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May 5, 2014

Washington Health Policy Week in Review Archive ca09be53-0296-42a1-bb1f-a0c1fc44e291

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Administration Says Health Law Enrollment Spiked After End of Official Sign-Up Period

By Rebecca Adams, CQ Roll Call

May 1, 2014 -- About 900,000 people signed up for coverage in the new insurance plans created by the health care law after the official end of open enrollment on March 31, according to a federal enrollment report released late last week. The surge represented about 12 percent of the more than 8 million people who applied for coverage from Oct. 1 through April 19.

President Obama had previously announced the 8 million total on April 17. The 45-page report provides more details about the demographics and state-by-state breakdown of people who signed up, as well as the number who chose a plan after the official deadline.

The surge of sign-ups after March 1 accounted for almost half of the total enrollment from Oct. 1 through April 19. The administration had extended the sign-up period beyond the official March 31 deadline so that people who had trouble enrolling by that date would have more time.

About 85 percent of people who signed up during the entire sign-up period were eligible for federal subsidies.

About 28 percent of the total number of people signing up after Oct. 1 through April 19 were between the ages of 18 and 34 years old, compared to a cumulative 25 percent of the people who signed up from Oct. 1 through March 1. Supporters of the law and insurers had hoped that around 40 percent of the people who chose a plan would be young adults in order to offset the costs of covering older, sicker people.

On the other end of the age spectrum, about 25 percent of people who signed up during the full enrollment period were between 55 and 64 years old, which is a smaller percentage than the 30 percent of enrollees who signed up by March 1. Because insurers cannot ask people if they have medical conditions, age is being used as a proxy that will help officials estimate how many enrollees are healthy.

The Health and Human Services Department's (HHS) report did not include information on how many people have paid their first month's premium, which is a key step in getting covered. Individual insurance companies have said that about 10 percent to 20 percent of people have not paid to start their coverage.

Michael Hash, the director of the HHS Office of Health Reform, told reporters on a call that he expects insurance premiums next year to be stable "in every state," in part because of financial protections in the law that limit the losses of insurers and provide federal money to pay for the most expensive cases.

Health and Human Services Secretary Kathleen Sebelius said that the sign-up statistics are evidence that enrollment was "exceeding expectations and demonstrating brisk demand for quality, affordable coverage."

Much of the enrollment is driven by California residents. About 1.4 million Californians enrolled from Oct. 1 through April 19, according to the report.

Most U.S. residents chose the cheapest plans available. About 20 percent chose either the so-called bronze tier, which covers about 60 percent of the costs of care. About 65 percent chose the silver level of plan, which covers about 70 percent of costs. People whose income is less than two and a half times the federal poverty level also can get additional federal assistance paying their out-of-pocket costs if they choose a silver plan. The poverty level for a single person in 2013 was $11,490.

The report contains the first breakdown by race of individuals who signed up through the federal website, which handles enrollment for 36 states. About 69 percent of total enrollees used the website. Of those who voluntarily indicated their race or ethnicity, about 63 percent were white, almost 17 percent were African-American, almost 11 percent were Latino and almost 8 percent were Asian.

Roughly 54 percent of all enrollees were female and 46 percent male. In the past, insurers often charged women higher premiums on the grounds that they often have higher health care costs than men. The law bars different rates for women and men now.

The report also included the first federal statistics on the percentage of enrollees who were previously uninsured, although a federal official told reporters that the number was so high that it seemed "unreliable." Of the nearly 5.5 million people who chose a plan during open enrollment through the federal marketplace, about 5.2 million of them applied for subsidies and therefore had to answer a question about whether they had coverage. About 695,011 people, or 13 percent of subsidy applicants, said they did. But other independent surveys earlier this year indicated that somewhere between 50 percent and 73 percent of applicants already had coverage. New York state reported that 30 percent of applicants were insured and Kentucky officials have said 25 percent had coverage.

