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October 5, 2015

Washington Health Policy Week in Review Archive dc603a8a-0e9e-4359-befa-29599cf201d6

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Insurers Face $2.5 Billion Shortfall on Health Law Risk Program

By Kerry Young, CQ Roll Call

October 2, 2015 -- A federal program to protect insurance companies offering coverage under the Affordable Care Act had a $2.5 billion shortfall in its first year of operation, as expanding health care coverage for Americans proved more costly than many insurers had estimated.

Due to the shortfall, insurers will get only a fraction—12.6 percent—of the $2.87 billion in payments they had expected through the so-called risk corridor program, the Centers for Medicare and Medicaid Services (CMS) announced Thursday.

The total pool of money for risk-corridor payments is limited to the $362 million that insurers are expected to contribute for 2015. Obama administration officials had in the past spoken of potentially using other federal funds in the case of such a shortfall. But last year Congress blocked the administration through a rider added to the fiscal 2015 spending package (PL 113-235) from tapping major Medicare trust funds or appropriations to bolster the risk corridor program.

The announcement of the shortfall triggered a quick call Thursday from insurers for additional money from Congress for the program, but the odds appear stacked against this request due to continued Republican opposition.  GOP presidential contender Sen. Marco Rubio of Florida made his "ObamaCare Taxpayer Bailout Prevention Act" the first piece of legislation he introduced in the 114th Congress,  a deliberate decision to draw attention to this issue, according to his staff. This bill (S 123) would repeal the section of the 2010 health law that created the risk corridor program. Rubio also was among those who helped get the funding restrictions on the risk-corridor program into the spending law last year.

The program was meant to help insurers adjust to a new market, in which the health law prevents them from pegging prices and coverage decisions to people’s health. The risk corridor program was designed to collect money from insurance plans that have profits above a certain target, and then distribute this money among those plans that had profits that were below target.

"Stable, affordable coverage for consumers depends on adequate funding of the risk corridor program," said Marilyn Tavenner, the chief executive of America’s Health Insurance Plans and former CMS administrator, in a Thursday statement. "It's essential that Congress and CMS act to ensure the program works as designed and consumers are protected."

The paltry payments from the risk corridor program may have helped bring to an end one new health insurance venture. Health Republic Insurance of New York, one of the largest of the new nonprofit insurance cooperatives created with the help of the 2010 law, began winding down its operations last week.

It’s the second failure among one-time coop success stories that enrolled at least 100,000 people. The other giant CoOportunity Health of Iowa collapsed last year. Health Republic had expected a payment of about $147 million through the risk program, an official said. With the reductions in place, the insurer would receive a payment of less than $20 million.

CMS's approach to reducing payments appears close to what Sen. Bill Cassidy, R-La., spelled out in his risk corridor bill (S 359), for which Rubio is the chief cosponsor. Cassidy, who also helped get the rider on risk corridor funds added to the fiscal 2015 CR, wants to leave in place the risk corridor program. But he wants further restrictions placed on the use of federal funds for the program, with instructions to CMS that it should proportionately decrease payments to plans if requests exceed available money.

"We should not allow a rogue insurance company to cherry-pick the well as the expense of an insurance company that does it right and take all comers, so I am in favor of some sort of risk adjustment in which that is not allowed to happen," Cassidy, a physician who earlier helped found a community health clinic, told CQ HealthBeat Wednesday. "That said, the taxpayer should not be on the hook."

The risk corridor is part of what is known as the 3 Rs, referring to programs created by the 2010 health law to entice insurers to participate in a new market.

Only one of these programs is meant to be a permanent feature, the risk adjustment mechanism for shifting funds from plans where people are thought to be in better health in general to those that serve people who suffer from more medical problems. About $4.6 billion will be transferred among insurers through the risk adjustment program based on 2014 results, CMS said on Thursday.

For the third program, known as reinsurance, there will be $7.9 billion in payments based on 2014 results. This program is meant to spread the cost of covering people with very high medical costs among insurers. Like the risk corridor program, it is intended to level payments in keeping with the results seen in the first three years of the new marketplace, 2014, 2015, and 2016, with payments made a year later.

