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October 21, 2013

Washington Health Policy Week in Review Archive 8d59d5e9-c402-4442-a6fd-7a2505d12fac

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Federal Exchange Woes May Take Center Stage as Hill Threat to Health Law Fades

By John Reichard, CQ HealthBeat Editor

October 16, 2013 -- Irony of ironies. Having survived months of attacks from Republicans on Capitol Hill unscathed, is the health law, or at least a big part of it, about to grind to a halt anyway because of technical trouble with the federal exchange?

That marketplace was supposed to begin serving Americans in 36 states when it launched 15 days ago. But many of its would-be customers can't push through its virtual front doors.

Federal officials have offered vague assurances that the troubles are temporary. But they haven't detailed what they think the problems are—beyond saying the site that's the entry to the marketplace hasn't been able to handle the unexpected crush of customers. Officials don't talk a lot about specific design fixes or software patches. That fuels the speculation that they don't know exactly what's wrong. They've offered no predictions about when people will be able to easily navigate the site to shop for plans and enroll in them. And there's no obvious go-to person heading up the effort to fix things.

Increasingly, there's talk that federal officials will have to shut down the marketplace for some period of time and relaunch it.

David Brailer, who served as the federal health information technology coordinator in the Bush administration said it's "a coin flip" whether the current approach of making small fixes is going to get things functioning smoothly. He said he knows the option of temporarily shuttering the federal exchange is "on the table" in administration discussions of the problems.

"I know the option's being discussed. I don't know what they're going to do. Honestly I'm not even sure that they know what they're going to do,'' he said. "If they can't find some easy fixes they'll have to shut it down soon."

But a Health and Human Services (HHS) official denied the administration has plans to take down the site. "We are not planning to shut down the exchange," the official said in an email last week. "We are taking the application function off line at night for a few hours from time to time for maintenance work though."

Brailer, now the head of Health Evolution Partners, a San Francisco-based investment firm, says it's almost "self-evident" that a temporary shutdown is being contemplated. He asserts that there are fundamental architecture and design problems with the federal exchange, and that "any techie knows that if the architecture is wrong, you're not going to be able to tweak it.

"You can't just fix little pieces of it,''he explained "They've tried that. That's already been done. They've been working 24 by 7 to do that with no effect. They have a more fundamental problem. The whole way it's designed is wrong. This is a building where the elevators don't work and you're not going to fix it by washing the windows."

Brailer added that if the HHS has to redesign the architecture of the site they won't be able to relaunch it quickly, "It's not a short period of time."

When asked whether HHS is getting a handle on things, insurance industry consultant Robert Laszewski said: "They are not. As of yesterday, when I did my weekly review of carriers, the report was that enrollments are still trickling in at the same rate they were in the first week—like 20 to 50 new contracts per major market share carriers per state per week. Extrapolating those conversations, I'm very confident the 36 [federal exchange] states enrolled about 5,000 covered lives the first week and the second for a total of 10,000 covered lives in 14 days."

According to a Sept. 6 internal HHS memo to Kathleen Sebelius—obtained by the Associated Press—federal officials estimated that in the first month of open enrollment nearly 500,000 people would sign up for health coverage.

According to the AP, the memo included a state-by-state breakdown. For example, the AP says, California reported processing 16,300 applications as of Oct. 5. The HHS memo projected 91,000 people would enroll in the state by the end of the month. Maryland reported 566 applications processed as of Oct. 6, compared with 10,500 projected for the month by the memo.

At least two states have already exceeded the memo's projections, according to the AP. Kentucky reported 18,351 applications processed as of Oct. 9. That exceeds the memo's projection of 15,400 for the month.

And Washington state reported 24,949 applications processed last week, a little more than the memo's October projection of 23,800.

Many Major Issues Need Fixing

Laszewski said that the Centers for Medicare and Medicaid Services (CMS) is saying that cleaning up "834" transmissions—the transfer of enrollment files from exchanges to insurers—is their highest priority. "My problem with that is that they must have a dozen 'highest priorities' given the mess they are facing.

"Trying to fix this mess on the run is like trying to fix an engine while driving down the road," Laszewski said. "If they would just fess up, shut it down, and get it brought back online when it works they would be better off. Sure they would take a hit from Republicans. But that would last a couple of news cycles. Now they are dying by a thousand cuts."

Laszewski also said, "My belief is that all of the secrecy we have suffered with from CMS over the last three years continues. If they had been open in the first place a lot of this might have been avoided as carriers and IT experts called them out on what they were going. The secrecy continues."

Such criticisms might seem unfair in an environment when Republicans have seized on every implementation hiccup and used it as an argument to halt the health law. However, neither Brailer nor Laszewski have a particularly partisan reputation.

