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October 7, 2013

Washington Health Policy Week in Review Archive a1ff67b0-20f2-49e7-99a7-d61fb1d2f5bf

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HHS Says More Than 7 Million Have Visited Exchange Site, but Who Is Enrolling?

By John Reichard, CQ HealthBeat Editor

October 3, 2013 -- Federal officials on the third day of insurance exchange operations faced a new emerging narrative in the battle for public perceptions of the launch—lots of shoppers, but not many buyers.

Department of Health and Human Services (HHS) officials countered, however, that the system is working. Americans across the country are starting to enroll in plans, they said. But they aren't divulging numbers, and it's unlikely they will do so for a while.

Insurance industry consultant Robert Laszewski said HHS is under the gun to smooth out the process of shopping for plans and enrolling in them online however before the young people critical to the success of the health law get turned off.

"They need to fix this before the general feeling about Obamacare is that it is an administrative screw-up," he said in an email.

Laszewski said he heard from one insurance executive that HHS should have done a "soft launch" of the site serving states that don't have their own exchanges.

He said the lack of enrollments is purely because of technological glitches that could have been dealt with more effectively through a slower launch. "People can't get past the front door of the site," he said. "Carriers with dominant market share in a state are getting a handful of enrollees. I have directly heard reports of zero new customers to 10, or 20. A dominant player would almost certainly have received hundreds if not thousands of sign-ups by now."

But defenders of the HHS implementation effort say it takes time for people to make up their minds about which plan to select once they have the information they need. And they said the HHS site has been beefed up to handle more capacity through adding more servers, engineers, and improved system configurations.

An HHS official said wait times at the HHS call center have been cut in half, and that the average time it takes a consumer to get an answer to a question has been cut to two minutes in the past 24 hours.

"In the last two days, 7 million Americans have visited to learn about their options," said HHS spokeswoman Joanne Peters. "Experts are working around the clock and were able to expand system capacity somewhat overnight, cutting by one-third the volume of people waiting to apply." According to HHS statistics, the 7 million figure refers to "unique visitors" and doesn't include multiple hits from individual visitors. "That is more than the number of people that visit Southwest Airlines in a month," said an HHS official.

"Everyone presumes this can get on track when the fixes are made," Laszewski said. But "the concern we have all had is that healthy people would hear it is a real bother—phone wait times, websites not working—and would be discouraged from signing up. We are off to the wrong kind of start which makes people worried about anti-selection all the more worried."

Anti-selection refers to having not enough young and healthy people sign up to offset the costs of unhealthy enrollees requiring costly treatments.

But the many visitors bodes well for big enrollment figures down the road, said Ron Pollack, executive director of Families USA. "It means that many millions of people are anxious to receive significant new help that will make health coverage affordable for families that previously found health insurance beyond their reach. This is a strong indication that enrollment success will ultimately occur in the weeks and months ahead."

Pollack emphasized that people, particularly those new to insurance, need time to make choices.

"Over the 182-day enrollment period that lasts through March 2014, it is highly likely that there will be an acceleration of enrollees with each passing week and month," Pollack said. "As more and more people learn about comparably situated families who are receiving help through the Affordable Care Act, this will inevitably result in ever-increasing numbers of families seeking to complete their enrollment."

One of the more well-developed state exchange efforts, that of Maryland, appears to be progressing after a startup marred by delays and difficulties creating individual accounts. "The story of the first three days is tremendous interest in Maryland Health Connection through every channel that we have," said Joshua Sharfstein, Maryland Secretary of Health and Mental Hygiene.

"We have more than 140,000 people coming to the web site," he said in an interview. "We have thousands of calls to the call center. Our navigator partners have been swamped at different events. People are filling out paper applications if they can't get on line at the moment. We've had hundreds of people show up at local departments of social service seeking coverage."

"It's day three. I don't think anyone anticipated a lot of enrollments on day three. But this is not a case of somebody having a party and people not coming. This is a case of somebody having a party and tons of people coming. What we now have to do is be prepared to meet the whole demand. That's really the challenge but it's the right challenge."

Maryland had an "unexpected bottleneck at account creation, which for us is the first step," Sharfstein added. "In Maryland we require identity verification through account creation. There was a patch applied last night that made a big difference to account creation. Our expectation is that things will continue to improve."

