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September 19, 2016

Washington Health Policy Week in Review Archive d433c953-4978-42e4-99b7-20d71ac8aa41

Newsletter Article


Obama Meets with Insurers as Marketplaces Face Challenges

By Erin Mershon, CQ Roll Call

September 12, 2016 --- President Barack Obama met with major health insurance company officials Monday, commending those who will participate in the health law marketplaces after a summer marked by headlines about dramatic withdrawals from the market and rising premiums.

The president and other administration officials underscored the importance of continuing to participate in the marketplaces and asked for the CEOs' input on how to make the marketplaces stronger, according to a White House official. Administration officials have had yearly meetings with similar groups of CEOs ahead of the law's previous three open enrollment periods.

The meeting comes after two major insurance companies, UnitedHealth Group Inc. and Aetna Inc., announced a massive exodus from most of the marketplaces in which they were selling products, citing financial losses. Republicans also have hammered the 2010 health overhaul in campaign ads and congressional hearings this year, focusing on premium increases that could top double digits, in percentage terms, in some counties.

In a Monday letter to every participating insurance company, Obama highlighted the historic drop in the uninsured rate that has been driven by the law. He also acknowledged its issues.

"We know that this progress has not been without challenges. Most new enterprises have growing pains and opportunities for improvement. The Marketplace, while strong, is no exception," he wrote, according to the letter provided by a White House official. He pointed to recent regulatory changes intended to strengthen the exchanges, adding the administration "will continue to listen and identify opportunities to [improve the law]. These efforts underscore my commitment to making sure the Marketplace continues to work long after I leave office."

In addition to Obama, the meeting also was attended by Health and Human Services Secretary Sylvia Mathews Burwell, senior advisor Valerie Jarrett and Deputy Chief of Staff for Implementation Kristie Canegallo, and executives from 13 health plans or plan associations. The companies included Humana Inc., Cigna Corp., Highmark Inc., Molina Healthcare Inc. and a large array of Blue Cross and Blue Shield plans, as well as representatives from America's Health Insurance Plans and the Blue Cross Blue Shield Association (BCBS).

BCBSA President Scott Serota, who attended the meeting, said in a statement that his group will continue to work with the administration to develop rules that "encourage people to be continuously insured so they get the ongoing care they need."

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Deductibles Rise in Employer-Sponsored Health Plans

By Andrew Siddons, CQ Roll Call

September 14, 2016 -- Health insurance deductibles rose by 12 percent in employer-sponsored insurance, according to a new analysis by the Kaiser Family Foundation. The dramatic increases occurred as a growing number of American workers shifted to plans with lower premiums but higher out-of-pocket costs.

Health insurance premiums for people covered by their employers rose in 2016 at a similar pace to 2015 but still more slowly than in previous years.

In 2016, 29 percent of workers used plans with relatively high deductibles, compared to 20 percent in 2014. Average annual deductibles rose $159 to $1,478 in 2016. Those deductibles can widely vary based on the size of the workplace: They were on average $1,238 per year at large firms with more than 200 employees, versus $2,069 at smaller firms. Higher-deductible plans on average cost $5,762 for individuals and $16,737 for families.

Drew Altman, president of the Kaiser Family Foundation, said the shift from comprehensive plans to plans with high deductibles but lower premiums is "the biggest change in healthcare in America that we are not really debating." In a briefing with reporters on Wednesday, Altman called the shift "both good and bad."

And while the survey showed that more employers are investing in prevention and wellness programs designed to help employees manage their own healthcare costs, "there are real questions we can discuss around their effectiveness," Altman said.

The data paint a rosier picture for individuals with employer-sponsored coverage, who saw much less of a year-over-year impact on their pocketbooks than their counterparts purchasing coverage on the insurance exchanges established by the 2010 health overhaul (PL 111-148, PL 111-152). Those individuals saw their premiums increase by a national average of about 12 percent, though the impact was mitigated by consumers shopping around and by premium tax credits available for lower-income consumers.

The affordability of health insurance both on and off the exchanges remains a major priority for the Obama administration, which is fielding widespread criticisms from Republicans about future premium increases on the individual market that may be twice as high as last year's.

While the premium increases for employers were modest, premiums are still increasing more quickly than wages and economic growth, noted Steve Wojcik, vice president of public policy at the National Business Group on Health, a nonprofit that represents large employers' perspective on healthcare issues.

"Relief for employers and employees from these cost increases must increasingly come from stepped up efforts to pay smarter for health care, to combat excessive consolidation of hospitals and health care providers, and to eliminate perverse incentives that encourage physicians to provide unnecessary care and choose more expensive care," Wojcik said in an e-mail.

