By John Reichard, CQ HealthBeat Editor

May 16, 2012 -- Six states will get grants totaling $181 million to help them establish health insurance exchanges under the health care law, Health and Human Services (HHS) officials announced this past week. That makes 34 states and the District of Columbia that have received such federal assistance.

Officials also released a guidance document detailing how they will work with states to establish a "federally facilitated exchange" (FFE) for those that elect not to create their own such marketplace. The guidance says that at least in the first year of the federally facilitated exchange. HHS officials will run an "open market" that prevents a plan from being disqualified based on the rates it charges.

"This guidance describes how HHS will consult with a variety of stakeholders to implement an FFE, where necessary, how states can partner with HHS to implement selected functions in an FFE, and key policies organized by exchange function," HHS said in a news release.

The six states receiving the money are Illinois, Nevada, Oregon, South Dakota, Tennessee and Washington. Of the six, all but Washington are getting "level one" grants that provide one year of funding to begin the process of establishing an exchange. Washington is getting a level two grant, which is a multi-year allotment of money and means it is farther along in the process. It is only the second state to get a level two grant.

Another new guidance document consists of an "Exchange Blueprint" in which states will detail their plans when it comes to exchanges.

Many states appear to be holding back on exchange creation as they wait to if the U.S. Supreme Court upholds the constitutionality of the health care law (PL 111-148, PL 111-152), and if it does, whether Republicans make sufficient gains in the November elections to allow them to repeal the overhaul next year. But through its new grants and guidance documents, HHS is sending the message that it's business as usual despite the uncertain fate of the overhaul.

Steve Larsen, head of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services (CMS), declined to estimate in a telephone news briefing how many of the 34 states will have their own fully functioning exchanges operating when these marketplaces open for business in 2014. "We're very pleased with the progress many states have shown," he said. But in reality states are nowhere near as far along as framers of the overhaul envisioned they would be by now.

The Obama administration has responded to foot-dragging by the states by giving them flexibility.

States can approach exchange creation in three ways: do it all themselves; let the federal government run things through the federally facilitated exchange; or opt for a partnership model in which the states perform some functions and the federal government carries out other functions. States going the partnership route can eventually take over exchange operations fully, but they don't have to do so by Jan. 1, 2014, when the marketplaces open.

If the health care law survives, states hostile to the measure may ultimately decide they want to run their own exchanges rather than have the federal government do it. Larsen said states that want to do things themselves have to file for approval by Nov. 16 of this year in order to have time to meet a requirement that HHS approve a state-operated exchange by Jan. 1, 2013. The law requires HHS approval of a state-run exchange a full year before it begins operating.

States that want to run things themselves can file either for full approval or conditional approval. Conditional approval means there are some exchange functions states haven't fully developed by Jan. 1, 2013, but that they expect to complete during 2013.

States must apply for approval using the "exchange blueprint" document. It lists the various functions exchanges will perform. States must list which ones they are fully ready to handle themselves and which ones they aren't.

While some states will run things entirely themselves, a number are expected to opt for the partnership model. In that approach, the state agrees to be responsible for plan management, consumer assistance or both. The federal government manages all other exchange functions. Plan management includes such duties as certifying that a health care plan offers the required minimum benefits and has an adequate provider network. Consumer assistance includes making sure exchange customers have the information they need to pick a plan.

That would leave federal officials to carry out such functions as establishing eligibility for tax credits and determining the size of those credits.

States have long complained that they can't make a decision on whether to run their own exchanges or let the feds do it because of a lack of information on how the federally facilitated exchange will work.

"For the states that will need to operate a federally facilitated exchange, having this initial guidance will help inform states on how to coordinate with the federal government to tailor their health benefit exchanges to meet the needs of their populations," said Stephen Finan, Senior Policy Director of the American Cancer Society Cancer Action Network.

Officials said that exchange-related grants provided to the states under the health care law now total more than $1 billion. Larsen was asked in the briefing whether states would have to return the awarded funds if the law is struck down. He declined to answer, saying he expects that the constitutionality of the law will be affirmed.