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'Focus and Fix' Must Be the Mantra at CMS, Say Brookings Analysts Who Set Up Part D

By John Reichard, CQ HealthBeat Editor

October 1, 2013 -- Coping with the glitches that crop up during the first open enrollment of the health care law exchanges is going to be a matter of focusing and fixing them—something the staff at the Centers for Medicare and Medicaid Services (CMS) has the experience and determination to do, say top Bush administration officials who implemented the Medicare drug benefit.

Mark McClellan, Larry Kocot, and Keith Fontenot talked to CQ HealthBeat last week about the opening of the health care law exchanges, contrasting this launch with the startup of Medicare part D. McClellan was CMS administrator at the time, in 2005 and 2006. Kocot, a career CMS employee, was his top lieutenant. Fontenot was a senior official at the White House Office of Management and Budget. Also a career employee, Fontenot went on to become the top health budget official at OMB during the Obama administration.

The trio said there are many parallels between the kinds of problems they faced with Part D—and solved—and those the Obama administration now faces.

Moving ahead with implementation will allow problems that can't be anticipated to be identified and addressed, said Kocot and Fontenot. Also, a dedicated CMS staff and its good working relationship with insurers will make it easier to overcome challenges, they said.

But none of them disputed the idea that gearing up enrollment under the health law (PL 111-148, PL 111-152) is a far more complex undertaking than the 2006 start of the Medicare drug benefit. And the three weren't unanimously predicting that the health law launch would ultimately be successful.

McClellan noted that many in the individual market may find themselves paying higher premiums under the health law. Kocot said there are many questions about the affordability of plans offered on the exchanges, questions that the Obama administration can't answer by just saying premiums are lower than predicted. For example, will a "young invincible" that signs up for coverage in January keep up his premium payments when he takes on new car payments in June?

But they also noted numerous similarities between the questions raised now about whether or not the health law will ultimately succeed, and the doubts expressed about the start of the drug benefit, which is now popular and widely viewed as a major success.

Better to Get Started

Starting open enrollment now gives CMS more time to find and fix problems said Fontenot. With coverage starting on Jan. 1, there's time to do that, he said, likening the current period to a beta test. It's a longer open enrollment than when Part D started. Beneficiaries had from Nov. 15 to Jan. 1 to sign up.

"The sooner this starts actually the better for when you get to January," Fontenot said. "So getting it going now and starting to iron these things out is critical. It's more the beta test phase than the live phase. There are a lot of reasons for that."

With all the early reports of glitches in the exchange launch, there's sure to be criticism that the Obama administration should have gotten a much earlier start in order to debug the systems before going live. But Kocot said Part D implementation taught him the limits of what you can know ahead of time.

"The epiphany that we had was you don't know what you don't know until you know it," Kocot said. "And you don't find out these things until you're actually in the process of administering the details of a very complex undertaking."

Kocot said it's unlikely many people will sign up right away. They need time to absorb information about the different plans and to settle on a choice. That didn't happen quickly with Part D, he said, recalling that the Bush administration made a big push to make Thanksgiving "a day of conversation" when families could discuss senior drug coverage and move ahead with decision making.

There were other challenges too, and plenty of doubts: Would there be enough plans? Would plans be affordable? Was the enrollment process too complex? Was the CMS web site too frustrating and would enough people have internet access to get to the site? Would enough people sign up?

Even if there was not the same level of criticism leveled at Part D as the health law, there was still plenty to go around. Kocot recalls hearing criticism from "everywhere."

There were external events too. Maybe not a shutdown, but big challenges nonetheless.

"We were getting ready for open enrollment and all of a sudden Katrina hit," Kocot recalls. "Personally I was dealing with getting drugs to people in the Astrodome and all sorts of sheltering that was going on and other things in addition to planning for the eligibility system."

Among the challenges in the fall of 2005 was testing the system to determine whether people were eligible for coverage. "One of the things that became very clear was in early December there wasn't nearly the enrollment data in system that we needed to test the system," he said.

"There was a massive effort to call plans" and get them to submit the enrollment data and lags developed in getting people processed into plans. There's likely to be some of that same problem going into 2014, Kocot said. "Remember, no enrollment is effectuated until the premium is paid."