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Affordable Care Act Tweak Headed to Obama's Desk

By Melissa Attias, CQ Roll Call

October 2, 2015 -- The Senate quietly cleared legislation Thursday that would amend President Barack Obama's signature health care law to keep midsized employers from having to comply with more stringent insurance coverage requirements, marking one of the relatively few times that Congress has acted on a bipartisan basis to send changes to the overhaul to Obama.

The bill (HR 1624), while a modest change, is a reminder that Congress is occasionally capable of clearing legislation that addresses issues even as controversial as the Affordable Care Act and could possibly signal some willingness among both parties to make fixes.

The Senate cleared the measure by voice vote Thursday after the House passed it under an expedited floor process by voice vote Monday—an impressively fast timeline considering the House Energy and Commerce Health Subcommittee held its hearing on the bill last month. A White House spokeswoman said Obama will sign the bill.

The measure "is a smart health care bill aimed at protecting workers' benefits, lowering premiums and reducing costs to taxpayers," Senate Majority Leader Mitch McConnell, R-Ky., said after clearing the bill.

South Carolina Republican Tim Scott, who sponsored the Senate version (S 1099), also praised McConnell for the quick path to the Senate floor.

"So often we hear in America that we can't get things done in the United States Senate," he said. "Because of your leadership, Sen. McConnell, and because of the good work of Congressman Guthrie on the House side and Sen. Shaheen, we see that we're going to have an opportunity to make sure that small business owners all across America are not more negatively impacted by Obamacare."

Jeanne Shaheen of New Hampshire, the Senate bill's lead Democratic sponsor, also applauded the move in a statement. "While the Affordable Care Act continues to divide Congress, today we've made real progress towards improving this law," she said.

Under the 2010 overhaul, businesses with 51 to 100 workers are categorized as small employers. State regulators, however, have the option of designating them as large employers until 2016, meaning they can offer health coverage through the large group market that does not have to cover specified benefits and meet other requirements that apply to smaller groups.

To prevent midsized employers from being forced to change coverage and possibly absorb premium increases, the bill would automatically place businesses with 51 to 100 workers into the large employer category, while still allowing states to treat them as small employers if they choose.

"Passage of the PACE Act comes at a critical time as health insurance premium rates are being finalized for the upcoming year," Council for Affordable Health Coverage President Joel White, a former House GOP aide, said in a statement praising the measure. "Moreover, employers are already shopping for coverage options and will need to make decisions soon for plans that begin in 2016."

But not everyone was on board. Washington State Insurance Commissioner Mike Kreidler testified against the legislation at the House hearing, saying insurers are counting on an expanded pool of covered people to keep requested premium decreases.

The Small Business Majority advocacy organization, which has defended the law, also wrote to the leaders of the House panel last month urging opposition to the change. The group expressed concern it would hurt small businesses that have been waiting for the small-group health insurance market to grow as scheduled.

"Expanding the small-group market next year will increase the size of the insurance pool, which benefits the healthcare system overall," wrote Founder and CEO John Arensmeyer. "What's more, it will increase the number of lives eligible for the small business health insurance marketplaces, which is good for businesses."

The bill also would put $205 million into a Medicare improvement fund that was cut under the health law.

Other changes to the health overhaul that have been cleared by Congress since enactment include the repeal (PL 112-9) of a provision that required businesses to submit expanded Form 1099 tax reporting of transactions and the elimination of a long-term care insurance program that never took effect (PL 112-240). Congress also tapped a mandatory pool of money in the law for prevention and public health activities as an offset for broader legislation (PL 112-96).

Less than a month after enactment, Congress also cleared legislation (PL 111-159) to clarify that coverage for military families and other groups counts as medical coverage. The health law requires most Americans to be covered or face a penalty.

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Experts Defend Controversial Obamacare 'Cadillac' Tax

By Melissa Attias, CQ Roll Call

October 1, 2015 -- Opposition to the health care law's so-called Cadillac tax on high-cost employer health plans has grown in recent weeks as Democratic presidential contenders pushed for its repeal, but 101 health economists and policy experts urged tax writers Thursday not to weaken it without enacting an effective alternative.

The group's ranks represent a mix of ideological views, from Joseph Antos of the conservative-leaning American Enterprise Institute to the Brookings Institution's Alice M. Rivlin, who was director of the Office of Management and Budget under President Bill Clinton. The left-leaning Center on Budget and Policy Priorities circulated the letter and sent it to the top Democrats and Republicans on the House Ways and Means and Senate Finance committees.

