By Melissa Attias, CQ Roll Call

September 9, 2015 -- House Energy and Commerce members signaled interest Wednesday in a bipartisan plan that would amend the Affordable Care Act to keep employers with 51 to 100 workers from having to comply with more stringent insurance coverage requirements.

The bill (HR 1624), with 40 Democrats among its 215 cosponsors, drew a warmer response from Energy and Commerce Health Subcommittee Democrats than past efforts targeting the 2010 overhaul. Frank Pallone Jr. of New Jersey, the ranking member of the full committee, called the hearing a "turning point" in the debate, though he added the legislation could be premature.

"As opposed to using the ACA as a political football through repeated, futile attempts to repeal or defund the law, Republicans and Democrats have come together in a bipartisan fashion to improve and strengthen the ACA," Pallone said, referring to the law, known as the Affordable Care Act. "I'm hopeful this spirit can continue."

Under the law, 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. Monica Lindeen, president of the National Association of Insurance Commissioners, said her group endorsed the bill because it would allow states to continue to have control over the small-group market and ensure stability.

Although the effects would vary by state, Lindeen warned of premium increases and reduced flexibility to tailor benefits for the firms in question if the legislation is not passed. Employers with younger and healthier workers could self-insure to avoid fallout from the change.

Kurt Giesa, a partner at the management consultant Oliver Wyman, said his analysis found that 64 percent of midsized employers would see their premiums rise in 2016, with an average boost of 18 percent. After firms with younger, healthier workers leave the market, he estimated that premiums for small businesses in the new combined market could go up 3 to 5 percent.

But Washington State Insurance Commissioner Mike Kreidler testified against the legislation, saying insurers are counting on an expanded risk pool to keep requested premium decreases. Making the change "so late in the game will be very disruptive to the market in the state of Washington," he said.

Kreidler also noted that employees would not have access to the guaranteed benefits under the health care law and suggested that lawmakers could postpone the change rather than remove the requirement. "The jump is a good one for health care reform and for the small group market," he said.

North Carolina Republican Renee Ellmers questioned why Kreidler opposed the measure when a state could opt out of the definition change. But Kreidler said Washington state law sets its coverage limit at 50 employees, meaning he would have to gain legislative approval—the odds of which he put at "zero to none" given the link to the health law.

Lindeen noted that the Obama administration has offered a transition policy that could allow relief for mid-sized employers in participating states until October 2017, but she said her group thinks the legislation is necessary to preserve coverage options and for future stability. She also dismissed the notion that consumers would have fewer protections under the bill and said that the requirement for plans to offer certain benefits wasn't needed for the large-group market.

"It's important not to deny the small businesses that are currently utilizing a product that works for them to be able to continue to do that," Lindeen said.

Jennifer Sherman, spokeswoman for bill sponsor Brett Guthrie, R-Ky., said a preliminary estimate from the Congressional Budget Office found that the legislation would save $400 million over a decade. That should insulate the measure from the offset concerns that dogged other efforts to change that health law that garnered bipartisan support.

By Jad Chamseddine, CQ Roll Call

September 9, 2015 -- Ahead of a House hearing on health market competition, the American Medical Association (AMA) is releasing studies showing that the industry would suffer great harm if proposed mergers among the largest health insurers are not scrutinized. 

The country's largest physicians' association opposes health insurance consolidation out of concern that more combinations would boost costs across the country. "A lack of competition in health insurer markets is not in the best interests of patients or physicians," AMA President Steven J. Stack said in a prepared statement Tuesday.

The studies were released ahead of a House Judiciary Regulatory Reform, Commercial and Antitrust Law Subcommittee hearing scheduled for Thursday focusing on the state of competition in the health care marketplace. The hearing will be one of many, according to statements made by House Judiciary Chairman Robert H. Goodlatte, R-Va., and subcommittee Chairman Tom Marino, R-Pa.

Republicans blame the 2010 health care law for increased consolidation in the health care industry.

"Since its enactment, Obamacare has had a significant impact on each of these markets," according to the statement. "Americans are already starting to see their medical bills rise, the quality of their care becoming diminished, and their options for care becoming more limited." Similar statements were leveled against the White House by Senate Majority leader Mitch McConnell, R-Ky, after Louisville, Kentucky-based Humana announced its merger with Aetna Inc.