In addition to the 8 million people who signed up for coverage in the marketplace plans, the Congressional Budget Office estimated that about 5 million people will have coverage this year through individual market plans sold outside of the marketplaces. The insurance risk pool in each state is based both on the people who bought insurance through the marketplaces and outside of it.

NEW starts here: The administration also released partial Medicaid and Children's Health Insurance Program enrollment data. The report showed that, when compared to enrollment before the marketplace sign-up period started, more than 4.8 million additional people enrolled in Medicaid or the Children's Health Insurance Program from Oct. 1 through the end of March. The data are incomplete because not all states reported the same information and it reflects people who applied through state agencies such as state Medicaid divisions or state-run marketplaces.

"It's good news that more people are getting coverage," said Joan Alker, the executive director of the Georgetown Center for Children and Families. "One thing it shows is that when you create a welcoming atmosphere, it encourages those who are already eligible to sign up."
Another 1 million people had gained coverage through an early expansion of Medicaid to low-income adults in seven states before Jan. 1, 2014, federal officials said.

Many Democrats running for re-election have shied away from praising the law. But House Energy and Commerce senior Democrat Henry A. Waxman of California, who is retiring, said that the final enrollment report proves that the health care law "is a historic success."

The next open enrollment period for Americans to buy coverage through the law (PL 111-148, PL 111-152) is expected to run from Nov. 15 through Feb. 15. People can still sign up before if their circumstances change, such as a loss of health coverage or change in marital status. Many people also will be able to sign up earlier if they had trouble enrolling before April 15. Those individuals can ask to sign up through special enrollment.

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CMS Officials Grant More Exemptions Allowing People to Buy Coverage Outside of Open Enrollment

By Rebecca Adams, CQ HealthBeat Associate Editor

May 2, 2014 -- Federal officials have broadened the number of people who can buy individual health coverage this year before a new health law open enrollment period begins on Nov. 15.

Individuals who can obtain temporary employer-provided coverage after leaving a job, people whose individual plans will renew outside of the sign-up periods and those in national service programs like AmeriCorps are eligible to sign up before open enrollment.

The Obama administration also expanded the number of people who would not face a penalty if they opt not to buy coverage.

The changes were announced by the Centers for Medicare and Medicaid Services (CMS) in a guidance bulletin.

Separately, the Department of Labor and CMS said that employers would have to change health insurance notices about the right to choose to get work-related coverage after a job loss through the Consolidated Omnibus Budget Reconciliation Act, known as COBRA.

The COBRA notices will be changed so that people starting or leaving a job will be told that if they lose coverage that meets the standards of the health care law, they can buy a health plan through its insurance marketplaces.

"In many cases, workers eligible for COBRA continuation coverage can save significant sums of money by instead purchasing health insurance through the marketplace," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi in a statement. "COBRA continues to play an important role in helping workers and families maintain coverage after a job loss, and it is important that workers know that in some cases there is a marketplace option as well."

The health care law (PL 111-148, PL 111-152) requires people to purchase individual coverage within defined enrollment periods. The first was supposed to be from Oct. 1 until March 31, although administration officials extended it through mid-April. The next open enrollment period is scheduled from Nov. 15 until Feb. 15, 2015.

One of the reasons for having a set open enrollment period was to give people a deadline and motivate them to stop delaying the purchase of insurance.

But the administration has granted a wide range of exemptions. People can buy coverage when they move, lose insurance that met the law's coverage standards or get married, divorced or become parents, among other circumstances.

Another set of people who can sign up outside the enrollment periods are those who had trouble enrolling in coverage for reasons ranging from a natural disaster to errors on, the federal website handling enrollment for 36 states.

The guidance announced last week broadens the coverage opportunities for people who live in states served by the federal marketplace. States are encouraged to use the same guidelines. CMS spokesman Aaron Albright said the agency did not have any estimates of how many additional people might gain coverage because of the changes.