The cost of premiums in plans that include employees and their families increased by 3 percent in 2016, to $18,142, an increase similar to the year before, according to the Kaiser survey. The premium for covered individuals was $6,435, which did not represent a statistically significant increase over the year before. Workers themselves on average contributed 18 percent of those premium costs for individual plans and 30 percent for family coverage. Over the five-year period from 2011 to 2016, those premiums increased 20 percent. That was slower than a 31 percent increase from 2006 to 2011 and a 63 percent increases between 2001 and 2006.

Workplace size had an impact on several factors. Workers at smaller firms paid a larger share of the total premium (36 percent) compared to workers at large firms (26 percent). Workers at smaller firms are also more likely to pay a larger share of the cost if they have coverage for their families. At the very smallest firms, with only 3 to 9 employees, only 46 percent of employers offered any coverage at all.

Under the 2010 healthcare overhaul (PL 111-148, PL 111-152), employers with at least 50 full-time employees were required to offer health benefits. The number of employers offering coverage to their employees in 2016 was 56 percent, similar to the 57 percent covered the year before. This means that 89 percent of workers are employed somewhere that offers health benefits.

While there has been concern that the employer mandate could result in employees being shifted from full-time to part-time, where they wouldn’t be eligible for coverage, only 2 percent of firms surveyed said they plan to change job classifications in this manner. On the contrary, 7 percent said they planned to move part-time employees to full-time positions so they would be eligible for coverage.

The White House on Wednesday pointed to the Kaiser survey as proof that the administration’s healthcare policies have been working as intended. Jason Furman and Matt Fielder of the Council of Economic Advisers said in a blog post that deductibles were rising at a predictable rate and that they were not related to premium increases slowing. They instead argued that other structural changes were responsible for the lower premium growth.

"While trends in deductibles receive the most attention, families’ overall out-of-pocket spending burdens also depend on other features of their coverage, including what services are covered before the deductible, the size of their co-payment and co-insurance obligations, and whether they have a limit on their annual out-of-pocket costs," they wrote.

The analysis, from the Kaiser Family Foundation and Health Research & Educational Trust, was based on a survey of 1,900 small and large employers.

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Medicaid Commission Examines Uncompensated Care Funding Impact

By Marissa Evans, CQ Roll Call

September 15, 2016 – Safety-net hospitals are facing reduced federal funding for the care of people who are not insured, and the Medicaid and CHIP Payment and Access Commission (MACPAC) is grappling with what kinds of policies to recommend that could affect hospitals still relying on uncompensated care funding.

On Thursday, the 18-member commission examined funding for so-called disproportionate share, or DSH, hospitals that care for a high percentage of Medicaid and uninsured patients compared to other providers. Medicaid is the joint federal-state health insurance program for the poor and disabled.

The meeting comes as the federal funds for safety net hospitals are scheduled to decline during fiscal year 2018. The commission, also known as MACPAC, discussed whether the 31 states and District of Columbia that have expanded Medicaid eligibility residents with incomes up to 138 percent of the poverty level should see their DSH funding recalibrated.

"Whether the Medicaid expansion decision ought to be viewed in isolation rises to me as a very important" issue, said Sara Rosenbaum, chair of MACPAC and a health policy professor with the George Washington University Milken Institute School of Public Health.

The commission said that between 2013 and 2014, uninsured patient care fell by 25 percent in states that expanded Medicaid eligibility under the health care law and only 13 percent in non-expansion states. Hospitals in expansion states also were pleased with a 37 percent decrease in charity care and unpaid patients' debts as part of their operating expenses. Expansion states enjoyed a $5.8 billion reduction in charity care and bad debt overall in that same time period. While such care was falling in expansion states, hospitals in non-expansion states faced a $300 million increase in uncompensated care.

Brian Burwell, a commissioner for MACPAC and vice president for community living systems at Truven Health Analytics, said during the meeting that the commission should further examine how hospitals are using DSH funding and make recommendations for how the funds should be used. He said it’s difficult to tell if hospitals are being inefficient or the variety of beneficiaries is causing them not to make the most of the funding.

"There could be a moral hazard that with expansion, some of these hospitals have been flooded with patients who are Medicaid and altered the payer mix in those hospitals that are deemed DSH hospitals or those hospitals that happen to take care of these patients," Burwell said.

State officials and the Centers for Medicare and Medicaid Services have been in tough negotiations in recent years over uncompensated care funding. States like California, Florida, Tennessee and Texas rely on uncompensated care funds for hospitals since it is a reliable pool of funding for treating their relatively large Medicaid populations. But federal officials are planning for the program to wind down and have pointed to Medicaid expansion as a way to shore up funding for hospitals.

The presentation to MACPAC noted that Medicaid expansion states will be heavily affected by the new uncompensated care formula during fiscal year 2018. The reductions will be partly based on the number of uninsured people in the state.

Christopher Gorton, one of the commissioners and president of public plans at Tufts Health Plan, said that he is wary of MACPAC making recommendations about DSH without thinking about how it impacts other parts of a state’s health delivery system.

