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September 29, 2014

Washington Health Policy Week in Review Archive c3356268-07f2-40fb-a37c-d1e4c484774f

Newsletter Article


More Insurers Flock to Sell Plans Through Federal Marketplace, HHS Says

By Rebecca Adams, CQ HealthBeat Associate Editor

September 23, 2014 -- The number of insurance companies that are offering plans in the 36 states that use is growing from 191 to 249 this year, a 30 percent increase, according to a new report by the Department of Health and Human Services (HHS).

None of the 36 states have seen a net decrease in the number of companies selling coverage, although 11 have seen no changes. The biggest difference was in Indiana, where 10 insurers will offer plans, up from four last year.

The increase is smaller in states that run their own websites, with 61 companies last year growing to 67 insurers in 2015. California was the only state reporting data that saw a decrease. This year, 10 insurers will offer coverage in California, compared to 12 last year.

Insurers do not have to offer coverage throughout an entire state, however, so there still may be regions where consumers have very few choices. It also is not clear how many more plan options consumers will have. A company could offer several types of insurance options or very few.

Federal officials are hoping that this year's experience with new marketplace plans offered under the health care law (PL 111-148, PL 111-152) will be far better than last year's launch, when was plagued with technical problems for two months. will assist two additional states with enrollment this year. The new open enrollment season runs from Nov. 15 through Feb. 15.

HHS issued the report ahead of remarks Health and Human Services Secretary Sylvia Mathews Burwell made at the Brookings Institution touting the law and competition it is bringing to the health marketplace.

The number of insurance plans is at least doubling in four states this year: Indiana, Missouri, New Hampshire, and West Virginia.

Not all of the states in the country reported data. No information was available for seven states, including some that have had difficulty with their online marketplaces, such as Massachusetts and Oregon.

Burwell touted the increased number of insurers in her remarks.

"There isn't a business in America that wouldn't be ecstatic with this kind of growth," said Burwell in her speech.

She also highlighted the new benefit requirements under the law, which she said results in more comprehensive benefits that must meet minimal standards.

Supporters of the law "haven't done a very good job of making the case" that middle-class families who already had insurance have better coverage, Burwell said.

And she cited statistics from the New England Journal of Medicine that suggest that more than 10 million more adults have gained coverage since last year. Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner told lawmakers last week that 7.3 million people were covered in marketplace plans in August, and CMS officials released statistics early last week showing that an additional 8 million people in July were covered by Medicaid and the Children's Health Insurance Program compared to a three-month period last year before the marketplaces were in effect.

The HHS secretary's next challenges include making sure that the next enrollment period runs smoothly and that people who get coverage remain insured.

Burwell in her remarks appealed to Americans to turn down the volume of the debate over health care.

Former Congressional Budget Office director Alice Rivlin, who introduced Burwell, said that running HHS is always hard work. But, she said, "This may be the most challenging time of all because it includes implementing the Affordable Care Act." 

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Hospitals' Uncompensated Care Costs Fall Under Health Law, HHS Says

By Rebecca Adams, CQ HealthBeat Associate Editor

September 24, 2014 -- The hospital industry may save about $5.7 billion this year because it will treat fewer patients who cannot pay their medical bills, according to a recent federal report. Spending on uncompensated care is estimated to be 16 percent less than hospitals' costs would be without the health care law, and most of the savings will be concentrated in states that expanded Medicaid.

Almost three-fourths of the total savings, or $4.2 billion, will accrue in states that expanded Medicaid as soon as possible, according to the 28-page Department of Health and Human Services (HHS) report. Health systems in those expansion states will save about 25 percent off the costs that they might have faced without the health care law in effect.

A total of 28 jurisdictions including the District of Columbia chose to expand their Medicaid programs under the law, but the report did not include two of the states in the estimate because those expansions were not in effect by midyear.

HHS officials said that hospitals in states that did not broaden Medicaid will see a combined savings of $1.5 billion, or 9 percent below the level of uncompensated care spending that would be expected this year without the law.

The amount of uncompensated care in states that expanded and states that did not expand Medicaid has been similar in the past. The health care law (PL 111-148, PL 111-152) allows states to broaden Medicaid, the federal and state program for the low-income, to people with income of up to 138 percent of the federal poverty level.

Hospital association officials in many states, aware of the potential for savings, have actively lobbied their governors and state legislators to take the federal money for Medicaid expansion. The federal government will pick up all of the costs through 2016 and phase down to 90 percent of costs in 2020.

HHS officials extrapolated the savings based on estimates that 10.3 million fewer people will be uninsured this year and 8 million additional people will be covered by Medicaid.

Hospitals' uncompensated care was defined as both bad debt, which are bills that hospitals expected patients would pay, and charity care, which comprises medical expenses for which hospitals didn't expect to be paid because officials had determined early on that patients couldn't afford them.