AMA Board of Trustees member Barbara L. McAneny is expected to appear as a witnesses on Thursday and argue against Aetna acquiring Humana Inc. and Anthem Inc. buying Cigna Corp. While Congress does not have a say in whether the deal will ultimately pass regulatory muster, the tone lawmakers strike during the hearings can help shape public opinion and pressure the Justice Department to block the combinations.

The AMA has long cautioned against excessive consolidation and said in its most recent study that companies with higher market shares are "largely the result of mergers and acquisitions" in the industry. Without considering the proposed mergers, the AMA's study shows that out of the 388 geographic markets in the country, about 70 percent were highly concentrated, and that in 89 percent of the geographic markets, one insurer has at least a 30 percent market share.

Using an index applied by the Justice Department and Federal Trade Commission to measure market concentration, the AMA found that Anthem's $53 billion acquisition would significantly enhance market power of the combined company in 10 of the 14 states in which Anthem provides commercial coverage.

The deal would also "warrant scrutiny" in four of the remaining states in which coverage is provided. The physicians association said the deal would reduce overall competition in 111 geographic areas within those states.

The combination between Aetna and Humana would only have a considerable effect on 15 markets in seven states.

A similar study by the American Hospital Association was made public last month urging government regulators to block both transactions. AHA CEO Richard J. Pollack is expected to appear as a witness on Thursday.

By Marissa Evans, CQ Roll Call

September 8, 2015 -- Medicaid beneficiaries who use more prescription drugs tend to have lower costs for other health care services, according to a Health Affairs report.

Just a 1 percent increase in overall medication use led to lower costs in other medical spending for low-income or disabled beneficiaries in the joint state and federal program, which cost a total of $449 billion in 2013, the study found.

The drop was more intense for those battling chronic illnesses and disabilities. Among blind or adults with disabilities with an average age of 46 years old, a 1 percent increase in drug use was associated with a 0.108 percent decrease in total non-drug costs, the report found. A similar 1 percent increase in the use of prescription drugs among other adults who were 36 years old on average led to a 0.167 percent decrease in other medical costs, and among children a 0.041 percent decrease.

The report released Tuesday focuses on 1.5 million adult and child beneficiaries enrolled in fee-for-service Medicaid programs in 11 states. About 25 percent of them were blind or disabled adults, 11 percent were other adults and 64 percent were children. Researchers analyzed Medicaid eligibility and claims data on long-term care, the use of inpatient and outpatient services and prescription drug use from 2008 through 2010.

Prescription drug use was highest among blind or disabled adults, with 50 prescriptions filled per year, compared to 20 for other adults and six for children, according to the study. Among blind or disabled adults, 42 percent used medication for hypertension, 35 percent for depression, and 30 percent for gastroesophageal reflux disease.

About 23 percent of the other adults used anti-depressants, the most common medications in that group. Among children, the most commonly treated illnesses were asthma and chronic pulmonary disease.

The study comes as more policy experts and lawmakers continue to seek out data that shows the correlation between prescription drug medical care costs in Medicaid and other programs.

A 2012 Congressional Budget Office (CBO) report found such a link in the Medicare program, which serves seniors and people with disabilities. A 1 percent increase in drug utilization resulted in a 0.20 percent reduction in spending on other types of medical care including emergency department visits and hospitalizations. The authors of the new report noted that the CBO findings did not directly relate to the Medicaid population but that, taken together, the reports suggested that greater drug use can potentially hold down costs for other types of medical care.

"We believe that our study, as a complement to the CBO's work on Medicare, helps strengthen economic evaluations of Medicaid," according to researchers.

By Kerry Young, CQ Roll Call

September 11, 2015 -- Advisers to Congress are wrestling with how to judge the quality of treatment provided to elderly and disabled people recovering after serious illness and surgeries.

Facing a June 2016 deadline to deliver a mandated report to Congress, members of the Medicare Payment Advisory Commission (MedPAC) on Thursday delved into the complexities of comparing treatments delivered in different settings to people who still need medical care after being discharged from hospitals. The panel is tasked with looking at four settings: inpatient rehabilitation centers, skilled nursing facilities, long-term care hospitals, and patients' homes, where care is provided with the help of aides. People served in these settings often are recovering from strokes or hip replacements.

