the first time," she said.

"Health centers are especially well equipped to promote enrollment in neighborhoods that stand to benefit the most" from new insurance exchanges opening to offer coverage, the secretary added. "They can do that by reaching out to their patients and the neighbors in the area."

Sixty percent of health center patients are people of color, officials said, and come from communities with disproportionately large uninsured populations.

The announcement "builds on the extensive outreach efforts that we have planned for the coming months," Sebelius said. "This summer administration officials and I will be traveling around the country to spread the word about enrollment. And we've great allies and partners in the states and private and non profit sectors who will also be stepping up to help educate people and get them signed up," she said.

But Sebelius didn't elaborate on those coming efforts, and there's lots of doubt that resources for the job will match its size. "This won't be easy," Sebelius said. But connecting the uninsured with coverage "will have huge health benefits for the American people. And we have a very robust plan to get it done."

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