By Erin Mershon, CQ Roll Call

April 27, 2016 -- The second-largest U.S. insurer, Anthem Inc., picked up more health exchange customers than it expected during the 2016 open enrollment period—a gain it attributes in part to the failure of more than a dozen nonprofit co-ops created under the health law.

Anthem's uptick is likely to continue, executives said on a call Wednesday. The company's optimism stands in stark contrast to UnitedHealth Group, which forecast hundreds of millions of dollars in losses on the insurance marketplaces and announced withdrawals from at least 26 of the 34 states it participates in.

Enrollment is a closely watched barometer of the health coverage expansion spawned by the 2010 health care law.

"Over time we do believe we're well-positioned for continued growth in the exchange marketplace, if the market stabilizes to a more sustainable level—I think that is a key consideration," said CEO Joseph Swedish. "Clearly the performance has lagged expectations throughout the industry, as some of our peers have recognized. In consideration of that, we are monitoring the market very closely to see that our offerings continue to be ... rational and sustainable for the customers."

The company picked up about 184,000 customers during the open enrollment period that ended Jan. 31, but officials said they didn't yet have the data to know whether those were new enrollees or existing exchange customers who switched from another health plan. Executives said many of their biggest gains came in states like New York, Kentucky, and Colorado, where the nonprofit co-ops that were created to compete with established insurers failed.

"Generally where we've seen unexpected uptake has been markets where the co-ops have become insolvent," said  Wayne DeVeydt, the company's chief financial officer. "Where we're probably surprised on the uptake though, has been that we weren't the next lowest-cost carrier. In many cases we were substantially higher than the next, or several next lowest-cost carriers. There appears to be a little bit of a flight to safety, if you will, and security."

Swedish said that the company intends to leverage that feeling and "how folks are connecting back to us in terms of a known brand" more effectively across all its markets.

Policy Priorities 

Still, Anthem isn't expecting the new customers will yield huge profits. Executives on the call emphasized that their projections remain "conservative," especially as they try to understand the health needs of the new enrollees.

"Frankly, given how 2015 played out, we want to take a more conservative posture over this year and see how this develops," said DeVeydt. Both he and Swedish said several times that they are keeping estimates at a "break-even" point. Officials throughout the insurance industry have said people who enrolled were sicker than predicted.

To better improve the exchange business for insurers, Swedish outlined regulatory changes he favors, including eliminating the 2010 law's health insurance tax and further narrowing the number and variety of special enrollment periods outside of the official sign-up period. He wants to tweak a mechanism that shifts money from insurers with healthier-than-average consumers to those with a relatively large number of sick patients and limit a grace period that allows those who don't pay their premiums to stay enrolled.

"When you put all that together in a mosaic, I think maybe a sustainable model can be built, and we will continue to perform in the marketplace in a way that lets us maybe try to achieve the membership we had originally anticipated when this effort began in 2014," Swedish said.

Swedish also said he expects Anthem's pending merger with Cigna Corp. will "present a meaningful improvement in affordability for our members." He said he expects that merger to be completed in the second half of this year.

By Marissa Evans, CQ Roll Call 

April 25, 2016 -- Health insurers that participate in Medicaid will have to spend a minimum amount of the money they receive on medical care, under a new Centers for Medicare and Medicaid Services (CMS) rule released late Monday.

The change was included in the 1,425-page rule that gives states, health providers, and managed care organizations new clarity. Under the final rule, managed care plans that cover Medicaid patients for the first time will have to spend at least 85 percent of their revenues on medical care under guidelines in the rule. Those standards are similar to those that private plans that serve Medicare must meet.

States also will have to develop the first Medicaid managed care quality rating system to help consumers compare and shop for insurance plans, develop more robust provider network adequacy standards and develop more tools to help beneficiaries learn how to enroll and file an appeal when their care is not covered.

Vikki Wachino, director of the Center for Medicaid and CHIP Services within CMS, said on a press call that the rule "takes a major step forward" in improving Medicaid and Children's Health Insurance Program coverage.

"The overall goal of the rule is to clearly support cost efficient, high-quality care," Wachino said. "That's important because many states use managed care not just to promote better coordination but to drive cost efficiency forward in their program."