CMS officials are providing a one-time opportunity for people who are eligible for COBRA to buy coverage through the marketplace instead. Those people have until July 1 to buy a marketplace plan.

Ordinarily, there are only two chances for people who qualify for COBRA to choose a marketplace plan outside of the open enrollment period. Those opportunities come when people first qualify for COBRA but before they actually get benefits, or when the COBRA benefit period ends.

CMS officials said that they thought that people on COBRA might have been confused this year. They may not have understood that they either need to buy a marketplace plan during open enrollment, or when they first are eligible for COBRA or when their COBRA benefits are exhausted. So federal officials are giving them more time to buy a marketplace plan.

People with individual policies whose coverage years end before the next sign-up period also will qualify for a special enrollment period. Consumers will have 60 days from the date that their plan is supposed to renew to choose a plan in the marketplace.

A third group of people who won the chance to sign up before the fall are volunteers through federally-sponsored programs such as AmeriCorps and VISTA. The coverage that AmeriCorps and VISTA volunteers get typically doesn't meet the requirements of the health care law, meaning they wouldn't be able to buy a marketplace plan outside of the normal sign-up period if they lose coverage.

The guidance stated that the volunteers will have 60 days either from the day they start their service or after they lose their coverage to buy a marketplace plan.

"We are going to see a continuing evolution about special enrollment periods in order to me sure that that there are adequate opportunities for people who are facing different circumstances to get into the system and get their coverage," said Families USA Director of Organizational Strategy and Enrollment Program Director Rachel Klein.

The advocacy group had asked the administration this year to allow COBRA-eligible people and AmeriCorps volunteers, along with several other types of people, to sign up outside of the enrollment periods.

The federal memo also provided two exemptions from the penalty in the law for failing to buy insurance. The health care law requires anyone who doesn't have coverage for three months in a row to pay a fine equal to the greater of 1 percent of the person's income or $95.

The guidance stated that AmeriCorps and VISTA volunteers with noncompliant coverage will qualify for an exemption from the individual mandate penalty. People who bought individual health insurance outside of the marketplace that took effect by May 1 also would not have to pay a penalty if they were without coverage until then.

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Health Cooperatives Try to Gain Foothold Against Insurance Giants

By Kerry Young, CQ Roll Call

April 28, 2014 -- Some of the underdogs in the market to sell health coverage to uninsured Americans have scored unexpected early wins as they compete with industry giants for customers.

CoOportunity Health, a nonprofit cooperative operating in Nebraska and Iowa, will cover about 74,000 people in 2014, its first year of operation. That's far more than the 18,000 that the co-op had earlier expected to cover, said Cliff Gold, its chief operating officer.

It's just one example of the inroads the National Alliance of State Health CO-OPs (NASHCO) points to in reporting that more than 400,000 people have enrolled in the 23 newly created nonprofit insurers. The covered population is still tiny compared to major for-profit insurers such as WellPoint Inc., which counts roughly 36 million people in its health plans.

But the chairman of NASHCO's board, Martin Hickey, who also leads New Mexico's new health co-op, said the group is "thrilled" with the progress.

"These numbers show that co-ops are indeed making a real impact on the health insurance marketplaces in their states," said Hickey, whose group will release only an aggregate figure and doesn't break down covered populations for individual members.

The co-ops were assembled largely from scratch over the past few years. Many have partnered with other groups for support operations or connected with an existing medical organization. Common Ground Healthcare Cooperative of Wisconsin, for example, is linked to the state's largest medical system, Aurora Health Care.

Experienced insurance executives such as Hickey had to build entirely new enterprises while facing glitches in the startup of the federal health exchange website and some state exchanges.

It's too early to tell whether the co-ops will have a lasting effect on the insurance landscape. Backers tout them as a way to rein in health costs for individual consumers and small businesses through an emphasis on local participation that the insurance giants lack.