"MACPAC should think about making recommendations about equitable distribution in Medicaid funds including DSH, but at the end of the day, the state should decide how they allocate it," Gorton said. "They have more insight into how their mental health and foster systems and all of the other things work than the federal level."

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No Funds Available for 2015 Risk Corridor Payments, CMS Says

By Erin Mershon, CQ Roll Call

September 12, 2016 --- Federal health officials will not make any of this year's scheduled payments to insurance companies under the so-called risk-corridor program of the 2010 health law.

Instead, the Centers for Medicare and Medicaid Services (CMS) said in a late Friday memo it will use funds it collected in 2015, the second year of the program, to continue to pay back the shortfalls it accrued in the program's first year. The risk corridor provision of the health law was aimed at redistributing funds from plans with relatively healthy patients to those with relatively sicker ones.

Republicans, led by Sen. Marco Rubio, R-Fla., decried the risk corridor payments as an "insurer bailout." He and his colleagues added a rider to the fiscal 2015 spending package (PL 113-235), which was carried into the next year's appropriations omnibus as well (PL 114-113). It's difficult to strike a rider once it has been added to appropriations measures. The same language also appears in both the Senate and House versions of the fiscal 2017 Labor-HHS-Education appropriations bills (S 1695, HR 3020).

As a result of the language, the program in 2014 could only pay insurers 12.6 percent of what they otherwise would have received. It is that shortfall that CMS intends to address with this year's collected funds.

Many insurance companies have decried the loss of the risk corridor funding as well as the financial losses they incurred on the marketplaces. Several of the non-profit cooperative health plans established under the law -- all but seven of which have now collapsed -- cited the risk corridor shortfall as a major reason for their financial troubles. Several have sued the Department of Health and Human Services (HHS) over the missing payments.

CMS has said that it will continue to use new funds collected under the program to pay off the 2014 shortfall before it pays the 2015 payments, and to pay off any of those shortfalls before it funds the 2016 payments. The program is set to expire after 2016.

"In the event of a shortfall for the 2016 benefit year, HHS will explore other sources of funding for risk corridors payments, subject to the availability of appropriations," the agency wrote in the memo.

CMS also offered to discuss settlements for outstanding lawsuits in its Friday memo.

"As in any lawsuit, the Department of Justice is vigorously defending those claims on behalf of the United States," the agency wrote. "However, as in all cases where there is litigation risk, we are open to discussing resolution of those claims. We are willing to begin such discussions at any time."

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Brady Faces Demands from Groups on Rehabilitation Pay Bill

By Kerry Young, CQ Roll Call

September 16, 2016 -- A coalition of groups representing nursing and rehabilitation centers on Thursday pressed House Ways and Means Chairman Kevin Brady for significant changes in his proposal to peg more Medicare payments to judgments about the quality of service provided.

The Texas Republican last week held a hearing that included discussion of his bill (HR 3298), which seeks to move post-hospital care more toward value-based purchasing. The bill would require the Centers for Medicare and Medicaid Services (CMS) to establish performance standards and scores by which to rank providers. Payments would be partially based on these rankings.

Nursing center industry groups including the American Health Care Association and Leading Age want revisions in Brady's draft. In its current version, the bill leans too much on metrics based on how medical resources are used, said the signers of the five-page letter, which also include the National Association for Home Care & Hospice.

Instead, the coalition wants to delay the shift toward a new system to wait until metrics based on patients' outcomes will be ready. CMS is already working on such measurements but will not finish for years. The group also wants nursing centers to be able to receive bonus payments for improving their quality scores.

"Should these revisions be made, we will be better able to achieve support from our respective memberships," the groups said in their letter. "If these changes are not made, we will be left with no choice but to oppose the legislation."

Brady is one of the congressional leaders in efforts to update how Medicare pays for care of people recovering from strokes, serious illnesses and surgeries. Known as post-acute or post-hospital care, this field costs Medicare about $60 billion a year. Brady helped with the passage of the IMPACT Act of 2014 (PL 113-185), which calls for CMS to establish a framework for a new payment approach to all post-acute care. The agency now issues separate rules for payments for skilled nursing facilities, inpatient rehabilitation centers, specialty hospitals and home health agencies that help people recover.

"We strongly urge that changes be made to H.R. 3298 so that it adheres to the IMPACT Act’s implementation timeline, thereby ensuring that the cross-setting measures that would be necessary for implementing this legislation have been fully developed, validated and vetted," the groups said in their letter.

But experts have raised questions about the slow rollout of changes envisioned by the IMPACT Act. A member of the Medicare Payment Advisory Commission (MedPAC) at a March meeting wondered whether the timeline for changes to this field could be accelerated. The deadlines now in place would transition to a more unified payment system around 2026 or 2027, said MedPAC commissioner Kathy Buto, a veteran federal health adviser. "We're talking 10 years before there will be anything new," she said.