Kocot emphasized that in the current atmosphere of intense criticism it's going to be critical for CMS and health plans to work together closely to fix problems—and said he thinks that kind of working relationship exists.

"From what I've seen," there is that spirit of working together. "I know that the career staff at CMS are incredibly dedicated. A lot of them have just a massive amount of experience from Part D, and they'll bring that to bear, and I know the plans are committed to this. Some of the exchanges are new to this business, and there may be a learning curve for them, but a lot of them have hired people with experience."

CMS is going to be working around the clock to fix problems and has acquired a lot of experience working with the insurance industry, Fontenot said. Implementing the drug benefit and changes in the Medicare Advantage program under the 2003 Medicare overhaul law gave the agency that experience, he added.

Kocot noted other difficulties with the drug benefit launch.

In a number of cases the wrong premium amounts were withheld from Social Security checks to pay prescription drug plans anywhere from a few dollars to 60 dollars. "The premium withhold was a big problem and it's analogous to if they get the subsidies wrong," under the health law he said.

"Congress wasn't happy when we withheld too little obviously we then had to go collect it, but they obviously weren't happy when we withheld too much because we when we had to go collect the beneficiary wasn't happy. "We did eventually work that out. But it wasn't without a lot of pain and congressional hearings. I visited both houses of Congress on this very issue."

But other comments by Kocot showed the huge complexities involved in implementing the health law and the many unanswered questions that remain about affordability of plans.

"You have to get those subsidies right," he said. If an insurance applicant submits a premium payment for what the insurer considers to be the wrong rate, the insurer has to send it back to the exchange to get adjudicated, he said. "Invariably there are going to be problems with this determination, regardless of whether it's automated or manual. And it's going to take time."

"Affordability is an interesting question because all of the debate" has been about has been about how projected rates compare with existing rates. " It says nothing to the individual circumstances of the beneficiary in terms of what can they afford," Kocot said." For example a young invincible, what happens when they want to buy a car in June? Will they stay with this, is that going to be part of their budget? Or the very poor who are just subsidy eligible with four kids who have to make a choice between food and clothes. This is a big experiment in that respect."

McClellan said that the enrollment process under the health law will be gradual compared to Part D, when most of those eligible the first year signed up. And enrollment will vary by state. But "it is going to get off the ground," McClellan said. "There are going to be millions of people who will be using coverage, glitches notwithstanding starting in early 2014." But he added that there will "still be a lot of important questions about how the program is going to sort out."

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Analysis of Marketplaces Show Wide Range in Number of Insurers

By Rebecca Adams, CQ HealthBeat Associate Editor

October 3, 2013 -- Sixteen states have one to three insurance companies operating in their individual marketplaces while 11 states have more than 10 insurers, according to an analysis released last week by the consulting firm Avalere Health.

The wide variability that federal officials have discussed is on exhibit in a map by the consulting firm showing how many insurance companies are operating in every state in the new marketplaces under the health care law (PL 111-148, PL 111-152).

Four to six insurers are operating in the individual marketplaces in 19 states and the District of Columbia, and seven to nine insurance companies are in four states.

"The federally facilitated marketplace landscape reveals meaningful competition among issuers and a variety of plan options for consumers to choose among," said Dan Mendelson, CEO of Avalere Health.

Many people in the federal marketplace will have a health care plan associated with the Blue Cross and Blue Shield Association as their second-cheapest option in the silver tier, according to Avalere. That is not a huge surprise because Blue Cross and Blue Shield plans dominate the current individual market.

The second-lowest-cost silver plan is the one upon which federal subsidies are based. Silver plans cover 70 percent of medical costs.

Consumers who want to get extra help paying for their copays and deductibles also must choose one of the plans at the silver tier level. People whose income is 250 percent of the federal poverty level or less qualify for extra financial help with their cost-sharing.

Avalere found that in a sampling of 13 states, the second-lowest-cost silver plan was associated with Blue Cross and Blue Shield in eight of the 13 states, a national Humana or Coventry plan in two of the 13 states,a local plan in two of the 13 states and a Medicaid/Medicare Advantage plan in one state.