Government agencies and health industry groups have been waiting for a finalized rule for almost a year after CMS officials released a proposed version. The rule updates regulations issued 14 years ago. Wachino said that provisions of the rule will be implemented in phases starting Jan. 1, 2017.

The rule comes as more states move toward managed care systems for poor and disabled Medicaid beneficiaries, including those with chronic health issues and social service needs. Thirty-nine states and the District of Columbia use Medicaid managed care organizations, according to CMS. About two-thirds of the 72 million people who receive Medicaid are in managed care. 

A number of states that expanded Medicaid under the federal health law are using managed care for people who gained eligibility.

The new provisions are also giving state and federal officials more work. Under the rule, the federal agency will have to approve the primary care providers states use and will monitor the adequacy of provider networks for patients.

Wachino said during the call that the agency was unable to develop specific cost estimates as each state would likely have different ways of implementing changes.

Matt Salo, executive director for the National Association of Medicaid Directors (NAMD), said that the organization would be "looking at it from a pragmatic approach." Last year, NAMD expressed concerns over state and federal officials having the budget and staff to fulfill new requirements in the proposed version, CMS's own ability to oversee the changes and the lack of power states would have.

"The big things we're looking at are: Can this actually be implemented?" Salo said. "What are the timetables? Is this realistic?"

By Marissa Evans, CQ Roll Call

April 27, 2016 -- Patient advocates say a new rule allowing short-term inpatient care for Medicaid beneficiaries in mental health crises could prod federal lawmakers to pass broader legislation.

Under a Centers for Medicare and Medicaid Services (CMS) rule released Monday, states running Medicaid care programs will get more help covering patients needing mental health and substance abuse services.

Current law generally prohibits federal officials from providing Medicaid payments for such care if patients receive it in an institution. Lawmakers have been considering mental health legislation that would remove the prohibition, but the multi-billion-dollar costs have raised concern. 

Under the new rule affecting patients in managed care plans, Medicaid will offer matching federal reimbursements to psychiatric hospitals and facilities for less than 15 days a month for patients.

"This will give many states important tools with which to address some of the increasingly untenable provisions of the underlying statute and allow states to improve the delivery of mental health services to the Medicaid population," according to a statement from the National Association of Medicaid Directors.

Lawmakers and advocates are still parsing the 1,425-page rule that gives states more clarity about how to run Medicaid care plans. Aside from the inpatient mental health reimbursements, CMS is also forcing states to spend 85 percent of their revenue on medical care, develop the program's first quality rating system for consumers and meet stricter requirements to ensure provider networks are adequate.

Pressure on Congress?

The new provision is a game changer, according to John Snook, executive director for the Treatment Advocacy Center, a nonprofit mental health advocacy group. He said that the CMS rule could finally get Congress to pass stalled legislation that would expand Medicaid coverage for inpatient treatment.

"I hope this brings more pressure on Congress...at this point it would be an embarrassment to say they weren't able to finish this," Snook said in an interview. "The administration has done most of the heavy lifting, that to not make sure that every person would be able to have this access would be ridiculous."

Bills in the House and Senate are in limbo as lawmakers in both chambers try to assess the financial costs.

Mental health legislation (S 1945) that the Senate Health, Education, Labor, and Pensions Committee approved does not include a provision to allow Medicaid to cover inpatient services, but sponsor Christopher S. Murphy, D-Conn., would like to add that. The Senate Finance Committee, which oversees Medicaid issues, likely would have to approve and find money to pay for this. The Finance Committee is holding a hearing Thursday on ways to address mental health issues through programs such as Medicaid.

Some advocates say the rule should have done more to help people with mental health needs receive other support that could help them live outside of institutions. Bethany Lilly, policy attorney for the Bazelon Center for Mental Health Law, said states may not feel pressure to provide additional services like case managers, supportive housing or employment services to people living with a mental illness.

"We have some concerns that this is going to incentivize states to over-rely on hospitalization," Lilly said. "If you're not taking a systemic look at your mental health systems and understanding access across the continuum of care, you're not going to fix the problem."

However, congressional advocates for mental health legislation said the rule will be beneficial. Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee, said in a statement on Tuesday that the new rule on reimbursement for mental health is "welcome news."