Former CMS Administrator Mark McClellan said it's difficult to tell whether CMS is getting a handle on things. "It's one of those things that's hard to tell while the fixing is going on," he said. "There's not one thing you can do and 'boom, the problem is fixed.' It's a whole series of fixes that are necessary. For the whole experience to work each of the pieces has to work.

"It's still just the middle of October," McClellan added. "I don't think people are going to be focusing on this until November. There's still a bit of time left."

McClellan said it's difficult to know whether CMS will be able to get the website fixed quickly enough to get large numbers of people enrolled early on. "I'm sure the staff is working really hard," he said. "There are always work-arounds. The ultimate work-around is paper enrollment or enrollment directly through health plans and there are a lot of health plans and organizations that are committed to finding ways to get people who want coverage enrolled. The bigger challenge is making this easy for everyone who might want coverage not just those who are enthusiastic about signing up right away."

John Gorman, a former CMS official who now heads the Gorman Health Group consulting firm, said "I suspect the administration's not talking about these things to avoid giving [Tea Party supporters] a talking point when they're about to get rolled on the Hill. There is a ton of fix and workaround activity going on though, so we hear."

Keith Fontenot, who recently left his post at the top health budget official in the White House Office of Management and Budget, said "I would imagine all the people that can are working flat out to improve the system. In a big complex enterprise like this, and at this early stage, I don't see an alternative to taking the issues in segments, diagnosing the problem, developing a fix, testing it, and implementing it.

"I heard a surgeon say once, 'there is nothing surgery can't make worse.' I think the same might be said about computer code; they have to be fast, but they also have to be deliberate lest they create more problems."

For his part, Brailer wasn't predicting the exchange or the health law (PL 111-148, PL 111-152) would fail despite the serious problems he sees now with the federal exchange. "My prediction is in two years no one will remember this," he said.

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Baucus Says He's Confident Health Exchange Operations Will Improve

By Emily Ethridge, CQ Roll Call

October 15, 2013 -- A top Democratic senator and the Obama administration voiced confidence last week that the online systems for the health care law's exchanges would improve, despite continued problems with consumers enrolling on the websites.

Senate Finance Chairman Max Baucus said he has "a lot of confidence" that the system will eventually work. He noted he had talked to people in the public and private sector and that "because of the people I've been talking with, I have confidence."

Baucus, D-Mont., in widely publicized comments predicted earlier this year that the administration's failure to educate people about the overhaul (PL 111-148, PL 111-152) could lead to "a huge train wreck."

Many Republicans are saying that train wreck is now in progress, with consumers across the country facing long wait times and technical difficulties visiting the health care law's website.

So far two Republicans, Sen. Pat Roberts of Kansas and Rep. John Fleming of Louisiana, have called for Health and Human Services Secretary Kathleen Sebelius to resign because of the website problems.

"Had investors launching a private company devoted even a fraction of the time and treasure that's been spent on Obamacare, people would have been fired by now," said Fleming in a statement. "Taxpayers should not have to tolerate this kind of waste and incompetence from Washington."

White House Spokesman Jay Carney, however, said recently that Sebelius has "the full confidence of the president."

"She, like everyone else in this effort, is focused on our No. 1 priority, which is making the implementation of the Affordable Care Act work well," said Carney during a press briefing, noting that people are working "24/7" to resolve the issues.

"Even though there have been challenges with the website, there are Americans across the country who are, through call centers and through the website and through states, getting access to this information and making sure—seeing what choices are available to them and enrolling if they're ready to enroll," Carney said.

The administration has not provided numbers yet on how many people have actually enrolled in the exchanges.

Millward Brown Digital prepared an analysis that found that only 1 percent of people who attempted to register for the federally run exchange through Oct. 5 completed enrollment.

The group found that states running their own exchanges have had relatively more success enrolling people than the federally run exchange.

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Interest Groups Concerned About Other Year-End Deadlines

By Rebecca Adams, CQ HealthBeat Associate Editor

October 15, 2013 -- While the clock ticks on the debt ceiling, other financial deadlines also are approaching, including the last chance for Congress to block a nearly 25 percent cut in Medicare physician payments and a range of expiring provisions that affect everything from therapy caps to hospital payments.

On Dec. 31, a long list of health policy provisions will expire. Traditionally, Congress has continued the payments—also referred to as "extenders"—one year at a time, although sometimes lawmakers have missed the deadlines and had to apply the provisions retroactively. The uncertainty leads to an annual lobbying frenzy.