By John Reichard, CQ HealthBeat Editor

May 16, 2012 -- Sen. Sheldon Whitehouse has taken on the role in Congress of showcasing new forms of health care delivery that save money without undermining quality or access, and of touting the role the 2010 health care overhaul plays in incubating that innovation.

But Republican statements at a hearing last week by the Senate Health, Education, Labor, and Pensions Committee challenged the notion that the government can play an effective role in fostering redesign of health care delivery.

The health care law "undermines any serious attempt to reform the delivery of health care in the United States," Sen. Michael B. Enzi, R-Wyo., said in a statement released at the hearing. He did not attend the session.

Whitehouse, D-R.I., who chaired the hearing, emphasized that changes are occurring in the private sector that have produced "real improvements to quality, real improvements in patient outcomes, and real cost savings. The advantage of this approach is that it does not rely on shifting costs or cutting benefits."

His prime example: Coastal Medical, a doctor-run physician group practice that delivers primary care to 105,000 residents of the state, 10 percent of its population. Coastal CEO Alan Kurose testified that electronic medical records and the use of "nurse care managers" have played a key role in making health care more efficient at that practice.

Coastal uses IT to track costs and measure the quality of health care. As part of a shared savings agreement with Blue Cross Blue Shield of Rhode Island, it sets performance goals in areas such as controlling blood sugar in diabetics, keeping blood pressure within normal ranges, screening for depression and immunizing adolescents.

Nurse care managers coordinate treatment services and work with patients to engage them in their own care. They contact patients within two days of a hospital discharge to monitor how they are doing and whether they are keeping up with their post-discharge instructions.

Practice managers also try to ease access to care to better maintain the health of patients. The first thing a patient hears when calling the office is: "Would you like to see a provider today?" The office is open seven days a week to treat children and now has Saturday hours for adults. Starting July 1, Coastal plans to open Sundays and holidays for adult patients.

Practice officials say that costs for its Blues patients grew just 1.5 percent in 2011. Hospital readmission rates for the Medicare Advantage patients it treats fell 27 percent compared to 2010. The number of days Medicare Advantage patients spent in the hospital fell 13 percent compared to 2010.

"We do not intend to bend the cost curve, but rather to break it," Kurose said. "We have committed ourselves to reduce the total cost of care for our populations of patients by 5 percent by the end of 2014," he said.

Kurose said Coastal is an example of how physician practices can build a more efficient form of health care delivery from the ground up. It began with the merger of seven small doctor's offices and since then has added other small practices, now employing some 90 providers.

Much of what it does is consistent with the vision of a "patient-centered medical home" the health care law (PL 111-148, PL 111-152) seeks to help implement as one model for system redesign. Testimony by Kurose was music to the ears of Sen. Barbara A. Mikulski, D-Md. "What you say in your testimony is stunning. It's exactly what we wanted," she said.

Kurose said Coastal has received "crucial support" from federal programs, such as payments for meaningful use of IT—paid for under the economic stimulus law—and regional IT extension centers that help providers adopt IT systems. A Medicare advanced payment program to provide up-front working capital to deliver team-based care through accountable care organizations will benefit Coastal greatly if it is approved for the program, Kurose said.

But Republicans on the HELP Committee argue that money spent under the health care law to test and promote health system redesign is being poorly spent. They've sharply criticized the CMS Center for Medicare and Medicaid Innovation, for example.

Republicans skipped the hearing but made their presence felt in other ways. Enzi's statement said a vital part of fixing the nation's "broken" health care system involves changing the way Medicare pays for services.

James Capretta, a White House health budget official during the President George W. Bush administration, picked up on that point during his testimony. "It will be nearly impossible to move to a high-value, low-cost delivery system if Medicare fee-for-service continues to operate as it does today," he said. He said it has fostered the creation of an "overbuilt" health care system.

"A more reliable approach to higher-quality and lower-cost patient care is strong competition in a functioning marketplace."