The wishes of people in need of such postacute care should factor heavily in these assessments, said Rita Redberg, a MedPAC member and cardiologist from the University of California at San Francisco.

"In my experience taking care of people the last 30 years, most people want to go home," she said. "They always want to go home if that is a reasonable option."

Too often, though, they may end up admitted as patients to treatment centers, she said. These can prove more costly than home care, but haven't been shown to provide a clear benefit to patients in many cases. Redberg also suggested that hospice should be considered among the options for post-acute care, as some of the people admitted to long-term care hospitals are nearing death.

But that would be beyond the scope of the mandate given to MedPAC through a 2014 law known as the IMPACT Act (PL 113-185), noted Mark E. Miller, executive director of the panel, while indicating some openness otherwise to the suggestion.

There's bipartisan agreement among lawmakers for the need to overhaul post-acute care, despite deep rancor on other medical issues, such as the implementation of the 2010 health law.

The IMPACT Act was cleared by the Senate by unanimous consent on Sept. 14, 2014, two days after the House agreed to it by voice vote. Medicare in 2013 paid for 9.6 million episodes of postacute care, and the cost to the program for the field of medicine roughly doubled between 2001 and 2012, according to MedPAC.  "Yet despite this heavy investment, the need for [post-acute care] is not well defined, and Medicare gives providers considerable latitude in delineating which patients they admit among the patients referred to them by hospitals," the panel said in its March 2015 report to Congress.

The decision on how to treat a person in need of post-acute care often is made for reasons besides medical rationales, including local practice patterns, the availability of care in a market, patient and family preferences, and financial arrangements between a provider and the referring hospital, according to the commission.

Medicare and Congress have worked for years to better understand the field. The IMPACT Act, for example, directs MedPAC to build on data from a postacute care research that was authorized by the 2005 Deficit Reduction Act (PL 109–171).

Several MedPAC members expressed frustration with the lack of data available to aid in making comparisons about different sites of care. The panel is charged with putting ideas to aid in creating "a payment model that is in the spirit of site neutral payments,"  said Katherine Baicker of the Harvard School of Public Health. Yet commissioners still want to know more about why "patients who look very much the same" and obtain similar results from their care "get treated in settings that have very different costs," she said.

Baicker and other panelists noted the challenges ahead, including avoiding overpaying for home health services simply because they look inexpensive compared to more costly options. Miller said that MedPAC members would continue to discuss postacute care, one of the more complex topics facing the panel, at several meetings before the June deadline.

"Some of the issues we get, when we are lucky, are kind of dichotomous, like taking a left and taking a right," said MedPAC Chairman Francis J. Crosson. "This one I think requires a GPS because there's so many twists and turns here."

By Kerry Young, CQ Roll Call

September 9, 2015 - An emergency request for information needed to operate a risk-management program for insurers will take longer to complete than federal officials expect, insurance industry officials say.

The Centers for Medicare and Medicaid Services (CMS) delayed a planned August release of estimated payments and charges through the so-called risk corridor program to address a "significant number of discrepancies" in data submitted to the agency by insurers. The program, which was created in the Affordable Care Act, caps profits and blunts losses for insurers that offer plans through new marketplaces.

CMS also had questions about insurers' information regarding the so-called medical loss ratio, which requires insurers to spend set amounts of premiums on health expenses. Plans that don't meet those thresholds owe refunds to customers. CMS estimated that 250 organizations would have to submit additional information to clear up these questions, requiring about 2,040 hours combined for these firms and groups.

That estimate "substantially understated" how long it would take to complete worksheets that CMS is using to address questions, said America's Health Insurance Plans and the Blue Cross and Blue Shield Association in a joint comment to CMS on the agency's Aug. 31 filing about its emergency plan to collect more data.

In a separate comment, the insurance company Kaiser Permanente challenged the CMS estimate of roughly 8.13 hours of work for each insurer. Instead, it would take 600 to 800 hours, with five employees working full time for two weeks and another five devoted part time to the task, according to Kaiser.

"Even with these resources, we do not believe we are able to complete the detailed allocations within the allotted time frame," wrote Anthony Barrueta, senior vice president of government relations for Kaiser Permanente, which serves more than 10 million Americans. "We will submit the information we have available by the September 14 deadline and continue performing reconciliations beyond the submission date."