The letter noted the economists and policy analysts involved hold "widely varying views" on other parts of the controversial health law and that measures other than the Cadillac tax could be used to reign in the tax break for employer-sponsored coverage. "But, we unite in urging Congress to take no action to weaken, delay, or reduce the Cadillac tax until and unless it enacts an alternative tax change that would more effectively curtail cost growth," the letter said.

In 2018, the threshold for the tax would be $10,200 for self-only coverage and $27,500 for family plans, with a 40 percent tax imposed on amounts over those limits.

Although the tax doesn't take effect until 2018, a growing lobbying force of business groups and labor unions are seeking to eliminate the levy. Nevada Republican Dean Heller and Ohio Democrat Sherrod Brown both introduced Senate repeal bills last month (S 2045, S 2075), following the introduction of House repeal bills from New Hampshire Republican Frank C. Guinta and Connecticut Democrat Joe Courtney earlier this year (HR 879, HR 2050).

Democratic presidential candidate Hillary Rodham Clinton got attention Tuesday when she released a statement encouraging Congress to scrap the tax that was created by Democrats "and to fully pay for the cost of repeal."

Republicans on the House Ways and Means Committee, meanwhile, endorsed its repeal alongside other pieces of the health law Tuesday in their recommendations for the expedited budget reconciliation process, which President Barack Obama is certain to veto.

In their letter, the experts said the health overhaul established the Cadillac tax to address something economists and policy specialists across the political spectrum have agreed on for decades: "that the unlimited exclusion of employer-financed health insurance from income and payroll taxes is economically inefficient and regressive." They maintained that the tax will restrain the growth of premiums for private coverage by encouraging employers to restrict their plans' costs, while discouraging them from providing insurance that covers so much spending "that consumers have little incentive to insist on cost-effective care and providers have little incentive to provide it."

The signers also predicted that employers will boost wages or other benefits as they redesign their health plans to meet the tax's thresholds. In addition, they cited a Joint Committee on Taxation projection that repealing the tax would increase the deficit by $91 billion through fiscal 2025.

In addition to Antos and Rivlin, the letter was spearheaded by well-known economists Henry Aaron, David Cutler, Peter Diamond, Robert Reischauer, and Gail Wilensky. Massachusetts Institute of Technology economist Jonathan Gruber, who advised the administration as the 2010 law was enacted and apologized before a House panel last year for embarrassing Democrats with "glib, thoughtless, and sometimes downright insulting" comments about the overhaul, also signed onto the effort.

Opponents of the tax maintain that the provision will end up hitting a number of plans rather than solely those with overly generous benefits, with the ranks growing each year because it's aligned with the consumer price index but medical inflation is higher. Critics are pushing for quick action on repeal because they say employers are already reducing coverage or shifting costs to workers to avoid the tax.

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Senators Signal Interest in Electronic Health Records Changes

By Melanie Zanona, CQ Roll Call

October 1, 2015 -- Obama administration officials told a Senate panel that Congress can help improve the use of electronic health records through potential provisions in the committee's upcoming biomedical innovation bill. But officials were reluctant to endorse a delay in requirements under a federal program meant to encourage the records' adoption–a postponement favored by top lawmakers on the panel.

In the last string of Senate Health, Education, Labor, and Pensions hearings to identify "five or six steps" to enhance health information technology, Chairman Lamar Alexander said Thursday that he hopes to include some of the committee's findings in a bipartisan package to speed new medical cures. The House passed its own version (HR 6) in July and the committee is expected to release its first draft in coming weeks.

"We want to do in our legislation what the administration can't do administratively," Alexander said. The Tennessee Republican previously had said the issue might not need to be addressed legislatively.

The committee is exploring ways to increase interoperability, or getting electronic health information systems to talk to each other. The so-called meaningful use program, a $30 billion Centers for Medicare and Medicaid Services program included in the 2009 stimulus package (PL 111-5), was meant to incentivize doctors and hospitals to adopt electronic health records, or EHRs. But physicians and other providers have struggled to meet the first two phases of requirements.

"In the same way that an email sent from a Gmail account makes sense when it's opened in Yahoo, data in one EHR system should be structured so that it makes sense in others," said Patty Murray of Washington, the panel's ranking Democrat.