A program that gives federal loans to start nonprofit health co-ops began as a conciliatory gesture for congressional Democrats disappointed that the 2010 health care law didn't include a so-called public option. Republican lawmakers criticized the idea as unsound and politically motivated, and six GOP senators have asked the Government Accountability Office to examine the financial viability of the co-ops.

Debate so far has been dominated by anecdotes of a failed effort. Vermont state officials last year said that they wouldn't issue a license to a co-op, citing concerns about its ability to stay solvent, repay federal loans and gain enrollment. The co-op has been approved to receive about $34 million in federal loans. Following the rejection of the license application, the Centers for Medicare and Medicaid Services directed the co-op to forfeit all unused money.

"American taxpayers lost $4.5 million in startup funds for a co-op that had been approved by the administration but that failed to meet even the most basic requirements for state licensure," GOP staff of the House Oversight and Government Reform Committee charged in a February report. The report characterized the co-ops as the Obama administration's $2 billion "gamble."

Democrats in Congress have done little to defend the program. They have allowed funding to be whittled down from the original $6 billion target to roughly $2 billion through recent budget deals. Lawmakers also allowed the co-ops to be saddled with some onerous restrictions from the start.

The co-ops can't use these startup funds to advertise and market their plans, according to Devon Herrick, a senior fellow at the nonprofit National Center for Policy Analysis. Nor can they compete freely with the insurance giants for large group employer plans, yet another reason Herrick sees them as doomed.

"As with most ill-conceived ventures run by inexperienced or undercapitalized management teams, health insurance co-ops will likely muddle along until they run out of taxpayers' money," Herrick said.

People running the ventures and some of their customers are more optimistic. Some of the co-ops appear to be gaining market share by emphasizing their local ties. A majority of the boards of co-ops must be members no later than two years after these nonprofit insurers become operational. The co-ops also have been stressing that they will return excess revenues to improve care in their communities.

"As a member-governed nonprofit organization, surplus revenues will be used solely for improving member health benefits, reducing health premium levels for members or for other programs intended to improve the quality of health care delivered to members," the Kentucky Health Cooperative states on its website.

Publicly traded insurance giants have commitments to pay their shareholders regular dividends. WellPoint, which had operating revenue of $70 billion last year, paid cash dividend payments of $448 million last year, according to a regulatory filing.

"We are not obligated to send money to out-of-state masters," said NAHCO's Hickey, who also heads New Mexico Health Connections, one of the co-ops.

One insurance industry expert said such arrangements are a drawback, not an advantage.

Having shareholders provides more oversight for companies and also gives them another path for raising funds, said insurance industry consultant Robert Laszewski. The co-ops will need extra funds to try to keep their rates low enough to compete during their start-up years, and there are few places that they can turn, he added.

"The biggest challenge that they have is long-term access to capital. Because it takes five to 10 years to turn a profit, you really have to subsidize your rates in the first few years," Laszewski said.

Co-op executives likely won't be able to manage around this challenge, especially when competing with entrenched giants in their markets, Laszewski said.

"It's possible a handful will survive," he said. "Most will go by the way."

Gold of CoOportunity agreed that there will be challenges ahead, but said there still are opportunities for which co-ops are well-suited.

He said the emergence of his co-op prompted a rival in Iowa, Wellmark Blue Cross and Blue Shield, not to increase premiums for individual and small business group plans to cover added medical and administrative costs this year. The Blue Cross plan will only raise rates less than 6 percent to recover costs associated with the health law and added taxes.

Co-ops also are a part of a shift toward a more consumer-oriented care that could grow if more employers opt to stop health coverage and send their workers to exchanges.

"Our goal was never just to have a successful insurance company," Gold said. "That's not enough. It was to fundamentally change the markets in which we operate from our little corner out here in the prairie."

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CMS Releases Rule Creating Payment System for Health Centers

By Rebecca Adams, CQ HealthBeat Associate Editor

April 29, 2014 -- Community health centers' Medicare payments would rise under a final rule recently released by the Obama administration.