This year, interest groups are hoping for solutions that will last for at least a few years, if not a decade. But the longer Congress remains flummoxed by negotiations over the government shutdown and the debt ceiling, the slimmer the chances become for a multi-year solution, or even a short-term fix before the Dec. 31 deadline.

One practical problem is that some of the staff experts at the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid Services are furloughed. Some lawmakers are pushing both organizations to bring back some analysts so that they can offer technical advice and produce new cost estimates for legislation to address the so-called "doc fix" and other expiring provisions.

Earlier this year, the CBO estimated it would cost $139 billion over 10 years to get rid of the Sustainable Growth Rate formula now used to pay doctors. Because the price tag was lower than in previous years, advocates that lawmakers would see a long-term solution as more cost-effective than year-by-year patches.

The House Energy and Commerce Committee did pass a rare bipartisan bill (HR 2810) this summer that would give physicians 0.5 percent annual raises through 2018, use pay-for-performance requirements and get rid of the flawed existing formula. The committee did not identify ways to pay for the $175 billion cost over 10 years.

Neither the House Ways and Means Committee nor the Senate Finance Committee has publicly released a long-term bill.

The American Medical Association (AMA) is continuing to prod lawmakers to act this year on a long-term change.

"With 10,000 baby boomers aging into Medicare each day, we need to repeal the SGR and give Medicare a firm foundation so physicians can pursue delivery innovations that help improve care and reduce costs," AMA President Ardis Dee Hoven told CQ HealthBeat via email. "It's the only fiscally prudent path."

But since any of the efforts now being considered to prevent a government default and open the government will last only a few months at most, lawmakers' attention for the rest of the year is going to be focused on those talks and the Medicare fixes could fade as a priority.

Some groups are acknowledging that getting even a short-term extension will be difficult. The expiring provisions include changes to caps on patients' therapy, additional payments for ambulance providers in rural areas, higher Medicare payments for low-volume and rural hospitals, and authorizations for programs to help low-income Medicare patients.

"Given the current political climate and what is feasible given the current government shutdown and debt ceiling discussion, we are also continuing to send a message to the Hill that should there only be a short-term fix to Medicare this year, the therapy caps exceptions process with modifications to the medical review process needs to be included as well," said Ingrida Lusis, director of federal and political advocacy for the American Speech-Language-Hearing Association.

The American Speech-Language-Hearing Association and the American Physical Therapy Association (APTA) are working on a coalition campaign that is set to launch on Nov. 4 and will accelerate on Dec. 2, which is 30 days before the deadline. About 50 groups will encourage their members to call and write lawmakers both at home and in Washington, D.C.

The coalition is concerned about the expiration of language that prevents patients' therapy from being cut off from Medicare coverage once it costs $1,900 if a doctor says more therapy is needed. Patients and their physicians can circumvent the cap through an exceptions process but the authority for that appeals process expires at the end of the year. With or without legislation, Centers for Medicare and Medicaid Services officials are expected to increase the cap slightly in 2014, but in many years, the increase has been only $20 or so higher.

"Everybody is waiting to see what comes out of the discussion on the budget and debt ceiling," said Mandy Frohlich, APTA senior director of government affairs. "Everyone who lives in the extender world remains hopeful there will be time to talk about long-term solutions for these. But we're preparing for whatever direction this goes."

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Kaiser: Uninsured in Coverage Gap Likely to Remain Uninsured

By CQ Staff

October 16, 2013 -- The coverage gap for poor Americans who won't be able to enroll in Medicaid or get subsidies in the new health care exchanges is concentrated in five of the 26 states that have decided not to expand Medicaid, according to a new analysis by the Kaiser Family Foundation.

The nonpartisan foundation found that of the 5.2 million uninsured people who won't qualify for Medicaid because the states they live in are not expanding the program, more than half live in Texas, Florida, Georgia, North Carolina and Ohio. In Texas, the analysis says, more than 1 million people are affected.

"Most of these people have very limited coverage options and are likely to remain uninsured." the Kaiser report says. This coverage gap affects people whose annual incomes are below the federal poverty level but who live in states where that income still doesn't qualify them for Medicaid. The authors of the health care law (PL 111-148, PL 111-152) never envisioned this problem. They thought by setting the eligibility level for Medicaid under the expansion at 138 percent of the federal poverty line, they weren't leaving anyone out. People who earned up to that would be in Medicaid. But the authors didn't count on the Supreme Court ruling that states that didn't expand Medicaid under the health law wouldn't lose the rest of the federal Medicaid funds. And so far 26 states have decided not to expand.