Capretta added that the Congressional Budget Office has examined many of the demonstration programs carried out by Medicare officials in the past decade. All of them aimed to promote delivery system changes to control costs and improve care. But he noted CBO's conclusion that the results are "often disappointing."

By John Reichard, CQ HealthBeat Editor

May 15, 2012 -- Health care costs for a family of four covered by an employer-sponsored preferred provider organization will average $20,728 in 2012, according to an estimate released on last week by the Milliman consulting firm.

The total represents sums paid both the by the employer and the employee.

"While the 6.9 percent increase over 2011 is the lowest rate of increase in the 10 years of this study, the $1,335 increase surpasses last year's record of $1,319," Milliman said in a news release. "This helps illustrate the challenge of controlling health care costs," said Lorraine Mayne, a Milliman actuary. "When the total cost is already so high, even a slower rate of growth has a serious impact on family budgets."

Employers on average will pay $12,144 of the $20,728 total while employees—through payroll deductions and out-of-pocket expenditures—will pay the remaining $8,584, the consulting firm said. The survey also found considerable variation in tracking costs in 14 cities. Miami was the most expensive at $24,965, while Phoenix was the least expensive at $18,365.

• Study

By CQ Staff

May 15, 2012 -- One key to better blood pressure control is to have a team of health professionals follow a patient's care, something that should be incorporated into the health delivery system, a Centers for Disease Control and Prevention (CDC) task force recently said.

The Task Force on Community Preventive Services made the recommendation, CDC officials said, after reviewing 77 studies of team-based care. The research "showed that patients' control of blood pressure improved when their care was provided by a team of health professionals—a primary care provider supported by a pharmacist, nurse, dietitian, social worker, or community health worker—rather than by a single physician,'' CDC officials said in a written statement.

In areas where this model was in place, team members supplemented the activities of the primary care provider by supporting and sharing in tasks such as medication management, patient follow-up and helping people adhere to their blood pressure control plans—including monitoring blood pressure routinely, taking medications as prescribed, reducing sodium in the diet and increasing physical activity.

The studies showed that blood pressure was controlled the best when health professionals in the team, other than the primary care provider, had the ability to change a patient's medication independently as opposed to only monitoring someone's adherence to a prescription.

"Adoption of this model throughout the United States would improve blood pressure control for the 68 million adult Americans who have high blood pressure and reduce their risk of heart attack, stroke, and other health problems," CDC Director Thomas R. Frieden said in a statement. "This analysis shows that when primary care physicians and other health care professionals with different expertise and approaches work together to support their patients, they can find the right formula for getting blood pressure under control."

High blood pressure was listed as a primary or contributing cause of death for approximately 336,000 Americans in 2007, according to the CDC, which estimated that if all patients with high blood pressure were treated as outlined in current clinical guidelines, 46,000 deaths might be averted each year. Total annual costs associated with hypertension are $156 billion, including medical costs of $131 billion and lost productivity costs of $25 billion.

By CQ Staff

May 15, 2012 -- A new Web-based tool is bringing together data sets from across the federal government in one place so Americans can monitor and measure how the nation's health care system is performing, Health and Human Services (HHS) Secretary Kathleen Sebelius said last week when the new site launched.

Known as the Health System Measurement Project, it will allow policy makers, health care providers and the public to develop consistent data-driven views of changes in critical U.S. health system indicators, HHS officials said.

"Ensuring all Americans have access to these data is an important way to make our health care system more open and transparent," Sebelius said in a written statement.

The project includes data from topical areas, such as access to care, cost and affordability, prevention, and health information technology. It presents these indicators by population characteristics, such as age, sex, income level, insurance coverage, and geography.

The tool contains information on how the measures were calculated and provides users with direct links back to the original data sources, HHS officials said. To access the Health System Measurement Project, go to https://healthmeasures.aspe.hhs.gov/.