Some centers' payments could rise by as much as 32 percent, said Centers for Medicare and Medicaid Services (CMS) officials in a statement. Medicare currently reimburses health centers for their costs, up to payment limits. The health care law (PL 111-148, PL 111-152) requires CMS officials to devise a new system with set payments for care provided.

Under the new system, Medicare will pay health centers a single per-patient daily rate for all of the care the patient gets, with some exceptions. The base rate will be $158.85 per day but fluctuate to reflect the cost of care in geographic regions. The same services that have been paid for by Medicare in the past will continue to be covered under the new system, CMS officials said.

Health centers will get more money for new patients who might have unmet medical needs and need more intensive services at the outset. A center also will get more for patients receiving an initial preventive exam or for those getting their annual wellness visits.

National Association of Community Health Centers spokeswoman Amy Simmons said that under the current system that is being replaced, most health centers lost money on each Medicare patient they serve.

Health centers are supported by many members of both parties in Congress and have received significant amounts of additional payments in recent years from the federal government. About 21 million Americans got their care from health centers in 2012.

"The new payment system helps increase the ability and capacity of federally qualified health centers to provide essential and affordable services for even more patients who need care," said CMS Administrator Marilyn Tavenner. The centers "are essential to countless patients in local communities who depend on them for getting their primary and preventive care," she said.

Under the current system, the out-of-pocket costs for patients was based on the health centers' charges. Typically, patients are required to pay 20 percent of charges, but the sum can rise to more than 20 percent of the total Medicare pays the center. Under the new rule, patients' coinsurance will cost either 20 percent of the providers' charge or the daily rate—whichever is less.

The rule states that in future years, the rates must be adjusted by the Medicare Economic Index or by the increase in the cost of services and goods provided by health centers.

The law said that CMS officials must take into account the type, intensity and duration of health center services when setting the payments. The rule will be published in the Federal Register on May 2 and the new payment system will be implemented starting with the new fiscal year, on Oct. 1.

Even though it is a final rule, CMS officials solicited further comments on a few proposals. CMS will accept comments until July 1 and will issue another final rule this year. The issues include: a simplified method for calculating coinsurance when a preventive and non-preventive service is on the same claim, the creation of Medicare-specific payment codes to be used under the new system and ways in which payment for chronic care management could be adapted for health centers and rural health clinics.

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Medical Spending Surges with Health Law Sign-Ups

By Adriel Bettelheim, CQ Roll Call

April 30, 2014 -- Health care spending surged 9.9 percent during the first quarter of 2014 as people who gained insurance coverage under the health care law apparently began using more medical services, the government said last week.

The jump in health spending was in contrast to government estimates that the economy as a whole grew just 0.1 percent at an annual rate during the first quarter, after economists anticipated growth of about 1.2 percent.

The Bureau of Economic Analysis advance estimate found health care prices during the first three months of the year grew at an annual rate of 0.5 percent.

Obama administration officials cautioned that the main survey the Bureau of Economic Analysis uses to track health spending won't be available for the first quarter until June, meaning there could still be significant revisions. However, Jason Furman, chairman of the Council of Economic Advisers, said the preliminary results tracked with expectations as the health law rollout continues.

"The sharp increase in estimated utilization appears to have been driven by greater use of health care services by people who gained insurance coverage during the first quarter because of the Affordable Care Act ... this increase in utilization is neither a surprise, nor a cause for concern," Furman wrote in a blog post. "Furthermore, any upward pressure on health care spending growth from expanding insurance coverage will cease once coverage stabilizes at its new, higher level, so it does not affect the longer-term outlook for spending growth."

Furman added consumers are being helped by slow growth in health care prices, which are partly attributed to changes brought by the health law (PL 111-148, 111-152).

"Slower growth in health care prices drives slower growth in families' out-of-pocket costs and insurance premiums and has been an important contributor to the overall slow growth in health care spending seen over the last few years," Furman wrote.