The risk corridor program has been a source of continuing controversy about the implementation of the 2010 health law. The three-year program was designed to aid insurers because the new law allowed people in poor health, many of whom are expensive to cover, to gain coverage without consideration of their medical conditions. Insurers with costs above a certain target will get federal subsidies, while those with profits above a limit will pay the government.

Many Republicans, including GOP presidential contender Sen. Marco Rubio, R-Fla., consider this a potential bailout for the insurance industry. Rubio's first piece of legislation for the 114th session was a bill (S 123) to end the risk corridor program, according to his office. He's so far drawn 11 GOP cosponsors, while more than 20 Republicans back the companion House bill from Rep. Andy Harris, R-Md. 

Another GOP duo is taking a different approach to curbing potential payments to insurers. Bills (S 359, HR 724) from Sen. Bill Cassidy of Louisiana and Rep. Leonard Lance of New Jersey seek to insure that payments from the program are made from money collected within the insurance industry and not from taxpayer funds.

Cassidy and Lance claimed a victory last year when appropriators included language blocking transfers of federal funds for the risk corridor program in the fiscal 2015 spending package (PL 113-235).

It's unclear how CMS will respond if the demand for payments through the risk corridor program exceeds what's available through collections, said Scott E. Harrington, a professor at the Wharton School who studies in the insurance industry.

"There's some expectation that the numbers for risk corridors could be pretty poor, according to the CMS perspective, in that the amount of money that is owed could be quite large relative to the collections under this program," Harrington said in a Tuesday interview.

By Kerry Young, CQ Roll Call

September 10, 2015 -- The substantial safety-net protections for insurance plans that cover prescriptions may be dulling the insurers' incentive to negotiate the best deals for Medicare at a time of rising pharmaceutical costs, advisers to Congress said.

The Medicare Payment Advisory Commission (MedPAC) will delve Friday into how the federal health plan for the elderly and disabled manages pharmaceutical spending, including the approximately $78 billion Part D prescription drug plan program. The plans cover the routine prescriptions people purchase in pharmacies. Medicare pays for drugs given in doctors' offices and hospitals through the separate outpatient care part of the program.

Ahead of the meeting, MedPAC staff highlighted their concerns regarding the exploding cost of reinsurance payments. The funds are meant to soften the financial blow for insurers when a customer's drug costs hit an annual cap, set this year at $7,000. Medicare is responsible for most of the additional spending over the limit. Reinsurance was included to attract insurers to the drug program, which has been operating since 2006 and now serves more than 40 million Americans.

"Now that the market is established, it may be time to reevaluate policy goals for sharing risks in Part D," the MedPAC staff said in a Sept. 1 blog post about reinsurance.

Growth in reinsurance payments is outstripping increases in all of the other major expenses in the Part D drug program, including monthly payments to plans for patients' routine drug costs and subsidies that help low-income people afford medicine. The ballooning reinsurance costs are due in part to the introduction of costly hepatitis drugs and the increasing number of Americans with chronic diseases.

The growth raises concerns that the program is evolving into a relatively uncontained reimbursement, a payment approach that lawmakers and federal officials have been trying to abandon for the rest of the Medicare program.

"If this trend continues, Medicare's payments for Part D become closer to cost-based reimbursement that relies on open-ended reinsurance payments than one that relies on capitated payments, or ones that are more tightly controlled," MedPAC said in the blog post. "This is a particular concern going forward because launch prices for new drugs have reached levels that may push more beneficiaries over Part D's out-of-pocket threshold."

Last year, reinsurance payments topped the more tightly-controlled routine monthly payments to plans for the first time, according to the most recent Medicare trustees' report.

Annual reinsurance costs jumped by 363 percent since the start of the program, to $27.8 billion last year from $6 billion in 2006.

In the same period, regular payments to plans for patients' care rose only 6 percent. Funds for the subsidy for low-income people increased by 62 percent.

MedPAC has offered several ideas for changing Part D's risk management, including requiring insurers to include more of the costs of catastrophic spending in their covered benefits.

America's Health Insurance Plans argues that the key issue is to instead tackle the rising prices charged by drug companies.

"Any solutions addressing the rising costs of the Part D program should therefore get at their root cause, the increased use of high cost drugs," the trade group said in a statement to CQ HealthBeat, calling for increased transparency into drug companies' prices.