'Breathtaking' Change

Yet people who work in the field of post-acute care argue that they already feel the effects of a whirlwind effort within CMS to revamp how the federal government pays for health care.

"The level of change and innovation to achieve this goal is unprecedented," Gregory M. Worsowicz, a doctor speaking on behalf of the American Academy of Physical Medicine and Rehabilitation, told the House Ways and Means Health Subcommittee at a Sept. 7 hearing.

He, too, asked that Congress hold off on efforts to create a value-based purchasing program for post-hospital care, saying that both work in the field and CMS initiatives will have a broad effect on the practice of medicine. CMS, for example, has a test underway that can reward or dock hospital reimbursements based on how well people enrolled in Medicare fare in the 90 days following hip and knee replacements. As a result, hospital officials are taking a new look at the post-acute care options for their patients.

"We believe passage of this legislation at this time would add major additional policy changes to a sector that is struggling to comply with the existing pace of reform," Worsowicz said of Brady's bill said in testimony.

The IMPACT Act's timeline is meant to allow CMS to gather good comparison data about the different options for post-acute care, he said. He considered the pace of the work that CMS already is doing to roll out quality measures "breathtaking."

"It presents significant challenges for providers in keeping abreast of, and adapting to, these changes which are primarily focused on quality improvement," Worsowicz said.

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Median Household Income Jumps for First Time Since Recession

By Erin Mershon, CQ Roll Call

September 13, 2016 -- Median household income in the United States rose 5.2 percent to $56,516 last year, the first annual increase in that figure since the 2008 recession, according to new data from the U.S. Census Bureau.

The income gains were accompanied by a significant 1.2 percentage point drop in the poverty rate. About 43 million people in the U.S. lived in poverty, 3.5 million fewer than in 2014—the largest year-to-year drop since 1999.

Together, the figures paint a picture of an improving economy as the nation digs out from the deepest recession in decades. The White House jumped at the chance to herald the announcements.

"Today’s report from the Census Bureau shows the remarkable progress that American families have made as the recovery continues to strengthen," several officials, including Chairman of the Council of Economic Advisers Jason Furman, said in a joint statement.

Trudi Renwick, chief of the poverty statistics branch at the Census Bureau, highlighted the historic nature of the jump in median household income in particular.

"It's up really just across the board. It's up for all four [geographic] regions. It's up for almost every age group of household heads. It's up for almost every racial group except for Asians," she said on a call with reporters. "It's really a broad, broad increase in household median income, and it's one of the largest year-to-year increases in median household income that we've ever had."

Gains were largest for lower-income Americans—the poorest 10 percent of Americans enjoyed gains of nearly 8 percent. Those in the top 10 percent saw income gains of about 2.9 percent.

At the same time, the census bureau's measures for income inequality, the so-called Gini index, didn't change meaningfully from 2014 to 2015. Increases in median income and the decrease in the poverty rate, then, didn't meaningfully improve the lives of poorer Americans any more than those of richer Americans. Since it was first implemented in 1993, however, the index has risen 5.3 percent—showing that the income gap between the rich and the poor has widened over time.

Republicans used the report to highlight that millions of Americans remain in poverty.

"Too many Americans are still struggling to provide for their families and reach their full potential," House Ways and Means Committee Chairman Kevin Brady, R-Tex., said in a statement that also touted House GOP plans, led by Speaker Paul D. Ryan of Wisconsin, to overhaul health care, taxes and other policy areas.

Health Coverage Gains

The agency's latest figures also showed that about 4 million people gained health insurance coverage in 2015, dropping the total number of uninsured individuals to 29 million. The nation's uninsured rate was 9.1 percent, down from 10.4 percent in 2014.

It represents a sizeable change from 2013, the year many of the provisions of the president's signature health care law took effect, when the same report showed that 41.7 million individuals were uninsured. Democrats and other supporters of the health law have trumpeted its improvements in access to health care as one of its clear, demonstrable successes—even as the newly insured continue to face substantial challenges affording that coverage.

The gains in insurance coverage, which occurred for individuals with both private and government coverage, were higher in states that have chosen to expand Medicaid, the federal-state program for the low-income people and those with disabilities.

The survey also includes statistics that show how many Americans would be in poverty without supplemental income like Social Security. Those figures showed that 26.6 million Americans were lifted out of poverty by Social Security, another 9.2 million were lifted out by refundable tax credits, and about 4.6 million were lifted out of poverty by Supplemental Nutrition Assistance Program benefits. The supplemental measure also shows how the poverty rate is impacted when taking into account expenses. That data showed that some 11.2 million people slid into poverty after accounting for their out-of-pocket medical expenses. About 5.6 percent did so because of work expenses.

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