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Health Law Brings Access to More Contraceptives, But Coverage Gaps Remain, Advocates Say

By John Reichard, CQ HealthBeat Editor

April 29, 2014 -- The health care overhaul law is giving teens access to a wider range of contraceptive products that will strengthen efforts to prevent unwanted pregnancy among young people, advocates say.

After a period of interpreting the law's requirement for contraceptive coverage too narrowly, insurers have begun to cover a wider range of products including expensive intrauterine devices, speakers at a forum on preventing teen pregnancy in the District of Columbia said.

But gaps remain in coverage, said Athena Cross, a director of health reform implementation at the Planned Parenthood Federation of America. Contraceptive patches and rings often aren't covered, she said. And the law (PL 111-148, 111-152) won't fulfill its potential without efforts to encourage teens to talk to their doctors about their contraceptive options.

Doctors themselves need to be educated about the range of available products, said another speaker, Brenda L. Gleason, a professor of health policy and health communication at the George Washington University School of Public Health. Gleason also has her own consulting firm and acts as a consultant to Planned Parenthood.

Planned Parenthood clinics have long been relied on by women and teens as a source of counseling on contraceptive products and as a place to get birth control pills on the spot on a confidential basis.

Despite the ongoing controversy and Supreme Court challenges over forcing employers to cover contraceptives in their health plans, most Americans appear to support the health law's contraceptive coverage mandates.

Asked about for-profit companies whose owners object to birth control on religious grounds, 55 percent of adults in a new poll by the Kaiser Family Foundation said they should still be required to cover contraception. And 61 percent backed the health law requirement that private plans be required to cover prescription birth control without cost-sharing.

Family planning advocates emphasize that countries with wide access to contraception are more prosperous economically because women are better able to become educated and get better jobs.

Cross also made that point concerning U.S. teens at the forum sponsored by the D.C. Campaign to Prevent Teen Pregnancy. The campaign is a nonprofit charity that aims to cut the teen pregnancy rate in the District by 2015.

In particular, she emphasized the importance of "long acting reversible contraception," which can last for years and is proving to be an increasingly popular and effective way to prevent pregnancy.

The health law includes contraceptives among the preventive care that insurers must provide without charging out of pocket costs to patients.

At first insurers skimped on coverage, said Cross. "We had health plans that said okay, we're going to cover this one oral contraceptive and we're going to say that this one product satisfies the entire regulation for contraceptive coverage," she said.

But advocates put pressure on the Department of Health and Human Services to work with plans to cover more products. That's led to more coverage IUDs and intrauterine contraceptives. "We've experienced huge uptake of IUDs," which are one type of long acting contraceptive and are very expensive, said Cross.

"I think it's really important in the teen population," she added. "Previously a lot of providers felt like IUD and IUCs should only be used for women who have already had children who are older. But there's nothing to prevent younger people from having access to long acting reversible contraceptives."

Because users don't have to take any specific action for these products to work, they do a better job of preventing pregnancies, their supporters say. But they haven't escaped the abortion controversy. Groups opposed to abortion say that IUDs can lead to abortions, a contention that Planned Parenthood disputes.

Gleason said doctors often aren't up to date on long acting contraception.

She said those seeking to prevent teen pregnancy can take brochures to doctor's offices to better inform physicians about available options. And teens and their parents can be given checklists for when they talk to the physician about contraceptive options. For example, a teen can be counseled to say "'Oh I heard about this thing Obamacare. I heard a lot of stuff is free. Is this free? This free? So giving them those kinds of checklists,'" Gleason said.

But Cross said coverage still isn't what it should be.

"It's still very much left up to the health plans to determine what will be covered," she said. "Furthermore, not every plan has to cover these things," she added, noting that some insurance plans have "grandfather" status under the health law and aren't subject to all of its coverage requirements.

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