Avalere looked at the federal database with premium information, which is available on, and checked offerings in the 13 federally-facilitated marketplace states that are expected to have the most people enroll. Those states were Arkansas, Florida, Georgia, Illinois, Indiana, Michigan, North Carolina, New Jersey, Ohio, Pennsylvania, Texas, Virginia and Wisconsin.

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Blues Multistate Exchange Plans: Next Best Thing to Public Option?

By John Reichard, CQ HealthBeat Editor

October 4, 2013 -- Americans bitter about the health care law's failure to include a so-called public option in insurance exchanges could console themselves this week with other choices in insurance exchanges that materialized: multistate Blue Cross Blue Shield plans negotiated by the federal Office of Personnel Management (OPM).

The choices "ensure that Americans across the country have access to high-quality health insurance plans with reliable benefits," OPM said in a fact sheet announcing the Blues plans.

The agency said it brings to its job of running the multistate insurance plan program under the health law more than 50 years of running the Federal Employees Health Benefit Program.

The plans "have a broad network of providers, a high percentage of spending on health care rather than administrative costs, and strong consumer protections," OPM said. "These plans may also provide families with members who live in different states the option of being enrolled in the same plan."

Aggressive Bidding

The public option would have been designed by federal officials. It likely would have appealed to Americans who are leery of for-profit insurance, like the idea of government-run, single payer health care, and are fans of the Medicare program for example. But private insurers were able to keep it from being included in exchanges. They argued that a powerful federal government would have had an unfair advantage in negotiating lower rates with providers.

At first glance, the Blues multistate plans wouldn't figure to come in as the lowest cost plans given OPM's comments that they have broad networks of providers.

That's "a reasonable theory," says Caroline Pearson, vice president of the Avalere Health consulting firm, "but it isn't what we've seen thus far."

Pearson notes that the Blues are dominant in the individual insurance market and says they are bidding aggressively for market share under the health law by coming in with either the lowest or second-lowest rates in exchange markets. While Pearson said her firm hasn't seen all the price data yet for the Blues multistate offerings, they are likely to match or be close to the premium rates charged by Blues plans sold in exchanges that aren't multistate plans.

She says that while the multistate plans are offering national provider networks, it's likely they are limiting the size of their local networks in order to be able to charge lower premiums. If that's so, they won't have one element that makes Medicare attractive to people—the ability to see a wide range of providers.

The Blues are offering 150 multistate plan options in 30 states. The health care law (PL 111-148, PL 111-152) requires that multistate plans be offered in all states, but not right away—within four years.

The multistate plans are adding choices to markets that lack them, OPM said in its fact sheet. Without the plans Alaska, New Hampshire, and West Virginia would have only one exchange plan, OPM said. The plans also will be offered in 10 states served by the federal exchange where there are five or fewer plans offering health plans.

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A Glimpse of the Debt Limit Crisis End Game?

By John Reichard, CQ HealthBeat Editor

October 3, 2013 -- A recent letter to the Obama administration from Senate Finance Republicans may be something like what the end game looks like in resolving the building crisis over raising the debt limit.

The letter to U.S. Treasury Secretary Jack Lew doesn't demand a delay in the health care law. Nor does it call for a defunding of President Barack Obama's signature legislative accomplishment. And it doesn't specify how much money Obama must cut from federal spending to get a GOP sign-off on a debt limit increase.

All of those things have been urged by House Republicans in recent days—and the administration says they are non-starters.

But what the letter does do is push for cuts in entitlement spending in a broad sense without getting into specifics on how they should be accomplished. The letter notes the Congressional Budget Office's recent assessment that most of the long-term growth in federal spending in the next 25 years, not including interest payments, is in the government's major health programs. They are Medicare, Medicaid, the Children's Health Insurance Program, and health care law (PL 111-148, PL 111-152) subsidies on insurance exchanges. The GOP senators add that Social Security spending also is expected to outpace economic growth.

"We ask that the President begin discussion now to combat our long-term debt through meaningful entitlement reforms—not merely more cuts to health care providers," the Sept. 25 letter said. It also asked "how long and how great of a debt limit increase the Administration is requesting."