By Jane Norman, CQ HealthBeat Associate Editor

May 14, 2012 -- Advocates for children's health warn that low-income families might slip through the cracks in the new state health benefits exchange system, according to a letter advocacy groups submitted in response to provisions in an exchange rule issued earlier this year.

In the rule, "many provisions would potentially undermine the ACA's [Affordable Care Act] clear intent to establish a simple, unified pathway to health coverage for consumers," wrote the groups, including the American Academy of Pediatrics. One major element of the rule would let state exchanges opt out of making final determinations on public program eligibility, they said.

There have long been concerns about making sure that families eligible for Medicaid, the Children's Health Insurance Program, or subsidized coverage in the exchanges understand how the new system works and that they are not frustrated by its complexities.

The idea of the exchange itself is that it is a one-stop shop. However, in its comments the group said that might not be the case for the poor, many of whom may be gaining health insurance coverage for the first time in their lives. Under the health care law (PL 111-148, PL 111-152), Medicaid will be extended to every adult under 65 who is earning less than 133 percent of the federal poverty level.

The groups are also concerned that states will be given too much time to ponder their final say-sos on whether people are eligible for insurance coverage, especially pregnant women in need of prenatal care and newborn babies who should be seen by doctors regularly.

While a final 644-page exchange regulation was issued in March, Department of Health and Human Services officials kept several provisions as interim final regulations, which meant they were still open to public input. Overall, the rule sets up a framework in which HHS will assist states in setting up their exchanges, though not every detail is available yet. Public comments were due on at the end of last week.

The coalition of children's health advocates, including the Children's Defense Fund, Children's Hospital Association, and March of Dimes, wrote that they were "very troubled" by a decision to allow the state exchanges to decide if they want to give up responsibility for making eligibility decisions on Medicaid. Instead, under the exchange rule, state Medicaid and Children's Health Insurance Program offices would make those determinations, the groups said.

Proposed rules published in 2011 said that Medicaid determinations would be made initially by the exchanges so they could ensure that people were enrolled in the right programs, said the children's advocates. However in the revised rule published in March, states can opt to have the exchanges make a preliminary "assessment" and hand off the final decision to Medicaid agencies. In the past it has been a problem when this responsibility was split among agencies even in states with the best of intentions, the groups said.

This could prove a problem for families in which different members may be covered by different programs, or where household income fluctuates month to month and eligibility changes. A February 2011 study in Health Affairs estimated that in a typical year, 28 million people will shift between being eligible for Medicaid and for subsidized health care through the exchanges. These families would then have to figure out how to navigate as many as three different systems during the course of a single benefit year: the exchange, Medicaid and CHIP, said the groups.

"Unfortunately, we know that families in this situation are at greater risk of falling through the cracks of coverage and that a fragmented eligibility system will exacerbate this risk," they wrote. "We are deeply concerned that it is the nation's children who will most frequently suffer if states fail to establish simple, user-friendly eligibility and enrollment systems."

States strapped for cash might even opt to split up the responsibility if they think it might slow down enrollment in Medicaid and CHIP, the groups said.

They suggest that "if a state is going to be allowed to adopt a more complicated eligibility system than is necessary, it should be required to first establish that it could do so without harming families." The groups said that states should have to demonstrate that their Medicaid agencies are capable of making eligibility determinations in full compliance with the final Medicaid eligibility rule issued by the federal government, that their health technology systems can work in tandem with the exchange systems and that they will comply with requirements that they not subject families to repeated verifications or requests for information.

The groups also said they are worried that the government would give states as many as 45 days to determine Medicaid eligibility for people without disabilities and as many as 90 days for people with disabilities. The groups pointed out that prompt prenatal care is important and newborns are supposed to see a health care provider three times in their first month. Given that the government is making massive investments in new health technology, eligibility decisions should be made within a few days when data is available and "under no circumstances" longer than 30 days, they said.

For all these exchange issues, deadlines loom. State exchange plans must have approval from HHS by Jan. 1, 2013, however conditional approval is allowed if a state is advanced in its readiness.