Ultimately, the federal government picks up most uncompensated care costs. Hospitals pass on to federal agencies such as Medicare, Medicaid and the Veterans Health Administration about 62 percent of uncompensated care.

Lawmakers expected a decline in charity care and bad debt as consumers gain coverage and are better positioned to pay their bills. That was one reason why Congress included in the law billions of dollars in cuts in Medicare and Medicaid payments for hospitals that care for a large share of low-income patients.

But since the Supreme Court ruled in 2012 that states can choose whether to broaden Medicaid eligibility, it has been unclear how much uncompensated care costs would decline.

It also has been unclear how much more medical care people who gain coverage will consume than they did when they were uninsured.

"Given the magnitude and timing of these cuts, as well as the uncertainty introduced by whether and how states plan to expand Medicaid, it is critical to determine how [uncompensated care] is changing following coverage expansion so as to avoid shifting a large financial burden to states, localities, and hospitals," the HHS report stated.

The analysts acknowledge that their estimates are preliminary. The findings are based in part on evidence such as quarterly hospital earnings reports and member surveys conducted by hospital associations. The authors also used estimates of the historical link between changes in coverage and declines in uncompensated care costs to project the decrease in total U.S. hospital uncompensated costs as a result of increases in coverage under the health care law.

"Hospitals have long been on the front lines of caring for the uninsured, who often cannot pay the full costs of their care," said HHS Secretary Sylvia Mathews Burwell. "Today's news is good for families, businesses, and taxpayers."

The findings echo reports by other analysts somewhat.

Earlier this month, a PricewaterhouseCoopers analysis of financial data from the nation's five largest for-profit health systems showed that in states that expanded Medicaid, hospitals are seeing financial benefits. The number of hospitalized patients who had Medicaid coverage jumped by 10 percent at Community Health Systems, more than 20 percent at Tenet Healthcare and 32 percent at HCA Holdings. At the same time, the number of hospital patients who lacked coverage and had to pay their bills fell by 46 to 48 percent among the three systems.

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Study Shows Sharp Jump in Young Adult ER, Mental Health Care Under Health Law

By John Reichard, CQ HealthBeat Editor

September 24, 2014 -- Young adults under the age of 26 who had access to employer-sponsored health insurance used sharply more emergency room services and substance abuse and mental health treatment the year after the health law extended that type of coverage to their age cohort, according to newly released data. The health law (PL 111-148, PL 111-152) required employer-sponsored plans to cover members' children up to age 26 for family policies issued or renewed after September 23, 2010.

Researchers at the Health Care Cost Institute noted the rise in young adult use of those services may not be entirely attributable to the law and could be due to other factors, including changes in public policy, insurance benefits, or the health of the population. The findings were contained in an issue brief released last week.

Other analysts suggested the health law was a big factor.

Policymakers can likely count the overhaul as a success in fueling an increase in mental health and substance abuse treatment of young adults, said Ken Duckworth, medical director of the National Alliance for the Mentally Ill (NAMI). But it's adding to difficulties lining up treatment because the supply of beds and doctors isn't keeping up, he said.

The Health Care Cost Institute maintains the largest U.S. database of private insurance claims.

Prior to the passage of the law, many children lost coverage upon turning 19, the institute noted. Young adult enrollment rose 3.1 million, or 10.4 percent, between the fall 2010 and the end of 2011, according to federal data. Almost all of that growth was in private coverage.

It's plausible the covered group in 2011 included young people with previously unmet needs, institute researchers said in an interview. But the design of the study did not allow that proposition to be proven or disproven, they cautioned.

"We did not separate out people who gained insurance" from those who already had it, said senior researcher Amanda Frost.

Spending on emergency room (ER) visits by young covered adults rose 15.6 percent in 2011 after growing only 4.6 percent the year before. The number of ER visits per 1,000 young adults increased by 10.4 percent in 2011, the study said.

Spending on hospital admissions for mental health and substance use jumped 52.3 percent in 2011 after growing 30 percent the year before. The increase in spending was largely due to an increase in the number of these admissions. Mental health parity legislation (PL 110-343) intended to increase access to mental health care also could have played a role, the researchers said.

NAMI's Duckworth noted the difficulty of explaining the uptick because there were "a lot of moving parts" at play in 2011 other than the health law. They included the sluggish economy and growing abuse of prescription painkillers and other opioids.

Unlike other types of medical care, people tend to use more mental health and substance abuse treatment in a troubled economy. "There's more anxiety, more depression, more substance abuse," he said.

But "the fact that the Affordable Care Act brought young adults into the insurance game I think was going to predictably impact mental health/substance abuse spending. There are a lot of young adults who didn't have insurance before. They're not all going to be healthy and free of vulnerabilities," he said.