Sen. Orrin G. Hatch of Utah, the top Republican on the Finance panel, has sought during the year to build support for changes to Medicare that have drawn at least a smattering of bipartisan support in the past. They include a 15 percent surcharge on Part B premiums for beneficiaries who have Medigap plans with low cost-sharing. Other changes include streamlining several Medicare payments by establishing an annual catastrophic cap, a single combined annual deductible for Part A and B services, and a uniform coinsurance rate for amounts above the deductible. More controversially, they include raising the Medicare eligibility age from 65 to 67.

A debt limit deal charting a path toward such changes could be a face-saving way for Republicans to allow an increase in the limit without having to acknowledge they got nothing in return. And if it didn't have any real teeth, the administration could say it didn't make concessions in return for a debt limit hike. While unappealing to both sides, such an agreement might become more attractive if the two parties are facing a stock market collapse with a few days to go before default.

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Employers Trimming Benefits Now to Avoid Cadillac Tax in 2018

By Rebecca Adams, CQ HealthBeat Associate Editor

October 4, 2013 -- Even though it won't take effect for several years the so-called Cadillac tax in the health law already appears to be causing employers to try to rein in the costs of health coverage.

As employees at many private companies prepare for the open enrollment season, some will find out soon about decisions their employers have made about benefits in order to escape a tax on expensive health care coverage that hits in 2018.

The tax imposes a 40 percent excise tax beginning in 2018 on the cost of coverage for health plans that goes above limits of $10,200 for individual coverage and $27,500 for self and spouse or family coverage that year.

Nearly a third of all big employers say they are taking steps in 2014 to avoid the tax in 2018, according to a survey released earlier this week by the Mercer consulting firm.

Mercer estimates that about 40 percent of companies would have to pay the tax on at least one plan if they did not change the current benefit design. Mercer's figures are the partial findings of a survey of 2,800 large employers across the nation, with about 2,000 responses so far. The full survey will be released later.

One of the changes to lower employer costs and avoid the tax includes nudging workers to join an existing "consumer-directed" plan. Typically these plans include a feature such as a health savings account or a health reimbursement account funded in part by the employer to help pay out of pocket expenses. The plan is coupled with high-deductible coverage for catastrophic costs. Employers next year may be offering new consumer-directed plan options, said Tracy Watts, senior partner and Mercer's point person on health reform.

That fits with findings from August from an internal survey of 108 employers by the National Business Group on Health (NBGH), which represents Fortune 500 companies. The employers rated the three most effective ways to lower costs as wellness initiatives to improve employee health and lower medical expenses; consumer-directed health plans; and increasing employee cost-sharing such as deductibles.

In 2013, 54 percent of the large employers in the NBGH survey said they offer consumer-directed plans as an option and 19 percent as the only way for workers to get coverage. Several that offer the plans as one alternative now plan to provide it as the only option next year. The survey found that 22 percent will make it the only choice.

Employers are also investing in more wellness programs, changing drug benefits especially for specialty drugs like injectable treatments, offering more service through on-site clinics, doing more contracting with high-quality and low-cost centers and offering more disease management services.

Another approach being considered is charging higher-paid employees more for health coverage. One-third of companies in the NBGH sample said they would do that in 2015 and another 8 percent said they are considering it in 2015.

And private exchanges, an increasingly popular idea, could be a way for employers to make changes in benefits while simultaneously distancing themselves from reductions in coverage.

"You can look at private exchanges as a safety valve for the Cadillac tax," said Steve Wojcik, vice president of public policy for the National Business Group on Health. As 2018 draws closer, he said, employers who have been unable to scale back health care spending could turn to private exchanges.

"It's easy to imagine some employers won't be able to get costs under the threshold unless they move to private exchanges because sometimes it's easier for an outside entity to impose the changes by saying these are the plan offerings," he said.

In other words, instead of scaling back benefits for workers in their existing plans, the companies could join a private exchange in which all of the choices would not exceed the level of spending that would trigger the Cadillac tax.

Gary Claxton, the director of the Health Care Marketplace Project at the nonpartisan Kaiser Family Foundation, said employers do not want to wait until 2016 or 2017 to make changes abruptly. But at the same time, it's hard for employers to know exactly what the details of the excise tax will be since the Obama administration has not yet released a proposed rule on it.

"If you want to moderate costs, you can use it as an excuse," said Claxton. "Anytime someone can blame it on something else, they will."

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