"This commonsense change will have an important impact on families focused on getting their loved ones the care they need, and that's good news," Upton said.

By Marissa Evans, CQ Roll Call 

April 27, 2016 -- Residents in many states face health care costs that are thousands of dollars more than those in other areas, even in cities just miles away, according to a joint report released by Health Affairs and the Health Care Cost Institute.

Alaska had the highest average health care prices, with residents paying twice the costs of the national average, according to the report issued Wednesday afternoon. Wisconsin, North Dakota, New Hampshire, and Minnesota made up the rest of the top five states with the highest health care costs.

Only 15 states had health costs below the national average. Florida, Arizona, Tennessee, Maryland, and Nevada had the lowest in the country.

The study used data from the Health Care Cost Institute to assess national commercial claims and compare 242 medical services prices across 41 states and the District of Columbia between Jan. 1, 2012 to Dec. 31, 2013. Prices were standardized to reflect costs in September 2015. The study also looked at city data. No state data was available for Alabama, Arkansas, Hawaii, Idaho, Montana, Michigan, South Dakota, Vermont, and Wyoming.

"The questions that remain for researchers, policy makers, and health care leaders are as follows: Why do prices for the same service differ markedly across distances of only a few miles, and what amount of that difference is justifiable?" the researchers wrote.

When trying to compare the prices among 242 services, researchers found a wide variation. Authors found that in Florida, 95 percent of the prices for 241 services were at or below the national average. But among 221 services in Minnesota, 45 percent of the prices were at least 50 percent more than the national average.

The study also found that some residents in different cities in the same state could see significant price differences. In other states, differences between cities were minimal.

Researchers used a combination of prices for knee replacements and pregnancy ultrasounds alongside Metropolitan Statistical Area data to evaluate differences within 12 states. Californians seeking knee replacements could face a $27,243 average difference depending on whether they lived in Sacramento or Riverside. However, Virginia residents needing the same surgery only saw a $6 average difference between nearby cities.

Pregnant women needing ultrasounds in California were also bound to see price disparities across nearby cities. The average price difference in California was as much as $477. Pregnant women in Ohio saw an average $339 difference depending on whether they got their ultrasound in Cleveland or Canton. But Virginia area women found just a $4 average difference.

Providers might compete for fancier machinery or more convenient clinic locations, but they are not as competitive when it comes to prices, said Jonathan Skinner, a health economist at The Dartmouth Institute for Health Policy and Clinical Practice who was not involved in the study.

"The unknown question is: Do the higher prices get you better quality?" Skinner said in an interview. "I think what little evidence I've seen is just because you're paying a lot doesn't necessarily mean you're getting better quality."

By Kerry Young, CQ Roll Call

April 28, 2016 -- Medicare officials are winning praise for their bid to change rules for doctors' use of electronic health records (EHR) as part of a draft proposal released late Wednesday.

The Centers for Medicare and Medicaid Services (CMS) outlined a new approach to judge how well doctors use electronic health records. The proposal is accompanied by plans to prevent technology organizations from improperly blocking the flow of information among medical professionals.

The proposal is in a draft rule to implement a congressional overhaul (PL 114-10) affecting payments for many doctors. CMS' current meaningful use approach presents a high hurdle for many doctors, whose Medicare pay can be dinged for failing to meet a full set of goals set by the agency. Penalties start at 1 percent of reimbursement. Lawmakers including Senate Health, Education, Labors and Pensions Chairman Lamar Alexander, R-Tenn., have been quick to note that only about 12 percent of eligible doctors have been able to meet an advanced threshold of the meaningful use requirements.

The draft physician pay rule released Wednesday by CMS calls for a "new, more flexible scoring methodology," and a "more holistic approach to health IT." The agency said it is seeking comments on what kinds of measures to include in a new set of metrics, which would be called the advancing care information performance category. This will be part of the new merit-based incentive payment system Medicare is developing for doctors' pay.

"While we are still reviewing the proposed rule, we are pleased to see provisions support two of our main priorities: leveraging technology to deliver high quality health care at a lower cost and once and for all ending the practice of information blocking in a program built on the promise of information exchange," said Health IT Now, a coalition with members including insurance giant Aetna Inc., tech firms Oracle Corp. and Intel Corp., and medical specialty groups, such as the National Alliance on Mental Illness.