Duckworth said it's a public health triumph that more troubled young people are getting care but now policy makers "need to be thinking about what 'does it take to increase our supply of providers'?"

"It takes a very long time to make a child psychiatrist. It takes roughly about a decade from the day you enter medical school."

"Access to these services is a concern in many parts of the country. If you talked to people who worked in emergency rooms they would feel this increase in the visits. One of the areas that they're having the most trouble is getting people into mental health beds," he said.

Duckworth said he sees the rise in ER use found in the study as linked to the rise in demand for mental health/substance abuse care. "Virtually no inpatient psych or detox facility will take you unless you've been evaluated in an emergency room."

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Insurance Commissioners Hope to Stave Off Tough Federal Oversight of Plan Networks

By Rebecca Adams, CQ HealthBeat Associate Editor

September 26, 2014 -- The nation's health insurance commissioners hope to produce by December draft recommendations for an updated model law that states could use to regulate the adequacy of insurers' provider networks, according to a representative of the National Association of Insurance Commissioners (NAIC).

Federal regulators are expected to wait to see the blueprint before deciding how to update their own standards.

The state commissioners are holding a call on Thursday to discuss changes to their model law on network adequacy, said Jolie Matthews, the NAIC senior health and life policy counsel. She spoke last week at a Washington, D.C. forum sponsored by the Alliance for Health Reform.

A subgroup expects to come up with its draft by November or December. Matthews said it probably will not change much before the entire organization adopts it next spring.

The issues of whether provider networks in the new insurance exchanges are too narrow and whether consumers receive up-to-date information about which doctors and hospitals are in networks has captured growing attention in the past year. Under the health care law (PL 111-148, PL 111-152), the Centers for Medicare and Medicaid Services (CMS) are supposed to ensure that provider networks are adequate. But many consumer groups have complained that many of the most important and highest quality hospitals or other providers were left out of some insurers' networks.

CMS officials have suggested that they will more aggressively enforce the standards.

For insurance policies sold in the marketplaces, federal officials mostly relied upon states to review network adequacy in 2014. For the open enrollment season that runs from Nov. 15 through Feb. 15, CMS officials have suggested that they will have closer oversight. A particular focus, they say, will be on mental health providers, oncology treatment providers, primary care doctors and hospitals.

Federal officials more strongly enforce regulations governing Medicare Advantage plans than they do those pertaining to exchange plans, said the Kaiser Family Foundation analyst Gretchen Jacobson.

Commissioners decided to take on the task of coming up with a new state law in order to fend off additional federal rules. State regulators want to protect their authority to evaluate networks, said NAIC's Matthews. The trade association appointed a group in April to start discussing the issue in earnest.

"We're hoping that any thoughts of any federal regulations are stymied now that we're working and hopefully we'll have something early next year," Matthews said.

Any revisions to the model law will probably include requirements that insurers give consumers lists of network providers, she said.

CMS is collecting more data about networks, but the agency does not appear to be policing them more aggressively now, said two other speakers, Steven Shapiro of the University of Pittsburgh Medical Center and American Heart Association senior government relations advisor Stephanie Mohl.

Mohl predicted that federal regulators may probe the makeup of networks more assertively when plans submit proposals to participate in the third open enrollment season that will start in the fall of 2015.

Patient advocacy groups are concerned that consumers may face limited choices of where to get their care because of narrow networks in some places. The American Heart Association released a study last week by Avalere Health showing that in the marketplace plans offered last year, plans' coverage of providers and hospitals varied tremendously. Health plans covered about 11 percent of stroke centers in Atlanta but all of the comprehensive centers in Philadelphia.

"The feds are watching closely what NAIC does and if they think they don't go far enough, I think they will step in and in fact we might advocate that [federal regulators] step in," said Mohl of the Heart Association.

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Clean Extension of Children's Health Program Eyed for Lame Duck

By Melissa Attias, CQ Roll Call

September 25, 2014 -- Backers of the Children's Health Insurance Program (CHIP) are jockeying to get an additional four years of funding included in any year-end deal that clears Congress after the elections, but Republicans seeking changes may be reluctant to oblige them so far ahead of its September 2015 expiration date. Although Democrats in both chambers have introduced bills (S 2461, HR 5364) that would renew the program's funding and make policy adjustments, efforts are expected to focus on a "clean" four-year extension during the lame duck session. Roughly 8 million children receive coverage through CHIP, which was designed for children whose families earn too much to qualify for Medicaid but too little to afford private insurance.