Health and Human Services Department Acting Assistant Secretary for Health Karen DeSalvo outlined efforts the administration is already taking to make health IT more effective, such as expanding alternative payment models, simplifying program requirements, and collaborating with the private sector.

But she suggested that the committee also could assist by prohibiting systems from intentionally blocking data from one another, improving transparency in the marketplace and establishing a mechanism to hold vendors more accountable.

"We share the goal of making this technology more usable, and should Congress choose to legislate in this area, these actions could further help health IT reach its full potential," DeSalvo said.

Bill Cassidy, R-La., announced at the hearing that he would introduce legislation next week with Sheldon Whitehouse, D-R.I., aimed at enhancing interoperability. A Cassidy aide said they hope it will be folded into the panel's biomedical innovation package. The House version included language affecting the issue.

One area that was not addressed in the House bill was delaying the next phase of upcoming meaningful use requirements that dictate what criteria providers must meet  to receive payments and avoid penalties. 

Alexander expressed concern that the administration would "rush" to move forward with finalizing the third stage of regulations this fall when only 12 percent of physicians and 40 percent of hospitals have been able to comply with the second stage requirements. Alexander urged administration officials to take more time to "get it right" and warned that Congress could step in if necessary.

"We have an opportunity in Congress to carefully review whatever decision the administration makes about how we proceed," Alexander said. "One way can do that is through the innovation legislation."

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House Questions Grow for Insurer CEOS on Mergers

By Jad Chamseddine, CQ Roll Call

September 30, 2015 -- Republicans are joining the opposition to mergers among the largest U.S. health care insurers by questioning if the deals will provide benefits and synergies that will reach consumers.

The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law was largely unified in questioning Anthem Inc. CEO Joseph Swedish, whose company plans to buy Cigna Corp., and Aetna Inc. CEO Mark Bertolini, whose company wants to purchase Humana Inc., on Tuesday over advantages the executives say the mergers would bring to consumers. This was the House panel's second hearing on health care marketplace competition and the second time the CEOs appeared in Congress to defend their deals, following their testimony last week before a Senate panel.

While some Republicans used the stage to say the health care law known as Obamacare accelerates industry consolidation, an argument they made in the previous House subcommittee hearing, Georgia Republican Doug Collins complained that Aetna's acquisition of Humana would give the combined company control of 65 percent of Georgia's health insurance market.

"Tell me why I shouldn't be concerned about this level of concentration?" Collins asked.

Bertolini said Aetna and Humana could divest some of their business in some markets, including Georgia, to reduce the combined company's power in the state.
"Concentration is one measure of whether or not there is a problem from a competitive standpoint," Bertolini said. "We will cooperate with the Department of Justice in reviewing that opportunity and those issues."

While Bertolini said 10 competitors exist in Georgia, Collins pressed the CEO on a potential lack of choice for his constituents. "These choices seem to be narrowing more and more, and when you get to a market share of close to 65 percent that does tend to look like you're cutting off avenues."

John Ratcliffe, R-Texas, took time in the hearing to criticize Obamacare, calling it the "perversely named" Affordable Care Act, but showed concern as he asked whether previous mergers between health care insurers failed to add benefits to consumers. House Judiciary Subcommittee Chairman Tom Marino, R-Pa., had similar concerns as Ratcliffe, questioning how his rural constituents would get any benefits from multi-billion dollar deals.

He also criticized the health care law, saying, "I continually hear from my constituents, physicians, and hospitals that Obamacare is just driving the price up astronomically to the point that some of the hospitals and physicians believe they can't stay in business."

Democrats, who often urge government intervention when consolidations could hurt consumers, also expressed skepticism. Rhode Island Democrat Rep. David Cicilline, D-R.I., challenged the argument that the consolidations would lead to improved quality at reduced cost.

"This claim arises from the idea that the merged insurers will realize savings from increased efficiencies and will pass these savings on to consumers," Cicilline said. "However, I must admit after reviewing the testimonies, I'm skeptical."

New York Democrat Hakeem Jeffries urged the Justice Department to look at whether the public will benefit from these mergers, as opposed to just looking at anti-competitive effects.

"These are publicly traded companies, which means they have fiduciary obligations to their shareholders and I think the notion that the mode of analysis should simply be whether it's likely to result in a detriment to the public is a misplaced way to approach public policy," he said.