Bob Doherty, senior vice president for governmental affairs and public policy at the American College of Physicians, tweeted that the "proposed rule seems to be responsive to pleas to simplify reporting" through electronic health records. The American Medical Association said in a statement that "it appears that CMS has made significant improvements by recasting the EHR Meaningful Use program and by reducing quality reporting burdens."

Andy Slavitt, the acting CMS administrator, has been frank about the shortcomings of the meaningful use approach. He called on the health information technology industry and investors at a January conference to aid CMS in shaping a new approach, saying that the agency has lost the "hearts and minds" of doctors with its meaningful use program. It's often jokingly called "meaningless abuse" in medical circles, with doctors and other health professionals quick to name what they consider pointless information they must log about their patients. 

On a call with reporters Wednesday, Slavitt said CMS held focus groups meeting in eight cities about how to change the rules on electronic health records. Doctors told CMS, for example, that they were frustrated that they couldn't use electronic health records for many practical purposes, such as tracking how their patients fare when hospitalized, Slavitt said. Another common complaint was that the current rules lock doctors into certain products, making it tough to switch to new technologies that might suit them better.

"What they wanted was more flexibility and greater control," Slavitt said.

By Kerry Young, CQ Roll Call

April 27, 2016 -- Medicare officials on Wednesday unveiled a plan to offer doctors and other health care providers choices about how their performance will be judged under an overhauled payment system. The concession is unlikely to prevent further fights with lobbying groups about one of the largest federal medical expenses.

The Centers for Medicare and Medicaid Services (CMS) released its draft rule for carrying out last year's congressional overhaul (PL 114-10) of payments for doctors, physician assistants, and other providers of care routinely delivered in medical offices. The rule is intended to further tie payments for the care of more than 35 million Americans in traditional government-run Medicare to judgments about the quality of care by doctors and other providers. Medicare paid about $69 billion in 2014 for services covered by the physician fee rule, which also sweeps in related fields.

Doctors and other physicians will see their 2019 payments adjusted to reflect how well they fared on Medicare's metrics in 2017. CMS officials stressed on Wednesday that they want to allow flexibility in the new reimbursement system.

"By proposing a flexible, rather than a one-size-fits-all program, we are attempting to reflect how doctors and other clinicians deliver care and give them the opportunity to participate in a way that is best for them, their practice, and their patients," said Patrick Conway, the chief medical officer for the Centers for Medicare and Medicaid Services.

The draft rule fleshes out the mandates in the so-called "doc fix" law,  in which lawmakers undid a previous budget mechanism—known as the sustainable growth rate—that threatened for many years to cut Medicare payments to doctors.

Doctors now face a choice of moving into alternative payment models in which they face greater financial risks or rewards based on how Medicare judges their performance, or adapting to the new merit-based incentive payment system, or MIPS. The draft rule spells out how doctors can avoid the MIPS program by joining certain alternative payment models, which may carry increased financial risk and rewards.

Doctors in the new merit-based program would choose the metrics for judging their performance from among a range of approved quality measures, with an emphasis on those that reflect the actual results in their patients. MIPS also will be structured to try to reward doctors for increased care coordination, CMS said.

The draft MIPS rule outlines four performance categories—quality, advancing care information, clinical practice improvement activities and cost. The quality measure would represent 50 percent of the total score in the first year. Doctors and other health care providers would choose to report six measures from among a range of options that accommodate differences among specialties and practices.

The advancing care information category would account for 25 percent of the score in the first year. In this field, doctors and other providers of health care can choose to report customizable measures that reflect how they use technology in their day-to-day practice, with a particular emphasis on interoperability and information exchange. The clinical practice improvement activities would account for 15 percent of the total score. This category would reward activities focused on care coordination and patient safety. Doctors and providers of health care may select activities from a list of more than 90 options.

Cost would be 10 percent of the total score in the first year. The score would be based on Medicare claims, meaning no reporting requirements. This category would use 40 episode-specific measures to account for differences among specialties.

CMS will accept comments on the draft rule through June 26.