The only option for those low-income people who will not qualify for Medicaid would be to try and get insurance through the new marketplaces. But, the Kaiser study points out, the health care law prohibits anyone with an income below the poverty line to get a federal premiums subsidy, the assumption being that such people would enroll in Medicaid. Without a federal subsidy, these Americans are unlikely to be able to afford to buy insurance.

The group affected by this gap, the Kaiser report says, "represents more than a quarter (27 percent) of all the uninsured adults ages 19 to 64 in the states not moving forward with the Medicaid expansion. The share ranges from 18 percent in Alaska to 37 percent in Mississippi."

These uninsured people, the report also explains, will face significant problems accessing health care.

"People in the coverage gap are likely to face barriers to needed health services or, if they do require medical care, potentially serious financial consequences," the report says. "Further, the safety net of clinics and hospitals that has traditionally served the uninsured population will continue to be stretched in these states."

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AHIP to Push for Two-Year Delay of Premium Tax in New Budget Talks

By John Reichard, CQ HealthBeat Editor

October 17, 2013 -- The head of the nation's largest health insurance lobby recently said that she'll push lawmakers to include a two-year implementation delay of the new health law insurance tax in the budget agreement that they must negotiate by Dec. 13 under the measure Congress passed to reopen the federal government and suspend the debt ceiling limit.

Part of the industry fees charged under the health law to pay for wider health coverage, the taxes would start in 2016 rather than 2014, said Karen Ignagni, president of America's Health Insurance Plans.

Ignagni spoke to an industry conference in suburban Virginia and to reporters afterward.

Ignagni said the fees are driving up premium charges to individuals, small businesses and enrollees in Medicare Advantage, the private plan part of Medicare. Delaying them by two years would require offsets totaling $15 billion in order to avoid adding to deficit spending, she said.

Ignagni also addressed other issues, predicting that problems with the federal exchange would be fixed well before the Jan. 1 start of expanded coverage under the health law (PL 111-148, PL 111-152). She also called for a new focus on the prices of health care services and products that involves addressing the "dangerous" impact of hospital consolidation.

"The country cannot walk away from this anymore," she said.

A nearly successful campaign by the medical device industry to get out from under fees they must pay under the health law has energized attempts by other industry lobbies to lessen fees and payment cuts. The Federation of American Hospitals recently called for relief from health law cuts as a matter of parity if lawmakers were going to eliminate the $29 billion in fees device makers must pay over 10 years.

The scramble to lessen health law burdens raises questions about whether financing of the health law that keeps it budget neutral is beginning to unravel. The latest tactic is to press for delays rather than outright elimination of the fees. Given the kick-the-can-down-the-road propensities of lawmakers, delays have a way of turning into the same thing.

However, some lawmakers and lobbies are calling for offsets to keep changes in health law financing from adding to deficit spending.

"We have a number of ideas about pay-fors," Ignagni said. "We'll be talking about that as we talk to members of Congress."

As an example, she said "we are very excited about the Department of Health and Human Services (HHS) reports that premiums now are coming in less than what Congressional Budget Office (CBO) projected. There are implicit savings in there."

A recent Health and Human Services analysis found that premiums health plans are charging on the new insurance exchanges are lower than the amounts the CBO assumed in calculating the impact of the health law on federal spending.

Lower Premiums Lower Health Law Cost

To the extent the premiums are lower, that suggests some reduction in the price tag of the law. Plans have already locked in their 2014 rates. Since insurers are selling elimination of the health law taxes as a way to lower premiums, how would that work in 2014 with the rates already settled?

"The plans would give credits to consumers and to employers," Ignagni said. "This would be a way for people on both sides of the aisle to provide some additional benefit to individuals purchasing health insurance coverage, small businesses purchasing coverage, or governors and states and Medicaid Advantage."

Under the law that resolved the budget impasse, Sen. Patty Murray, D-Wash., and Rep. Paul D. Ryan, R-Wisc., the chairs of the budget committees in their respective chambers, must negotiate a budget accord by Dec. 13. "We don't know the scale and scope of that," Ignagni said. But she noted that lawmakers are preoccupied with the cost of insurance premiums. "More and more members of Congress are focusing on this issue and asking for solutions and to the extent we can point to things that impede affordability and solve that problem that would be a very good thing," she said.

The insurance tax adds 2.3 percent to premium changes in 2014, said Ignagni, or $300 per family. Over time the taxes increase so they will add 5 percent to premium charges, she said.

She also called for addressing costs in other ways.

"I think that what the exchanges are going to do is to shine a bright light on the issue of cost containment, and the need for the nation to go back to that issue of cost containment, " she said.

The focus so far has been on the premiums charged in exchanges but premiums are based on the underlying cost of hospital care, pharmaceuticals and other services and products, she said. "And that's where we need to now take the discussion. Why are we paying so much more in this country compared to other countries for every part of our health system? We need to get to the prices."