"We want to be as clean and simple as possible," said Bruce Lesley, president of the advocacy group First Focus, who noted that policy provisions could be debated in a later package. In the Senate, West Virginia Democrat Jay Rockefeller–a champion of CHIP who will retire at the end of the session–plans to pursue a four-year renewal in the lame duck, according to a spokeswoman. That would align the program's funding stream with its "maintenance of effort" eligibility and enrollment standards (PL 111-148, PL 111-152), which expire at the end of fiscal 2019. An omnibus spending bill or a package of tax extenders are two potential legislative vehicles, the spokeswoman added. Retiring Rep. Henry A. Waxman of California, the top Democrat on the Energy and Commerce Committee, is also looking for opportunities to push CHIP funding over the finish line in the lame duck session. States are already planning their 2015 budgets, a Waxman spokeswoman said, so providing them with certainty early on while ensuring children's coverage isn't disrupted should be a goal everyone can agree on.

But Republicans appear comfortable with a slower pace. An Energy and Commerce spokeswoman said Chairman Fred Upton supports CHIP and is collecting input from states and other stakeholders about how to improve the program before its funding expires. That process is underway, she said, but any legislative action will occur next year. The Michigan Republican, along with Waxman, Senate Finance Chairman Ron Wyden, D-Ore., and Finance ranking Republican Orrin G. Hatch of Utah, sent letters to all 50 governors in July asking for information about their programs by Oct. 31 as their committees consider whether and how CHIP should be extended.

Hatch is focused on getting that input because CHIP funding does not expire until September 2015, according to spokesman Aaron Fobes. "Moving forward, he hopes to use this feedback to reform CHIP in a bipartisan and bicameral way that puts the program back on a fiscally responsible path," Fobes said in an email.

CHIP advocates are trying to stress the urgency of early action, however, given that the joint program is state-administered like Medicaid. James M. Perrin, president of the American Academy of Pediatrics, said states are already working on their upcoming budgets and could be put in a difficult situation by funding uncertainties.

"We think it's very important this year," Perrin said.

Although some experts thought the 2010 health care law would make CHIP unnecessary, advocates say many things would need to be fixed before children covered by the program could move into the insurance exchanges the law created.

Mara Youdelman, managing attorney for the National Health Law Program in Washington, D.C., said her group is concerned that many children would completely lose health coverage if CHIP goes away. And while some will end up in the exchanges, she said, the new marketplaces' ability to meet children's specific needs hasn't been well-evaluated.

"We believe that there are services lacking that children will need," Youdelman said.

In contrast with advocates' push for a four-year extension, the Medicaid and CHIP Payment and Access Commission (MACPAC) in June recommended a two-year extension as a transition period for Congress to consider how to effectively incorporate CHIP enrollees into other sources of coverage. The commission noted that an additional extension should be considered if necessary.

But the report also provided advocates with encouraging news in terms of price. It cited Congressional Budget Office estimates that two more years of funding would cost $5 billion or less–nowhere close to another health policy contender in the lame duck–a roughly $130 billion effort to overhaul Medicare's physician payment formula.

"The federal costs of providing CHIP allotments for two more years would be largely offset by reductions in federal spending for Medicaid and subsidized exchange coverage–sources of federally subsidized coverage in which many children are assumed to enroll if CHIP funding were to be exhausted under current law," the report said.

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ACOs Complain Current Health IT Systems Thwart Cost Savings

By John Reichard, CQ HealthBeat Editor

September 24, 2014 -- The Obama administration boasts of successes launching accountable care organizations (ACOs) and fostering adoption of health information technology systems. But the two aren't coming together the way they are supposed to in an effort streamline the delivery of health care.

That was the complaint in a survey of ACOs jointly released last week by Premier Inc., a hospital consortium, and the eHealth Initiative, a nonprofit whose members include doctor, patient, insurer, public health and other groups.

ACOs aim to deliver team based care using health IT systems to coordinate treatment, share medical histories and test results and order tests and prescriptions with fewer errors. But the failure of health IT systems to work together seamlessly blocks these goals, said Premier Senior Vice President Keith Figlioli.

The lack of interoperability is a pervasive problem for ACOs, he added. "It could stymie the long-term vision for ACO cost and quality improvements if not addressed."

Figlioli is a member of the Health IT Standards Committee of the Office of the National Coordinator for Health Information Technology at the Department of Health and Human Services.

Using IT systems, ACOs are supposed to be able to pull in data from sources including hospitals, labs, doctors, pharmacists, and other caregivers.

Most acquire from fewer than 10 other entities. As they try to incorporate more, they're less able to coordinate care and measure quality, the survey sponsors say.

The cost of the systems is supposed to be recovered through cost savings, but the survey of 62 ACOs says they aren't receiving that kind of return on investment.

"The cost of interoperability can be prohibitive for many organizations," said Jennifer Bordenick, chief executive officer of the eHealth Initiative.

HHS is fielding numerous complaints about its inability to foster interoperable systems more quickly. But hospitals themselves balk at the regulations aimed at pushing interoperability, urging delays. Health IT Coordinator Karen DeSalvo is trying to prod a wide variety of health industry stakeholders to agree on a common plan to move toward interoperability over the next several years.

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