Jefferies said research has shown that merger benefits do not go to consumers. Jaime S. King, a law professor at University of California, Hastings College of the Law, agreed with Jefferies, citing a recent study showing that profits increased for the insurance companies without no reciprocal benefit to consumers.

The CEOs stuck to the same points they made during Senate subcommittee hearings a week ago, arguing the deal would allow consumers more affordability and better care. Swedish pointed to a flurry of new entrants to the market, saying the health care market was "flush" with competition and that the number of health insurers has increased 26 percent.

But Collins questioned whether that will really help consumers. "When elephants fight, the only thing that loses is the grass, and the grass is the people you serve," Collins told Bertolini and Swedish.

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Insurer-Run Medicare Plans Pressured to Guarantee Doctor Supply

By Kerry Young, CQ Roll Call

September 28, 2015 -- Connecticut Democrat Rosa DeLauro said she will introduce a bill that would make it tougher for Medicare plans to drop doctors and other health providers from their networks, adding to pressure on insurers to maintain more robust offerings for their customers. 

DeLauro also on Monday released a Government Accountability Office (GAO) report she and other lawmakers requested, which found that federal officials have been "largely reactive" in their monitoring of the adequacy of the networks of health professionals offered by these plans.

So-called Medicare Advantage plans have boomed in recent years, bringing more urgency to questions about whether the customers in this roughly $160 billion market have adequate access to doctors and other health workers. Enrollment stands at more than 16 million people, or more than 30 percent of the elderly and disabled people covered by Medicare.

UnitedHealth Group, Humana Inc., and other firms that sell Medicare Advantage plans must do a balancing act in creating networks of doctors and other health professionals for their customers. The ability to exclude some medical professionals is one of the key cost-savings tools for these plans, which were designed to allow Medicare to benefit from strategies used in the private sector.

But the Centers for Medicare and Medicaid Services (CMS) also has regulations determining the minimum number of providers of different medical specialties that a network should include. These are set on a county-level basis, factoring in population. Advantage plans in Muscogee County, Ga., for example, would be required to have six primary care doctors to serve about 3,300 eligible beneficiaries, according to an example provided by CMS in a guidance document.

To check on whether these standards are met, CMS relies heavily on reports from the insurers about their networks and complaints from doctors who may have been shut out of Advantage plans, according to GAO. The investigative arm of Congress also said CMS doesn't look closely at whether doctors listed as participating in a plan may work only part-time or may not be taking new patients.

"As a result, provider networks may appear to regulators and beneficiaries as more robust than they actually are if not all providers are open for business," GAO said in the report, which is dated August 2015, but was not posted until Monday.

There have been complaints for several years about how Advantage plans create their networks and how they inform their customers about which doctors are included, with many protests coming from specialty medical groups.

GAO noted in its report the results of a 2014 study, which looked at listings for about 4,700 dermatology professionals listed in directories of large Medicare Advantage plans.  About 46 percent of the listings were duplicates and 8.5 percent of the individual providers had died, retired, or moved out of the area, GAO said in summarizing the study results.

CMS in April said it was considering whether to require the Advantage plans to provide, and regularly update, network information in a standardized, electronic format for eventual inclusion in a nationwide provider database. 

In Connecticut, UnitedHealth's termination of more than 1,440 providers last year affected about 18,700 beneficiaries, or 13 percent of the state's participants in Medicare Advantage, GAO said. UnitedHealth mailed letters to customers in mid-November 2013 about changes effective Feb. 1, 2014. CMS began weekly calls with UnitedHealth about the terminations after "these network cuts drew media attention and widespread provider complaints," GAO said.

DeLauro will soon reintroduce a bill for which she drew 10 Democratic cosponsors in the 113th Congress, according to a spokeswoman. That measure would have allowed Medicare Advantage plans to drop doctors and other health professionals from networks due to medical negligence and violations of contractual requirements. But the cost of a doctor or another health professional for an Advantage plan "does not constitute cause for the [Medicare Advantage] organization to remove such provider or supplier from the network, and such cost may not be considered as a factor in favor of a determination," the 2014 version of DeLauro's bill said.

In a statement Monday, DeLauro said that the GAO report on provider networks reinforced her concerns about the program. "Medicare Advantage patients have no recourse to stop bad behavior like we saw in Connecticut with UnitedHealth," she said.

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