Current pricing "is going to be very difficult to sustain" with the U.S. trying to compete in a global economy, she added. "If prices come down, then premiums come down."

That means addressing what Ignagni called "dangerous" hospital consolidation. "I say dangerous because it affects the prices that are being charged and it makes it very difficult to negotiate affordable premiums."

Workforce issues also must be addressed in wrestling down costs, she said, adding that there is a shortage of doctors. So she's calling for a mobilization of nurses, physician assistants and others to provide primary care and coordinate treatment.

Ignagni also cautioned her audience of industry representatives that "there will be pressure to turn back the clock on the new payment arrangements that are improving care and showing results. And we're going to be dealing with that at the federal level and we're going to be dealing with that at the state level, and we're going to be partnering with you to again shine a spotlight on that."

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Hospitals, Insurers Trade Barbs over Consolidation

By Rebecca Adams, CQ HealthBeat Associate Editor

October 18, 2013 -- The historical tension between hospital and insurance executives seems to be exacerbated by current congressional efforts to trim health care spending. A top hospital lobbyist came out swinging late last week in response to comments that he said attacked the industry he represents.

Chip Kahn, president and CEO of the Federation of American Hospitals, took exception to a comment by America's Health Insurance Plans (AHIP) President and CEO Karen Ignagni last week. In an interview with reporters after she addressed an industry conference, Ignagni called hospital consolidation "dangerous," adding, "I say dangerous because it affects the prices that are being charged and it makes it very difficult to negotiate affordable premiums."

Ignagni also invited scrutiny of hospital prices by saying, "The focus so far has been on the premiums charged in exchanges but premiums are based on the underlying cost of hospital care, pharmaceuticals and other services."

Kahn said in an interview last week that he was "taken aback" by Ignagni's choice of words.

"The insurance industry seems to be on this jihad regarding hospital consolidation," said Kahn. "It's the proverbial pot calling the kettle black. There is a lot of concentration in that industry."

Kahn pointed to American Medical Association (AMA) statistics that showed that in nine states, one insurer dominates the market.

The backdrop for this war of words is the financial pressure that both industries face and the concerns that each sector has about ongoing budget discussions in Congress. Both hospitals and insurers want to protect their companies from payment cuts that would be used, for example, to stave off Medicare reductions for physicians or to lower the budget deficit.

Insurers also are trying to convince lawmakers to enact legislation that would delay by two years a 2.3 percent tax on plan premiums that starts in January. Such a delay would cost $15 billion at a time when Congress is trying to go in the opposite direction by finding ways to save money.

Consolidation has been an issue throughout the health care industry, affecting both insurers and hospitals. It is in each industry's interest to convince lawmakers that the other is to blame for high health care spending and could withstand further Medicare cuts.

Kahn represents for-profit hospitals. Officials at the American Hospital Association (AHA), which represents for-profit and not-for-profit medical facilities, supported Kahn's view.

"It is not hospital prices that are driving the rise in insurance premiums," AHA spokesperson Alicia Mitchell said in an email. "Hospital price growth is at the lowest in more than a decade. Hospitals are responding to private sector and government policies to provide more coordinated and efficient health care by, among other strategies, partnering with others. Sometimes these partnerships involve mergers and acquisitions, which are subject to strong oversight at the federal and state level."

An AHIP official who was told of Kahn's comments repeated Ignagni's argument. "As the country tries to bring down health care costs, there's got to be a much greater focus on prices, and consolidation is one of the bigger drivers of price increases," said spokesman Robert Zirkelbach.

Kahn acknowledged that each side is stepping up its advocacy campaign as a bipartisan congressional panel begins its work to find budgetary savings. The lawmakers are supposed to reach an agreement by Dec. 13, well before the current continuing resolution (HR 2775) to fund the government expires on Jan. 15.

"I think obviously they want to get rid of the health insurance tax and want to protect themselves from Medicare Advantage cuts" to managed care plans that cover seniors and other beneficiaries, said Kahn. "So instead of addressing their issues directly, it's easier to create a villain. To me, it's bizarre to look at hospitals as villains. I don't know how many insurers' corporate offices people would head to if they have chest pains."

The fault lines between the two powerful groups will be evident in the coming months as each side tries to convince lawmakers that they should not be a budgetary target.

Kahn and Ignagni know each other well. Kahn represented the insurance industry until 2003 as the leader of the Health Insurance Association of America. Ignagni was the leader of a rival trade association for insurers. When the two groups merged a decade ago, Ignagni remained at the helm of the combined group.

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